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As our leading practitioner for cannabis business in California, Tiffany advises clients on California’s existing and proposed state and local marijuana regulations, including preparing them for licensing under the Medical Cannabis Regulation and Safety Act (MCRSA) and the Adult Use of Marijuana Act (AUMA).

California cannabis lawyerLast week, California lawmakers introduced a new bill to increase protections for California cannabis businesses from federal persecution. The timing couldn’t be better as a new president and incoming federal administration have many in the cannabis industry concerned about the future of legal marijuana in the United States.

California Assembly Bill 1578 would prohibit California state and local agencies from taking certain actions and assisting federal agencies in enforcing federal law against marijuana businesses for medical or recreational cannabis activities authorized under California law.

The prohibited activities would include:

  1. Using agency money, facilities, property, equipment, or personnel to assist a federal agency to investigate, detain, detect, report, or arrest a person for commercial or noncommercial marijuana or medical cannabis activity authorized by law in the State of California.
  2. Responding to a request made by a federal agency for personal information about an individual who is authorized to possess, cultivate, transport, manufacture, sell, or possess for sale marijuana or marijuana products or medical cannabis or medical cannabis products, if that request is made for the purpose of investigating or enforcing federal marijuana law.
  3. Providing information about a person who has applied for or received a license to engage in commercial marijuana or commercial medical cannabis activity pursuant to MCRSA or AUMA.
  4. Transferring an individual to federal law enforcement authorities for purposes of marijuana enforcement or detain an individual at the request of federal law enforcement for conduct legal under state law.

State and local agencies would only be allowed to take these actions if they receive a court order signed by a judge. Thus, AB 1578 would protect California cannabis businesses that are operating legally in the state from being handed over to federal law enforcement unless a judicial exception is made.

The bill is similar to other legislation proposed by California lawmakers and signed into law by California Governor Jerry Brown in September of last year. In Assembly Bill 2679, California lawmakers provided guidance for cannabis manufacturers currently operating in the state to increase their protection against misguided raids by local law enforcement. Then, under Senate Bill 443, California lawmakers revised the state’s asset forfeiture laws to reduce the risk of unfair property seizure by state and local law enforcement. SB 443 prohibits state and local law enforcement from transferring property seized under state law to a federal agency and also requires state agencies obtain a criminal conviction to receive a share of federally seized property or to recover their expenses.

If approved and signed into law, AB 1578 would be a good step to ensuring California cannabis businesses and consumers that the state of California is behind them and that it will not allow the federal government to interfere with their licensed and compliant cannabis businesses, at least not by providing the help of any state or local agencies.

California cannabis marijuanaLast Friday, the California Bureau of Medical Cannabis Regulation (BMCR) announced in a press release that it has begun seeking applicants to participate in a Cannabis Advisory Committee. The role of the Committee will be to help the Bureau and other state agencies – the Department of Food and Agriculture (DFA) and the Department of Public Health (DPH) – develop cannabis “regulations that protect public health and safety while ensuring a regulated market that helps reduce the illicit market for cannabis.”

The Committee is required under Proposition 64 and is one of several steps needed if California is to keep its promise to begin issuing cannabis business licenses by Prop 64’s January 1, 2018 deadline. The agencies still have their work cut out for them, including the challenge of reconciling the conflicting provisions under the Medical Cannabis Regulation and Safety Act (MCRSA) and Proposition 64.

The Bureau and other state agencies have been holding pre-regulatory meetings throughout California over the past year to gather information from cannabis stakeholders, which it is now using to draft initial state regulations for the various cannabis license types. According to the Bureau’s communications director, Alex Traverso, the Cannabis Advisory Committee will meet several times during the next year to review drafts of regulations and share their opinions to ensure that California rule makers are on the “right path.”

They are specifically seeking input from representatives of the cannabis industry, labor organizations, local or state law enforcement, state or local agencies, and from communities disproportionately affected by past federal and state drug policy, as well as cannabis cultivators, environmental experts, patient advocates, physicians, public health experts, social justice advocates, individuals with expertise in regulating intoxicating substances for adult use, and individuals with expertise in the medicinal properties of marijuana.

