New Cannabis Legislation

Posted by Margolin & Lawrence on October 1, 2018

Allison Margolin, founder and partner of Margolin & Lawrence, spoke on Wednesday about dosing regulations at the State of Cannabis conference in Queen Mary, Long Beach. The maximum dosage is 100 mg of THC for packaged edible products, and each serving can contain no more than 10 mg. This was established in the final re-adoption of the emergency regulations (CCR, Title 17, Division 1, Chapter 13, §40305), and while these limits may frustrate consumers with a higher tolerance, larger doses of concentrated cannabis products are allowed in non-edible forms. Under §40306 of the regulations, topical products, concentrates and other non-edible products (including tinctures and capsules) may be sold in amounts up to 1,000mg per package. a special recommendation to get a larger dose (up to 1,000mg) without medical prescription. Up to 2,000mg per package is also permitted under this provision, but only for medicinal-use customers and with appropriate labelling.

Applying for a Commercial Cannabis License: State vs. Local

Posted by Margolin & Lawrence on August 13, 2018

Since the Department of Cannabis Regulation opened up Phase II licensing in Los Angeles a couple of weeks ago, questions have been flooding in regarding the differences between state and local licensing. While the requirements set forth in local ordinances usually reflect the laws set forth by state agencies, there are some distinctions in terms of what is required for the purposes of applying for business licensing.

What happens after the temporary cannabis license?

Posted by Margolin & Lawrence on March 2, 2018

On January 1, 2018 the state of California began issuing temporary licenses for cannabis operators. We are about halfway through the 120-day period allotted for temporary licenses and the state has allowed an additional 90 day extension so long as businesses submit a complete application for the annual license. Our Los Angeles cannabis attorneys are facing many questions about what happens when the temporary license expires. The answer is that you need to submit for an annual cannabis license from the state. 

Ask a Cannabis Lawyer: Which license do I need for cannabis events? 

Posted by Margolin & Lawrence on January 30, 2018

With the rise in popularity of cannabis related events in California such as Kush Stock, Chalice, High Times' Cannabis Cup, Hempcon, and the Secret Sesh; many event organizers and vendors are uncertain as to the new laws relating to cannabis events now that marijuana is legal in California. Our Los Angeles Cannabis attorneys are often asked about events and licensing. The Bureau of Cannabis Control recently issued guidance on just this topic. 

In short, everyone must be licensed. All cannabis event organizers will be required to obtain a cannabis event organizer license from the Bureau of Cannabis Control. The one exception to this is if you are hosting a private event. If your event is open to the public and you are selling tickets to the public, you need an event license. 

The Bureau recently clarified what will be expected of event organizers moving forward in order to comply with all regulations. If you want to sell cannabis products at your event, you will either need vendors who have a retail license there to do the sales, or you will need a retailer license yourself.

The State license fees will be determined by the number of events the organizer plans to produce during that year. However, this event license does not authorize the event organizer to cultivate, distribute, manufacture, or sell cannabis or cannabis products. In order to participate in the sale, cultivation, distribution or manufacturing or cannabis, the organizer must obtain separate licenses to engage in those commercial cannabis activities. This also means that compensation to a cannabis event organizer may not be tied to the sale of cannabis goods.

Once an event organizer obtains their event organizer license from the Bureau, the organizer must then ensure that all cannabis goods transported to the event site are transported by a licensed distributor and that the only vendors permitted to sell at the event to retail customers are a licensed retailer or microbusiness. To further ensure compliance by all participants, event organizers will be required to provide to the Bureau with a list of all licensees selling cannabis on-site at the event.

All cannabis goods sales at the event and access to the area where cannabis consumption is allowed must be limited to individuals 21 years of age and older, and cannabis products and cannabis consumption can’t be visible from any public place or non-age- restricted area. Food trucks are still allowed, but the consumption of alcohol and tobacco is not at cannabis events.

Currently, the State of California is issuing temporary cannabis event licenses for cannabis events that last no longer than four consecutive days. To obtain a temporary cannabis event license, the cannabis event organizer licensee must submit an application to the Bureau at least 60 days before the first day of the cannabis event and must obtain a license for each individual cannabis event from the Bureau for the specific dates and location of the event. Finally, the event organizer must obtain written approval from the local jurisdiction authorizing on-site cannabis sales and consumption by individuals 21 and older. This leaves it up to each individual municipality to determine whether they will allow cannabis events to take place. For example, the Orange County Fair Board members recently voted to prohibit marijuana-related events at the Costa Mesa Fairgrounds. The first cannabis event State license was issued to the Burn Out Music, Art and Cannabis festival scheduled to take place in Tulare County, but was subsequently cancelled by City Officials just two days before the event.

To start the process of applying for your event, you can do so directly on the Bureau of Cannabis Control’s website. For legal advice to ensure the success of your cannabis event, CONTACT US

Ask A Cannabis Trademark Lawyer: How Do I Apply For A State Trademark?

Posted by Margolin & Lawrence on January 9, 2018

 As of January 1st, 2018, the long wait is over: cannabis business owners can apply for California state trademarks. The application form can be obtained here: http://bpd.cdn.sos.ca.gov/ts/forms/tm-100.pdf. Because cannabis is still federally illegal and cannabis products themselves cannot be trademarked, this is a viable avenue for many California cannabis brands that will protect your business marks within the state. You can read our prior post about USPTO Trademarks here.

