On September 18, 2017, California Governor Brown signed AB 133 into law. AB 133 contains many so called “clean-up” provisions to the California Medical and Adult-Use Cannabis Regulatory and Safety Act (“MAUCRSA”). This post will highlight the more relevant provisions of AB 133 and what these changes mean for California cannabis businesses under this newly enacted law.
- The definition of “Premises” has been modified to remove the separate and distinct requirement for licensed premises. This has the effect of allowing multiple cannabis licenses to be issued to the same owner/lessee of one premise. Bus. & Prof. Code § 26001(ap). AB 133 now allows for co-location of retail locations provided the same licensed premises hold both an A and M retail license. This allows a retail location that has both license types to allow persons 18 or older with a valid recommendation and/or persons 21 or older to purchase cannabis from the same retail location.
- Provides that a licensee who voluntarily provides proof of a valid, unexpired license, permit or other authorization from their local jurisdiction to the state licensing authorities is presumed to be in compliance with their local ordinances unless the state licensing authority is notified otherwise by the local licensing authority. This rebuttable presumption will help to streamline the application and licensing process for the State. Bus. & Prof Code § 26055(e). Further, if the state licensing authority does not receive proof of local licensure from the applicant and the state submits a request to the local jurisdiction for notification of compliance and no response is received by the state within 60 business days of the request, then the licensing authority shall make a rebuttable presumption that the applicant is in compliance with all local ordinances and laws. Bus. & Prof Code § 26055(g)(2)(D).
- The Bill extends the time for cannabis cultivators to submit a statement of water diversion and use, a pending application for a permit to appropriate water, and documentation demonstrating that the diversion of water is authorized under a riparian right be submitted to the State Water Resources Control Board on or before October 31, 2017. Bus. & Prof Code § 26060.1(a)(2)(A)(ii)-(v).
- The Bill removes the provision from MAUCURSA that requires a licensed medical manufacturer to only manufacture cannabis products for sale by medical cannabis retailers. This opens up the manufacture of cannabis products for both adult-use and medicinal products by the same manufacturer provided that the manufacturer has both an A and M manufacturer license.
- The Bill authorizes a licensee to allow a primary caregiver for a person holding a valid medical marijuana recommendation on the premises to purchase medicinal cannabis. Bus. & Prof Code § 26140.
- AB 133 increases the amount of cannabis concentrates a person may possess from 4 grams to 8 grams. Health & Safety Code § 11357.
- AB 133 modifies the definition of the phrase “enters the commercial market” for the purposes of assessing the cultivation tax on all harvested cannabis to exclude the tax from being levied on immature plants or cannabis seeds. Revenue & Taxation Code § 34010(m).
- AB 133 removes the requirement that the cultivation tax be paid upon the first sale or transfer of unprocessed cannabis from a cultivator to a manufacturer. This has the effect of delaying the payment of taxes or providing a refund for the payment of taxes for the cannabis transferred to the manufacturer until or unless the manufactured cannabis has been determined to pass the quality assurance and testing requirements. Revenue & Taxation Code § 34012(h)(4).
- AB 133 provides relief from tax penalties for licensees who are unable to make timely payment of the taxes imposed on cannabis due to “reasonable cause and circumstances beyond the person’s control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect. Revenue & Taxation Code § 55044(a).
- Finally, I also want to draw your attention to the recently passed legislation of AB 1159 that provides protection for cannabis contracts from the defenses of illegality and public policy when raised to rebut the validity of a cannabis contract. AB 1159 also explicitly provides protection for attorneys who are engaged in providing legal services in compliance with state and local cannabis laws, but in conflict with federal laws.
As we have noted, McAllister Garfield, P.C. has expanded its practice into California and now has seven lawyers, including founding partner Sean McAllister, in offices in San Diego, Los Angeles, and San Francisco. Do not hesitate to contact us if you have any interest in the California market or any questions about this email.