The application to join the Cannabis Advisory Committee includes requests for any relevant work history in the cannabis industry, and past or present affiliation with a cannabis company, relevant qualifications to serve on the Committee, an explanation of why you wish to serve on the committee, and any potential conflicts of interests. Applicants will also need to provide four references and submit a resume and letters of recommendation. In addition, selected committee members may be required to complete a Fair Political Practices Commission (FPPC) Form 700, Statement of Economic Interest disclosing their personal assets and income.

Committee members will be appointed by the Director of the Department of Consumer Affairs (DCA), Awet Kidane. The DCA is not looking to fill a specific amount of committee seats, but instead the committee’s size will be determined by the number of qualified applicants. Also, the positions on the Cannabis Advisory Committee are voluntary, which means you will not be paid for serving on the Committee, but members are entitled to receive reimbursement of their travel expenses to approved meetings, which will be held in the state’s capitol in Sacramento.

If you’re interested in applying, the bureau says it will keep the application process open for at least a month. For those currently involved in or hoping to join the California cannabis industry, this is an important opportunity to help shape the laws that will impact your/our future. The best way to affect marijuana law and policy is to get involved, whether it’s at the local, state, or federal level.

California marijuana license
California marijuana licenses: start now, but stay flexible

California lawmakers have been tasked with the difficult challenge of reconciling the Medical Cannabis Regulation and Safety Act (MCRSA), which legalized commercial medical marijuana activities, with Proposition 64, which legalized recreational marijuana use for all adults and is set to begin licensing commercial recreational businesses by January 1, 2018. We’ve previously blogged about this challenge and the state’s efforts to meet the 2018 deadline here, here and here.

The many conflicts between the MCRSA and Prop 64 include different timelines, license categories, rules on ownership, residency requirements, and tracking systems. Another key difference is that the MCRSA places limits on vertical integration, generally allowing cannabis licensees to hold state licenses in up to two separate categories and only in certain combinations. The MCRSA also does not allow licensed cannabis cultivators and manufacturers to hold a marijuana distribution license. Licensed cannabis cultivators and manufacturers in the State of California instead must work with an independent distributor to transport cannabis products to labs for testing and quality assurance before they enter the consumer market.

The California cannabis industry is divided on both vertical integration and distribution issues, and the side you take most likely depends on your views on allowing big business to operate under the new regulated cannabis regime. Growers and dispensaries in California are also divided on the issues. California dispensaries generally believe that the use of independent distributors is unnecessary and will ultimately increase costs for the consumers, small mom-and-pop operations worry that without limits on vertical integration they will be squeezed out by bigger, well-funded investments groups.

In contrast, Prop 64 places no limits on vertical integration, except that all testing labs must be independent and large Type 5 grows will not be able act as their own distributors (but these licenses won’t even kick in until 2023). For those hoping to create a vertically integrated cannabis business in California in 2018, Prop 64 offers a nice alternative to avoid the MCRSA’s limits and independent distribution requirements altogether.

However, this option could be gone by the time state licenses are issued. As California legislators work to develop regulations for both the MCRSA and Prop 64 that can operate simultaneously and in congruence, special interests are sending their lobbyists to the Capitol to try and influence the upcoming laws. Labor unions, investors, and entrepreneurs are all seeking to shape the laws that will most favor their members and bottom lines for when the California cannabis gold rush starts in earnest.

The coalition of Teamsters, local government, police chiefs, a Sacramento distribution company called RVR, and the California Growers Association (CGA) that helped draft the MCRSA bills wants to see the same limits on vertical integration and independent distribution requirements extended to recreational businesses under Prop 64. On the other side, cannabis manufacturers, the United Food and Commercial Workers (UFCW), and the California Cannabis Industry Association (CCIA) want to see a more free-market approach under the current Prop 64 model. They argue this is the model California voters supported when they passed Prop 64 last November.

To make changes to Prop 64, California legislators will need to pass any amendments by a two thirds vote. We advise cannabis license hopefuls to start NOW to prepare for California cannabis licensing, but remain ever mindful that much can change between now and January 1.

