California enacted the country’s first medical marijuana regime in 1996. Until now, the industry has operated entirely with local regulations only and no significant state regulations. Last year, the California legislature passed three bills collectively known as MCRSA (the Medical Cannabis Regulatory and Safety Act) that for the first time will provide a comprehensive framework for regulating medical cannabis. MCRSA sets up a dual licensing system at the state and local level and creates myriad regulations with a seed to sale approach similar to other states, like Colorado.
Three main agencies will regulate licenses under MCRSA: the Bureau of Medical Cannabis Regulation (housed in the Department of Consumer Affairs and regulating dispensaries, testing labs, distribution, and transportation), the Medical Cannabis Cultivation Program (housed in the Department of Food and Agriculture and regulating cultivation), and the Office of Medical Cannabis Safety (housed in the Department of Public Health and regulating manufacturers). The agencies are conducting stakeholder meetings to determine the scope of the new regulations. Actual draft regulations are expected to be ready in early 2017. McAllister Law Office has participated extensively in these stakeholder meetings, including by providing written comments. The agencies hope to be ready to issue licenses in early 2018.
Simultaneous to this momentous change in California, Proposition 64 is on the ballot in November, and would legalize recreational or adult-use marijuana in California. Proposition 64 will largely mimic the highly regulated model of MCRSA. However, Proposition 64 requires owners to have been residents of California as of January 1, 2015. This will certainly slow down or change the form of out of state investment in California. If passed, and the initiative is leading in the polls at this time, state agencies would develop regulations in 2017 and they will begin issuing state licenses in early to mid-2018.
In addition to the state development of new rules, each county and city will need to enact a clear local licenses system to allow marijuana businesses at the local level. Many local communities have not developed clear rules at this time, or they have enacted moratoriums or bans to slow down the rollout of marijuana businesses in their communities. For those interested in participating in this new industry, the first task is likely going to be working with local governments to ensure that a local licensing system is set up to allow for marijuana businesses under Proposition 64 and MCRSA.
McAllister Law Office will continue to monitor and participate in the state licensing process and keep our clients up to date on the new developments with California marijuana law. The Firm is already working with entrepreneurs inside and outside of California who are trying to position themselves appropriately to be ready for the big changes in 2018. As always, contact our office if you have any questions about the new California laws or policies.
Author: Sean McAllister