Archive for the ‘Adult Use Regulations’ Category

  • Recent Local Updates from Sonoma and Mendocino Counties

    Here is a “heads up” about some of the actions taken in Sonoma County and Mendocino County related to cannabis over the past month. Stay tuned for more detailed posts about each of these jurisdictions.

    SONOMA COUNTY

    Cloverdale

    Last month, the City of Cloverdale passed a comprehensive cannabis ordinance to regulate various cannabis uses in the city. The ordinance goes into effect today, October 26. The following types of cannabis operators will be able to obtain a local permit from Cloverdale: cultivation, testing laboratories, manufacturing (both volatile and non-volatile), distributors, retailers (both storefront dispensaries and delivery-only), and microbusinesses. Additionally, on October 24 the City Council passed a resolution adopting a tax rate of 4.5% on all cannabis businesses and also voted to revise the application and permit fee schedule in order to reduce the cost to operators. Applications for every other type of cannabis business besides dispensaries will be accepted soon, however the ordinance requires a complex request for proposals (RFP) and selection process for dispensaries that will take a few months longer. The City Manager said that the RFP for dispensaries will be released on November 14, but that dispensary permits will not be issued until March of 2018.

     

    Sebastopol

    On October 24, the Sebastopol Planning Commission voted to approve a Zoning Code Interpretation that would allow a number of commercial medical cannabis uses to exist within the City. The Interpretation would permit laboratory testing, non-volatile manufacturing, infused product manufacturing, delivery-only retailers, distributors, processing, and packaging and labeling in various zones of the city based on similar uses that are allowed there. The interpretation went into effect immediately. An application checklist is forthcoming soon. Sebastopol does not currently have a special cannabis tax.

     

    Sonoma County

    The Sonoma County Board of Supervisors voted on October 26 to extend the deadline for cultivators to pay their first quarter cannabis taxes by waiving all delinquency penalties until November 17, or until November 30 for cannabis cultivators who were located in an mandatory evacuation zone during the wildfires earlier this month. More information on Sonoma County cannabis taxes, including tax rates and forms, can be found here: http://sonomacounty.ca.gov/Cannabis/Taxes/

    Cultivators who have lost or damaged crops due to the fires may be eligible for an adjustment in the amount of taxes they owe to the county. In order to qualify for a crop loss adjustment, the following elements must be met: (1) the cultivation site must fall within the fire perimeter as determined by the Cal Fire map; and (2) the cannabis must be visibly damaged; and (3) the product must be destroyed to avoid resale (the destruction will be verified by the Department). Growers wishing to take advantage of this should contact the Sonoma County Department of Agriculture/Weights & Measures at (707) 576-2371 to schedule an inspection. The inspection costs $177/hour and there is a ¼ hour minimum.

    While the tax deadline has been extended slightly, the deadline to submit penalty relief forms for existing cultivators wishing to qualify for the transition period is still October 31, 2017. More information about the transition period and penalty relief application can be found here: http://sonomacounty.ca.gov/Cannabis/Permits/Temporary-Code-Enforcement-Penalty-Relief-Program/

     

    Santa Rosa (UPDATE AS OF 11/09/17)

    The City of Santa Rosa has been a leader in Northern California in terms of regulating medical cannabis activities, and now it is vying to become one of the leaders in regulating adult use cannabis activity as well.

    On November 9, the Santa Rosa Planning Commission agreed 5-0 to include adult use cannabis businesses in its comprehensive cannabis ordinance, which will be considered by the City Council on December 12. This is exciting news for anyone who’s been keeping an eye on the 5th largest city in the Bay Area. The city’s Planning Department and Medical Cannabis Policy Subcommittee have been working on developing the comprehensive policy for quite some time. If the Santa Rosa City Council approves the Planning Commission’s recommendation, the new policy would go into effect no later than February 2018.