California marijuanaWe previously wrote about possible delays to California’s cannabis state licensing program due to conflicts between the state’s new medical and recreational laws under the Medical Cannabis Regulation and Safety Act (MCRSA) and the Adult Use of Marijuana Act (AUMA), respectively. The AUMA, aka Proposition 64, was passed by California voters last November and required state agencies begin issuing licenses by January 1, 2018 (hereinafter “the 2018 deadline”).

Last week, we provided an update on the work California legislators have been doing to get the state ready to issue licenses. Lori Ajax, the Chief of the Bureau of Medical Cannabis Regulation (soon to be the Bureau of Marijuana Control), promised audiences at a recent cannabis event that licenses would be issued by the 2018 deadline set under Prop 64.

However, California lawmakers are not so sure. On Monday, January 30, 2017, state Senate committees held an oversight hearing to discuss whether California agencies are on track to meet the 2018 deadline. During the hearing, Sen. Jerry Hill voiced “a considerable amount of skepticism” that the state would meet the deadline. Though lawmakers believe some agencies will be able to start processing applications by 2018, they doubt they will be able to issue all of the “tens of thousands” of licenses applied for by that time. Once the cannabis license applications are received, they could take months to process and complete the necessary background checks.

As Sen. Mike McGuire so aptly put it, the state is “building the airplane while it’s being flown,” and thus “it’s not realistic that all of the Proposition 64 rules and regulations will be in place by the new year.” The state’s process for rule-making includes the potential for further delays as public feedback could require a major reworking of regulations (followed by further feedback and more reworking) while new legislation could rewrite rules or change the process entirely (we covered proposed pot legislation here, here, and here).

Ajax admitted not everyone will receive their California cannabis license on January 1, 2018, but instead some could receive temporary licenses while the rest of the applications are being processed. She also stated that California’s state marijuana regulations will be in place by the 2018 deadline through a streamlined, “emergency regulation” process.

Ajax and her 11-person staff (six positions remain unfilled) are working hard to meet the deadline, but there is still a lot left to do. They have yet to convene the advisory committee required under Prop 64 to advise the Bureau and state agencies on drafting standards and regulations for marijuana businesses. Prop 64 also requires implementing a marijuana track and trace system the state has yet to develop. Besides creating the computer program behind the system, the government process will also involve long timelines for drafting proposals, selecting vendors, and completing a statewide rollout. Ajax has stated that applicants may not be included in the track and trace system by the 2018 deadline.

It’s currently unclear what would happen if California is unable to meet the January 1, 2018 deadline. Some argue it is better to have a well-crafted system later, than risk an ineffective system and a thriving illegal market. Since medical cannabis businesses can continue operating until state licenses are issued, the effect of any delay will fall mostly on prospective recreational cannabis businesses.

California CannabisOn January 18, 2017, California state regulators attended a cannabis event in Sacramento to discuss cannabis policy and what lies ahead for California. Though previous reports indicated that California cannabis licensing could be delayed for an additional year, state regulators at the event promised a licensing program would be operational by January 1, 2018.

Lori Ajax, the Chief of the California Bureau of Medical Cannabis Regulation (soon to be renamed again to the Bureau of Marijuana Control under Proposition 64), told the audience:

We will not fail. We will make this happen by Jan. 1, 2018, because we have to […] It may not be pretty. But we will get there.”

Since Prop 64 passed last November, California regulators are now in charge of crafting comprehensive regulations and issuing state licenses to not only medical marijuana businesses but to recreational cannabis businesses as well. This includes 17 license types for medical businesses and 19 licenses types for recreational businesses, covering cultivation, manufacturing, retail dispensaries, distribution, testing, and transportation. The authority to regulate and license these cannabis businesses is divided among ten California state agencies.

The California Department of Food and Agricultural will oversee cannabis cultivation activities, and it created a new division, the CalCannabis Cultivation Licensing program, to issue permits and develop regulations for cultivators, including setting up a track and trace system for all cannabis plants that enter the California market. Amber Morris, a branch chief for CalCannabis Cultivation Licensing, was also in attendance at the event in Sacramento and she said that California state departments are working with economists to create a tiered permit fee program that will assign fees to cannabis cultivators based on the size and scale of their businesses.

