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Habib is a lawyer in our San Francisco office, where his practice focuses on regulatory compliance, corporate, and transactional matters for cannabis companies.

Alameda cannabis lawyersCalifornia has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we cover who is banning cannabis, who is waiting to see what to with cannabis, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your California cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on Oakland and before that San FranciscoSonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Today’s post is on Alameda County.

Welcome to the California Cannabis Countdown.

Location.  Alameda County is the 7th most populous county in the state of California. Its county seat is in Oakland and it occupies much of the East Bay region. It’s home to the Alameda County Fair and the Alameda County Fairgrounds, which can boast to being the home of the oldest one-mile horse racing track in America. Hope that tidbit comes in handy on trivia night.

History with Cannabis and Current Cannabis Laws. Back in 2005, Alameda County (this post is addressing only Alameda County and not the City of Alameda) began regulating cannabis by passing a medical cannabis dispensary ordinance. Though we’re always happy to see cities and counties embrace cannabis businesses with sensible and reasonable regulations, Alameda’s first foray should be described as a very timid one. Alameda’s ordinance only addressed medical cannabis dispensaries and it capped the number of dispensary licenses at three and it also limited the amount of cannabis a dispensary could keep on its premises.

With friendlier regulations in Oakland, Berkeley, Richmond, and Emeryville, this first ordinance put Alameda at a competitive disadvantage with potential cannabis businesses when compared to those cities. With the passage of the Medical Cannabis Regulation Safety Act (MCRSA), Alameda County (along with a number of other California jurisdictions) decided it was time to amend their cannabis ordinance. In June of 2016, the Alameda County Community Development Agency and the Castro Valley Municipal Advisory Council held a meeting to begin the process of updating Alameda’s cannabis ordinance. If you’ve ever followed a cannabis ordinance as it winds its way through your local jurisdiction you are well aware that after one meeting comes many others – supervisor meetings, planning commission meetings, citizen advisory committee meetings, and interdepartmental working group meetings, just to name a few. Like Gremlins, the meetings just continue to multiply. Let me not be too harsh on Alameda because slow progress is better than no progress and definitely better than these alternatives.

Proposed Cannabis Laws: On August 1, 2017, the Alameda County Board of Supervisors conducted the first reading of its proposed amendments to their cannabis ordinance and on September 12th of this year (we like to keep you up to date here on the Canna Law Blog) the Board held a second reading of their cannabis ordinance. Here’s a list of the some of the highlights of Alameda’s cannabis ordinance:

  • Increases the number of dispensaries allowed from three to five.
  • Allows delivery of medical cannabis from permitted dispensaries within the county and from outside jurisdictions from 9:00am to 9:00pm.
  • Allows the sale, distribution, and delivery of edibles.
  • Removes the 100-pound limit on the amount of cannabis that can be stored by a dispensary on its premises.
  • Implements a two-year pilot program authorizing medical cannabis cultivation. This pilot program will authorize up to six cultivation permits – up to two indoor cultivation operations and four mixed-light operations. Outdoor cultivation is prohibited.
  • Nurseries may be permitted where cultivation is permitted.
  • Cultivation sites will have to be at least one thousand feet from any pre-K to 12th grade school, licensed child or day care facility, public park or playground, drug or alcohol recovery facility or public recreation center.

Although the caps imposed on medical cannabis dispensaries and cultivators will limit the innovation, investment, and tax revenue generated by Alameda County cannabis businesses, this is still a step in the right direction and we should not let perfect be the enemy of the good. We’re also optimistic that Alameda County will continue on its path towards increased legalization – perhaps with fewer meetings next time.

California cannabis processors

Three of our California cannabis lawyers recently did a webinar on the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) and how it repealed the Medical Cannabis Regulation and Safety Act (“MCRSA”) while consolidating some of MCRSA’s provisions with the licensing provisions of the Adult Use of Marijuana Act (“AUMA”). If you missed the webinar don’t you worry, we’ve got you covered right here. During the webinar we received so many great questions from our attendees (close to 1,500 people signed up!), we decided to address them here on the Canna Law Blog. Last week we discussed the future and unknowns surrounding onsite consumption in California. This week we’re going to discuss California cannabis processors.

If you find yourself thinking you never read anything about about cannabis processors in the MAUCRSA, go ahead and give yourself a pat on the back because it does in fact nowhere mention processors, nor is there any mention of processors in the California assembly and senate bills that made up the MCRSA. Upon passage of the MCRSA, the California Department of Food and Agriculture (“CDFA”) held eight public workshops to solicit feedback from the public and interested stakeholders. After the workshops, the CDFA published a scoping report detailing some of their findings. When the CDFA released its proposed regulations for the medical cannabis cultivation program it also released a companion Initial Statement of Reasons (“ISOR”) and it is in the ISOR where we are first introduced to processors.