    The comprehensive draft ordinance would set up a permitting process for cannabis cultivation, manufacturing (both volatile and non-volatile), testing, distribution, retail, and microbusinesses. Personal cannabis cultivation would be exempt from the permit process, provided that the city’s guidelines for size and plant count are followed. Santa Rosa voters already approved a cannabis business tax during a special election in June 2017. The tax rates are as follows: for cultivators, 2% of gross receipts or $5 per square foot of canopy; for manufacturers, 1% of gross receipts; for distributors, 0%, and for medical retailers, 0%.

    The City of Santa Rosa’s cannabis webpage can be found here.

     

    MENDOCINO COUNTY

    Willits

    The City of Willits passed a new comprehensive cannabis ordinance on September 27, which will go into effect on October 28. The ordinance would allow a number of different types of medical cannabis operations to exist in the city, including cultivation, processing, laboratory testing and research facilities, manufacturing (both volatile and non-volatile), infusion, distribution, packaging, and retail. A selection process for dispensaries/retailers is laid out in the ordinance, as well as application requirements for other cannabis businesses. The permit fee schedule was considered by the City Council on October 25. The initial and renewal permit fees will be scaled based on the type of business (and also based on size for cultivators).

     

    Mendocino County

    On October 17, Mendocino County passed a comprehensive ordinance  allowing the county to issue permits for numerous types of commercial cannabis uses other than cultivation, which is already included in a separate county ordinance passed earlier this year.  The new ordinance—which includes both medical and adult-use operations—will make local permits available for processing, manufacturing, testing laboratories and research institutions, retailers, distribution, and microbusinesses.  It will go into effect on November 16. The ordinance describes the application procedures as well as operational requirements. There is a special cannabis tax in Mendocino County, which for the current year is 2.5% of gross receipts for cultivators (some minimum amounts apply), 5% of gross receipts for dispensaries, and a flat rate of $2500 for other commercial cannabis businesses.

     

  • California to Issue Temporary Cannabis Licenses Starting January 1

    The Bureau of Cannabis Control (formerly the Bureau of Medical Cannabis Regulation)(hereafter the “Bureau”) released information today regarding temporary cannabis licenses, which will be available beginning on January 1, 2018. The Bureau is the primary licensing agency for cannabis distributors, testing laboratories, retail stores, and microbusinesses within California.

    Temporary state licenses will only be issued to applicants that have a local permit, license, or other authorization. What exactly this authorization looks like will depend on the local jurisdiction. No temporary license will be effective prior to January 1, 2018. Once issued, temporary licenses will be valid for 120 days (4 months), though they can be extended for 90 days and possibly longer if the Bureau takes longer than expected to issue permanent licenses. During this period, a company with a temporary license can and should be working to submit its full state license application. Companies that have received a temporary license will only be able to do business with other companies that have received temporary or permanent licenses.

    Applicants will be required to provide the following information for a temporary license from the Bureau:

    1. Local jurisdiction authorization – Applicants must provide a copy of a valid license, permit, or other authorization issued by the local jurisdiction where the business is operating that allows the applicant to conduct commercial cannabis activity at the location. The authorization must specify that the applicant is authorized to conduct cannabis activity.
    2. Name – Applicants must provide a name of the individual or entity requesting the license.
    3. License type requested – Distributor, Retailer, Microbusiness, or Testing Laboratory.
    4. License designation requested – A-license (adult use) or M-license (medicinal).
    5. Contact information – Applicants must provide a designated primary contact including first and last name, title, address, phone number(s), and email address(es).
    6. Owners – For each owner that meets the criteria of Business and Professions Code section 26001 (al), the owner’s name, mailing address, and email address.
    7. Physical address – Location of the proposed premises.
    8. Authorization to use the location – A copy of the title or deed to the land where the premises is proposed to be located. If the applicant does not own the land, a document from the landowner stating that the applicant has the right to occupy the property and may use the property for the commercial cannabis activity.
    9. Premises diagram – A diagram of the business’s layout at the proposed location.

    Lori Ajax, Chief of the Bureau, says that temporary licensees will receive approval via e-mail and will be able to print their temporary license from home. The final regulations for medical and adult use cannabis businesses will be released in November, and full-length license applications will be available soon after that.