A big challenge faced by state regulators is the lack of banking available to cannabis businesses and affiliated companies. Ajax expressed her hope that there would be some clarity on the matter by the time state licenses are issued, stating that banking is “a challenge for us, too. As we set up our online permitting system, we would like to accept credit cards. We don’t want to have to accept wads of cash.”

The banking issue has been high on the mind of California lawmakers, as we get closer to statewide regulation. In December, California Treasurer John Chiang wrote a letter to President Donald Trump seeking guidance ahead of California’s licensing program. In his letter, Chiang wrote that the new program could “exacerbate” the banking problem because California’s cannabis economy will be so large.

Due to federal prohibition on marijuana and anti-money laundering regulations issued by the Financial Crimes Enforcement Network (FinCEN), banks are reluctant to work with cannabis businesses. The banking challenge is not unique to California and it affects businesses in legal marijuana states across the United States. Several U.S. senators sent a letter to FinCEN in December asking for more guidance and explaining how the dearth of cannabis banking promotes tax fraud and creates a public safety issue because cannabis businesses are forced to deal in large amounts of cash.

Under the new California cannabis licensing program, state agencies will need to collect fees from licensed cannabis businesses. Yet most of these agencies have only one office — in Sacramento — which means anyone paying their fees in cash will need to carry that cash with them all the way to the capitol. To address this issue, California legislators recently introduced new legislation to increase the number of government offices that can accept payments from cannabis businesses for state fees and taxes. The legislation, known as the Cannabis Safe Payment Act, is sponsored by the Board of Equalization (BOE), which has been collecting sales tax from California medical marijuana businesses since 1996.

The BOE currently accepts payments in cash from cannabis businesses at its 22 offices across the state. However, to reach these offices, many California cannabis cultivators have to travel great distances with “bags of cash” in their cars, which BOE Chairwoman Fiona Ma agrees “is not the safest method of paying your taxes.” Thus, Ma states that the BOE’s “priority has to be increasing safety—for the business owner, the public, law enforcement, and state employees by enabling cannabis businesses to pay their taxes and fees in as many a safe and secure locations as possible.” Under the Cannabis Safe Payment Act, California counties that receive approval by board of supervisors and tax collectors will be able to accept cash payments from local cannabis businesses on behalf of the BOE and other state agencies.

With promises from the Marijuana Bureau to begin issuing state licenses by January 1, 2018, collaboration from state agencies to develop regulations and set permit fees, and efforts from state lawmakers to alleviate banking challenge, California legislators are showing they are hard at work creating a viable state licensing program for cannabis businesses. For cannabis businesses planning to take advantage of California’s new cannabis program, a lot of work lies ahead and you should start preparing now.

California Cannabis lawsSince Proposition 64 passed last November, there has been a spike in reports of California dispensaries advertising their willingness to sell recreational cannabis to anyone 21 years and older “with only a valid ID” (i.e. physician’s recommendation not required). However, Prop 64 requires dispensaries apply for and obtain a state retailer license to sell recreational cannabis or face criminal and civil penalties for each day of illegal operations. Since the State of California has yet to issue such a license, any dispensary currently selling recreational cannabis in California is doing so illegally.

For marijuana consumers, your options are simple: (1) obtain a valid physician’s recommendation and purchase medical marijuana from a dispensary; (2) grow your own recreational marijuana at home by following local regulations; or (3) get home grown marijuana from other adults in California through a free, sharing economy.

For dispensaries, your options are even simpler: (1) sell medical marijuana legally by following local laws and securing any necessary permits or licenses; or (2) operate illegally and face severe penalties, raids, and criminal prosecution.

Dispensaries in California have been making illegal sales long before Prop 64 passed. But local law enforcement believe dispensaries have become “more emboldened” now that recreational cannabis is legal in the state. Some dispensaries might wrongly believe that any and all sales are allowed under a Prop 64 regime, but others clearly choose to operate outside of the law. This angers legal dispensary owners who pay the high costs of operating a legal business (including taxes, licensing fees, and security costs) while also waiting to profit on recreational sales after state licenses are issued.