According to the website for the Office of the California Secretary of State:

“Beginning January 1, 2018, customers may register their cannabis-related Trademark or Service Mark with the California Secretary of State's office so long as:

1.The mark is lawfully in use in commerce within California; and 

2.Matches the classification of goods and services adopted by the United States Patent and Trademark Office.  

If the application submitted to register a Trademark or Service Mark is found deficient, the application will be returned to the registrant for correction.

Note: Not all cannabis-related products can be registered under current law due to the inability to meet federal classifications.”

This means that in order to obtain your state marks, you must be lawfully using the marks in commerce at the time of the application. Therefore, you will need to be licensed in compliance with SB 94,  both at the local and state level, before you’re eligible for trademark approval. Otherwise, if you claim an unlicensed use, you may run into issues with the Secretary of State. Further, once your license is obtained, you must also show that you’re making actual, bona fide use of the trademarks on your products in the stream of commerce. That means that customers are identifying you by your brand when they purchase your goods or services in the marketplace.

Ask An LA Cannabis Attorney: Do I need a cannabis water permit?

Posted by Margolin & Lawrence on January 4, 2018

The complex cannabis regulations that have been rolled out by local and state governments across California means that as a cannabis operator you will be working with a number of different regulatory agencies. The rules for many of the cannabis activities are promulgated by different agencies - for example, the Bureau of Cannabis Control regulates retail, distribution and delivery in the state of California, while CalCannabis (a division of the CDFA) regulates cannabis cultivation in the state. One area of great confusion for many cannabis cultivators that our Los Angeles cannabis attorneys have been fielding questions on is the issue of obtaining a state water license. The regulations for water were passed in October, and the application portal is currently open to apply for a water permit. The water policy aims to protect California's natural streams and bodies of water from pollution and prevent diversion of water for cannabis cultivation. 

On October 17, 2017, the State Water Board adopted a state-wide policy establishing strict environmental standards for cannabis cultivation. The state-wide policy is designed to protect water flows and water quality in the state of California. All cannabis cultivators will need to comply with this state-wide policy. In addition to complying with the Water Board’s state-wide policy, cultivators will need to comply with all other state, federal and local laws.

The state-wide policy will be implemented through a water quality permit known as the Cannabis General Order and through conditions for cannabis-related water rights known as Cannabis Small Irrigation Use Registration.

All cultivators will need to register their water right and water discharge using the Water Board’s online portal. The Water Board’s online portal can be found here. Depending on the cultivator’s water source, the state-wide policy may or may not apply to them.

To see the cannabis cultivation policy, click here. If you are a cannabis cultivator and have questions relating to the state-wide policy, CONTACT US to speak with one of our cannabis attorneys. 

How Many Bitcoins to Apply for an L.A. Cannabis License?

Posted by Margolin & Lawrence on December 15, 2017

At a meeting this week, the LA City Council adopted a draft ordinance on the subject of the fees and fines for cannabis licensing, bringing the city one step closer to opening its official cannabis licensing process. Our Los Angeles Cannabis Lawyers are often asked how much the compliance process will cost. Now that LA has published their fee schedule, many existing cannabis businesses have sticker shock.  Existing cannabis retailers, for instance, will have to pay nearly $10,000 for an official LA retail license. Cannabis microbusiness owners will need to pay fees for each cannabis activity they are conducting. The City will likely only accepting payment in cash or by check (no bitcoin, yet).

A Macro-Overview of Cannabis Microbusiness Laws In California

Posted by Margolin & Lawrence on December 13, 2017

Our Los Angeles Cannabis Attorneys are constantly fielding questions about a popular license category called microbusiness. The Type 12 license allows you to engage in multiple cannabis activities on the same premises. For example, you could cultivate up to 10,000 sq. ft. of canopy, and distribute, and deliver under one license for microbusiness. The chance to diversify your business and conduct multiple activities under one license is appealing to many existing and prospective cannabis business owners.

The Bureau of Cannabis Control (BCC), released their final regulations for cannabis microbusiness licensees last week, after revising them post SB-94 (you can read more about the process here). Here’s what they have to say about the restrictions on cannabis microbusinesses:

  • Microbusinesses must engage in at least 3 different commercial cannabis activities
  • Microbusiness applicants have to describe operating procedures as required for each activity
  • If a microbusiness license is revoked or suspended, it affects every activity done using that license
  • Microbusiness license fees range from $5,000 to $120,000 depending on size of operation (up to $5 million)
  • Retail operations & Microbusinesses with retail sales can give out free samples to medicinal marijuana customers, as long as it meets the same conditions as normal retail sales
  • Sales at events are allowed
  • Retailers & Microbusinesses with retail will have to employ security guards

If you’re interested in learning more about cannabis microbusiness or retail, CONTACT US to speak to a Los Angeles Cannabis attorney. 

 

Breaking news: California releases emergency cannabis regulations

Posted by Margolin & Lawrence on November 16, 2017

Today, California’s three state cannabis licensing authorities released proposed emergency licensing regulations for commercial medicinal and adult-use cannabis. The regulations are intended to reflect the law that was set out in California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), and will replace the draft regulations that were released for cannabis cultivation, manufacturing, retail and other activities in April 2017 (you can read more about the prior regulations in our post here).  These regulations will allow the state to start issuing temporary licenses to conduct commercial cannabis activities on January 1. Our San Francisco and Los Angeles cannabis attorneys are analyzing the new regulations and comparing them to the previous draft and we will do a more in depth post on what has changed very soon. 