    The Bureau and the other two California cannabis licensing agencies, the Department of Food & Agriculture’s CalCannabis Licensing Division and the Department of Public Health’s Manufactured Cannabis Safety Branch (formerly OMCS) plans to hold licensing workshops around the state starting in October. Be sure to check the Bureau’s website at www.bcc.ca.gov for more information and updates related to cannabis licensing.

     

  • Summary of Local Ordinances Released by Bureau of Cannabis Control

    The Bureau of Cannabis Control (Bureau), formerly named the Bureau of Medical Cannabis Regulation, is working on regulations pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to establish a licensing and enforcement program for commercial cannabis distributors, retailers, testing laboratories, and microbusinesses.

    As lead agency under the California Environmental Quality Act (CEQA), the Bureau has prepared an Initial Study/Proposed Negative Declaration (IS/ND).  The entire document can be downloaded by clicking the image below.

    The Initial Study/Proposed Negative Declaration (IS/ND) is huge at 491 pages; however, it contains three very helpful summaries.  These summaries have been extracted for your convenience and can be downloaded by clicking the image below or here.

    The summaries are:

    Table C-1: Summary of County Ordinances (as of August 17, 2017)

    Table C-2. Summary of Ordinances in the Ten Largest California Cities (by population) (as of August 17. 2017)

    Table C-3. Summary of Regulations in Other States that Have Passed Legislation Authorizing Adult Use of Cannabis (as of August 17, 2017)

    These official summaries provide helpful information to: 1) regulators seeking guidance from other local jurisdictions, 2) entrepreneurs looking for cannabis-friendly local jurisdictions issuing local permits, and 3) those who seek to understand cannabis policy in California and other states that have passed legislation authorizing the adult use of cannabis.

    NOTE: Ordinances, laws, and regulations are in a state of evolution, and change from day to day.  The official summaries are current as of August 17, 2017, meaning they are probably already out of date.  We cannot guarantee the accuracy of these official summaries, which are provided for informational purposes.

    Please check directly with the local jurisdiction (the city for activity within city limits, or the county for activity within the unincorporated area of the county) to find the latest ordinances pertaining to cannabis.

    * * *

    The above information is provided as a public service.  It is not intended as legal advice.

    For answers to your legal questions, or legal assistance in obtaining local permits and/or state licenses, please contact the Law Offices of Omar Figueroa at (707) 829-0215 or (415) 489-0420 to schedule a confidential legal consultation.

  • SB-162 Would Bar Cannabis Licensees from Using Branded Merchandise (and is Probably Unconstitutional)

    California Cannabis Industry Alert!

    Senate Bill 162 (hereafter “SB162”), currently making its way through the state legislature, would impose draconian restrictions on cannabis marketing. Specifically, it would prevent cannabis licensees from advertising or marketing cannabis products using merchandise, such as clothing, hats, t-shirts, or other items branded with the name or logo of the product. The bill already passed through the California Senate unanimously, but its constitutionality is questionable.

    The bill is intended to limit marketing of cannabis products in ways that were already conceptually prohibited by AUMA in that a licensee may not advertise a cannabis product in a way intended to encourage people under 21 years of age to consume or purchase cannabis. However, the bill goes beyond just requiring that merchandise may not be made attractive to children and bars, presumably, any branded merchandise.

    The language of the proposed law is extremely broad.  SB162 would amend Section 26152 of the Business and Professions Code to read:

    26152. A licensee shall not do any of the following:

    (a) Advertise or market in a manner that is false or untrue in any material particular, or that, irrespective of falsity, directly, or by ambiguity, omission, or inference, or by the addition of irrelevant, scientific, or technical matter, tends to create a misleading impression.

    (b) Publish or disseminate advertising or marketing containing any statement concerning a brand or product that is inconsistent with any statement on the labeling thereof.

    (c) Publish or disseminate advertising or marketing containing any statement, design, device, or representation which tends to create the impression that the cannabis originated in a particular place or region, unless the label of the advertised product bears an appellation of origin, and such appellation of origin appears in the advertisement.

    (d) Advertise or market on a billboard or similar advertising device located on an Interstate Highway or on a State Highway which crosses the California border.

