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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://ofl2.zdca.biz/posts/