Los Angeles Cannabis Community At the Infused Expo this Weekend

Posted by Margolin & Lawrence on October 22, 2017

This weekend was the second annual The Edibles List Infused Expo in DTLA. As LA Cannabis lawyers, our firm is tracking the City's development of regulations and also California's. This weekend, the focus was on edibles.

Does my California Cannabis Business have to be a nonprofit?

Posted by Margolin & Lawrence on October 10, 2017

The short answer is yes, for now. Until the law changes, you need to operate as a nonprofit. You should also prepare yourself for for-profit operation so that your business is not caught off guard when the law does change. There is a great deal of misinformation and misunderstanding about how cannabis businesses are allowed to be organized in California.  California Health & Safety Code § 11362.765 is the law of the land, stating in part: “nor shall anything in this section authorize any individual or group to cultivate or distribute cannabis for profit.”  Note that this section was not repealed or replaced by any provisions in SB 94 (our Guide to SB94 is available here). Appellate decisions have interpreted this language to mean that all cannabis cultivation and distribution in the state is required to be conducted on a non-profit basis, and that anyone cultivating or distributing cannabis “for profit" is subject to criminal sanctions (currently a misdemeanor in most cases, with potential jail time and fines).

State of MJ 2017 – Cannabis Lawyers & Entrepreneurs Convene in DTLA

Posted by Margolin & Lawrence on August 29, 2017

Los Angeles cannabis lawyer Allison Margolin spoke at the State of Marijuana conference this past weekend. In this video clip, she gives an overview of the cannabis licensing process in California. If you haven't heard, you need to get local authorization (which can mean a license or something less official like local government officials signing off on your project to the state) in order to apply for a California cannabis license when it becomes available January 1, 2018. Our cannabis attorneys are familiar with local jurisdictions statewide and are actively advising our clients on the nuances and complexities of zoning, the application process, and compliance with local ordinances. 

How Can I Advertise My Cannabis Business?

Posted by Margolin & Lawrence on August 24, 2017

One of the most frequent questions our cannabis lawyers get from savvy business owners is: How can I legally market my cannabis products? As with many branches of marijuana law, cannabis business advertising regulations are complex because they fall under an overlapping set of legal regimes, some of which are in conflict with each other. When considering advertising cannabis four bodies of law apply: Federal, State, Local, and Internet TOS (the terms of service and operating contracts that govern your relationships with digital advertising hosts). Cannabis marketers must navigate all four sets of regulations here.

Federal Law places an absolute ban on cannabis advertising under the Controlled Substances Act of 1970. The Act stipulates: “It shall be unlawful for any person to place in any newspaper, magazine, handbill, or other publications, any written advertisement knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute a Schedule 1 controlled substance.” Further, “It shall be unlawful for any person to knowingly or intentionally use the Internet, or cause the Internet to be used, to advertise the sale of, or to offer to sell, distribute, or dispense, a controlled substance where such sale, distribution, or dispensing is not authorized by this subchapter or by the Controlled Substances Import and Export Act.” In other words, as far as federal law is concerned, there's no such thing as a legal marijuana advertisement.

California has recently placed regulations on marketing under the MAUCRSA (aka SB-94). This means that, if the regulations are followed, an advertisement can be in compliance with California law. Among its requirements are that advertisements must identify the license number of the advertiser, must not be targeted at individuals younger than 21, and must not contain false or misleading information about the products advertised. While these standards are relatively straightforward, figuring out how to advertise within the existing marijuana laws can be tricky even for California-based businesses. Local laws may differ from the state regulations, and a host of pending legislation like AB-175 (Marijuana: county of origin: marketing and advertising) and AB-76 (Adult-use marijuana: marketing) may change the state’s standards even further.

On top of that, the terms of service of online sites which host advertisements, such as Google and Facebook, often ban any mention of marijuana, on the basis that federal law still forbids it – since, of course, any online advertisement can be seen outside of California. This rapidly evolving area of law will be discussed at the State of Marijuana Conference this weekend in downtown Los Angeles, where attorney Allison Margolin will be leading a panel on Next-Gen Cannabusiness Marketing. For more information, check our guide to California cannabis business law or contact us at info@margolinlawrence.com to speak with one of our Los Angeles cannabis lawyers.

CONTACT US

CA State Agencies Withdraw Draft Regulations

Posted by Margolin & Lawrence on July 26, 2017

New Regulations will be released in Fall 2017 and the agencies will use emergency rulemaking to pass them. 

From the Bureau of Medical Cannabis Regulation: 

Earlier this spring, the Department of Consumer Affairs’ Bureau of Cannabis Control, Department of Public Health and Department of Food and Agriculture released proposed regulations for the Medical Cannabis Regulation and Safety Act. These licensing authorities held public hearings and accepted written comments regarding the proposed regulations. However, in late June, the Legislature passed and the Governor signed into law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act, which creates one regulatory system for both medicinal and adult-use cannabis. As a result, the licensing authorities will withdraw the proposed medical cannabis regulations noticed for public comment on April 28 and May 5, 2017. The withdrawal is likely to happen early next month.

The three cannabis licensing authorities are each developing new proposed regulations based on the new law for the commercial medicinal and adult-use cannabis industries. During this process, the licensing authorities will consider the robust and valuable public comment received regarding the proposed medical cannabis regulations.

