Washington State New Cannabis lawsIn 2015, Washington passed Senate Bill 5052, which allowed medical marijuana patients and their designated providers to grow cannabis plants for personal medical use and band together to form medical marijuana cooperatives. That bill did not provide a legal pathway for cooperatives, medical marijuana patients, or designated providers to acquire plants. It also did not allow retail sales of plants directly to consumers. In 2016, the Washington Legislature passed legislation allowing cooperatives to purchase plants from licensed marijuana producers, but failed to address the ability of other patients to acquire plants.

Washington lawmakers recently addressed this issue with Senate Bill 5131, which allows qualifying patients and designated caregivers to purchase cannabis plants directly from licensed marijuana producers. A “qualifying patient” is a person who has been recommended medical marijuana by a healthcare professional and a “designated caregiver” is a person the qualifying patient designates in writing as authorized to procure medical cannabis. Qualifying patients can enter into a medical marijuana authorization database and receive a recognition card from the state. Not all qualifying patients enter the database and so some qualifying patients do not hold recognition cards. Carrying a recognition card brings advantages, such as tax discounts and the right to purchase larger quantities of marijuana in a single transaction.

All Washington marijuana patients can grow marijuana for their personal use, unlike recreational users, but qualifying patient cardholders can grow more. Cardholders may cultivate six cannabis plants at home (up to fifteen plants if their physician recommends it) which can yield a maximum of eight ounces of useable marijuana. Cardholders can also join state-registered medical marijuana cooperatives to cultivate marijuana with four other patients. Patients who are not cardholders may grow up to four cannabis plants and possess up to six ounces of useable marijuana produced from those plants, but cannot join a cooperative.

SB 5131 also allows qualifying patient cardholders to purchase immature plants and clones:

Qualifying patients and designated providers, who hold a recognition card and have been entered into the medical marijuana authorization database, may purchase immature plants or clones from a licensed marijuana producer as defined in RCW 69.50.101.

The Washington State Liquor and Cannabis Board (LCB) recently issued an interim policy statement that describes how members of cooperatives, cardholder, and cardholder’s designated providers can purchase cannabis plants and seeds but makes no mention of how patients without qualifying patient cards can purchase seeds. The LCB is mandating that Washington State cannabis producers receive documentation before selling plants or seeds. Members of a cooperative must show a valid recognition card and a copy of the letter from the LCB confirming the person is part of a registered cooperative. Qualifying patients must show a valid recognition card. It appears that there still is no means for patients who do not enter the database and receive a recognition card to legally obtain seeds to grow their own medical cannabis.

The LCB’s policy statement provides additional guidance on the sale of plants and seeds. Immature plants or clones are defined as plants that have no flower, are less than 12 inches in height and less than 12 inches in diameter. Producers must abide by security and traceability requirements including a 24-hour waiting period imposed on all cannabis transfers. Patients and providers must notify a producer 24 hours before picking up plants or seeds. All transfers must occur on the producer’s licensed property and deliveries are prohibited. Cooperatives, patients, and caregivers are not permitted to purchase more plants than they were authorized to grow by a physician or under Washington law. The patient or caregiver must buy the plant in person and producers cannot sell to anyone other than those who called in on a product. Sales tax applies to the sale of plants or seeds, but the state’s marijuana excise tax does not.

You can find more on SB 5131 at the following links:

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!

California cannabis manufacturing
California cannabis manufacturing

We wrote about cannabis edibles regulations under the proposed manufacturing rules issued pursuant to the MCRSA, but clients have been asking about what, if anything, has changed due to passage of Senate Bill 94. Here’s what SB 94, aka “MAUCRSA,” has to say, generally, about edibles:

MAUCRSA mandates edible cannabis products must meet the following requirements:

  1. Not be designed to appeal to children, or be easily confused with commercially sold candy or foods that do not contain cannabis;
  2. Produced and sold with a standardized concentration of cannabinoids not to exceed 10 mg of THC per serving;
  3. Delineated or scored into standardized serving sizes if the cannabis product contains more than one serving;
  4. Homogenized to ensure uniform disbursement of cannabinoids;
  5. Manufactured and sold under sanitation standards that comport with California State Department of Health regulations;
  6. Provided to consumers with sufficient information to enable informed consumption of the product, including the potential effects of the cannabis product and directions for its consumption; and
  7. Marked with a universal symbol that will be set by the California Department of Health.