    (e) Advertise or market cannabis or cannabis products in a manner intended to encourage persons under 21 years of age to consume cannabis or cannabis products. This prohibition includes all advertising of cannabis or cannabis products through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product.

    (f) Publish or disseminate advertising or marketing that is attractive to children.

    (g) Advertise or market cannabis or cannabis products on an advertising sign within 1,000 feet of a day care center, school providing instruction in kindergarten or any grades 1 through 12, playground, or youth center.

    (Emphasis added.)  The entire bill is available on the Legislature’s web site, at:

    https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB162

    As of August 1, 2017, the Legislative Counsel’s Digest for the bill states, “This bill would specify that advertising or marketing cannabis or cannabis products in a manner intended to encourage persons under 21 years of age to consume cannabis or cannabis products includes all advertising of cannabis or cannabis products through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product.”

    You read that right—if this becomes law, then cannabis licensees would be prohibited from advertising their brands on any merchandise, even if it was not designed to appeal to minors or even made available to people under the age of 21. The bill cites a case related to tobacco advertising restrictions (Commonwealth Brands, Inc. v. United States, 678 F.Supp.2d 512 (2010)) in support of the legislature’s position that such a restriction on speech for cannabis would be constitutional. However, there are problems with that comparison.

    First, Commonwealth Brands dealt with a federal law that placed restrictions on advertising, whereas AUMA is a state law. The federal district court’s holding in Commonwealth Brands is not binding on courts in California.

    Second, tobacco and cannabis are not the same thing, nor do they have the same effect on the human body. The court in Commonwealth Brands made only passing references to the government interest being served by the federal law at issue in that case citing the Act’s aim as being “to curb tobacco use by adolescents” (at 519) and reducing tobacco use by minors” (at 522). However, even interests that some may consider intuitively worthy are not self-validating under the law. Rather, the government must prove that the interest is substantial (or, in some cases, compelling). In this instance, the interest put forth in tobacco regulations is substantial because it has been widely accepted, through substantiation of numerous studies, that tobacco use is inherently dangerous in its causation of cancer, heart disease, and other serious health effects. This interest is explicitly referenced in the act regulating the tobacco advertising at issue and therefore implicitly accepted by the court in Commonwealth Brands. That said, there is simply no evidence that the potential harm and therefore the same interest in curbing cannabis use. The government lacks the same or even comparable body of evidence demonstrating that cannabis is carcinogenic or otherwise harmful to one’s health. In fact, a number of recent studies comparing tobacco smokers and cannabis smokers found that cannabis smokers had better long-term health and were less likely to suffer from cancer than tobacco users.

    In addition, unlike in Commonwealth Brands, where the government provided “extensive documentation” to show that marketing of tobacco products had a causal connection on consumer behavior of children, the legislature does not provide any proof that restricting advertising of cannabis products will affect youth behavior. Rather, the current version of SB162 simply states:

    Research by The RAND Corporation indicates that adolescents who are exposed to advertising of cannabis were more likely to report using cannabis or say they planned to use the substance in the future. The American College of Pediatricians’ research has found that cannabis has adverse effects on the adolescent brain and is associated with psychiatric illness and negative social outcomes.

     The bill does not provide any specific studies from either the RAND Corporation or the American College of Pediatricians to support this position, or to demonstrate that restricting speech in this broad way will achieve the desired outcome. Failure to provide the studies presumably demonstrating the government’s interest not only leaves the public in the dark as to what the government posits its substantial interest to be, but also creates a lack of accountability in the manner such interest was substantiated should the public infer or otherwise guess at what the interest might be.

     

    Commercial v. Non-Commercial Speech

    The First Amendment prohibits the government from making any law abridging the freedom of speech. Commercial speech is speech where the speaker is more likely to be engaged in commerce, where the audience consists of actual or potential customers, and where the content of the message is commercial in nature. Admittedly, commercial speech is afforded less protection by the First Amendment than non-commercial speech.