The licensing authorities will use the emergency rulemaking process for the new proposed regulations. The emergency regulations are expected to be published in fall 2017. The implementation date for the issuance of commercial cannabis licenses remains the same: January 2, 2018.

For additional information about the Bureau, or to subscribe to email alerts to hear about updates as they become available, please visit our website www.bmcr.ca.gov.

Answers to Your Top 10 Cannabis Business Law FAQs

Posted by Margolin & Lawrence on July 26, 2017

It sounds like a dream, but it's not – a billion dollar black market is now a legitimate business option. If you are an entrepreneur already in the industry and looking to legalize your business, you may be confused or lack foundational knowledge about the new state and local regulations on operating a compliant cannabis business. Below are answers our Los Angeles cannabis lawyers receive most often:

1) Are owners of commercial adult-use and commercial medicinal cannabis companies required to be California residents in order to obtain a license?
No. The residency requirements of the AUMA have been repealed by the MAUCRSA. In other words, “out of staters” and even residents of other countries can freely participate. Read more about the new State Laws in our Guide


2) What area of the commercial cannabis industry is the easiest to break into?
Delivery Service requires the least start up capital and has the fewest barriers to entry.


3) Where is the best place to get a license?

There are 482 cities and 58 counties in California. Each municipality has different requirements. Call us to find out what’s best for you!


4) What type of licenses are available?
Distribution, Cultivation, Manufacturing, Testing, Micro business, Nursery and Retailer.


5) What type of Business Organization do commercial cannabis companies have to be?
Every commercial cannabis business must currently operate as a non-profit (see H&S Code 11362.765(a)), although the laws are expected to change to allow for-profit entities.

 

6) Will my cannabis businesses be discontinued by the federal government?
Hopefully not, as long as you are in strict compliance with state & local laws and your commercial activities are strictly medical.

 

7) How many licenses can an owner have?
The MCRSA does not specifically limit the number of licenses a person may hold of a particular license type; however, it does limit the types of licenses a person may hold at one time. Specifically, testing lab or large cultivation license holders may only hold a license in that specific area.

 

8) Can I have my old marijuana felony dismissed or reduced to a misdemeanor?
In many circumstances, yes. Call us to discuss.

 

9) Do I still need a recommendation to buy cannabis?
At the moment, yes! The law for commercial adult use does not go into effect until January 2018.

 

10) Where can I get my complex questions answered?
CONTACT US   to set up a meeting with our team in Los Angeles or San Francisco. 

Ask A Cannabis Lawyer – Are Edibles Legal Under The MAUCRSA?

Posted by Margolin & Lawrence on July 11, 2017

Reflecting the fact that cannabis edibles have become an increasingly popular alternative to smoking marijuana, California's MAUCRSA introduces new regulations on edible cannabis manufacturing. Cannabis manufacturers must take heed of these new limits and regulations to ensure that their products are not only within compliance, but also effective and safe for human consumption.

The MAUCRSA defines an “edible cannabis product” as manufactured cannabis intended for human consumption, either in whole or in part. “Manufacturing” of cannabis is the production, preparation, propagation or compounding of cannabis products. This includes the extraction and infusion processes, packaging, repackaging, labeling and relabeling of manufactured medical cannabis or cannabis products.

According to theLEAFonline, many other forms of manufactured cannabis, including tinctures, have a maximum of up to 1,000 mg of THC. However, under the proposed regulations, edible cannabis products will only be allowed to contain 10 mg of THC per serving, with the finished product capping no more than 100 mg of THC per package. This caution speaks to a key concern about edible cannabis: consistency.

Due to its being absorbed through the stomach rather than the lungs, edible cannabis doesn't usually reach its full potency for at least an hour after consumption. When combined with inconsistent labeling, this makes edibles easy to consume to excess before their full effects are felt. As WikiLeaf writes, this may cause side effects like anxiety, paranoia, cottonmouth, and lethargy. Nevertheless, these effects often differ from person to person, depending on factors such as the frequency of use, size and weight of the user, and whether the edibles are taken on an empty stomach. Consistent dosage helps to prevent these possible adverse effects. For this reason, edible products that contain more than a single serving must be recorded, defined, or otherwise marked to indicate how many servings they contain. 

Under the MAUCRSA, manufacturers would be required to take reasonable measures to ensure that their products successfully communicate:

  • How many milligrams of THC are in each serving

  • What the recommended dosage would be based on specific criteria, such as weight, size, etc.

  • What, if any, side effects may occur if taken in excess

With these THC dosage limits in place, a consumer can easily understand how many servings are needed to achieve their desired results without any side effects.

The proposed regulations have also stated that edible cannabis products cannot contain any infused alcoholic beverages, nor any non-cannabinoid additives such as caffeine and nicotine. This is to ensure that these additives don't combine to increase the potency, addictive potential, or toxicity of cannabis edibles.

The MAUCRSA is vague, however, in determining whether natural caffeine is permissible; some caffeinated edible cannabis products, such as tea to alleviate pain and insomnia, are currently available for medical use, but it's unclear what their status would be under the new regulations. Manufacturers may bear the greater burden when it comes to remanufacturing their products to comply with state law.

LA Cannabis Licensing & Social Equity

Posted by Margolin & Lawrence on June 29, 2017

As explained in our previous blog post, “compliance” will be a major factor in the distribution of marijuana licenses in Los Angeles – and cannabis lawyers around the city are fielding a number of questions about what, exactly, LA’s priority licensing process will entail.