In the ISOR, the CDFA states “it was brought to the Department’s (that’s the CDFA) attention that some cultivators send untrimmed, uncured, or unpackaged cannabis to locations off-site for processing” and decided to add the processor as a new license type. Under the proposed regulations, a processor can also hold different types of cultivation licenses but would not be allowed to grow cannabis plants at the processing facility. The proposed annual license fee for processors was $2,790 – which was on the lower end for cultivation license type fees. The CDFA went on to define a processor in the proposed medical regulations as a cultivation site that conducts only trimming, drying, curing, grading or packaging of cannabis and non-manufactured cannabis products.

What caught many people’s attention is how CDFA classified pre-rolls as a type of non-manufactured cannabis product. Though consumer feedback on the quality of pre-rolls varies, there’s also a burgeoning marketplace for cannabis businesses that promote quality and brand themselves accordingly. The CDFA also envisioned an increased interest in processor licenses as they assumed approximately 20% of California’s cannabis production would be processed through California licensed cannabis processors. As you can imagine, our cannabis attorneys were getting a boatload of inquiries regarding this license type, but then California Governor Jerry Brown signed MAUCRSA into law and just like Keyser Söze, it was gone.

But is the processor license type gone for good here in California? Will those with cultivation licenses under MAUCRSA be allowed to conduct cannabis processing on their premises or will the CDFA bring back from the dead the processor as a separate license type in California? We’ll have to wait until the CDFA publishes its new proposed regulations in the fall under an emergency rule-making process so that the state will be able to issue cannabis licenses beginning on January 02, 2018. Since the processor license type was so short-lived, even if the CDFA does re-create it as a license type it will probably take some time for cities and counties to add processors to their licensing structure.

We’ll keep you posted on any new developments.

California cannabis events
California cannabis events. So far, so good.

In case you missed it, on June 27, 2017, California Governor Jerry Brown signed into law the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”). MAUCRSA repealed the Medical Cannabis Regulation and Safety Act (“MCRSA”) while consolidating some of the MCRSA’s provisions with the licensing provisions of the Adult Use of Marijuana Act (“AUMA”). Our firm just recently held a webinar on the major changes between the MCRSA and MAUCRSA and what California cannabis businesses can expect from California’s Bureau of Cannabis Control (be sure to check in regularly as we’ll be posting the webinar on our site in the next couple of days). During the webinar we addressed a whole host of questions but due to the number of attendees (nearly 1,500 of you signed up) and the volume of questions, we couldn’t get to all of them. Fret not though my friends, as over the coming days we’ll be answering many of your questions here on the Canna Law Blog. As a matter of fact, how about I start now and discuss a topic on which we received a lot of questions: onsite consumption at cannabis events (where such events have slowly started to fade because of robust state cannabis regulations–see here and here).

The AUMA granted local jurisdictions the authority to decide whether smoking, vaporizing, and ingesting cannabis would be allowed by a retailer or a microbusiness. Ultimately, the ability to provide a unique and personal experience via onsite consumption will enhance California cannabis retailers and microbusinesses abilities to differentiate themselves in the marketplace. Onsite consumption will also prove to be a big advantage for California cannabis businesses bordering Nevada, as state regulators there grapple with the issue of onsite consumption.

The MAUCRSA also built on the AUMA’s concept of onsite consumption by allowing for temporary event licenses for onsite cannabis sales and consumption at district agricultural association events and your local county fair–just when you thought churros couldn’t get any better! Does that sound too good to be true? Well that’s because I haven’t mentioned the following caveats:

  • Only a licensee can receive the temporary event license;
  • Your local jurisdiction has to authorize such events in the first place;
  • Access to the area where cannabis consumption is allowed is restricted to persons 21 years of age and older;
  • Cannabis consumption is not visible from any public place or nonage-restricted area; and
  • Sale or consumption of alcohol or tobacco is not allowed on the premises. Sorry, but no jamming out to Phish with a beer and a pre-roll in your future.

The MAUCRSA also states the activities at such events must be “otherwise consistent with regulations promulgated and adopted by the Bureau [of Cannabis Control] governing state temporary event licenses.” What are these regulations you ask? Unfortunately we won’t know until the Bureau releases them in the fall. Normally we’d look to the draft medical regulations the Bureau released this past April for guidance but those regulations didn’t cover onsite consumption and they only apply to MCRSA (and have been withdrawn because of MAUCRSA). What we do know is there’s a lot of interest in how the Bureau will interpret the definition of premises. Premises is currently defined in the MAUCRSA as follows:

The designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee.