Though Prop 64 makes clear that anyone making retail sales or deliveries of recreational cannabis must have a California state license, the challenge faced by local (and soon state) prosecutors is how to go about shutting down illegal businesses. Often when a city or county attempts to shut down an illegal dispensary, the dispensary owner just relocates the business and changes the name, resulting in an endless game of “whack-a-mole” for local authorities. But now that cannabis businesses are beginning to set their sights on state licenses, is it more important than ever to play nice with your local city and county officials as local authorization is a requirement for state licensing. Businesses caught operating illegally can be disqualified from receiving a local permit, and even if state and local authorities cannot prohibit these business from applying for a California cannabis license, past troubles with following the law will likely be a negative mark on your cannabis license application.

We also expect state and federal enforcement to pick up over the next few years. California state agencies do not currently have jurisdiction over illegal cannabis businesses, but once state licenses are issued they plan to work with local authorities to enforce the cannabis laws. Even worse, If illegal businesses continue to thrive in California, the federal government could challenge California’s entire regulatory system under the guidance of the Cole Memo. With a new federal administration coming in, and the possibility of an anti-marijuana Jeff Sessions as Attorney General, California could face even greater scrutiny. So by operating an illegal business not only do you risk your own chances at the legal market, you also risk undermining the legalization effort California strived so long to achieve.

As California transitions into a regulated legal market, the grey areas we have long been dealing with will soon shrink. In a post-Prop 64 world you can either follow the laws and obtain a license to make legal recreational sales or you can risk fines, jail time, and the loss of the chance to ever operate again.

Proposition 64California cannabis laws states that adults in California age 21 and older may legally possess, plant, cultivate, harvest, dry, or process up to six marijuana plants as well as possess the marijuana produced from those plants. Though cities and counties can completely prohibit personal outdoor cultivation (and some already do), Prop 64 does not allow them to prohibit personal cultivation indoors or in an outside structure that is fully enclosed and secure.

However, Prop 64 does grant California cities and counties the authority to reasonably regulate these activities and requires that all persons cultivating cannabis for personal use comply with any local ordinances. In addition, Prop 64 limits personal cultivation to six marijuana plants per private residence (regardless of the number of adults living in the residence) and requires any marijuana produced from the plants that is over the legal possession limit of 28.5 grams be kept within the residence or in a locked, outdoor space not visible to the public.

Some California municipalities have already started passing local ordinances to regulate personal cultivation. Prop 64 allows cities and counties to “enact and enforce reasonable regulations to reasonably regulate” personal cannabis cultivation activities. So now the question is just how reasonable are these new regulations?

In December, the City of Indian Wells passed an ordinance that requires residents to register for a permit from City Hall to cultivate marijuana at home. To receive the permit, residents must allow home inspections by city employees and pay an annual fee of $141. According to Erwin Chemerinsky, Dean of University of California, Irvine Law School and prominent constitutional law scholar, Indian Wells’ regulation “goes significantly beyond what state law allows local governments to do.” There is also concern that by requiring individuals to register to grow, the City’s regulation forces them to self-incriminate themselves under federal law and is therefore unconstitutional.

Last week, the City of Los Banos also considered an ordinance requiring its residents to first register with the City to cultivate marijuana indoors for personal use. The stated reason for requiring residents to register was so authorities could educate them on how to safely grow marijuana and avoid fire hazards. However, one City Council member did not support the ordinance because he was concerned about creating a public registry that could potentially expose home growers to “shaming, harassment or violence.” The Los Banos City Council later amended the proposed ordinance to provide greater privacy for registrants by avoiding collection of personal data. The modified ordinance was approved unanimously on January 4th.

We’ve been working with plenty of cannabis companies in California on the local permitting and future state licensing processes, but this is the first time individuals are being asked to register to cultivate marijuana in their own homes for their own personal use. Ultimately, it may be up to a court to decide whether these new local regulations are indeed “reasonable,” as required under Prop 64. In the meantime, California residents should be aware that they cannot legally purchase recreational cannabis from any dispensaries and, if they happen to live in a city or county that has passed regulations on personal cultivation, they also may not be able to legally grow marijuana in their residences without first registering and complying with any new rules.