The draft regulations the City has released extend a certain amount of privilege to existing marijuana sellers when it comes to licensing. Businesses and dispensaries that have operated “in substantial compliance” with prior iterations of marijuana law will be given priority, allowing them to continue operating while their license approvals are pending. Clearly, this confers a major business advantage, which has raised concerns about whether a compliance-based approach to awarding priority is equitable.

Disqualifying potential cannabis business owners for past violations, but opening the door to “compliant” newcomers, threatens to reinforce inequality. As Drug Policy Alliance policy director Cat Packer, slated to head the City of LA’s Cannabis Commission, explained in an interview with Merry Jane, “The impact of marijuana prohibition and the drug wars was heaviest in black and brown latino communities. If you say people with prior arrests and convictions can’t participate, it automatically has a disproportionate effect on communities that were punished by the War on Drugs.” In other words, privileging “compliance” could compound the negative effects of marijuana prohibition, blocking communities which have historically been more likely to be punished for cannabis use from gaining access to the benefits of the new, legal marijuana industry. As attorneys who have practiced in cannabis law for many years, we have seen the damage prohibition has done to these communities, and are fully supportive of a restorative approach to justice through the licensing process.

The LA City Council recently moved to create a Social Equity Program for marijuana licensing, intending to serve “those individuals and communities that were disproportionately harmed by cannabis prohibition.” This follows in the path of a similar program in Oakland, which reserved half of new dispensary permits for residents who lived in certain neighborhoods, had below-average annual incomes, or had previously faced cannabis convictions. Given how much larger Los Angeles' marijuana industry is than Oakland's, however, the mechanics of the LA program may need to be worked out, and it may not be able to mirror the Oakland model in every way.

Whatever the exact parameters of LA's Social Equity Program end up being, (and however they'll be affected by recent changes to state and city licensing regulations,) the priority-based system will continue to play a major role in deciding which marijuana businesses are allowed to operate. At present, the city plans to reserve a special round of applications for organizations that fit a profile similar to the requirements Oakland used. For more on priority and marijuana laws to the new state law (MAUCRSA), check our previous blog posts or guide to Prop 64, or email us at info@margolinlawrence.com.

 

The M&L Guide to CA's Cannabis Laws, by LA's Top Med. Cannabis Lawyers

Posted by Margolin & Lawrence on June 19, 2017

By California’s Leading Med. Cannabis Lawyers, Margolin & Lawrence

What are the new California cannabis laws as of June 2017?

On June 15, 2017, the California Senate passed S.B. 94, the MAUCRSA. The MAUCRSA effectively repeals the MCRSA and establishes a single regulatory regime with two parallel tr

acks: one for medical and one for recreational. One of the key changes coming out of this new legislation are that cannabis businesses may be able to co-locate, meaning they can have recreational and medical activities licensed on the same property, so long as they obtain two separate licenses and follow all the compliance requirements for each track. Take the time to read the regulations yourself and also make sure to consult with a qualified cannabis lawyer who can advise you on how to comply with the requirements for state licensing and set up your business for success. 

The MAUCRSA still has two parallel licensing tracks: 

A-licensees will be applying for adult use/Prop 64 licenses.

M-licensees will be applying under the medical regime. 

 

Here are our med. cannabis attorneys' top takeaways from the new bill:

  • Co-location: the same facility may be able to have a medical and an adult use license under the new regulations.
  • City/County Ordinances: You will still need local authorization from your City or County before you can apply for a state license under the MAUCRSA.
  • Delivery: There is more clarity around how delivery operators can and should operate, particularly with respect to local jurisdictions in the MAUCRSA. See SEC. 63. Section 26090 of the Business and Professions Code (e)
  • Delivery: those without storefronts can deliver to customers (so long as it complies with local regs).
  • Edibles: will contain 10mg THC or less per serving & will be marked with a universal symbol which the Department of Public Health will release later this year, among other requirements.
  • Priority Applications: applicants who have been operating in compliance with the Compassionate Use Act of 1996 and its implementing laws prior to September 1, 2016 will receive priority in the state licensing process.
  • Residency requirement: the provision in the AUMA requiring proof of state residency prior to 2015 has been repealed.
  • Appellations Control & Organic designations: the state also clarified the rules around naming your product after a City/County and paved the path for eventually allowing organic certifications on cannabis products.
  • Cultivation: Cultivators will need to identify the source of their water supply under SEC. 48 § 26060.1(1)(A).

 

You can read the full text of S.B. 94 or the MAUCRSA here:

http://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB94

What are the licensing categories?

The MAUCRSA will license for 20 different categories. Each activity requires a separate license. So, if you are applying for a cultivation site and a manufacturing site, you will need to complete two separate applications for each activity. (Plus two applications for your local jurisdiction before you can apply for the state license). 

The main categories are:

Dispensary/Retailer Licenses – License for retail sale of cannabis and cannabis products.  The dispensary licenses also allows for deliveries.

Manufacturing Licenses – There are two types of manufacturing license types.  One for use of volatile solvents, another for non-volatile manufacturing processes.  The state will limit the number of licenses that use volatile solvents because of public safety concerns.

Testing License – Laboratories that test cannabis products before they reach the patient or consumer. Required to be a third party, independent from the other operators in the supply chain.

Cultivation Licenses – Commercial cultivation licenses vary depending on size of grow, and the types of light that are used. Note that many local jurisdictions are banning outdoor cultivation because of perceived nuisance by neighbors.