If the area “held under the control of the applicant and licensee” is separate and distinct from the rest of the fairground, will that constitute separate premises and satisfy the alcohol restriction? At most county fairs you’ll find a great selection of local wines and craft beers and that’s not going to be changing any time soon. However we foresee county fairs will not want to miss out on the revenue and foot traffic a well-cultivated list (pun definitely intended) of cannabis businesses can attract.

Will the Bureau propose reasonable regulations (perhaps restricting cannabis consumption to evening hours?) to allow county fairs to provide for reasonable consumption of alcohol and cannabis on county fairgrounds? Will the one licensee restriction apply to temporary events? That seems unlikely, but until the State of California releases its cannabis regulations we won’t know for certain. What we do know is that these temporary event licenses will be a great way for entrepreneurial cannabis businesses to market themselves – let’s just hope the Bureau issues business friendly and reasonable regulations.

 

Oakland cannabis lawyersCalifornia has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we cover who is banning cannabis, who is waiting to see what to with cannabis, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your California cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on San Francisco and before that Sonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Today’s post is on the City of Oakland.

Welcome to the California Cannabis Countdown.

Location. With a burgeoning nightlife, beautiful Lake Merritt, and a slightly more reasonable cost of living than San Francisco, there’s much to love about Oakland. But yes, losing the Raiders and the Warriors is going to hurt – perhaps another category for chronic pain and suffering?

History with Cannabis and Current Cannabis Laws. Ever since the voters of California passed the Compassionate Use Act in 1996 (Proposition 215), Oakland has been on the forefront of legalizing cannabis use. In 1998, the Oakland City Council passed Resolution No. 72516 C.M.S. in support of the Oakland Cannabis Buyers Collective when the federal government sued the collective (and five other entities) seeking an injunction to get the collective to cease distributing and manufacturing cannabis. By making an attempt to come to the aid of a medical cannabis collective, Oakland firmly signaled it would fight for Oakland residents’ right to medical cannabis. In November of 2004, Oakland residents passed ballot measure Z. Ballot Measure Z was a continuation of Oakland’s dual-pronged approach to cannabis: focusing on social justice reform and proper regulation. The ballot measure made citations and arrests of private adult cannabis use Oakland’s lowest law enforcement priority and set the groundwork for establishing a system to license, tax, and regulate cannabis. Oakland followed up Measure Z by enacting Ordinance No. 12694, which established a community oversight committee with the role of assisting the city council in fulfilling the objectives of Measure Z.

Medical cannabis dispensaries in Oakland are currently regulated under Title 5, Chapter 5.80 of the Oakland Municipal Code, which became effective in July of 2011 and was most recently amended on March 28, 2017. The City of Oakland — more than most California jurisdictions — has shown a willingness to assist those most disadvantaged by the disparate enforcement of cannabis laws. When Chapter 5.80 was amended in March of this year, the City Council sought to remedy the disadvantages faced by residents via an equity permit program, which provides as follows:

  • Defines an equity applicant as one whose ownership has an annual income at or less than 80 percent of Oakland’s medium income adjusted for household size and has either lived in any combination of Oakland police beats 2X, 2Y, 6X, 7X, 19X, 21X, 21Y, 23X, 26Y, 27X, 27Y, 29X, 30X, 30Y, 31Y, 32X, 33X, 34X, and 35X for at least five of the last ten years or was arrested after November 5,1996 and convicted of a cannabis crime committed in Oakland;
  • Allows Oakland’s City Administrator to issue no more than eight new brick and mortar dispensary permits per year, with half of those dispensary permits going to equity applicants;
  • Allows applicants to apply for an onsite cannabis consumption permit;
  • Allows for delivery-only cannabis dispensaries;
  • Requires applications for cannabis dispensaries be subject to a public hearing.

Medical cannabis cultivation, distribution, testing, and transportation are currently regulated under Title 5, Chapter 5.81 of the Oakland Municipal Code, which became effective in July of 2010 and was also amended on March 28, 2017. Chapter 5.81 also included an equity permit program. Other of its highlights include the following:

  • A collective or cooperative of qualified patients or primary caregivers may cultivate medical cannabis covering an area of no more than 250 square feet inside a residential unit or if in a nonresidential building on one parcel of land without a permit (subject to numerous operating standards);
  • Allows for usage of both volatile and non-volatile solvents in manufacturing medical cannabis products;
  • Permits facilities that hire and retain formerly incarcerated Oakland residents to apply for a tax credit or license fee reduction based on criteria established by the Oakland City Administrator;
  • Mandates that no cannabis or cannabis odors shall be detectable by sight or smell outside a permitted cannabis facility;
  • Allows for more than one medical cannabis operator to situate on a single parcel of land, however, each such cannabis operator must obtain a permit for its applicable permit category; and
  • Requires cannabis cultivation and manufacturing applicants to obtain approval from the Alameda County’s Department of Environmental Health and its Department of Agriculture.

