Transitioning From Medical Cannabis Collectives To Commercial Cannabis Businesses

Transcription

1 Transitioning From Medical Cannabis Collectives To Commercial Cannabis Businesses

2 COLLECTIVE TRANSITION Timeline State Law Med vs. Rec Sonoma County Municipalities Process and Tips

3 Timeline for Transition Now Collective Nonprofit Model Sonoma County Transition Period This Year Obtain local permits Seller s Permit CPA/Taxes Water Board Registration Apply/Obtain State License to For-Profit Work only with Licensed Operators

4 Transition Under State Law Nonprofit Patient Collective to Commercial For-profit Business

5 What is a medical cannabis collective? In 2004, Senate Bill 420 was passed to allow distribution of medical cannabis between patients and caregivers through collectives or co-ops. A collective is a group of qualified patients that is authorized to grow, distribute and/or sell medical marijuana on a non-profit basis to their collective members. SB 420 also allows patients to have 6 mature or 12 immature plants and up to one-half pound of dried, processed marijuana. Patients are exempt from this requirement if their doctor states on the recommendation that the patient needs more. Collectives may possess enough cannabis to cover the needs of their patient members, Collectives should have membership agreements with all of their patient members.

6 What is the difference between personal use and commercial cannabis operations? Personal use = your personal consumption Sonoma County = 100 square feet, including up to 6 plants for adult use per residence Commercial cannabis activity = cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, delivery, or sale of medical cannabis or a medical cannabis product

7 COLLECTIVE (Prop 215/SB 420) vs. COMMERCIAL (MCRSA/AUMA) Collective (SB 420) Group of qualified patient members that agree to share medicine Operate as not for profit Collective agreement Seller s Permit for cultivators/manufacturers Subject to local cannabis tax regardless if permit is obtained Commercial Business (MCRSA/AUMA) Local Permitted + State Licensed Allowed to Operate For Profit Legal Business should not be subject to State/Local law enforcement if complying with permit and license requirements Watch out for potential Federal changes Subject to local, state, and federal taxes

8 Medical Licenses vs. Rec Licenses Prop 215/SB 420 Defense to persecution and collective model before state issues licenses Prop 64 No authorized recreational businesses until state licenses become available

9 How long can collectives continue to operate? Under MCRSA SB 420 collective model will sunset one year after the state starts accepting medical cannabis license applications Which could be January 1, 2019, if the state opens license applications on January 1, 2018.

10 Transition in Sonoma County Nonprofit Patient Collective to Commercial For-profit Business

11 Sonoma County Transition Period No more 30 plants per patient! Sonoma County Resolution was superseded by Cannabis Ordinance 6189 Allows for transition period for Cultivating Collective established before January 1, 2016 To continue to operate until January 1, 2018 only if No increase in size of cultivation area Operations are in compliance with both: Best Management Practices (from SoCo Ag Commissioner) and Operating Standards (page 19, Exhibit A-2)

12 Sonoma County Transition: What we don t know Sonoma County transition period silent as to Plant count = defer to state guidelines (6 mature/12 immature plants) No increase in size = cultivation area or plant count? Moving facilities, locations or changing cultivation methods Evidence required to qualify for transition period Loose leaf collectives Cultivating in RR/AR zones protected? Who or what is the Review Authority

13 Transition in Municipalities Nonprofit Patient Collective to Commercial For-profit Business

14 Transitioning if located in a municipality Rules are based on the location from which you operate Sonoma County rules only apply to unincorporated areas 9 cities in Sonoma County = different rules Check local ordinances and comply with state laws

15 Transition Procedure & Tips Nonprofit Patient Collective to Commercial For-profit Business

16 Converting Nonprofit business to For-Profit Consult with an attorney Look to your by-laws and/or operating agreement Until state medical licenses available, operations must remain not for profit State law allows for nonprofits to merge or convert to for-profits, or you can winddown your nonprofit and start with a new for-profit

17 Best Management Tips for a Successful Transition from Collective to Commercial Work with trusted professionals = CPA, attorney, bookkeeper, designer/architect, environmental consultant, fire protection/safety consultant, etc. Find a location/site that can be permitted/licensed Obtain owner permission and written consent Create a business plan and cost projection plan to obtain permits/licenses Form Business entities and create contracts for partnership/equity arrangements Secure investors & raise capital Know your strengths and weaknesses and build your team accordingly Take business classes or hire qualified person to manage business operations

18 What happens if operators continue to operate without permits/licenses? Law enforcement Code enforcement $$$ will be available for enforcement based on permit/license fees for county/state Track/Trace impact on Black/Grey Market Taxes

19 Questions? Team Canna Legal (a division of Beck Law, P.C.) Dan Beck, Attorney Julie Mercer-Ingram, Attorney Jolene Strange, Paralegal

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