Yes, California has legalized recreational cannabis, but we still have a long way to go until it becomes widely available for all adults living in our state.

California cannabis

Proposition 64 (Prop 64 or the Adult Use of Marijuana Act), which passed last November and legalized recreational cannabis use throughout California, included stricter laws regarding driving while “high.” But California senators have proposed a new bill, Senate Bill 65 (SB 65), to close what they say is a loophole in the law that does not explicitly make it illegal to drive while consuming marijuana as long as you aren’t impaired.

One of the stated intents of Prop 64 was to maintain existing laws that make it illegal to operate a car (or other vehicle) while impaired by marijuana. Like driving under the influence of alcohol, it is illegal in California to drive or operate a vehicle under the influence of any drug. You are under the influence of a drug when your physical or mental abilities are impaired to the point where you can no longer drive with the caution of an ordinary, sober person under similar circumstances. However, there are no current state laws that address the legality of driving when not impaired but while still consuming marijuana or marijuana products.

Prop 64 provides that it does not permit any person to, among other things:

  • possess an open container or package of marijuana while driving, operating, or riding in the passenger seat of a vehicle
  • smoke or ingest marijuana or marijuana products while driving or operating a vehicle
  • smoke or ingest marijuana or marijuana products while riding in the passenger seat or compartment of a vehicle, except as permitted by a local jurisdiction

Note that even though Prop 64 does not permit these activities, it also does not prohibit them. However, it provides that any person with an open container of marijuana in a vehicle may be cited for an infraction and have to pay a fine of up to $250. For persons under the age of 18, drug education and community services will instead by required. In contrast, no penalties are included for smoking or ingesting marijuana while driving or riding in a vehicle, an oversight that the authors of Prop 64 simply forgot to include.

SB 65 would “remedy” this by making it illegal for a person to smoke or consume marijuana in any form while operating a vehicle, vessel, or an aircraft; and any violations could result in either an infraction or a misdemeanor. However, SB 65 would also prohibit consumption of CBD-only marijuana products while driving a vehicle, which could be a problem for many medical marijuana patients.

Though SB 65 would clearly allow police to ticket anyone caught smoking or ingesting marijuana red-handed, a challenge for the bill is how to test whether a driver who is pulled over for driving erratically recently consumed marijuana. There is currently no THC threshold for impairment established in California as well as no standard test for impairment (e.g. blood, saliva, breath). A separate bill, Assembly Bill 6, was recently proposed to allow law enforcement to perform saliva tests on drivers they suspect are impaired by marijuana use. But a similar proposal was rejected in 2016 because legislators were concerned about the dependability of field testing marijuana-induced drivers.

To address this problem, Prop 64 allocates some of the tax revenues that will be raised from recreational marijuana sales to the Department of California Highway Patrol to create protocols for determining whether a driver is impaired by use of marijuana. The state is currently exploring ways to test driver impairment, including the use of marijuana breathalyzers that have already been road-tested on California highways.

Finally, for those that are still unclear on California’s stance on using cannabis while driving, the state recently launched a $1 million anti-drugged driving campaign that uses television and digital ads to show the dangers of driving under the influence of marijuana. For California cannabis consumers, the state wants you to know “DUI doesn’t just mean booze” anymore. (You can watch the video here.)

California cannabis lawsA new California bill, Assembly Bill 64, is currently being considered by California legislators. AB 64 would amend the marijuana advertising rules under Proposition 64 (aka the Adult Use of Marijuana Act, or AUMA) to create stricter regulations for advertising on highway billboards. Though Prop 64 already bans marijuana ads on any billboards on California interstate highways or state highways that cross the border of any other state, AB 64 would extend that prohibition to exclude advertising on billboards on any highways within the state.