Proposed Cannabis Laws: On July 20th of this year, Oakland’s Cannabis Regulatory Commission met to discuss the ongoing implementation of the Equity Permit Program to see if it is accomplishing its goals. The Commission is also in the process of assisting the City Council with adopting a regulatory structure for the adult use of cannabis. Some of the issues the Commission highlighted for the City Council to review are the following:

  • Whether Oakland will create a licensing category for micro-businesses. Under California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), a micro-business operator may act as a cultivator, retailer, distributor, and non-volatile manufacturer.
  • Whether the Oakland City Council will limit or cap the number of adult use cannabis dispensaries?
  • Whether to allow cannabis dispensaries to operate as both a medical and an adult use dispensary?

To help you better understand what is going on with California cannabis and what MAUCRSA means for your cannabis business, three of our California attorneys will be hosting a free webinar on August 8, 2017 from 12 pm to 1 pm PT. Hilary Bricken from our Los Angeles office will moderate two of our San Francisco-based attorneys (Alison Malsbury and me) in a discussion on the major changes between the MCRSA and MAUCRSA, including on vertical integration and ownership of multiple licenses, revised distributorship standards, and what California cannabis license applicants can expect more generally from California’s Bureau of Cannabis Control as rule-making continues through the remainder of the year. We will also address questions from the audience both during and at the end of the webinar.

To register for this free webinar, please click here. We look forward to your joining us!

San Francisco cannabis lawyersCalifornia has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we plan to cover who is banning, who is waiting, and who is embracing California’s change to legalizing marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was an update on Sonoma County and before that the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Welcome to the California Cannabis Countdown, where today I write about my home city and the location of our Northern California office: San Francisco.

LocationSan Francisco is one of the most beautiful cities in the world and home to many iconic landmarks. In the span of a couple of hours you can cross the Golden Gate Bridge, check out the Palace of Fine Arts, grab a cheesy shirt at Fisherman’s Wharf, ride a cable car, and tour Alcatraz. Fans of late of 80’s sitcoms can (and too often do) take selfies in front of The Full House home. And If you’ve found yourself in the financial district lately, there’s no way to miss the construction boom going on. San Francisco, my kind of town.

History with Cannabis and Current Cannabis Laws. Though San Francisco (the city and county) is known for its progressive and forward thinking policies, San Francisco’s Medical Cannabis Act (“MCA”) didn’t come into effect until December of 2005. Initially the MCA (regulated by San Francisco’s Department of Public Health) was not an aggressive push by the city of San Francisco to embrace the multifaceted benefits of all aspects of California’s medical cannabis industry. Most people would be surprised to find that San Francisco lags behind Oakland, Sonoma, and Sacramento when it comes to progressive cannabis regulations. Instead of taking the lead and being a beacon for the rest of California, the MCA focused solely on medical cannabis dispensary collectives. As it stands now, San Francisco does not currently issue stand-alone licenses or permits for cannabis cultivators or manufactures (or any other non-dispensary operator) but instead allows dispensaries to manufacture and cultivate cannabis subject to certain regulations. Here’s a list of some of the MCA’s requirements:

  • Medical cannabis dispensaries shall be operated only as non-profit collectives or cooperatives.
  • Dispensaries can maintain up to 99 cannabis plants in up to 100 square feet of total garden canopy area at the dispensary site and their cultivation must be conducted indoors.
  • Dispensaries can cultivate at an offsite location so long as they get approval from the San Francisco Planning Department and the Department of Building Inspection.
  • You cannot combine booze and bud. A medical cannabis dispensary shall not hold or maintain a license from the State Department of Alcohol Beverage Control to sell alcoholic beverages or operate a business that sells alcoholic beverages. Nor shall alcoholic beverages be consumed on dispensary premises or in the public right-of-way within fifty feet of a medical cannabis dispensary.
  • No edible cannabis products requiring refrigeration or hot-holding shall be manufactured for sale or distribution due to the potential for food-borne illness (you can apply for an exemption though); and
  • Packaging that makes cannabis product attractive to children or imitates candy is not allowed. Any edible cannabis product made to resemble a typical food product must be in a properly labeled opaque (non see-through) package before it leaves the dispensary.

In 2015, the San Francisco Board of Supervisors created the Cannabis State Legalization Task Force (“Task Force”) to advise the city’s Board of Supervisors and other city agencies on matters relating to legalization of adult use cannabis. The Task Force held its first meeting in January of 2016 and has held a number of meetings since, covering everything from social justice initiatives to land use requirements. A complete list of the Task Force’s meetings can be found here.

