California is about to legalize cannabis. What does that mean!?

Everyone is talking about cannabis these days. Or so it seems. Perhaps I am jaded by the fact that I live in California and we are voting on legalization soon. Or perhaps due to the fact that I am constantly scouring through endless recent articles and studies justifying the medical properties of cannabis as part of my job. But I feel as though the conversation almost always touches on the current climate in the cannabis industry, whether I am talking to my grandmother, my best friend or my barista.

I have developed a wealth of knowledge concerning the different ailments that medical cannabis can treat, the endo-cannabinoid system and how our brains function on cannabis, as well as the exciting world of terpenes and flavor compounds. But when it comes to the upcoming vote in November and what exactly legalization and Prop 64 will mean, especially in relation to medical cannabis laws already in place in the state of California – I tend to shy away from the conversation while I ponder what all that jargon could possibly mean – aren’t we simply trying to allow safe access for medical patients? YES! But that comes with a LOT of regulation, licensing, dictation from local and state level, amendments and unwritten policy. The word complicated doesn’t even begin to describe the existing situation and attempt at understanding the difference between current statutes (MCRSA) and potential future propositions (AUMA). At least that is the case for someone like me who can barely remember my one and only law class from college. That is why I felt it necessary to create a brief, comprehensive chart that anyone can gain some insight (and not just a headache) from. The Medical Cannabis Regulation and Safety Act is laid out on the left, and the Adult Use of Marijuana Act, or Prop 64, is on the right.

yes on AUMA

Image credit: Herb

A CLOSER LOOK: MCSRA AND AUMA

MCRSA

AUMA

Overview & Key Points

  • Consists of 3 different bills passed in September 2015 regarding a new licensing system for commercial production of medical cannabis
  • Licenses will be available for the commercial cultivation, manufacture, retail, sale, transport, distribution, delivery and testing of medical cannabis
  • Vertical integration is limited
  • Proposition 64; to be voted on in November to legalize marijuana for recreational use for those over 21
  • If passed, adults over 21 will be legally allowed to possess up to 1 oz of cannabis and privately cultivate up to 6 plants
  • Creates licensing system for commercial production of cannabis (similar to those in MCRSA)
  • Allows for onsite consumption in specifically licensed facilities
  • Reduces penalties for crimes related to cannabis from felony to misdemeanor (in most cases)
  • Allows prior offenders to petition the court for dismissal charges that have been decriminalized

Licensing

  • 17 different license types regarding:
    • Cultivation, manufacturing, testing, dispensary, distribution, transporting
  • Vertical integration limitations: one person/business may only obtain 2 of each kind of license, limits certain licenses given to those already in possession of another certain kind of license
  • Distributors license required: all cultivators and manufacturers are required to send products to a Type II licensee for quality insurance and inspection before being passed on to next step of manufacturing / retailing
  • Need licenses / permits on both state and local level
  • 19 different license types regarding
    • Cultivation, manufacturing, testing, retailers, distribution, micro business
  • Concern regarding one of the additional license types; Type 5 Cultivators License for large grows (beyond MCRSA’s ½ acre indoor and 1 acre outdoor). Type 5 licenses will not be available until 2023
    • License priority will be given to those who’ve demonstrated compliance with the Compassionate Care Act since Sept 1, 2016 and given to those with continuous residence in CA since Jan 1, 2015
  • Limitations for large cultivator license: cannot also hold license for distribution, testing or microbusiness

Taxes

  • Did not create any new taxes for cannabis businesses
  • Businesses are required to have a sellers permit which imposes a 7.5-10% sales / use tax
  • IF AUMA PASSES: MCRSA licensees will be subject to new AUMA taxes
    • AUMA new tax scheme will be applied to medical and recreational
    • MCRA licensees will be subject to: excise tax, sales / use tax, cultivation tax and tax exemption

·

  • New tax scheme that will affect medical and recreational businesses
  • Imposes 15% excise tax on gross receipts for medical and recreational, imposed on purchases of cannabis or cannabis products
  • 7.5-10% CA sales tax will NOT be imposed when a qualified patient / primary care giver provides proper medical use ID card
  • Imposes cultivation tax (per oz) on all harvested recreational and medical cannabis that enters the market (NOT if harvested for personal use)
  • Municipalities can impose local taxes
  • Allocates portion of state tax revenue for specific purposes:
    • Grants for services and drug education in communities most affects by past drug policies ($10 million)
    • evaluate the effects of AUMA ($10 million)
    • create / adopt methods for determining impaired driving ($3 million)
    • study the risks / benefits of cannabis ($2 million)

Local Control

  • licensees are prohibited from holding ownership interest in real or personal property or other assets used in any other license category
  • cultivation / dispensaries must be at least 600 ft from any schools K-12
  • all recreational cannabis licenses must be located at least 600 ft from schools, youth centers, day care centers unless otherwise granted by local authorities
  • do not need a local permit to apply for a state license

Working Together

  • If AUMA passes:
    • MCRSA licenses and regulations will remain intact. Local government that allows medical cannabis operations will have the ability to prohibit or regulate a recreational cannabis business
    • Bureau of Medical Marijuana Regulation under the Department of Consumer Affairs will become its own “Bureau of Marijuana Control” and given chief authority to regulate the industry
  • If passed, dispensaries licensed under MCRSA for medical cannabis can also obtain a license to sell recreational cannabis from the same location
  • Explicitly addresses concept of joint MCRSA and AUMA licenses and gives priority to businesses operating in compliance with MCRSA
  • Allows qualified patients 18 + to enter dispensaries with proper medical card ID
  • If passed, municipalities can ban recreational while allowing medical cannabis

Hopefully that helped! It certainly helped me understand the current and future regulatory climate surrounding cannabis.  While there are a many criticisms to what has been (or hasn’t been) included in AUMA, legalization of any kind is still a win for California and a step in the right direction, and legalization is absolutely on the horizon.

on-the-horizon

Do you have any questions? Opinions or concerns? Please comment below. We love to hear from you. And don’t forget to vote in November!

Sources:

“AUMA Legalization Measure on November Ballot as Prop. 64.” California NORML. N.p., n.d. Web. 16 Sept. 2016.

“Cal  NORML: A SUMARY OF THE MEDICAL CANNABIS REGULATION AND SAFETY ACT (MCRSA).” California NORML. N.p., n.d. Web. 16 Sept. 2016.

http://www.calcannholdings.com/wp-content/uploads/MCRSAAUMA-Special-Report-.pdf

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