    The test to see whether a restriction on commercial speech violates the First Amendment is outlined by the U.S. Supreme Court’s decision in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n, 447 U.S. 557 (1980). First, in order to be protected by the First Amendment, commercial speech must be truthful and not misleading. If the answer is yes, the speech can only be constitutionally regulated if (i) the government has a substantial interest in regulating the speech; (ii) the regulation directly advances the governmental interest asserted; and (iii) the regulation is not more extensive than is necessary to serve that interest. Central Hudson at 565.

    Additionally, any regulation of speech is void if it is vague, meaning it does not give reasonable notice of what is prohibited, or overbroad, meaning it regulates substantially more speech than is necessary to serve the government interest at stake.

    The government has the burden of demonstrating that the challenged regulation advances its interest in a direct and material way; mere speculation or conjecture that the regulation may serve the interest is not sufficient. There must be a “reasonable fit between the legislature’s ends and the means chosen to accomplish those ends, a means narrowly tailored to achieve the desired objective.” Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 561 (2001).

    The Commonwealth Brands case seems to rely on the idea that branded merchandise when utilized by the public, even if only those members of the public aged over 21 years, such individuals become walking advertisements to which minors will be inevitably exposed.  While there is some logic to the concept, if taken to its logical conclusion, absolutely no brand affiliated products intended for adults should be visible in the public domain given the likelihood that a minor might encounter them – this ban would include not only tobacco, cannabis, and alcohol, but also to clearly illogical extremes such as pharmaceuticals, cars (which are not to be driven except by individuals aged 16 and older), military careers, and more. Certain, more conservative, portions of the population may well include many more items to such a list.

    In either event, even if such items may seem easily forgone by some, the Supreme Court has already rejected such logic, not only with substantial interests but even the higher bar of compelling interests, and for good reason.  In Lorillard, the Court held that even retailers and manufacturers of adult-oriented products have an interest in conveying truthful information about their products to adults, and adults have a corresponding interest in receiving truthful information about such products. Lorillard at 564. In fact, the Court has reiterated several times that the level of discourse reaching the public simply cannot be limited to that which would be suitable for a sandbox, despite the presence of minors and their inevitable exposure to such discourse. To hold otherwise would be to reduce the adult population to reading only what is fit for children. Id (citing Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 74 (1983) and Butler v. Michigan, 352 U.S. 380,  383 (1957)).

    Purely political speech is given the full protection of the First Amendment, and restrictions on political speech are judged using strict scrutiny, which is the most difficult burden for the government to uphold. There must be a compelling government interest at stake and the government restriction on speech must be narrowly tailored to achieve that interest. A law is not narrowly tailored if it is over-inclusive, meaning it restricts even speech that does not implicate the government’s interest, or if there is a less restrictive means available to serve the government’s interest. Additionally, government restrictions on the content of speech are judged using this strict scrutiny analysis.

    The constitutionality of non-commercial, content-neutral restrictions of speech are assessed using intermediate scrutiny. This means that the law or restriction must advance an important government interest, and the means chosen must be substantially related to that interest. As is the case with content-based, purely political, or commercial speech, the law cannot be vague or overbroad.

    Additionally, there can’t be what’s called a “prior restraint” on speech, which is a governmental action that prevents speech or expression before it occurs. Prior restraints are typically found to be unconstitutional.

     

    Prohibition on Cannabis Advertising of Bands

    Cannabis companies advertising their brands or products on merchandise would likely fall under the purview of commercial speech, though certain messages could be construed to be non-commercial or even purely political given the fact that the legality of cannabis is currently a topic of political discussion.

    Yet, even if a court were to find that cannabis and cannabis product advertising on merchandise was commercial speech, the restriction would not withstand Central Hudson review. Specifically, the government would not be able to meet the first and final prongs of the test—that the government have a substantial interest to be served and the regulation be not more extensive than necessary to achieve that interest. Here, the State of California may well posit an interest in ensuring that children do not have access to cannabis products made for adults in much the same way that the State has an interest in ensuring youth do not have access to alcoholic beverages; however, the scientific data is entirely lacking to put cannabis on par with tobacco given the severe and undisputed health effects associated with the latter but not the former.