Proposed Cannabis Laws: Just last week San Francisco’s Board of Supervisors approved an ordinance to create an Office of Cannabis whose director can issue permits to cannabis related businesses. The director of San Francisco’s Office of Cannabis must propose to the Board of Supervisors a schedule for cannabis permit applications and annual license fees. Though this ordinance is strictly administrative in nature, our San Francisco cannabis lawyers foresee substantive (and helpful) regulations on the horizon. The Task Force has also made the following draft recommendations to the San Francisco Board of Supervisors (which is not a complete list):

  • San Francisco should allow cannabis sales as an accessory use — where selling selling cannabis is not the location’s primary use — and should develop regulations specifying how cannabis products should be separated from non-cannabis products and how accessory cannabis should be defined;
  • San Francisco should establish a cannabis “restaurant/food” license, with guidelines to prevent cross contamination;
  • San Francisco should reduce the distance new cannabis retailers can operate in proximity to sensitive uses to less than the MAUCRSA-required 600 feet; and
  • San Francisco should allow existing permitted medical cannabis businesses and cannabis businesses that have been closed (as long as they closed in good standing with the city) to have priority consideration in the adult use cannabis approval process.

We’ve had a number of medical cannabis manufacturers locate their cannabis businesses in the cities and counties around San Francisco and our California cannabis lawyers (like these cannabis manufacturers) are confident the San Francisco Board of Supervisors will address and formulate a cannabis licensing regime relatively soon. Our San Francisco office is also seeing a large  increase in interest from existing cannabis businesses as well as new entrants into the field in anticipation of San Francisco granting licenses to cannabis business beyond just dispensaries.

Cannabis businesses that have their corporate structure in order will be well positioned to succeed in the lucrative San Francisco market and this is, in most cases, the first thing you should do to get ready. We’re still in a period of massive transition in California with the passage of MAUCRSA, but San Francisco will not be left behind when it comes to comprehensive local regulation, so stay tuned to be sure you’re up-to-date on where the city is headed.

To help you better understand what is going on with cannabis in San Francisco and the rest of California, with a focus on what MAUCRSA means for your cannabis business, three of our California attorneys will be hosting a free webinar on August 8, 2017 from 12 pm to 1 pm PT. Hilary Bricken from our Los Angeles office will moderate two of our San Francisco-based attorneys (Alison Malsbury and me) in a discussion on the major changes between the MCRSA and MAUCRSA, including on vertical integration and ownership of multiple licenses, revised distributorship standards, and what California cannabis license applicants can expect more generally from California’s Bureau of Cannabis Control as rule-making continues through the remainder of the year. We will also address questions from the audience both during and at the end of the webinar.

To register for this free webinar, please click here. We look forward to your joining us!

Sonoma County cannabis lawsCalifornia has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series we’re updating Sonoma County because Sonoma County will begin accepting applications for commercial medical cannabis businesses on July 5th at 8am (enjoy your 4th of July but be ready bright and early to get your application in at the permit center).

Our last California Cannabis Countdown post was on the City of Davis, and before that the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the ,City of Desert Hot Springs, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Welcome to the California Cannabis Countdown.

The 411 on Sonoma County. We should start off by stating that Sonoma County is only accepting applications for medical cannabis businesses — recreational cannabis businesses are still prohibited but may be considered by the Board of Supervisors in the future. But starting on July 5th, Sonoma County will begin accepting applications for medical cannabis cultivators, manufacturers, dispensaries, and distributors. Here’s some important information (not an exhaustive list) for those interested in operating a medical cannabis business in Sonoma County:

  • Permits will not be limited to local cultivators. However, local cultivators operating prior to 2016 with a local hiring plan will receive priority processing.
  • An individual or entity can apply for multiple medical cannabis cultivation permits, so long as their total combined cultivation area does not exceed an acre (nurseries are considered cultivation and will be included in the one acre limit).
  • An individual or entity can hold a medical cannabis cultivation license and apply for a medical cannabis manufacturing permit (non-volatile) or other medical cannabis business.
  • Stand alone delivery services will not be allowed – deliveries will only be allowed as part of a medical cannabis dispensary use permit.
  • Sonoma County will cap the number of medical cannabis dispensaries at nine. There are currently five permitted dispensaries and three applications currently pending.
  • If you granted the Sonoma County Agriculture and Open Space District (“District”) an easement then you can say goodbye to your hopes of operating a medical cannabis cultivation site on your property. The District collaborates with the Federal Government and it will not risk the potential for federal enforcement.
  • Edible cannabis manufacturers and dispensaries will require a health permit with the County Environmental Health and Safety Division on top of a minor and conditional use permit.
  • Edible cannabis products cannot be designed to appeal to children or include other addictive substances (such as tobacco or alcohol), and must list ingredients and allergens. They must also indicate serving size, servings per container, and have a host of warning labels (font size could be an issue when it comes to packaging).
  • Taxes for medical cannabis manufacturers and dispensaries will be based off of gross receipts. Medical cannabis manufacturers will have to pay a 3% tax while medical cannabis dispensaries will be taxed at 2%. Medical cannabis cultivators will be taxed per square foot. Taxes will range anywhere from $1.00 to $11.25 per square foot depending on the cultivation license type.
  • On May 23rd, 2017, the Sonoma County Board of Supervisors passed a Code Enforcement Temporary Penalty Relief Program which allowed certain cannabis businesses to operate without being subject to land use fines while their permit applications are being reviewed.

