MARIJUANA REGULATORY STRUCTURE LEGISLATION Key County Issue Medical Cannabis Regulation & Safety Act Adult Use of Marijuana Act Proposition 64 Local Control Local control clauses Referenced in Business & Professions Codes 19315 (a), 19316 (a) & (c) Locals are responsible for awarding local licenses to operate Referenced in Business & Professions Code 19320 (a) Cultivation must comply with local rules Referenced in Health & Safety Code 11362.777 (b) (3) Local fee and tax power Referenced in Business & Professions Code 19320 (d) Personal grows restrictions Referenced in Health & Safety Codes 11362.2 (a) (1) & 11362.2 (b) (1) Personal grow of six plants maximum Referenced in Health & Safety Code 11362.2 (a) (3) Locals cannot ban indoor personal grows of 6 plants on a residence Referenced in Health & Safety Codes 11362.2 (b)(2) State cannot approve applicants that conflict with local rules Referenced in 26055 (e) Main local control provisions Referenced in Health & Safety Code 26200 Allows local governments to prohibit/restrict marijuana use in publicallyowned facilities Referenced in Health & Safety Code 11362.45 (g) Broad and explicit county taxing authority Referenced in Business & Professions Code 19348 County Taxing Authority County authority to tax deliveries Referenced in Business & Professions Code 19340 (c) Local fee and tax authority Referenced in Business & Professions Code 19320 (d) Referenced in Business & Professions Code 19350 Broad and explicit county taxing authority Referenced in Revenue and Taxation Code 34021.5
Licensing Entity Local license issuance Referenced in Business & Professions Code 19320 (a) Bureau of Medical Cannabis Regulation in Department of Consumer Affairs - Primary state licensing entity Referenced in Business & Professions Codes 19302, 19303, 19304 California Department of Food & Agriculture has role in cultivation licensing Referenced in Business & Profession Code 19302.1 (e) Referenced in Health & Safety Code 11362.777 (b) (1) (B) Cultivation licenses must first commence locally Referenced in Health & Safety Code 11362.777 (b) (2) Department of Consumer Affairs issues licenses for dispensary, distributor, transporter, special dispensary, testing laboratories Referenced in Business & Profession Code 19302.1 (d) & 19334 (a) Department of Public Health issues licenses for manufacturers Referenced in Business & Profession Code 19341 No mandatory local license issuance requirement Bureau of Marijuana Control in Department of Consumer Affairs is primary state licensing entity Referenced in Business & Professions Codes 26010 (a) (b) (c) & (d) California Department of Food & Agriculture has role in cultivation licensing Referenced in Business & Professions Code 26012 (a) (2) Department of Consumer Affairs issues licenses for dispensary, distributor, transporter, special dispensary, transportation, storage, distribution, sale Referenced in Business & Professions Code 26012 (a) (1) Department of Public Health issues licenses for manufacturers/testing laboratories Referenced in Business & Professions Code 26012 (a) (3)
Environmental Enforcement Establishment of the Medical Cannabis Fines & Penalties Account Referenced in Business & Professions Code 19360 Fine & penalty monies dedicated to state and local environmental enforcement efforts Referenced in Business & Professions Code 19351 (c) Bureau of Marijuana Regulation shall establish a grant program to locals for regulation/enforcement assistance Referenced in Business & Professions Code 19351 (d) Water diversion protections Referenced in Business & Professions Code 19332 (d) Cultivation standards Referenced in Business & Professions Code 19332 (e) (2) Identify water source Referenced in Business & Professions Code 19332.2 Referenced in Business & Professions Code 26036 Referenced in Business & Professions Code 26056.5 Referenced in Business & Professions Code 26057 (b) (1) Referenced in Business & Professions Code 26060 (c) Referenced in Business & Professions Code 26066 State agency focus on environmental damage by cultivation Referenced in Business & Professions Code 13276 Collective Model/Personal Grows Abolishes collective model Licensing requirements for all commercial cannabis activities Referenced in Business & Professions Code 19320 (a) Referenced in Health & Safety Code 11362.775 (b) Personal grow exemption/primary caregiver exemption for 5 patients Referenced in Business & Professions Code 19319 (a) & (b) Those exempt must still comply with local restrictions Referenced in Health & Safety Code 11362.777 (g) Cannot cultivate without license Referenced in Referenced in Business & Professions Code 26067 (b)
