Cannabis Business in Iowa

Medical Cannabis Industry in Iowa

The Iowa Department of Health and Human Services (HHS) regulates the medical marijuana industry in the state through the Medical Cannabis Program. This program operates under the Bureau of Cannabis Regulation at HHS. Its mission is to provide Iowans with qualifying medical conditions a safe, effective, and well-managed medical cannabis program. The program seeks to strike a balance between giving patients access to medical cannabis and ensuring product quality and safety.

Licensing of Manufacturers and Dispensaries

HHS is responsible for licensing businesses involved in the medical cannabis industry in Iowa, specifically medical cannabidiol manufacturers and dispensaries. This includes:

• Medical Cannabidiol Manufacturers: As of December 1, 2017, the department was required to have licensed up to two manufacturers for the production and distribution of medical cannabis within the state. These manufacturers can manufacture, possess, cultivate, harvest, transport, package, process, or supply medical cannabidiol. The department must re-license or license new manufacturers annually by December 1st.
• Medical Cannabidiol Dispensaries: By April 1, 2018, the department was required to have licensed up to five medical cannabidiol dispensaries to distribute medical cannabis to qualified patients. Licenses are renewed or granted to new dispensaries annually by December 1st.

As you can see, the number of licenses for cannabis businesses in Iowa is limited. If a prospective entrepreneur is interested in starting a cannabis business, they may want to look for a cannabis business for sale from an existing licensee.

Requirements and Oversight

HHS has established regulations to ensure the safe and responsible operation of medical cannabis businesses. Key requirements include:

• Testing and Quality Control: Medical cannabidiol manufacturers are required to contract with independent laboratories to conduct spot-check testing. This testing ensures product quality, consistency, and the absence of contamination. The manufacturer is responsible for the cost of this testing.
• Security Protocols: Both manufacturers and dispensaries are mandated to implement comprehensive security measures, which include security alarm systems, access controls, intrusion detection systems, and personnel identification systems. These measures are intended to deter theft and unauthorized access.
• Prohibition on Relationships with Healthcare Professionals: To prevent conflicts of interest, manufacturers and dispensaries are prohibited from sharing office space with, referring patients to, or having financial relationships with healthcare practitioners. Consumption of medical cannabis is not allowed on their premises.
• Inspections: Manufacturers and dispensaries are subject to inspections by HHS to ensure compliance with the regulations.
• Employee Background Checks: Manufacturers and dispensaries are not allowed to employ individuals younger than 18 years old or those with disqualifying felony offenses. Background checks conducted by the Division of Criminal Investigation and the FBI are required for all owners and employees.
• Location Restrictions: Manufacturers and dispensaries cannot operate at the same physical location. Additionally, they cannot operate within 1,000 feet of a public or private school that was in existence prior to their licensing date.
• Marketing and Advertising Limitations: HHS sets limitations on signage, marketing, display, and advertising related to medical cannabidiol.

CBD and Hemp Businesses in Iowa

Consumable Hemp (CBD) Businesses

Iowa law permits the sale of consumable hemp products, including CBD oil, provided they meet certain requirements. These requirements, overseen by the Department of Inspections and Appeals (DIA), focus on product safety, consumer protection, and responsible business practices:

• Registration: Businesses involved in manufacturing or retailing consumable hemp products must register with the DIA. Out-of-state businesses selling or distributing consumable hemp products into Iowa also need to register with the DIA, with each location requiring individual registration.
• THC Limits: CBD products sold in Iowa must contain no more than 0.3% THC. Any product containing more than this limit is considered a controlled substance and is illegal in the state.
• Restricted Product Categories: Consumable hemp products cannot be added as ingredients to alcoholic beverages, meat and poultry products, or dairy products.
• Prohibition on Therapeutic Claims: Manufacturers and retailers are prohibited from making therapeutic claims on product labels or in marketing materials.
• Sales Restrictions: Sales of consumable hemp products are restricted, with prohibitions on door-to-door sales, vending machine sales, and sales at private parties.

Hemp Businesses

The cultivation, processing, sale, and use of industrial hemp are legal in Iowa under the Iowa Hemp Act of 2019. The Iowa Department of Agriculture and Land Stewardship (IDALS) is responsible for licensing and regulating hemp cultivation in the state.

Key Aspects of Hemp Business Regulations:

• Licensing: To cultivate or process hemp, a license from the IDALS is required. IDALS issues licenses to individuals and businesses, offering four different license types: Single Licensee, Multiple Licensee, Association Licensee, and University Licensee. Applicants can apply for more than one license.
• Application Requirements: Hemp license applications must be submitted to the IDALS, providing information on the applicant, the proposed cultivation site, and the hemp variety to be cultivated. A fingerprint-based background check is also required. Applicants with felony convictions related to controlled substances within the past 10 years are ineligible.
• Application Deadlines: The deadline for outdoor planting license applications is April 15th of each year, while indoor planting license applications are accepted year-round.
• THC Testing and Compliance: Before harvesting, hemp crops are subject to inspection by the IDALS, and the THC levels are tested. Crops with a THC content exceeding the 0.3% limit must be destroyed at the grower's expense.
• Prohibition on Smokable Hemp Flower: The sale, purchase, and possession of smokable hemp flower are illegal in Iowa.
• Animal Feed Restriction: The use of hemp products in animal feed is not permitted in Iowa.
• Municipal Authority: While municipalities in Iowa cannot prohibit hemp cultivation or processing, they do have the authority to regulate the location of hemp establishments.