Photo of Alison Malsbury

Every brand needs protection, and Alison extends her knowledge of intellectual property and corporate law to our cannabis clients, ensuring their businesses are protected.

marijuana intellectual property licensing
Licensing agreements can get complicated. Start with who owns what.

We’ve written extensively about the potential pitfalls of intellectual property (“IP”) licensing deals, which are prolific within the cannabis industry. (For a few select articles, try here, here and here). Recently, news broke of another licensing-related lawsuit, this time involving Tommy Chong. According to the lawsuit, Chong and his son allegedly conspired to steal profits from Evergreen Licensing LLC. The complaint seeks damages for breach of contract, fraud and unjust enrichment.

The complaint alleges that after three years and $1 million spent on the project, Chong and his son conspired to “take it all away, even hacking into Evergreen’s Gmail account in order to misappropriate social media sites that plaintiffs created for the project.” The plaintiffs further allege that they were cut “entirely out of the picture, the project and the revenue and profits the project was going to generate and is generating.” It all sounds pretty unfair.

Unfortunately, these types of allegations come as no surprise given some of the proposed deals that have come across our desks. IP licensing is often seen as a quick and easy way to enter the marijuana industry, without having to clear the hurdles of state and local licensing and regulatory compliance. But unfortunately, this simply is not the case. These deals are complicated and fraught with unique cannabis-related issues beyond those posed by state and local regulations.

In addition to regulatory compliance, those contemplating a cannabis-related IP licensing deal need to understand the fundamentals of intellectual property, and this often begins with determining who actually owns what. In the cannabis industry in particular, information, strain names, and industry terminology have been shared freely since long before state-level legalization, and this compounds the difficulty faced by cannabis business owners in protecting their IP.

Ownership of IP in the cannabis industry is fraught with issues, as we’ve discussed before, in large part because the USPTO will not issue federal trademark registrations for cannabis-related marks. Far too often, cannabis companies come to us with proposed licensing deals where basic due diligence quickly reveals the licensor simply does not own what it claims to own.

If you’re looking to license IP from another company, here are the most basic questions you should be able to answer about that company and its IP:

  • Does the licensor own any federal trademark registrations?
  • If so, what goods and/or services do those trademark registrations cover?
  • Was the description of goods and/or services filed with the USPTO accurate and true? Were there possible misrepresentations?
  • Are the trademark registrations based on actual use, or upon an “intent-to-use?”
  • What representations and warranties is the licensor making (or, often more importantly, not making) regarding the marks?
  • If the licensor doesn’t own any federal trademark registrations, is it licensing someone else’s trademarks?
  • Does the licensor have a master licensing agreement? Do the terms of any proposed sub-licensing agreement mirror that master licensing agreement?
  • What quality control standards will you be held to by the trademark owner?
  • Has the trademark owner warranted to keep all USPTO filings up-to-date?
  • Does the licensor own any state trademark registrations?
  • If so, has the licensor made lawful use of its mark in commerce in the state of registration?
  • Does the licensor have any common law trademark rights? Can the licensor even legally acquire common law trademark rights in your jurisdiction?

This list is only the beginning of the questions that will need to be asked and answered, but failing to address these issues at the outset of a deal is a recipe for litigation, as we see in the case of Tommy Chong. As a business owner considering entering one of these deals, don’t be distracted by big names or big promises: If the IP doesn’t exist and if ownership cannot be demonstrated, there is no real value to be had. Although IP licensing in the cannabis industry is complex, there are creative and valuable solutions to be had, but those require a solid understanding of both IP law and state and local cannabis laws to execute.

marijuana trademark canada
Some U.S. companies are looking north for trademark protection

With U.S. federal trademarks being impossible to obtain for cannabis goods and services that violate the Controlled Substances Act, my trademark clients are beginning to ask questions about their options for international trademark protection. Canada, having legalized cannabis and being our closest neighbor, is usually one of the first countries my clients are interested in.