Date of Licensure After January 1, 2018 Referenced in Business & Professions Code 19321 (c) Licensing entities shall begin issuing licenses by January 1, 2018 Referenced in Referenced in Business & Professions Code 26012 (c) Detailed Regulatory Standards Department of Consumer Affairs, California Department of Food & Agriculture & Department of Public Health have broad regulatory authority Referenced in Business & Professions Code 19321 California Department of Food & Agriculture responsible for cultivation regulations including weight and measures Referenced in Business & Professions Codes 19332 (a), 19332 (e) (1) Department of Pesticide Regulation & Department of Public Health develop pesticide standards Referenced in Business & Professions Code 19332 (b) Annual license Referenced in Business & Professions Code 19321 (b) Dispensary security standards Referenced in Business & Professions Codes 19334 (c) & (d) Testing laboratories Referenced in Business & Professions Codes 19343, 19344, 19345 Residency requirements None Department of Public Health promulgate regulations for manufacture and testing Referenced in Referenced in Business & Professions Code 26100 Department of Consumer Affairs, California Department of Food & Agriculture & Department of Public Health have broad regulatory authority Referenced in Referenced in Business & Professions Code 26013 All licensee must be bonded for tax liabilities Referenced in Referenced in Revenue & Taxation Code 34014 (b) Department of Pesticide Regulation & Department of Public Health develop pesticide standards, no Department of Public Health, but include California Department of Food & Agriculture & Water Regional Control Board Referenced in Referenced in Business & Professions Codes 26060 (a) (b) & (e) Annual license Referenced in Referenced in Business & Professions Code 26050 (c) California residency requirements Effective until January 1, 2020 Referenced in Referenced in Business & Professions Code 26054.1
Transportation Standards Transportation operators must be licensed, bonded & insured Referenced in Business & Professions Code 19337 (a) Detailed manifest/accessible records required Referenced in Business & Professions Codes 19337 (b), (c), (d) and (e) Bureau to develop minimum security requirement for transportation Referenced in Business & Professions Code 19334 (b) Local governments cannot prevent transportation of marijuana by licensee on public roads Referenced in Referenced in Business & Professions Code 19338 (b) Transportation operators must be licensed, bonded & insured Referenced in Business & Professions Code 26070 (a) (2) Bureau to develop minimum security requirement for transportation Referenced in Business & Professions Code 26070 (b) Local governments cannot prevent transportation of marijuana by licensee on public roads Referenced in Business & Professions Code 26080 (b) Referenced in Business & Professions Code 26200 (b) (2) General Enforcement Cities can request to be primary enforcement entity Referenced in Business & Professions Code 19316 (b) State not required to enforce local standards Referenced in Business & Professions Code 19315 (b) State disciplinary action could occur for failure to comply with local ordinance Referenced in Business & Professions Code 26030 (e) Peace officers can enforce licensing scheme Referenced in Business & Professions Code 26035 (b) Locals can request to be primary enforcement entity Referenced in Business & Professions Code 26202 State is not required to enforce local standards Referenced in Business & Professions Code 26200 (a)
Mobile Retail Deliveries Permitted, unless prohibited by local ordinance Referenced in Business & Professions Code 19340 Can only be made from a licensed retailer Referenced in Business & Professions Code 19340 (b) Retail transactions can only be made from a licensed retailer Referenced in Business & Professions Code 26090 (a) Customer must maintain proof of delivery request Referenced in Business & Professions Code 26090 (b) Local governments cannot prevent transportation of marijuana by licensee on public roads Referenced in Business & Professions Code 26090 (c) Referenced in Business & Professions Code 26200 (b) (2) License Prohibitions (Criminal Record) Previous criminal violations