Rules Cover 17 License Categories From Seed To Sale
This week, medical cannabis patients and cannabis industry professionals in California anxiously wait for Gov. Jerry Brown’s signature on AB 266, a measure that would finally regulate medical cannabis production and sale for the first time in 20 years.
The bill was co-authored by four Democratic and one Republican Assembly member, and brokered with the direct involvement of the Governor, hence why its recent passage in both houses of the legislature practically guarantees that it will get a signature in the next few days.
After more than seven months since this bill was introduced in the legislature, the progress is welcome and long overdue.
Despite being the first state to legalize cannabis for medicinal purposes in 1996, California growers, dispensary owners, and producers of marijuana products like edibles and concentrates have still faced prosecution, asset seizure, and jail time simply for doing business with Prop 215 patients. Much of this prosecution occurred at the federal level, where cannabis is still a Schedule I controlled substance, but state and local law enforcement also interfered a great deal due to the lack of clearly-defined rules and regulations.
Law enforcement now has black-and-white instructions not to arrest or prosecute compliant state license holders, or interfere with licensed activity.
Apart from the constant fear of criminal prosecution, cannabis businesses in California have long been subject to inconsistent (or nonexistent) rules on the production, transportation and retail of cannabis, as well as local issues like zoning and taxation. Dealing with these inconsistencies costs dispensary owners valuable time and money that could be put back into the business and back into helping their patients.
“We’re making up for two decades of inaction”, said state senator Mike McGuire, whose district includes Northern California’s “Emerald Triangle” region, where an estimated 60% of the United States’ cannabis is cultivated. “This legislation brings clarity and desperately needed rules and regulations.”
Here are the main points to take away from this bill:
- A new Bureau of Medical Marijuana Regulation will be established within the existing California Department of Consumer Affairs. This agency will oversee the state licensing process, managing almost all aspects of cultivation, distribution and retail.
- Organic labeling will be available for qualified cultivators via the California Department of Food and Agriculture.
- Law enforcement now has black-and-white instructions not to arrest or prosecute compliant state license holders, or interfere with licensed activity.
- The Prop 215-compliant cannabis industry is now allowed to take profits – a big change from the past when dispensary owners could be prosecuted and jailed for being in the black, even accidentally.
- All moving parts of the industry are now covered with 17 new dual-license types (local and state), as follows:
- 11 Cultivation license types for small, medium, and large indoor, outdoor and mixed-light grows.
- 2 Manufacturing license types.
- 2 Dispensary license types for standalone or multiple retail sites.
- 1 Distribution license type.
- 1 Transporter license type.
- Cities and counties are now explicitly allowed to ban medical cannabis, upholding all current bans and moratoria. This is typically an unpopular approach as it restricts patient access; activists tend to believe this undermines Prop 215.
- Delivery service to patients is now explicitly allowed statewide, unless banned by the local government.
- Laboratory testing of cannabis products for potency, pesticides and mold is now required prior to retailing, though industry standards for these are not yet set.
- Distributors cannot own or operate grows, testing or production laboratories, or dispensary storefronts – just one of a few specific cross-licensing rules. Most other license holders can operate multiple types of businesses.
- Local governments can choose how to impose and collect tax from cannabis businesses.
- Alcohol cannot be sold where cannabis is sold.
- Workplaces do not have to permit stoned employees, even if they are Prop 215 patients.
While a select few in the state are sour about this bill and see it as a crackdown, the majority hope that the new measures will provide some clarification to local government and law enforcement, while simultaneously providing an industry model in preparation for impending adult use legalization in November. Plus, patients will benefit greatly from new regulations on mold and pesticides, which can cause or exacerbate illness.
Delivery service to patients is now explicitly allowed statewide, unless banned by the local government.
Though there will inevitably be growing pains, major dispensaries are looking forward to working with the new regulations in continued collaboration, including the nation’s largest, Harborside Health Center. Steve DeAngelo, the Bay Area-based dispensary’s co-founder and executive director, released a statement commenting on the historic passage of AB 266.
Harborside welcomes the long overdue enactment of statewide medical cannabis regulations—almost two decades after Proposition 215 called for them. However, we are concerned that time pressures made it impossible for legislators to adequately consider the impact of the new regulations on medical cannabis patients and the organizations that serve them. In addition, some of the language in the bill is unclear or may be in conflict with prior legislation. Harborside looks forward to working with lawmakers next session to address and resolve these outstanding issues. – Steve DeAngelo – Co-Founder & Executive Director of Harborside Health Center
Current local license holders and companies who provide compliance services have an extreme advantage over new businesses in the scope of these new regulations, but even as an entrepreneur, it may not be impossible to break into this newly official market if you can obtain the proper licenses and capital.
All things considered, when signed, this bill will usher in a modern era of regulated, industrialized cannabis for California, improving business practices as well as access for patients, as the state works its way toward a responsible adult use model.
You can read the full text of the bill here. How do you think this bill will impact the California medical cannabis community? Join the conversation and comment below!