But as for the other rules promulgated by the California Department of Health pursuant to the MCRSA? They are no longer applicable, and we will have to wait for another set of proposed rules to drop before we know exactly what the regulations will look like. If you weren’t happy with the first set of rules under the MCRSA, you shouldn’t get your hopes up for big changes as the odds are good that most of these rules will remain the same under MAUCRSA as it is widely expected the California Department of Health will issue a new set of rules very similar to the first. As a refresher, here are some of the cannabis products NOT allowed under the first set of rules that could change, but probably won’t:

  1. Cannabis-infused alcoholic beverages;
  2. Cannabis products containing any non-cannabinoid additive that increases potency, toxicity or addictive potential, or that would create an unsafe combination with other psychoactive substances, including nicotine and caffeine;
  3. Cannabis products that must be held below 41 degrees Fahrenheit to be safe for human consumption;
  4. Vacuum packed cannabis products;
  5. Canned cannabis products;
  6. Cannabis-infused juice;
  7. Perishable bakery products that must be held at temperatures below 41 degrees Fahrenheit, including cream or custard-filled pies, pies or pastries which consist in whole or in part of milk or milk products, eggs, or synthetic fillings, or meat-filled pies or pastries;
  8. Dairy products of any kind (yes, this appears to include butter);
  9. Meat products;
  10. Seafood products.

Also note that the initial set of proposed rules prohibited licensees from manufacturing cannabis products by applying cannabinoid concentrate or extract to commercially available snack candy or food items, also known as “re-manufacturing.” Though MAUCRSA (SB94) does not speak to this issue, the California Department of Health will likely take the same stance as they redraft the next set of proposed rules. Those hoping to secure manufacturing licenses pursuant to the MAUCRSA will need to stay tuned, and pay close attention to the revised rules as they develop.

To help you better understand 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 (Habib Bentaleb 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!

Barcelona Spain CannabisThe Parliament of Catalonia just approved by a 118 to 9 vote a new law that (Ley de asociaciones de consumidoras de cannabis) that establishes legal standards for cannabis clubs. Up until now, cannabis clubs in Catalonia were protected solely by municipal regulations and they have to a large extent been operating in legal limbo. This new law gives greater legal certainty to Catalonian cannabis clubs.

The law could still face legal challenges by Spain’s central government in Madrid or in front of Spain’s Constitutional Court, but for now it is the law of the land for Catalonia (which consists of four provinces: Barcelona, Girona, Lleida, and Tarragona. The law is intended to regulate recreational and therapeutic uses of cannabis as a way to improve public health standards, while also curtailing the illegal market and cannabis tourism. Here are some of the new laws key points:

  • The law will regulate the consumption, cultivation, and transportation of cannabis.
  • The cannabis clubs must be self-sustaining non-profit associations.
  • The law will impose requirements on how, who, and by what means cannabis can be delivered to a cannabis association.
  • To combat “cannabis tourism,” members of cannabis clubs must wait 15 days after joining an association to obtain cannabis.
  • The law will establish limits on advertising.
  • Cannabis clubs may not sell alcohol, cannabis-infused food, or any other drug.

Catalonia’s new cannabis law also imposes the following limits, but not for those utilizing cannabis for therapeutic purposes:

  • You must be 18 years or older to join a cannabis club.
  • Cannabis club members between the ages of 18 to 20 years old will be limited to obtaining 20 grams of cannabis per month.
  • Cannabis club members 21 years old and above are limited to 60 grams of marijuana per month.
  • The quantities of cannabis dispensed to club members must be accurately logged in a ledger.
  • Each cannabis non-profit association can produce no more than 150 kilograms of cannabis per year.

For more of our articles on cannabis in Spain (written mostly by our lawyers in Barcelona) go here.

 

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.

California cannabis lawyers California may take its cannabis advertising restrictions to the next level if Senate Bill 162 makes it through the Assembly Appropriations Committee. SB 162, which the Senate passed unanimously last month, would prohibit future cannabis licensees from advertising their cannabis products “through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product.”