According to a recent piece written by a group of Canadian attorneys at Torys LLP, the number of trademark filings covering cannabis-related goods and services in Canada has increased dramatically since talk of cannabis legalization began.

Canada has made some big changes to its Trademarks Act that will likely be implemented early next year, and these changes will make it much easier to register trademarks. In particular, Canada will remove the requirement that a trademark be “used” prior to registration issuing. In the U.S., an applicant can file a trademark application prior to making use of their mark in commerce if they have a bona fide intent to do so (this is called an “intent to use” application), but in order for a registration to actually issue, the applicant will need to submit a “Statement of Use” to the USPTO within six months from the date the Trademark Office gives a “Notice of Allowance.” One of the policy reasons for this “use” requirement in the U.S. is to prevent trademark “squatting,” where individuals register marks without any intent to use them in order to either prevent others from making use of the marks, or to extract payment from those wishing to do so.

It is indisputable that by removing the “use” requirement for trademark registration, Canada will be opening the doors to “trademark trolls” and “squatters.” According to the Torys attorneys, there are nearly 2,000 trademarks listed on the Canadian trademarks register with goods or services containing the words “cannabis” or “marijuana.” More than half of those applications were filed since January 2017 (apparently, as of five years ago, fewer than 100 such applications had been filed, making for a 1,900 percent increase in cannabis-related Canadian trademark applications). This rush to file for trademark protection makes sense, where companies will be forced to either register their marks, or risk losing them to third parties or squatters.

But given how relatively straightforward it is to obtain a trademark for cannabis goods or services in Canada, there are many restrictions placed on how those cannabis trademarks can be used via the proposed cannabis regulatory framework. For example, cannabis trademarks may not be used to promote cannabis goods:

  • In a manner that appeals to children;
  • By means of a testimonial or endorsement;
  • By depicting a person, character or animal, whether real or fictional;
  • By presenting the product or brand elements in a manner that evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk, or daring;
  • By using information that is false, misleading or deceptive, or that is likely to create an erroneous impression about the product’s characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks;
  • By using or displaying a brand element or names of persons authorized to produce, sell or distribute cannabis in connection with the sponsorship of a person, entity, event, activity or facility, or on a facility used for sports, or a cultural event or activity; and
  • By communicating information about price and distribution (except at point of sale).

With the exception of the fourth point, which could be construed as somewhat vague and certainly subjective, many of these restrictions on advertising and labeling are contained in the various state cannabis regulatory regimes here in the U.S., so these limitations should come as no surprise to cannabis business owners.

For cannabis business owners in the U.S., it may make strategic sense to consult with a trademark attorney with experience filing cannabis-related applications to consider filing for trademark protection in Canada. Successful brands will be those that think globally, not nationally.

california cannabis licensing

Today, the California Department of Public Health (CDPH) released its proposed emergency regulations governing cannabis manufacturing in shared-use facilities. We’ve written previously about CDPH’s statement that it was developing an additional license type, Type S, which would allow businesses to share facility space, and we’re pleased to see such quick progress in rules development. We see this license type as benefiting small business owners who may not otherwise be able to afford buildout of their own manufacturing facility.

According to the CDPH, the proposed emergency regulations will be filed with the Office of Administrative Law (OAL) on April 3, 2018, and will then undergo a five-day public comment period until April 8th. The stated goal of these new regulations is to “provide opportunities for small manufacturing businesses,” and is “in response to demand from cities and counties wishing to implement equity programs.” The regulations should be important to an often neglected segment of industry players.

Under the current rules, each manufacturing licensee must occupy its own separate and distinct premises, with the exception being that a licensee may hold both an M- and an A- license of the same type on one premises. But under the proposed rules, Type 6, 7 or N licensees would be able to register their location as a shared-use facility. After approval by the CDPH, other cannabis manufacturers wishing to utilize that shared-use facility would apply for a Type-S license.

