CannaBusiness Article

In October 2015, governor Jerry brown signed into law the California Medical Marijuana Regulation and Safety Act (MMRSA). California will now be moving away from an unregulated marijuana marketplace into more robust regulations.

These bills give various state agencies authority to set up rules and procedures for the following:

– Tracing cannabis product

– Record keeping

– Anti-diversion systems for transporting cannabis product

– Quality assurance testing standards

– Robust labeling and packaging

– Safe product handling

– Security requirements

The Act is not a single but actually several pieces of legislation. Each regulation focuses on a different goal and gives authority to several state agencies to set up and enforce the act.

MMRSA OVERVIEW

AB 266: This is MMRSA’s overall regulatory and licensing set up ordinance. It legalizes marijuana operations pursuant to a license. Additionally, it allows businesses to change structure from nonprofit to for profit. It establishes a regulatory agency under the Department of Consumer Affairs that has the authority to set rules and procedures to enforce the MRSA. It gives the Department of Consumer Affairs, the Department of Food and Agriculture, and the State Department of Public Health the power to pass any rules necessary to implement the MMRSA.

AB 243: This act focuses on regulating marijuana cultivation for medical use and California’s environmental concerns regarding marijuana cultivation. It gives the California Department of Food and Agriculture authority over the regulation of medical marijuana cultivators. They will be issuing and overseeing all cultivator licenses. It also grants the California Department of Pesticide Regulation power to oversee pesticide usage and safety. This act also excludes small cultivating patients if they cultivate marijuana exclusively for personal use.

SB 643: This Senate bill adds more regulatory and oversight measures to MMRSA. It puts forth standards for licensed medical physicians who recommend marijuana for medical use. This act will authorize the California Medical Board to investigate physicians who excessively recommend cannabis for medical use, fail to have a bona-fide patient relationship with those persons for whom they recommend cannabis, or fail to maintain sufficient records. It also mandates that applicants for any medial marijuana license must submit fingerprints to the Department of Justice for a criminal background check.

LICENSING

Licensing under this bill will begin at the earliest January 1, 2018 but most likely after this date. The following will be the License types established under AB 266 and SB 643:

Type 1 = Cultivation; Specialty outdoor. Up to 5,000 square ft of canopy, or up to 50 noncontiguous plants
Type 1A = Cultivation; Specialty indoor. Up to 5000 sq ft
Type 1B = Cultivation; Specialty mixed light. Using exclusively artificial lighting.
Type 2 = Cultivation; Outdoor. Up to 5,000 sq ft, using a combination of artificial and natural lighting.
Type 2A = Cultivation; Indoor. 5,001 – 10,000 sq ft.
Type 2B = Cultivation; Mixed light. 5,001 – 10,000 sq ft.
Type 3 = Cultivation; Outdoor. 10,001 sq ft – 1 Acre.
Type 3A = Cultivation; Indoor. 10,001 sq ft – 22,000 sq ft
Type 3A = Cultivation; Mixed light. 10,001 sq ft – 22,000 sq ft
Type 4 = Cultivation; Nursery.
Type 6 = Manufacturer 1 for products not using volatile solvents.
Type 7 = Manufacturer 2 for products using volatile solvents.
Type 8 = Testing.
Type 10 = Dispensary; General.
Type 10A = Dispensary; No more than three retail sites.
Type 11 = Distribution.
Type 12 = Transporter

CULTIVATION SIZE LIMITATIONS

The maximum allowable size is 1 acre outdoor or 22,000 sq ft indoors. Furthermore, the amount of licenses allowing cultivation for over 10,000 sq ft will be limited.

VERTICAL INTEGRATION

Vertical integration is the term used when an entity seeks several different licenses. The restrictions preventing this are complicated and should be discussed with an attorney. Any entity can only hold licenses in up to two separate categories. Small cultivation licensee Type 1 – 2 may hold manufacturing or Type 10A retail licenses (limited to three dispensaries). Type 10A licensees can apply for both manufacturing and cultivation, provided the total cultivated area does not exceed 4 acres. However, large cultivation licensees Type 3 – 4 cannot hold a manufacturing license.

Although the California agencies will not start issuing licenses until well after January 1, 2018, California medical marijuana business should start preparing now for this future regulatory system. Here at Macomber Yockey Law, we have experience and knowledge of the new laws and can assist you and your business in moving forward into this new phase of marijuana business regulatory law.