This legislation would fill some of the gaps in the proposed rules for the implementation of both Proposition 64 and the MCRSA, now known cumulatively as the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”). Many opponents of Proposition 64 raised concerns that legalization would lead to increased public consumption due to the measure’s “lax rules on marketing.” Well, if there was any concern over allegedly lax marketing standards, California’s legislature is now swinging in the extreme opposite direction by essentially eliminating any branded merchandise for cannabis businesses.

Originally, Prop. 64 limited ads in broadcast, cable, radio, print and digital mediums to placements where at least 71.6% of the audience is reasonably expected to be at least 21 years old, based on reliable, up-to-date audience data. This restriction was not included in any of the proposed rules for the MCRSA (which has now been repealed), but it is included in SB 162.

Prop. 64 required any advertisements or marketing by a state-authorized marijuana licensee satisfy the following:

  1. Accurately and legibly identify the licensee responsible for the content;
  2. Use a method to confirm age if involving direct, individual communication by the licensee; and
  3. Be truthful and appropriately substantiated.

Prop. 64 also specifically prohibited licensees from advertising or marketing marijuana in the following ways;

  1. On a billboard located on an Interstate Highway or State Highway that crosses the border of any other state;
  2. In a manner intended to encourage people under 21 to consume marijuana;
  3. With symbols, language, music, gestures, cartoon characters or other content known to appeal primarily to people under 21;
  4. On an advertising sign within 1,000 feet of a day care center, K-12 school, playground, or youth center; and
  5. Through free giveaways of marijuana or marijuana accessories as part of a business promotion.

SB 162 includes these restrictions, but takes things one huge step further with its extremely broad ban on branded merchandise. Ostensibly, the ban could extend to employee t-shirts or uniforms bearing the brand of the licensee, and would prohibit merchandise produced by an unlicensed third-party if that merchandise were created on behalf of a licensee (or if that third-party company was owned by a licensee in their individual capacity).

These advertising restrictions in SB 162 are more restrictive than we’ve seen in any of the other adult-use states in which our cannabis lawyers worked, and we’re pretty shocked California is trying to kill this kind of creativity because they truly believe that if kids see branded merchandise they’ll start using cannabis. Washington State, for example, prohibits licensees from selling branded merchandise in their stores or facilities such as hats and t-shirts, but allows separate or affiliated ancillary companies to sell this merchandise on a licensee’s behalf. And Washington does not prohibit the sale of branded paraphernalia, which would likely be included under the definition of “branded merchandise” in SB 162.

We think this piece of legislation goes way overboard in its attempt to regulate advertising. These types of onerous restrictions will not allow licensed businesses under the new regulatory regime to thrive, and it will definitely kill the swag game at all cannabis-related events in The Golden State, undermining cannabis business’ ability to grow, compete, and spread their brands. We will be keeping tabs on the progress of SB 162, and will provide an update on its final fate, but we really hope the California legislature comes to its senses and stops this form of modern reefer madness.

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: think local
California cannabis. Think local.

To the excitement of many, California’s Medical Cannabis Regulation and Safety Act (MCRSA) does not include a residency requirement akin to those we’ve seen in other states, like Washington. Though in theory this could change, such an about face is unlikely given the proposed rules that dropped a few weeks ago. And though Chapter 5, Section 26054(a) of Proposition 64 (dealing with recreational cannabis regulation) does contain a residency requirement, it is likely the medical and recreational cannabis rules will ultimately be synced, eliminating that requirement. For reference, however, that section of Proposition 64 states:

“[n]o licensing authority shall issue or renew a license to any person that cannot demonstrate continuous California residency from or before January 1, 2015. In the case of an applicant or licensee that is an entity, the entity shall not be considered a resident if any person controlling the entity cannot demonstrate continuous California residency from and before January 1, 2015.”

That residency requirement will expire on December 31, 2019 unless the California state legislature renews it. Also important to note is that even if this residency requirement were to go into effect, it would apply only to “controlling persons.” But again, we believe that as the medical and recreational cannabis rules are finalized and synced up, the residency requirements of Proposition 64 will be eliminated.

But this has not stopped local jurisdictions, including cities and counties, from implementing varying levels of residency requirements, or de facto residency requirements, on their own. For example cannabis licenses in the City of Los Angeles will likely be limited to state residents since the City is issuing first round licenses only to Proposition M Priority eligible applicants (i.e., the ~135 Pre-ICO cannabis collectives currently operating in the City under Prop. D immunity from prosecution). In theory, at least, the proprietors of these businesses, who would have been required to possess qualified patient authorizations, would have needed to be California state residents. In other words, the City of Los Angeles is limiting licenses to those who have operated locally since at least 2007, which functions as de facto localism.