    In addition, prohibiting all cannabis licensees from advertising their company or products on branded merchandise is more extensive than is necessary to serve that interest given the plethora of valid and easily implemented alternatives. There is not a “reasonable fit” here between the objective and the means chosen. Instead, the legislature could restrict marketing that is specifically designed to be attractive to children, or could prohibit cannabis licensees from distributing branded merchandise at locations where children are present. Additionally, self-regulation of the industry is also an option. This method works quite well in the beer industry, where industry-created guidelines exist for branding and marketing by brewers and have thus far prevented the need for outside, legislative restrictions.

    Interestingly, the prohibition on advertising cannabis or cannabis products through branded merchandise would only apply to licensees. This means that someone without a state-issued cannabis license, such as a headshop or unpermitted operator, both of which are more easily accessible by someone under the age of 21, could advertise cannabis products through branded merchandise without repercussion, but someone with a license would be in violation of the law if they did so. This does not seem equitable or in line with the goal of reducing child exposure to branded cannabis merchandise.

    Lastly, the restriction on speech in SB162 is overbroad, as it would regulate substantially more speech than is necessary to achieve the government’s interest in restricting advertisements to minors. Speech that is not targeted in any way towards children, is not sold or distributed in places where children are present, and is not attractive to children would be included in the prohibition. This would impede the ability of cannabis companies to engage in constitutionally protected truthful commercial speech.

    If you’re concerned about this, we encourage you to contact your state assembly member today and tell your representative to vote “NO” on SB 162 unless amended.

    Please contact the Law Offices of Omar Figueroa to learn more about proposed restrictions on cannabis branded products and constitutional challenges thereto.

  • Governor Brown Signs SB-94; MAUCRSA Becomes California Law

    On June 27, 2017, Governor Brown signed SB-94, a budget trailer bill that makes significant changes to California’s commercial cannabis regulatory scheme. The new law, called the
    combines the medical and adult-use cannabis systems into one licensing structure with the same regulatory framework governing medical and adult use facilities.

    The license types for both medical and adult-use cannabis businesses will 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 Level 1 [non-volatile solvents]
    16. Type 7 – Manufacturer Level 2 [volatile solvents]
    17. Type 8 – Testing Laboratory
    18. Type 10 – Retailer
    19. Type 11 – Distributor
    20. Type 12 – Microbusiness

    Licenses will be designated as either “M” (medical) or “A” (adult-use), except for testing laboratories which will be able to test both medical and adult-use cannabis products. The requirements for “M” and “A” licenses are the same unless otherwise specified. As currently written, the cross-licensure restrictions from MCRSA were mostly removed, so a person or entity can hold two or more licenses in different categories except for testing laboratories, which must be totally independent. Also, large cultivators, which will not be allowed until 2023, cannot hold distribution or testing licenses but can hold all other license types. Additionally, the premises of each license must be separate and distinct. A person can also hold both “M” and “A” licenses, but it is unclear at this point whether co-location of M and A licensees will be allowed.

    A big victory for small farmers is the removal of an independent distributor requirement. Distribution is still a required process, but now any license holder (except testing labs and large cultivators) can apply for a distributor license.

    One of the most significant changes relates to local control. Under MCRSA, an applicant was not eligible for a state license until they had a local permit or approval. Under AUMA, an applicant did not have to first obtain a local permit, but could not be in violation of any local ordinances or regulations. MAUCRSA adopts a method similar to AUMA, where an applicant may voluntarily provide proof of a license, permit, or other authorization from their local jurisdiction, but this is not required. Instead, the burden is on the local jurisdiction to provide the state with its ordinances and regulations related to commercial cannabis and to designate a contact person who will contact the state if local ordinances or regulations change, and on the state licensing agency to check with the local jurisdiction to see whether an applicant is in violation of local law. If the local jurisdiction does not respond within 60 days saying the applicant is violating local law, then the licensing agency will presume the applicant is in compliance.