that could trigger failure to obtain state license: Felony illegal involvement in controlled substances Fraud, deceit & embezzlement Illegal patient recommendations Illegal cultivation activities Record of violations in last 3 years Specified serious felonies Specified violent felonies Failure to have tax registration Referenced in Business & Professions Code 19323 (b) (5) Previous criminal violations that could trigger failure to obtain state license: Fraud, deceit & embezzlement Illegal cultivation activities Record of violations in last 3 years Specified serious felonies Specified violent felonies Failure to have tax registration Using minors for drug trafficking Referenced in Business & Professions Code 26057 (b) Local Involvement in License Revocation Yes. Referenced in Business & Professions Code 19323 (b) (3) Yes. Referenced in Business & Professions Code 26031
Advertising Restriction & Edibles Labeling No advertising restrictions Edibles labeling requirements Referenced in Business & Professions Code 19347 Labeling requirements Referenced in Referenced in Business & Professions Code 26120 Advertising restrictions Referenced in Referenced in Business & Professions Codes 26150, 26151, 26152, 26154 & 26155 No giveaway of product Referenced in Referenced in Business & Professions Code 26153 Cross Ownership of Licensing Extensive restrictions Referenced in Business & Professions Code 19328 No alcoholic beverage retailers can hold a medical marijuana license Referenced in Business & Professions Code 19329 Minimal restrictions in owning other licenses, as follows: Testing facilities cannot hold other licenses Referenced in Business & Professions Codes in 26053 (b) & 26100 (c) Alcoholic beverage retailers & tobacco retailers cannot hold any marijuana license Referenced in Business & Professions Code 26054 (a) Licensees can hold medical marijuana licenses Referenced in Business & Professions Code 26053 (b) Type 5 licensees shall not be able to hold testing licenses or distributor/transporter license Referenced in Business & Professions Code 26061 (e) Local Examination of Licensee's Records Yes. Referenced in Business & Professions Codes 19327 (c) & (d) Yes. Referenced in Business & Professions Code 26160 (c) Peace officers can inspect premise Referenced in Revenue & Taxation Code 34016
Employer Restrictions/Drug Free Workplace Employers can adopt policies regarding employee use Referenced in Business & Professions Code 19330 Employers can adopt policies regarding employee use Referenced in Health & Safety Code 11362.45 (f) Background Checks Prospective licensees must submit to State Department of Justice background checks Referenced in Business & Professions Code 19322 Nothing explicit -- Electronic submission of fingerprint images required Referenced in Business & Professions Code 26056 Addresses Doctor/Patient Relationship Facility/restrictions on financial interest Referenced in Business & Professions Code 2525(a) Physician recommendation requirements Referenced in Business & Professions Code 2241.5 & 2525.3 Physician advocating Referenced in Business & Professions Codes 2525.5 (a) & (b) Not Applicable
Appellation/Organic Standards/Agricultural Product Criminal Penalties Statues California Department of Food & Agriculture shall establish organic program by 2020 Referenced in Business & Professions Code 19332.5 (a) Bureau of Marijuana Regulation may establish appellations Referenced in Business & Professions Code 19332.5 (b) County of origin labeling standards Referenced in Business & Professions Code 19332.5 (c) For the purposes of this section Classifies cannabis as a Agricultural Product Referenced in Health & Safety Code 11362.777 (a) No criminal penalties if licensed Referenced in Business & Professions Codes 19317 (a) & (b) No license, then one is eligible to face criminal penalties Referenced in Business & Professions Codes 19318 (a) & (c) California Department of Food & Agriculture shall establish organic program by 2020 Referenced in Business & Professions Code 26062 Bureau of Marijuana Regulation may establish appellations Referenced in Business & Professions Code 26063 (a) County of origin labeling standards Referenced in Business & Professions Codes 26063 (b) & (c) Classifies cannabis as a Agricultural Product Referenced in Business & Professions Code 26067 (a) For the purposes of this section No criminal penalties if licensed Referenced in Business & Professions Code 26037 (a) No