Distributor License – Storage and distribution of products from the cultivators and/or manufacturers to dispensaries.

Transporter License – Transporters of cannabis and cannabis products between licensees.

A-licensees and M-licensees will be able to apply for licenses in the following categories under the MAUCRSA (updated June 19, 2017):

SEC. 31. Section 26050 of the Business and Professions Code is amended to read:

26050. (a) The license classification pursuant to this division shall, at a minimum, be as follows:

(1) Type 1—Cultivation; Specialty outdoor; Small.

(2) Type 1A—Cultivation; Specialty indoor; Small.

(3) Type 1B—Cultivation; Specialty mixed-light; Small.

(4) Type 1C—Cultivation; Specialty cottage; Small.

(5)  Type 2—Cultivation; Outdoor; Small.

(6)  Type 2A—Cultivation; Indoor; Small.

(7)  Type 2B—Cultivation; Mixed-light; Small.

(8)  Type 3—Cultivation; Outdoor; Medium.

(9)  Type 3A—Cultivation; Indoor; Medium.

(10)  Type 3B—Cultivation; Mixed-light; Medium.

(11)  Type 4—Cultivation; Nursery.

(12)  Type 5—Cultivation; Outdoor; Large.

(13)  Type 5A—Cultivation; Indoor; Large.

(14)  Type 5B—Cultivation; Mixed-light; Large.

(15)  Type 6—Manufacturer 1.

(16)  Type 7—Manufacturer 2.

(17)  Type 8—Testing laboratory. 

(18)  Type 10—Retailer.

(19)  Type 11—Distributor.

(20)  Type 12—Microbusiness. 

Read more here: S.B. 94

http://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB94

 

 

 

Can I apply directly to the State of California starting January 1, 2018?

NO. You will need authorization from your local jurisdiction in order to apply for a state license.

What is the process on a local level for the cannabis licensing application process?

There are 482 cities and 58 counties in California. Each has its own rules and regulations regarding cannabis. The City Council or Board of Supervisors will begin with marijuana as a discussion item on the agenda. Then they will vote to write a draft ordinance. Once there is a draft ordinance, there will be a first reading at one meeting. Then, a second meeting will be held where there will be a second meeting and the ordinance will be voted on. Once the ordinance is passed, the City will be allowed to open up applications to potential cannabis licensees. Typically, you will have 1-3 months to complete the application once it is released by the City or County. Then, once you turn in your application, they will have somewhere between 1-3 months to review it and let you know if you are moving on to the next step (depending on how they set up the process) or if you are licensed. After you complete the local licensing process, you can apply for your state cannabis license.

What are the new Los Angeles laws on cannabis? 

Being Los Angeles lawyers, we are closely following the new draft regulations coming from our City Council after the passage of Measure M in the March 2017 municipal election. You can read up-to-the-minute coverage of the LA Draft regulations on our blog. In a nutshell, LA’s draft licensing process gives an overview of where cannabis business can be located (zoning), as well as laying out new rules for sensitive use areas (800 foot distancing required). There are different regulations for cannabis dispensaries, cannabis cultivators, cannabis manufacturers, and other cannabis businesses. For example, dispensaries need to be at least 800 feet from other dispensaries, whereas cultivators and manufacturers do not have this buffer distancing requirement. The LA licensing process will have 3 waves of applicants: Priority Processing, Social Equity, and General Public. Priority Processing will be for existing cannabis businesses that meet certain requirements and are in the correct zoning. Social Equity will be for applicants who were affected by the war on drugs and we will be receiving more information on this round over the next 60 days. The General Public will be when anyone who does not qualify for Priority Processing or Social Equity can apply, and will come a few months later. The estimate from the City is that the Priority Processing applications will open in October 2017.

What are the requirements in an application for a city or county license?

The exact requirements will vary by jurisdiction. Typically, they fall into the following areas:

Some cities and counties will require more than the below, and some will not require documents to support each of these categories.

  • Type of activity: each cannabis related activity will have its own license under the new state and local compliance regimes. The main areas for licensing will be: cultivation, manufacturing, transportation, and distribution (dispensaries).
    1. Some local jurisdictions are licensing for certain activities but not for others. For example, accepting applications for cultivation but banning applications for dispensaries.
    2. Additionally, regarding cultivation, many jurisdictions have shown a preference for indoor cultivation over outdoor, due to the perceived nuisance of outdoor cultivation. Check with your local jurisdiction to see what activities are currently eligible for licensing applications.

(1) Business plan: a business plan that outlines the objectives and operating structure of the company as well as the key management and officers will be required. The plan will also require projected operating costs and revenues, planned relationships with suppliers and/or distributors, and an operational overview of how the business will work and what will be accomplished in the first 12-24 months.

(2) Zoning and Land Use: Is the property far enough from sensitive use areas? Is it in the correct zoning for land use purposes according to the municipal or county code (manufacturing, industrial, commercial vs. residential)?

The state law requires that any marijuana business be at least 600 feet from a school. Some local jurisdictions have also included parks, day care centers, and areas where youth congregate as “sensitive use.” Additionally, some have required 1,000 feet of distance. Also note that federal law has enhanced criminal penalties for marijuana distribution within 1,000 feet of schools.

(3) Security plan: many applications require a detailed security plan that shows alarms, personnel and strategy relating to securing the premises for retail (dispensaries) or cultivation operations.

(4) Insurance: some applications will require that you show proof of insurance for your operation.