Sonoma County should be considered a progressive and enlightened jurisdiction for its sensible cannabis regulations and well-informed staff (unlike many other parts of California). With skyrocketing real estate prices in San Francisco and Oakland, our Bay Area attorneys are seeing increasing interest in opening up cannabis businesses in Northern California and Sonoma County.

Well played Sonoma, well played.

Davis California cannabis
Davis California

California has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we plan to cover who is banning, who is waiting, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on the City of Santa Rosa, and before that that County and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Welcome to the California Cannabis Countdown.

LocationDavis is a city in Yolo County (please don’t yell “YOLO”). Within close proximity to California’s capital and home to UC Davis – one of the top 50 universities in the United States – the city of Davis has become an attractive destination for those in Northern California looking for affordable housing and a high quality (pun perhaps intended) of life. Davis also recently got a big shout-out from one of its native sons, Hasan Minhaj.

History with Cannabis and Current Cannabis Laws. Traditionally we focus on bigger localities (which Davis is not) in our Cannabis Countdown series but whenever a new locale enacts a cannabis ordinance we try to highlight them. Historically, Davis took a prohibitionist stance towards cannabis – which was surprising considering UC Davis’ agricultural history (I’m sure living alumni are glad it’s no longer called University Farm). After the California Legislature adopted the Medical Cannabis Regulation and Safety Act (then known as the Medical Marijuana Regulation and Safety Act) the Davis City Council passed Ordinance No. 2467 on January 19, 2016, prohibiting commercial cultivation and personal outdoor cultivation of medical marijuana throughout the city. The Davis City Council then expanded on the prohibition On November 1st, 2016 (7 days prior to passage of the Adult Use of Marijuana Ac) and then expanded on Ordinance 2488 and approved an interim moratorium on the establishment, creation, or expansion of any commercial cannabis uses and outdoor cultivation, with the intent to add commercial recreational cannabis as a prohibited activity. With Sacramento and nearby Sonoma County having favorable and well regulated cannabis ordinances on the books, it wasn’t likely Davis would continue with its ban of commercial cannabis activity, especially medical cannabis.

Proposed Cannabis LawsOn June 6 of this year, the Davis City Council adopted an ordinance permitting commercial cannabis manufacturing research, and distribution in properly zoned districts in Davis. Here are a couple of the ordinance’s highlights:

  • The ordinance allows for manufacturing non-hazardous and hazardous but non-volatile materials. The permitting process for hazardous materials will require additional precautionary measures.
  • The ordinance allows laboratories and research facilities to include limited cultivation on site so long as the cultivation is done strictly for research purposes.
  • A cannabis distribution facility is defined as any facility engaged in the procurement, temporary storage, non-retail sales, and transport of cannabis or cannabis products between State-licensed cannabis businesses, including warehouses and similar structures.

Though Davis’ ordinance isn’t as welcoming to cannabis businesses as those of some of its neighboring jurisdictions it’s better than nothing and history would indicate cities often like to dip their toes in the cannabis pool before diving right in. Just this Tuesday Davis’ City Council asked for feedback and direction for developing an ordinance that would cover dispensaries, delivery services, and commercial cultivators. We’ll be sure to keep you posted as Davis continues on with its road to enlightenment.

California Cannabis Law

California has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we plan to cover who is banning, who is waiting, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on the County and City of San Bernardino, and before that, Marin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Welcome to the California Cannabis Countdown.

Location. Santa Rosa is a city in Sonoma County. With a warmer climate than San Francisco and Oakland to go along with more reasonable home prices there’s no surprise Santa Rosa has seen a steady increase of its population over the last ten years. With its close proximity to the Russian River and all the fine dining and award winning wineries in Sonoma and nearby Napa County, Santa Rosa’s population will likely continue to grow. And who knows what business opportunities will come with the arrival of the SMART train?