license, then one is eligible to face criminal penalties Referenced in Business & Professions Code 26038 (c) Track & Trace/Unique Identification System California Department of Food & Agriculture shall establish a unique identifier program Referenced in Business & Professions Codes 19335 (a), 19332 (e) (3) & (e) (4) Locals can administrate their own unique identifier program Referenced in Health and Safety Codes 11362.777 (e) (1), (e) (2), (e) (3), (e) (2) Board of Equalization for tax compliance associated with unique identifier program Referenced in Revenue & Tax Code 31020 California Department of Food & Agriculture shall establish a unique identifier program Referenced in 26067 (c) (1) Locals can administrate their own unique identifier program Referenced in 26067 (d) Personal grows are not required to be part of unique identifier Referenced in 26067 (e) (1) Tax compliance associated with unique identifier Referenced in Business & Professions Code 26170
State & Local Regulatory Fee Authority Yes, explicit fee authority Referenced in Business & Professions Code 19350 Nothing explicit -> Rely on local control for fee recovery County Identification Cards No reference County identification cards protocols Referenced in Health & Safety Codes 11362.712 (a) & (b) Fees limitations Referenced in Health & Safety Code 11362.755 (b) Fee cost County recovery Legislative appropriation Referenced in Health & Safety Code 11362.755 (e) Legislative Furtherance Not applicable Legislature can adopt further measures by majority vote Referenced in Business & Professions Code 26000 (c) State Appellate Body No reference Creation & scope of Marijuana Control Appeals Board Referenced in Business & Professions Code 26040
Overconcentration of Retail Licenses No reference Ability to restrict issuances of licenses due to excessive concentration Referenced in Business & Professions Code 26051 (c) Retail Security Requirements Retail facility security requirements Referenced in Business & Professions Code 26070 (c) Local Control/Public Consumption No reference Locals can allow for public consumption Referenced in Business & Professions Code 26200 (d) Non-Profit No reference Possible creation of state non-profit license category Referenced in Business & Professions Code 26070.5
ADDENDUM MEDICAL MARIJUANA LICENSE CATEGORIES TYPE Type 1 Type 1A Type 1B Type 2 Type 2A Type 2B Type 3 Type 3A Type 3B Type 4 Type 6 Type 7 Type 8 Type 10 Type 10A Type 11 Type 12 CLASSIFICATION Cultivation; Specialty outdoor; Max 5,000 sq ft per premise/ 50 mature plants Cultivation; Specialty indoor; Max 5,000 sq ft per premise Cultivation; Specialty mixed-light; Max 5,000 sq ft per premise Cultivation; Outdoor; 5,001 10,000 sq ft per premise Cultivation; Indoor; 5,001 10,000 sq ft per premise Cultivation; Mixed-light; 5,001 10,000 sq ft per premise Cultivation; Outdoor; 10,001 1 acre sq ft per premise* Cultivation; Indoor; 10,001 1 acre sq ft per premise* Cultivation; Mixed-light; 10,001 1 acre sq ft per premise* Nursery; Can transport live plants Manufacturer 1; Products using nonvolatile solvents Manufacturer 2; Products using volatile solvents Testing Laboratory Dispensary; General Dispensary; No more than three retail sites Distribution Transporter *CDFA shall have a limit on the number of licenses in this type. ADDITIONAL LICENSE CATEGORIES CREATED IN PROPOSITION 64 Type 5* Type 5a* Type 5b* Type 12 Cultivation; Outdoor large Cultivation; Indoor large Cultivation; Mixed light large Microbusiness *Delayed issuance until January 1, 2023; Could be eligible in the 3-1-4 scheme
ADDENDUM STATE TAX PROPOSED IN PROPOSITION 64 State 15% excise tax @ retail (in addition to sales & use tax) Referenced in Revenue & Taxation Code 34011 (a) No sales & use tax on medical cannabis Must present medical identification card to enjoy exemption Referenced in Revenue & Taxation Code 34011 (g) State cultivation tax: Flowers: $9.25 per ounce Leaves: $2.75 per ounce Referenced in 34012 Board of Equalization: Collects & administers Can make adjustment Use tax stamps Link to track & trace Personal cultivation and caregiver exemption Paid quarterly Effective January 1, 2018 May require licensees to have security requirements for tax liabilities Proceeds from taxes placed in Marijuana Tax Fund Administration Then: 60% = Youth-related use 20% = Environment-related 20% = Local government & California Highway Patrol Legislature can change tax distribution formula after July 1, 2028