This new license structure would “allow for operations similar to a commercial kitchen or agreements in which larger manufacturers offer space and use of equipment to smaller ones.” This license type will open the door to many small manufacturers who have been unable to secure their own real estate in a highly competitive market, or do not possess the requisite capital for building out their own facility. In that sense, we are pleased to report today’s development.

Some important things to note about these new regulations:

  • A licensed premises still cannot be used to manufacture any non-cannabis products, and each manufacturer on the premises must be licensed by the state.
  • Type-S licensees may only conduct the following cannabis manufacturing activities:
    • Infusions;
    • Packaging and labeling;
    • Extractions with butter or food-grade oils (the extract or concentrate produced can only be used in the Type S licensee’s infused products).
  • The shared-use facility must include storage for the Type-S licensee’s cannabis and cannabis products.
  • The primary licensee/owner of the shared-use premises must assign a designated area to be used as a shared space. They must post an occupancy schedule, outlining the days and/or times that the space will be used by Type-S licensees, and only one licensee can utilize the space at a time.
  • There is no limit to the number of Type-S licensees that can operate within a registered shared-use facility, but again, only one licensee can utilize the shared space at a time.
  • The primary licensee is responsible for ensuring that the entire facility meets the conditions for cannabis manufacturing under state and local law and the cannabis manufacturing regulations. This includes providing security, waste management and contamination controls and providing secured storage for Type S licensees to hold their cannabis and cannabis products.

Also important to note is that all Type-S license applicants will need to submit a copy of a valid license, permit or other authorization issued by the local jurisdiction that enables the applicant to conduct commercial cannabis activity. This authorization will be required of both the primary licensee (showing that the local jurisdiction approves of a shared-use space) and all Type-S licensees utilizing the shared space. Most local jurisdictions have not explicitly addressed the issue of licensees sharing space, so it will be critical to communicate with your local government if you intend to apply for a shared-use facility designation or a Type-S license to determine what the licensing and permitting requirements will be.

oakland cannabis marijuana

Oakland’s City Council recently passed what is, to our knowledge, a first-of-its-kind ordinance intended to protect residential tenants in the city’s “Green Zone” from being evicted by cannabis businesses (as a resident of Oakland’s “Green Zone,” this is an issue of both personal and professional importance to me). The ordinance passed on its first reading last week, and the second reading will happen today.

The issue of cannabis-fueled residential displacement in Oakland seems to have come to everyone’s attention a few months ago, when a Denver-based cannabis company called Green Sage bought The Oakland Cannery, a community of live-work lofts that house more than 30 artists and makers. The tenants learned from representatives of the company that their intention was to convert the building to commercial use space, and to use it as a cannabis cultivation facility. Residents were told they would not be allowed to stay.

While many within the industry are quick to tout the economic benefits brought about by cannabis legalization (which are undeniable), Oakland is one of the first cities to grapple with the potential negative downstream effects on communities that are suddenly flooded with cannabis business dollars. The City recognizes the Bay Area’s affordability crisis in terms of housing, as well as the importance of “affordable housing and space for artistic and creative enterprises and small economic enterprises and businesses.” The City of Oakland Planning Code allows for a variety of live/work uses in its industrial and commercial zones, which provides important affordable housing and space for these creative and small economic enterprises.

The live/work spaces that the City is seeking to protect are located within the City’s “Green Zone,” which was established in May 2016. Since Spring of 2017, when the City began receiving applications for cannabis businesses, they have received more than eight hundred such applications. In its report, the City identified at least twenty-five permitted live/work properties in the “Green Zone” where cannabis businesses are allowed to situate. The City recognized that these properties, which are located in traditionally industrial areas, tend to be “both more affordable for residents and more conducive to businesses that support artists, makers, and other workers in creative sectors than in other areas of the City that allow more traditional housing and commercial uses.”