(5) Site plans: some applications will require you to hire a civil engineer or architect to draw up site plans for your cultivation operation.

(6) Environmental impact / Waste management: some applications will require a waste management plan and/or statement of water usage and how potential adverse consequences will be avoided.

(7) Live Scan / Criminal History: Some jurisdictions will require a live scan of the applicants and a disclosure of any criminal history. Some have written the laws so that you will only be disqualified if your prior criminal history involves a crime of moral turpitude. Other regulations state that past marijuana crimes will not count against you so long as they were non-violent. However, check with your local jurisdiction.

(8) Tax Returns: some jurisdictions require prior tax returns for the persons involved and the entity, if it has been in operation in the past.

Want more information on the local and state cannabis licensing process in California? 

 CONTACT US

 

FURTHER READING:

Federal Law – The Controlled Substances Act of 1970

21 U.S. Code § 812 – Schedules of controlled substances

https://www.law.cornell.edu/uscode/text/21/812

 

California Bureau of Cannabis Control 

 

Chris Conrad’s Guide to Cannabis Yields and Dosages:

http://www.chrisconrad.com/pdf/cannayieldsdosage10.pdf

 

CA Marijuana Laws Pursuant to Prop 64 – final regulations will be released later in 2017.

You can read the draft trailer bill released in April 2017 here

 

Marijuana Taxes

CA Revenue & Tax Code Division 2, Pt. 14.5 § 34010-34021.5

 

Industrial Hemp / CBD

HSC 11018.5 – What is “Industrial Hemp?”

Food & Ag Code 81000-81010 – California State Industrial hemp regulations (effective Jan 1, 2017)

 

California Cannabis Law FAQ

Is cannabis legal in California? Yes, and no. Three legal regimes apply to Cannabis: Federal, State and Local. Under Federal Law, Cannabis is still classified as a Schedule I substance under the Controlled Substances Act. Because there are a number of areas of law relating to cannabis it is essential to hire a cannabis lawyer who is familiar not only with the state regulations but also with the Federal law. There has been legislation introduced to de-schedule Marijuana and reclassify it from Schedule I, but nothing has passed yet as of June 2017 and the CSA is still the Federal Law in all 50 states.

Under State law in California, you have a defense as an individual charged with possession for sale of marijuana (Cal Health and Safety Code 11359) if you are a marijuana patient collectively associating with other patients, as long as you are doing so in a not-for-profit way, which is the subject of much confusion and litigation. Prop 64 which went into effect in November 2016, decriminalizes possession of cannabis in California and allows individuals to cultivate up to 6 plants per residence.

Cannabis businesses will be able to become legal if they are approved for state permits under the MAUCRSA. It is important to note that in order to apply for a California state license, you will need a local permit from either your city or county and be compliant with the local regulations and have been approved by your local governing body in order to do so.

Please be advised that marijuana activity is still against federal law as noted above. There is a quasi-defense available as long as Congress continues to pass an appropriations rider (that has been reinstated every year so far since 2014) which prohibits DEA spending on medical marijuana enforcement. California also introduced a bill in 2017 (AB 1578) that would prevent local law enforcement from participating with federal authorities on marijuana enforcement activities if it passes.

 

What is the legislative history of legalized Cannabis in California?

California has had a legal regime for medical marijuana collectives since and it was more robustly implemented via Senate Bill 420 in 2004. In 2017, the California Senate passed the MAUCRSA which repeals the MCRSA and creates medical marijuana compliance standards merged with adult use standards in one bill that creates two parallel tracks of regulations.

You can read S.B. 94 or the MAUCRSA which passed in June 2017 here: http://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB94 

You can read the text of prior Medical Marijuana laws passed in California here:

HSC 11362.5 Prop 215 – Text of Prop. 215

HSC 11362.7 – 11362.85 CA Medical Marijuana Program Act (SB 420)

HSC 11362.9 California Marijuana Research Program

 

 

What is the process for applying for a city or county license? 

There are 58 counties in California and over 482 distinct municipalities in the state. Under the state regulations, each city and county has a right to create their own laws to regulate cannabis, up to certain limits. Because you will need a local license in order to apply for a state one under the dual licensing structure, the local laws are extremely pertinent to anyone hoping to obtain a license for their cannabis business. Check with your City Council or County Board of Supervisors to see whether there are any ordinances in place or upcoming meetings relating to cannabis regulation. Some counties have temporary bans in place, while others are opening up for applications in the coming weeks, and still others have temporarily closed applications while they are processing those who applied in 2016.

Attend your local City Council and Board of Supervisors meetings when there is medical marijuana on the agenda. As a member of the public, you will be able to contribute to the conversation and help shape the cannabis regulations in your local jurisdiction.  If you hire us to consult regarding permitting or licensing, we can and do set up meetings with council and Board of Supervisor members to discuss our concerns and try to help shape the local regulations. If the City or County is accepting applications, often the first step will be to obtain a Conditional Use Permit (CUP) to confirm that your location is properly zoned and comports with the land use designations the City or County has passed. After your CUP is approved, you will move to the next step and be able to submit your Business License application permit. (note that this process varies by local jurisdiction).

 

What are the requirements in an application for a city or county license?

The exact requirements will vary by jurisdiction so it is important to consult with a cannabis lawyer who can interpret the local ordinance and advise you appropriately. Typically, application requirements fall into the following areas:

Some cities and counties will require more than the below, and some will not require documents to support each of these categories.