The sponsors of AB 64 state that the stricter regulations are meant to further enforce prohibitions against advertising cannabis to minors under the age of 21, who would be able to see ads on highway billboards even if the ads are targeted specifically at legal adult consumers and medical marijuana patients. In addition, the bill’s sponsors are concerned that cannabis businesses that have not yet received a state license to sell medical or recreational cannabis are already advertising on highway billboards across California.

AB 64 would prohibit not only licensed businesses, but any entities operating in California from placing marijuana ads on interstate and state highways. The bill would also extend all other restrictions under Prop 64 on marijuana advertising and marketing from licensees to all entities operating within the state; thus closing a loophole that currently exempts unlicensed cannabis businesses from new state advertising laws. What’s more, the bill would extend the prohibition on billboard ads to the marketing of medical cannabis and medical cannabis products.

Though the new advertising restrictions are already receiving pushback from the cannabis community, AB 64 is not all bad news for California cannabis businesses and license hopefuls. If passed, the bill will also provide clarification on major issues concerning many California cannabis businesses, specifically whether for profit businesses and delivery-only businesses will be allowed under new statewide regulation.

Under AB 64, the Medical Cannabis Regulation and Safety Act (MCRSA) would be amended to explicitly allow medical cannabis collectives and cooperatives to operate for profit. In order to operate for profit, these businesses will be required to obtain a valid California seller’s permit from the State Board of Equalization and a valid local license, permit, or other authorization from the city or county where the business operates.

AB 64 would also amend California law to specify that Type 10 dispensaries and Type 10A producing dispensaries under the MCRSA, as well as retailers (and by association microbusinesses) under the AUMA, may be either:

  1. a “storefront dispensary” for locations that have direct physical access for the public, or
  2. a “nonstorefront dispensary” for locations that do not have direct physical access for the pubic.

For the amendments under AB 64 to pass, two thirds of California legislators will need to vote in favor of the bill. This is California’s first attempt to consolidate the provisions of the MCRSA and the AUMA, which contain several conflicting provisions due to differing approaches on key issues under the two state initiatives. However, this will most likely not be the last attempt as the state prepares to license both medical and recreational cannabis businesses beginning as early as January 1, 2018. We will be closely following any changes to California cannabis laws throughout 2017 and those interested in securing a state license should be following along.

Nevada County CannabisCalifornia 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 Lynwood, and before that, the City of Coachella, Los 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.

Nevada County has long been a popular spot for cannabis cultivation due to its location and climate, but many longtime growers in the area were displaced in 2012 when the County passed restrictive cannabis regulations. In early 2016, the County banned all outdoor cannabis cultivation but it has since repealed the ban and adopted less restrictive, though still very limited regulations for indoor and outdoor cultivation that have not been well-received by local growers.

Location. Nevada County is located in the Sierra Nevada region of Northern California, bordering the state of Nevada. It was once home to the California Gold Rush of 1849 and it lays claim to many firsts and historic moments, including the first long-distance telephone, the only railroad in the West that was never robbed, and the historic Holbrooke Hotel. The County itself has stated that its “unique geographic and climatic conditions, which include dense forested areas receiving substantial precipitation, along with the sparse population in many areas of the County, provide conditions that are favorable to marijuana cultivation. Marijuana growers can achieve a high per-plant yield because of the County’s favorable growing conditions.”

History with Cannabis. On May 8, 2012, the Nevada County Board of Supervisors passed Ordinance No. 2349, which created regulations for medical cannabis cultivation.

On November 4, 2014, voters in Nevada County rejected Measure S, an initiative from the Nevada County branch of Americans for Safe Access designed to overturn the County’s ordinance and replace it with less restrictive provisions.

On January 12, 2016, the Board adopted emergency Ordinance No. 2405, banning all outdoor cultivation and limiting indoor cultivation to 12 plants per property. At the same time, the Board passed Resolution No. 16-038 to submit Measure W to the voters of the County.

On February 9, 2016, the Board passed Resolution No. 16-082, which clarified that if Measure W was not approved by a majority of Nevada County voters, the Board intended to repeal the ban on outdoor cultivation and adopt other regulations at the next available meeting after the election.