History with Cannabis and Current Cannabis Laws. Santa Rosa has been making consistent progress when it comes to cannabis regulations. Perhaps not fast enough for some, but when you see what’s been going on in other parts of California (uh hum, looking straight at you Riverside), Santa Rosa is avant garde. In 2005, Santa Rosa adopted an ordinance allowing medical cannabis dispensaries. In March of 2016, the Santa Rosa City Council adopted an interim ordinance allowing commercial cultivation of medical cannabis. Upon seeing the benefits of properly regulating dispensaries and cultivators, Santa Rosa’s Department of Planning and Economic Development in August of 2016 issued an official zoning code interpretation allowing manufacturing (non-volatile), testing, distributing, and transporting within its boundaries. In order to continue stay on top of the latest developments in the cannabis industry the city of Santa Rosa also created a medical cannabis policy subcommittee that met on the last Thursday of every month. This type of forward thinking will benefit Santa Rosa in the long term (pay attention Riverside).

Proposed Cannabis LawsIn March of this year, the Santa Rosa City Council approved a resolution placing a cannabis business tax measure on the ballot to cover the City’s costs of regulating cannabis – residents will get to vote on June 06, 2017. The tax measure features the following tax structure:

  • For cultivators: for the first two years (if the ballot is approved) 2% of gross receipts or $5.00 per square foot of cannabis cultivation area, at the taxpayer’s election. After two years the tax is scheduled to increase to 8% of gross receipts or $25 per square foot.
  • For manufacturers: the initial two year tax rate will be 1% of gross receipts and will increase to 8% after the two year term.
  • For dispensaries: the initial two year tax rate will be 3% of gross receipts (only applicable to non-medical use) and will increase to 8% after the two year term.
  • For distributors: the initial rate will be 0% but distributors will be subject to the standard city business tax under Santa Rosa City Code Chapter 6-04) – after two years this rate will also be set at 8%.

Santa Rosa believes its tax structure strikes the right balance between encouraging cannabis businesses to enter the regulated market, providing tax certainty to cannabis businesses, and ensuring the city has adequate revenue to regulate its cannabis industry. With nearly 60% of Sonoma residents voting in favor of the Adult Use of Marijuana Act, there’s a strong likelihood Santa Rosa’s tax measure will pass as well. Santa Rosa has the right balance of geography (between the Emerald Triangle and the big cities of San Francisco and Oakland) and forward thinking legislators who understand the benefits of proper regulation and taxation to be an attractive destination for cannabis businesses.

 

 

 

Marin County Cannabis
Marin County Cannabis: fog with a bit of sun

We’ve written recently about Marin County in our Cannabis Countdown series. We started with a history and update of Marin County’s medical cannabis ordinance. We then followed up with an update when the County Administrator rejected all ten applicants for medical cannabis dispensary licenses in Marin County (unincorporated Marin that is). Of the ten applicants that were denied, eight filed appeals to the rejections by the County Administrator and seven presented oral arguments before the Marin County Board of Supervisors and the public on May 23rd (one applicant withdrew its appeal before the hearing).

Before hearing the appeals, the County Administrator and Marin County Board of Supervisors released their reasoning behind their rejection of the applicant’s request for medical cannabis dispensary licenses. Although they varied from applicant to applicant there were a couple of common threads our readers will find useful:

  1. Applicants that did not have prior experience running cannabis dispensaries were facing an uphill battle. Sure, people can learn on the job, but a lack of experience is not going to be viewed favorably. If an applicant did not have a substantial background running cannabis dispensaries it was one of the first things the Board of Supervisors pointed out.
  2. The tiniest details do matter, especially if you’re hoping to open up a cannabis business in a jurisdiction that’s apprehensive about allowing in cannabis businesses. The Marin County ordinance listed 17 criteria for review in determining whether to grant or deny a medical cannabis dispensary license (See Section 6.85.061 of Ordinance 3639). Make sure your application clearly and forcefully addresses every single one of these areas for review because if you don’t, your minor oversight(s) could very well be the cause for denying your application. This is something we know well from the hundreds of cannabis applications we have done in multiple states (mostly California, Washington and Oregon).
  3. Not every locality is ready to open up to for-profit cannabis businesses. Mind you, I’m not talking about recreational cannabis use under the Adult Use of Marijuana Act (AUMA) but for-profit medical cannabis businesses allowed under California’s Medical Cannabis Regulation and Safety Act (MCRSA). The Marin County Board of Supervisors was quick to point out if an applicant was well-positioned to convert from a non-profit entity to a for-profit one. They were concerned that a for-profit entity would be more concerned about sales than the health concerns of their patient members and being a good community partner. Such a concern may have been unfounded but it didn’t diminish the weight the board placed on the distinction between non-profit and for-profit cannabis businesses.
  4. This is California so don’t ever forget about traffic and parking. The Board considered either a likely increase in traffic or insufficient parking spots as an issue with every single applicant. America is a pretty divided country on many issues right now, but I’ve yet to see a pro-traffic party so be prepared to address this issue as everyone is concerned with it.
  5. Public support is important. What was clear from the start was that most of the applicants had learned their lessons from the public hearings previously held during the application process – which were overwhelmingly attended by those against cannabis businesses. There were many people in the audience there to support of the applicants, as demonstrated by stickers favoring certain dispensary applicants and more encouraging comments when the floor was open to the public. Practice, practice, practice. Although not a stated reason for their rejection, it was clear some of the applicants did not spend enough time properly preparing their oral arguments to the Board of Supervisors. Your attorney represents your business so select them wisely. It’s also important to highlight that tone matters. One applicant seemed to treat the Board with outright contempt. You may find yourself before that board again or word of your behavior will travel across the state and imperil your future endeavors; so take a deep breath before you tell a Board of Supervisors at a public hearing how you really feel. Not a good strategy.