    You can read the full text of the new law here: Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)

    For more details about the changes in MAUCRSA, check out our previous post, “Legislature Consolidates MCRSA and AUMA into MAUCRSA”: http://www.omarfigueroa.com/posts/

     

  • Legislature consolidates MCRSA and AUMA into MAUCRSA


    On Thursday June 15, the California Senate and Assembly passed two bills, SB-94 and AB-110, which are the state legislature’s versions of Governor Brown’s Trailer Bill. The Trailer Bill is the administration’s effort to reconcile the medical and adult use cannabis systems in California. Now that these bills have passed, Governor Brown has until July 1 to sign them into law, which he is expected to do. The law would then go into effect immediately once signed.

    We contacted the Bureau of Medical Cannabis Regulation to ask what would happen next. Their official response was:

    “The bureau will withdraw the proposed MCRSA regulations and propose a new set of regulations consistent with the changes in the law. However, public comments on the proposed MCRSA regulations are still very important. Many of the provisions in the MCRSA proposed regulations will carry over to the new regulations. Public comment from the MCRSA proposed regulations will provide information for the bureau to use when crafting any new regulations.”

    The emergency rule-making process will most likely be used for the next round of proposed regulations.

    Below are some of the main changes coming soon to California cannabis.

     

    Name of the Law and Rebranding of Regulatory Agency

    The new name for the combined medical and adult use cannabis regulatory systems is the “Medicinal and Adult Use Cannabis Regulation and Safety Act” (MAUCRSA–we think this would be pronounced MAO-KUR-SA) (BPC §26000). The Bureau of Medical Cannabis Regulation will be renamed the “Bureau of Cannabis Control” (BPC §26001(e)).

     

    License Types and Combinations

    The license types for medical and adult use cannabis operations will be the same. There will be no transporter or producing dispensary licenses. Licenses will be identified as medical or adult use with an “M” or “A,” respectively, except for testing laboratories which shall not be designated as either. The requirements for M-licenses and A-licenses shall be the same, unless otherwise specified (BPC §26050(b)). Regarding which combinations of licenses a person may hold, the law removes MCRSA’s limitation on holding licenses in more than two separate categories. Large cultivators, which will not be allowed until 2023, cannot hold distribution or testing licenses but can hold all other license types.

     

    Definition of “Owner”

    The new law eliminates the distinction between public and private companies; the threshold is 20% interest in the company to be an owner; and the CEO of a company (if applicable) ; and all members of the Board of Directors of a nonprofit (if applicable); and anyone who exercises direction, management or control of the company (if applicable) (BPC §26001(al)).

     

    Delivery

    Deliveries may only be made by a licensed retailer or microbusiness (BPC §26090). However, retailers are allowed to conduct business exclusively by delivery. Such a retailer must still have a licensed premises, but the premises may be closed to the public (BPC §26070). Deliveries includes the use of technology platforms that are either independently licensed or owned and controlled by another licensee (BPC §26001(p)).

     

    Volatile Solvents

    The definition of “volatile solvents” has been completely changed, and no longer includes references to specific compounds. Instead, a volatile chemical is defined by MAUCRSA as “a solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures.” (HSC §11362.3(b)(3)).

     

    Lab Testing

    The bureau will issue testing laboratory licenses, but these licenses will not be designated as “M” or “A” (BPC §26050(b)). Holders of a testing laboratory license may not hold a license in any other category (BPC §26053(b)). Testing laboratories are responsible for obtaining samples and transporting them back to the laboratory

     

    Distribution

    Transportation of cannabis can only be done by licensed distributors (BPC §26070(a)(2)), but anyone, except testing laboratory license holders, can apply for a distributor license (BPC §26110).

     

    No More Prohibition on ABC Licensees Holding Cannabis Licenses

    MCRSA and AUMA prohibited a holder of an alcohol license from obtaining a license for commercial cannabis. The new legislation does away with that prohibition. Instead, the law would prohibit any cannabis licensee from serving alcoholic beverages or tobacco on the licensed premises (BPC §26054).

     

    Special Events

    Temporary event licenses that would allow on-site consumption may be available, if all participants are licensed and the local jurisdiction allows it (BPC §26200(e)).