On June 7, 2016, voters in Nevada County rejected Measure W, an initiative proposed by the Board of Supervisors to ban all outdoor cultivation, commercial cultivation, and all other commercial cannabis activities. As a result, the emergency ordinance from January 12th remained in place.

On July 26, 2016, to follow through on the Board’s intention to repeal the ban on outdoor cultivation, the Board approved urgency Ordinance No. 2416 to allow limited outdoor cultivation in the County.

Current Cannabis Laws. Under Ordinance No. 2416, cultivation is permitted in residential and agricultural zones in Nevada County in very limited amounts.

In residential zones:

  • Indoor and outdoor cultivation is prohibited in all R-1, R-2, and R-3 zones
  • In areas designated as residential and estate and zoned R-A:
    • On parcels of 5 acres or less, indoor and outdoor cultivation is prohibited
    • On parcels greater than 5 acres and up to 10 acres, a maximum of 12 plants may be cultivated indoors only; outdoor cultivation is prohibited
    • On parcels greater than 10 acres and up to 20 acres, a maximum of 16 plants may be cultivated indoors, outdoors, or a combination of both; a maximum of 12 plants may be cultivated indoors; outdoor cultivation must be on one contiguous staked grow area not exceeding 800 square feet
    • On parcels greater than 20 acres, a maximum of 25 plants may be cultivated indoors, outdoors, or a combination of both; a maximum of 12 plants may be cultivated indoors; outdoor cultivation must be on one contiguous staked grow area not exceeding 1,000 square feet

In agricultural zones (e.g., AG, AE, FR, TPZ, and areas designated as rural and zoned R-A):

  • On parcels 2 acres or less, indoor and outdoor cultivation is prohibited
  • On parcels greater than 2 acres and up to 5 acres, a maximum of 6 plants may be cultivated outdoors only; cultivation must be on one contiguous staked grow area not exceeding 300 square feet
  • On parcels greater than 5 acres and up to 10 acres, a maximum of 12 plants may be cultivated indoors, outdoors, or a combination of both; outdoor cannabis cultivation must be on one contiguous staked grow area not exceeding 600 square feet
  • On parcels greater than 10 acres and up to 20 acres, a maximum of 16 plants may be cultivated indoors, outdoors, or a combination of both; a maximum of 12 cannabis plants may be cultivated indoors; outdoor cultivation must be on one contiguous staked grow area not exceeding 800 square feet
  • On parcels greater than 20 acres, a maximum of 25 marijuana plants may be cultivated indoors, outdoors, or a combination of both; a maximum of 12 plants may be cultivated indoors; outdoor cultivation must be on one contiguous staked grow area not exceeding 1,000 square feet

In addition, all indoor and outdoor marijuana cultivation must comply with the following setbacks, as measured in a straight line from the nearest border of the grow area to the property line of any adjacent, separately owned parcel:

  • On parcels greater than 2 acres and up to 5 acres: 100 feet
  • On parcels greater than 5 acres and up to 10 acres: 150 feet
  • On parcels greater than 10 acres and up to 20 acres: 200 feet
  • On parcels greater than 20 acres: 300 feet

Proposed Cannabis Laws.

The regulations under Ordinance No. 2416 were passed amidst criticisms and protests from Nevada County residents, but the Board has said the ordinance is meant to be temporary in order to buy time to draft permanent regulations.

On November 8, 2016, the same day as the passage of Proposition 64 in California, the Nevada County Board of Supervisors formed a subcommittee to develop a permanent cultivation ordinance. The County is currently seeking stakeholder and community input on the ordinance and is also seeking proposals for consulting and facilitation services for their Marijuana Regulation Community Advisory Group.

Prop. 64 permits adults in California over age 21 to cultivate up to six plants for personal recreational use. While cities and counties can still ban outdoor cultivation, Prop. 64 does not allow cities and counties to ban indoor personal cultivation though they are allowed to regulate it. In response, the Nevada County Board of Supervisors introduced an amendment to Ordinance No. 2416 on December 13, 2016, to allow indoor personal cultivation of up to six plants per private residence. The Board will consider adopting the amendment at its meeting on January 10, 2017.