  • Type of activity: each cannabis related activity will have its own license under the new state and local compliance regimes. The main areas for licensing will be: cultivation, manufacturing, transportation, and distribution (dispensaries).
    1. Some local jurisdictions are licensing for certain activities but not for others. For example, accepting applications for cultivation but banning applications for dispensaries.
    2. Additionally, regarding cultivation, many jurisdictions have shown a preference for indoor cultivation over outdoor, due to the perceived nuisance of outdoor cultivation. Check with your local jurisdiction to see what activities are currently eligible for licensing applications.

(1) Business plan: a business plan that outlines the objectives and operating structure of the company as well as the key management and officers will be required. The plan will also require projected operating costs and revenues, planned relationships with suppliers and/or distributors, and an operational overview of how the business will work and what will be accomplished in the first 12-24 months.

(2) Zoning and Land Use: Is the property far enough from sensitive use areas? Is it in the correct zoning for land use purposes according to the municipal or county code (manufacturing, industrial, commercial vs. residential)?

The state law requires that any marijuana business be at least 600 feet from a school. Some local jurisdictions have also included parks, day care centers, and areas where youth congregate as “sensitive use.” Additionally, some have required 1,000 feet of distance. Also note that federal law has enhanced criminal penalties for marijuana distribution within 1,000 feet of schools.

(3) Security plan: many applications require a detailed security plan that shows alarms, personnel and strategy relating to securing the premises for retail (dispensaries) or cultivation operations.

(4) Insurance: some applications will require that you show proof of insurance for your operation.

(5) Site plans: some applications will require you to hire a civil engineer or architect to draw up site plans for your cultivation operation.

(6) Environmental impact / Waste management: some applications will require a waste management plan and/or statement of water usage and how potential adverse consequences will be avoided.

(7) Live Scan / Criminal History: Some jurisdictions will require a live scan of the applicants and a disclosure of any criminal history. Some have written the laws so that you will only be disqualified if your prior criminal history involves a crime of moral turpitude. Other regulations state that past marijuana crimes will not count against you so long as they were non-violent. However, check with your local jurisdiction.

(8) Tax Returns: some jurisdictions require prior tax returns for the persons involved and the entity, if it has been in operation in the past.

 

Do I need a state license to grow cannabis for personal use?

Under the MCRSA, qualified patients are exempt from the state license program if cultivating less than 100 square feet for personal medical use. However, this requirement begins Jan 1, 2018. It is debatable whether the sunset clause applies to this requirement. The sunset clause is the part of the MCRSA that allows the collective defense until one year after the beginning of the new regime, namely January 1, 2019. Until then, a patient may possess what is reasonable for their medical needs, and there is currently a draft gubernatorial proposal to amend the MCRSA to allow that “reasonable needs” test to continue instead of the 100 square foot regime.

As of Jan. 1, 2018, Primary caregivers with five or fewer patients are allowed up to 500 square feet (up to 30 plants). An exemption under MCRSA does not prevent a local government from further restricting or banning the cultivation, provision, etc. of medical cannabis by individual patients or caregivers in accordance with its constitutional police powers under Section 7, Article XI of the CA Constitution. AUMA (Prop. 64) allows individuals to grow cannabis for personal non-medical use (up to six plants per residence) without a state license. Only six plants are allowed to be grown per residence. All plants and harvested cannabis in excess of one (1) ounce must be kept within the person’s private residence, in a locked space, that is not visible from a public place. But please note that Prop. 64 has statutory language that prevents CPS from interfering with families of patients on that basis alone, but is not explicitly extended to AUMA users. So, it is best practice to have a medical recommendation if you are using or growing marijuana, if you are using it medically.

 

Can I sell homegrown cannabis plants or products to others without a license?

No. Proposition 64 does not allow the sale of homegrown cannabis, whether whole plant, clippings, clones, or any product derived from any part of the plant. But it does allow all Californians to give away under an ounce.

 

Can I smoke or consume cannabis in public places?

No. AUMA (Prop. 64) prohibits smoking or consumption of medical and recreational cannabis in public places or in places where smoking tobacco is prohibited, which includes but is not limited to hallways and lobbies of apartment buildings and hotels, on the street, in schools, amusement parks, public parks and places of business usually open to the general public. Additionally, consumption or smoking of cannabis is prohibited within 1,000 feet of a school or youth area while children present, except on private residential property provided smoking is not detectable by children. One issue that will be before city councils and county boards of supervisors will be zoning issues which determine where people may and may not use marijuana for various purposes.

 

FURTHER READING:

 

Federal Law – The Controlled Substances Act of 1970

21 U.S. Code § 812 – Schedules of controlled substances

https://www.law.cornell.edu/uscode/text/21/812

 

Chris Conrad’s Guide to Cannabis Yields and Dosages:

http://www.chrisconrad.com/pdf/cannayieldsdosage10.pdf

 

CA Marijuana Laws Pursuant to Prop 64 – final regulations will be released later in 2017.

You can read the draft trailer bill released in April 2017 here

 

Marijuana Taxes

CA Revenue & Tax Code Division 2, Pt. 14.5 § 34010-34021.5

 

Industrial Hemp / CBD

HSC 11018.5 – What is “Industrial Hemp?”

Food & Ag Code 81000-81010 – California State Industrial hemp regulations (effective Jan 1, 2017)

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This blog is not intended as legal advice and should not be taken as such. The possession, use, and/or sale of marijuana is illegal under federal law.