Los Angeles’ proposed regulations also require applicants provide a detailed plan for hiring local residents, including making an “ongoing good faith effort to ensure that at least 30 percent of hours of their respective workforce be performed by residents of the City of Los Angeles, of which at least 10 percent of their respective workforce shall be performed by Transitional Workers whose primary place of residence is within a 3-mile radius of the proposed Business.”

The city of Oakland has developed what is perhaps one of the most contentious residency requirements via its Equity Permit Program. This program aims to address inequity in the local cannabis industry by prioritizing permit issuance to those with roots in certain identified Oakland neighborhoods that have been historically impacted by disproportionate drug law enforcement, and to members of the Oakland community who have been arrested and convicted of cannabis crimes in Oakland in the last 20 years. The law moves qualifying Equity Applicants, defined as Oakland residents with an annual income at or less than 80% of the City average and who either lived in certain defined Oakland police beats for 10 of the last 20 years, or who have been convicted of a cannabis crime committed in Oakland within the last 20 years, to the front of the cannabis permitting line, and it also creates access to approximately $3.4 million in earmarked interest-free business loans and other assistance.

When issuing permits for any kind of cannabis business, the City must give half (i.e. maintain a 1-to-1 ratio) of all permits issued in its initial issuance phase to these Equity Applicants.  Oakland local law also requires dispensary staff be at least 50% Oakland residents, with at least half of those residents from areas identified as having high unemployment or low household incomes.

Other local jurisdictions are implementing or considering similar means of enacting residency restrictions, despite the state’s leniency on the issue. It is therefore imperative to review the local laws under which you intend to operate, particularly if you are not a California state resident.

 

 

 

California Cannabis Law Senate Bill 94
California just came out with its Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”)

The California Legislature today passed Senate Bill 94, which effectively repeals the Medical Cannabis Regulation and Safety Act (“MCRSA”) and incorporates certain provisions of the MCRSA in the licensing provisions of the Control, Regulate, and Tax Adult Use of Marijuana Act (“AUMA” aka Proposition 64). As we’ve covered extensively, draft rules for the MCRSA dropped in late April, but speculation has been rampant that the state would integrate the rules for both medicinal cannabis (MCRSA) and adult use cannabis (AUMA). SB 94 does just that by creating the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”).

Here are 10 of the most important highlights of today’s bill:

  1. The governing bureau will now be the Bureau of Cannabis Control (“the Bureau”).
  2. The types of licenses available for commercial adult-use cannabis activity and commercial medicinal cannabis activity will be the same. The licenses available under both the MCRSA and the AUMA will continue to be available for both kinds of activity, and for specialty cottage cultivation licenses and microbusiness licenses, and, commencing on January 1, 2023, licenses for large outdoor, indoor, and mixed-light cultivation will also be available for both medicinal and adult-use cannabis activity.
  3. Producing dispensary and transporter licenses will not be available.
  4. Quality assurance, inspection, and testing requirements of cannabis and cannabis products prior to retail sale will change. Distributors will be required to store cannabis batches on their premises during testing, testing lab employees will be required to obtain samples for testing and transport those samples to testing labs, and distributors will be required to conduct a quality assurance review to ensure compliance with labeling and packing requirements, among other things.
  5. Though the MCRSA limited the combinations of medicinal cannabis licenses a person may hold until January 1, 2026, the MAUCRSA will not apply these limits (other than that testing laboratory licensees are prohibited from obtaining licenses to engage in any other commercial cannabis activity);
  6. The residency requirements of the AUMA are repealed. In other words, out of staters and even residents of other countries can freely participate.
  7. Additional advertising requirements, including regulation of online advertising and the creation of a universal symbol for edible cannabis products will be implemented.
  8. The cannabis excise tax will be measured by the average market price (as defined) of the retail sale, instead of by the gross receipts of the retail sale.
  9. Applicants for cultivation licenses will need to identify the source of water supply.
  10. The Bureau will no longer have the authority to regulate and control industrial hemp.

The above is only a rough summary of the new legislation. We will be breaking down the details in the coming days so stay tuned.