Professionalism, tone, and demeanor are especially important because although the Marin County Board of Supervisors dished out heavy doses of stick, they also dangled a carrot at the end of the hearing by requesting the County Administrator’s office and its working group report back to the Board with suggestions for a medical delivery business licensing plan. There’s no denying that these hearings were a momentary setback for the medical cannabis movement in Marin County but there were some positives to take away. First and foremost, the Board of Supervisors reiterated its desire to provide Marin County residents with safe access to medical cannabis and to structure a licensing program to meet that need. Second, Marin County and its municipalities will want to address this issue or they will continue to lose significant tax revenue to neighboring counties. Yesterday was not a good day for cannabis in Marin County, but there are more days ahead.

California cannabis manufacturing lawNow that California’s Department of Public Health (through its Office of Manufactured Cannabis Safety) has released its initial rules for cannabis manufacturing, our California cannabis attorneys are fielding numerous calls from existing cannabis businesses (along with new entrants into the field) with a simple question: How do these rules affect me? Last week we covered some of the technical provisions of the rules. Since the regulations for manufacturing come in at a hefty 95 pages, I thought it would be helpful to go over some more rules and how they can affect your cannabis manufacturing business in California. First, it’s important to note that these regulations may change after the public and interested stakeholders have a chance to comment on them, but this is still a significant first step in clarifying what was previously a confusing landscape. The regulations for manufacturing are a clear and effective attempt by California to enact robust regulation to comply with the Cole Memo issued by the U.S. Department of Justice. Here are some areas of importance for anyone looking to engage in cannabis manufacturing in the Golden State:

Types of Licenses. The regulations state that California’s Department of Public Health will issue four types of licenses: Type P, Type N, Type 6, and Type 7. Type N licensees can conduct infusions and can package and label their own products while Type P licensees can do only packaging and labeling for other licensed cannabis manufacturers. Type 6 (non-volatile) and Type 7 (volatile and non-volatile) licensees can conduct extractions and infusions, and can package and label their own products. If you obtain a license there are two important things you need to consider: 1) Unless you obtain a type 7 license you will need to submit a new application if you want to change the type of manufacturing you are conducting; and 2) You need to be sure your cannabis manufacturing operations are in a location that can be sustained because relocating any portion of your manufacturing operation to new premises will require you submit a new license application.

DON’T PROCRASTINATE! If you have a cannabis manufacturing business that is legally operating in California before January 1, 2018, you will be able to continue operating it until the Department of Public Health approves or denies your application. This is extremely important considering it’s the next best thing to getting priority of review – which only applies to cannabis manufacturers that were operating and in good standing with their local jurisdiction as of January 01, 2016.

DO YOU REALLY KNOW YOUR BUSINESS PARTNER?! We’ve already covered who is considered an owner under California’s new cannabis regulations and it’s important you go over the ownership classifications because it can have profound implications on your business. Your application can be denied for a number of acts that your business partner may have committed. Strict attention must be paid to past acts because these prior offenses can torpedo your application and they’re not all obvious. Ever heard of the California Food Sanitation Act? How about the Sherman Food, Drug, and Cosmetic Law? You don’t need to know them inside and out but you do need to make sure your business partner never violated either of those acts because they can be grounds for denying your application.

DON’T EVEN THINK ABOUT IT. The rules state that no applicant or associated applicant shall hold a Type 8 (testing) or Type 11 (distribution) license. The rules also state “a manufacturer licensee shall not manufacture, prepare, package or label any products other than cannabis products at the licensed premises.” If you hoped to merge your cannabis manufacturing operation with a non-cannabis business for increased efficiency, sorry but NO SOUP FOR YOU. Lastly, the rules prohibit a manufacturer licensee from subletting any portion of the licensed premises.

These proposed regulations for cannabis manufacturers could not have come out at a better time, as the lack of legal specificity for cannabis manufacturing had been dampening the enthusiasm and desire of those looking to operate a marijuana manufacturing business in California. Before these new rules issued, our California cannabis attorneys were starting to see a slow but steady increase in sophisticated clients looking to start a California cannabis manufacturing business, but even just since they have come out the number has soared.