California Cannabis Business & the Law
California State licensing
In 2015, Gov. Jerry Brown passed the Medical Cannabis Regulation and Safety Act (“MCRSA”) creating a comprehensive licensing system for the state of California. The MCRSA was the most robust piece of legislation passed in California since the Compassionate Use Act (“CUA”) in 1996 that made medical cannabis legal, the Medical Marijuana Program Act (“MMP”), and the 2008 Attorney General Guidelines for Security and Non-Diversion of Medical Marijuana (“AGG”) that set forth an unofficial framework for businesses to operate within. The Attorney General Guidelines, along with the CUA and MMP, until recently, exclusively governed medical cannabis and medical CBs in a gray area.
That all took a turn when the MCRSA went into effect on January 1, 2016. Under the MCRA, the Bureau of Medical Cannabis Regulation (“BMCR”) in Sacramento was established as an arm of the Department of Consumer Affairs to roll out California's new licensing program.
Less than one year later, in November 2016, California voters approved Proposition 64, the Adult Use of Marijuana Act “AUMA”, legalizing and governing the recreational or “adult use” market.
Although these laws are current, no marijuana businesses in California have been licensed YET – medical or non-medical. State license applications will not be released until January 1, 2018, leaving California in a bit of a limbo awaiting the new rules and regulations. In the meantime, nothing in the MCRSA expressly negates the rules set forth in the AGG. Therefore, businesses in operation must continue to operate under the CUA, MMP and the AGG.
It should be noted, however, that marijuana and marijuana businesses are still considered federally illegal. Despite any efforts made to comply with California and local city laws, it will not prevent a cannabis businesses from being prosecuted under federal law. Regardless, those starting a marijuana business can avoid most serious problems by obtaining a state license and local permit.
While California Licenses will not be available until January 1, 2018, there are select cities throughout the state that have issued permits for cannabis businesses (for example, Santa Ana, Adelanto, Desert Hot Springs, Long Beach…to name a few). If you are not in possession of a city issued license, you are likely in violation of city law. However, you can comply with state law by following the collective model until you are licensed by the state of California and your city.
Although you must currently operate under the collective model, you must also position your business for licensing as it is quickly approaching. Contact Manzuri Law today to set up a consultation so we can help you structure, organize, and optimize your business for licensing.
Cannabis Law and compliance is complicated and the risks are great. To ensure you are structured and operating properly, contact one of our legal professionals without delay.
[Note: As will be discussed below in the Medical Cannabis Regulation and Safety Act, the MCRSA has created an “SB 420 collective defense sunset,” which will essentially abolish the “collective defense” provided by the MMP. To be exempt from prosecution, all CBs will have to be licensed in the near future, except for individual patient and caregiver gardens serving no more than five patients.]