California will vote on AUMA in November. What impact will it have on running your business, licensing, and operating under different regulators?
The Adult Use of Marijuana Act (“AUMA”) is gaining tons of traction as we quickly approach the November ballot. Naturally, many are wondering how the AUMA (if passed) will change the current laws regarding state licensing.
As many of us all know, the recent passage of the Medical Marijuana Regulation and Safety Act (“MMRSA”) ushered in the first green wave of state regulation. After nearly twenty years of uncertainty, California's government will finally attempt to regulate cannabis – its new prize industry. Under the MMRSA, actual state licenses will be given to medical cannabis businesses beginning in early 2018, with priority given to existing businesses that were “in operation and in good standing with [their] local jurisdiction by January 1, 2016.”
Now, recent polls show that up to 60% of voters are ready to legalize adult use marijuana this November. So it's looking like we're in for more changes ahead. But, for business owners, it all boils down to one question: how will the AUMA impact them going forward? For now, let's first discuss the different types of licenses under the MMRSA and AUMA, and the respective state government regulatory bodies that would be in charge.
The AUMA provides for 19 different types of licenses – most of which mirror the 17 licenses already created by the MMRSA. Here's a brief breakdown:
MMRSA LICENSE TYPESType 1 = Cultivation; Specialty outdoor; Small. (Up to 5,000 sf. of canopy, or up to 50 noncontiguous plants)
Type 1A = Cultivation; Specialty indoor; Small (Up to 5,000 sf.)
Type 1B = Cultivation; Specialty mixed-light; Small (Up to 5,000 sf. using exclusively artificial lighting)
Type 2 = Cultivation; Outdoor; Small (Up to 5,000 sf. using a combination of artificial and natural lighting)
Type 2A = Cultivation; Indoor; Small. (5,001 -10,000 sf.)
Type 2B = Cultivation; Mixed-light; Small (5,001 -10,000 sf.)
Type 3 = Cultivation; Outdoor; Medium (10,001 sf. – 1 Acre)
Type 3A = Cultivation; Indoor; Medium (10,001 – 22,000 sf.)
Type 3B = Cultivation; Mixed-light. Medium (10,001 – 22,000 sf.)
Type 4 = Cultivation; Nursery
Type 6 = Manufacturer 1 (Using non-volatile solvents)
Type 7 = Manufacturer 2 (Using volatile solvents)
Type 8 = Testing
Type 10 = Dispensary; General
Type 10A = Dispensary; No more than three retail sites
Type 11 = Distribution
Type 12 = Transporter
AUMA LICENSE TYPES**Type 1 = Cultivation; Specialty outdoor; Small (Same as MMRSA)
Type 1A = Cultivation; Specialty indoor; Small (Same as MMRSA)
Type 1B = Cultivation; Specialty mixed-light; Small (Same as MMRSA)
Type 2 = Cultivation; Outdoor; Small (Same as MMRSA)
Type 2A = Cultivation; Indoor; Small (Same as MMRSA)
Type 2B = Cultivation; Mixed-light; Small (Same as MMRSA)
Type 3 = Cultivation; Outdoor; Medium (Same as MMRSA)
Type 3A = Cultivation; Indoor; Medium (Same as MMRSA)
Type 3B = Cultivation; Mixed-light; Medium (Same as MMRSA)
Type 4 = Cultivation; Nursery (Same as MMRSA)
Type 5 = Cultivation; Outdoor; Large (No artificial lighting greater than 1 Acre)
Type 5A =Cultivation; Indoor; Large (Over 22,000 sf. using exclusively artificial lighting)
Type 5B = Cultivation; Mixed-light; Large (Over 22,000 sf. using a combination of artificial and natural lighting)
Type 6 = Manufacturer 1 (Same as MMRSA)
Type 7 = Manufacturer 2 (Same as MMRSA)
Type 8 = Testing (Same as MMRSA)
Type 10 = Retailer (Includes retail sale and delivery)
Type 11 = Distributor (Same as MMRSA but not mandatory)
Type 12 =Microbusiness (Can cultivate up to 10,000 sf. and also act as a licensed distributor, Level I manufacturer and retailer)
**All licenses issued for adult use would be distinct from those issued for medical use, and would be designated as such. E.g., an outdoor cultivator for medicalcannabis would receive a “Type 1” license, whereas a non-medicaloutdoor cultivator would receive a “Type 1 – Nonmedical” or “Type 1NM” license.
As you can see, the MMRSA and AUMA are very similar, at least with respect to license types. The key differences are: (1) if the AUMA is passed, the largest cultivation licenses (Types 5A and 5B) will not be issued until 2023 and will not allow for vertical integration; (2) unlike the MMRSA, the AUMA does not prohibit vertical integration for other licensees, except for Type 8 testers and Type 5 large cultivators; and (3) the AUMA provides for a versatile “microbusiness” license which allows for vertically integrated small farm operations – much like the collective model we've already been using here in California.
Same Regulators, New Name
If the AUMA passes, the MMRSA's lead regulatory agency – dubbed Bureau of Medical Marijuana Regulation (“BMMR”) – would be renamed to Bureau of Marijuana Control (“BMC”). The BMC would still be a sub-agency of the Department of Consumer Affairs, but it would be responsible for regulating both non-medical adult use cannabis as well as medical. So, basically, the BMC would just replace the BMMR and add adult use cannabis to its list of responsibilities. Identical to the BMMR, the BMC would designate about a half-dozen state agencies to handle different aspects of regulation – i.e., the Department of Public Health will oversee testing and manufacturing, while the Department of Food & Agriculture will oversee cultivation.
Unless you're a large-scale cultivator (over 20,000 sf.), the AUMA will not significantly alter your road to state licensing. In fact, for those who missed the January 1st deadline for priority licensing under the MMRSA, the AUMA may be good news – it gives operators another chance to get their businesses in “good standing” with local law by September 1st in order to be eligible for priority licensing. So, if you haven't done so already, now would be a good time to get in compliance with local law because the passage of the AUMA sounds like a good bet right now.