As anyone with any experience in vying for a properly-zoned space for their cannabis business in California knows, these spaces are hard to come by, and competition is fierce. The fact that an out-of-state cannabis company purchased The Oakland Cannery does not surprise us, and without intervention by the City, it’s likely that other owners of these live/work buildings would be tempted by the soaring purchase prices commanded by buildings that are zoned for commercial cannabis uses. Buildings in areas of Oakland that were for many years completely undesirable are now quite valuable, if those buildings can be put to use for cannabis cultivation or manufacturing.

In passing this ordinance, the stated purpose of the City Council is to “restrict and prohibit the issuance of cannabis approvals and permits in properties utilized for Work/Live or residential purposes [that existed as of March 6, 2018] to preserve the public peace, health, safety, and general welfare of the citizens and residents of the City of Oakland.” As we stated above, this is the first ordinance we’ve seen that intentionally carves out a cannabis zoning exception for live/work spaces, and given the character of the communities in Oakland that are encompassed by the “Green Zone,” I think this ordinance makes sense. It certainly shows that the City of Oakland continues to regulate cannabis in a way that is both progressive and beneficial to its communities and residents.

industrial hemp california

On Thursday, SB 1409, which proposes changes to California’s industrial hemp laws, was referred to committee. This piece of legislation proposes some much-needed updates to California’s industrial hemp laws. In our experience, states with adult use marijuana regulations, like California, tend to move more slowly building out their industrial hemp programs, which often come in as an afterthought. In that respect, SB 1409 is a welcome effort.

Currently, California law regulates the cultivation of industrial hemp, and specifies certain procedures and requirements on cultivators, not including an established agricultural research institution. Existing law defines “industrial hemp,” via the California Uniform Controlled Substances Act, as a fiber or oilseed crop, or both, that is limited to the non-psychoactive types of the plant Cannabis sativa L. and the seed produced from that plant.

Existing California law also requires that industrial hemp only be grown by those on the list of approved hemp seed cultivars. That list includes only hemp seed cultivars certified on or before January 1, 2013. Industrial hemp may only be grown as a densely planted fiber or oilseed crop, or both, in minimum acreages. Growers of industrial hemp and seed breeders must register with the county agricultural commissioner and pay a registration and/or renewal fee.

SB 1409 proposes to delete the exclusionary requirement that industrial hemp seed cultivars be certified on or before January 1, 2013. Additionally, “industrial hemp” would no longer be defined restrictively in the California Uniform Controlled Substances Act as a fiber or oilseed crop, and the bill would delete the requirement that industrial hemp be grown as a fiber or oilseed crop, or both. Presumably, this will allow cultivators to harvest hemp for CBD derivation, and related use.

SB 1409 would also authorize the state Department of Food and Agriculture to carry out, pursuant to the federal Agricultural Act of 2014, an agricultural pilot program for industrial hemp. Twinning a state-sanctioned pilot program with licensed, private cultivation is a model that has worked well in other states, like Colorado and Oregon. SB 1409 seems to have been well-researched in that sense.

To read more about the current state of industrial hemp under federal law, as well as what other states have done to regulate it, take a look at these posts:

We look forward to seeing whether California will take the lead, or at least take serious steps, toward regulating industrial hemp in a progressive way. SB 1409 was introduced only last month and seems to be moving along nicely. We will keep an eye on this bill, and keep you updated on any developments.

On Friday, I had the privilege of speaking on a panel at American University Washington College of Law’s Intellectual Property Symposium in Washington D.C., which addressed the obstacles of obtaining and enforcing IP rights in the cannabis industry. Many of the questions asked were ones I’ve been working through for the last several years, so I thought it would be helpful to address them in this post, and to revisit some of the basic issues my cannabis clients face in protecting their brand assets.

First, here are a number of posts I’ve written on cannabis IP and trademarks that cover many of the issues we discussed:

The most pressing topic, of course, was how we should advise our clients to protect their brand assets, given the unique legal status of cannabis. As far as brand protection goes, federal trademarks are the most effective device for ensuring that consumers are able to identify your goods and services, and for ensuring that third parties are unable to copy your mark. A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.

On one hand, owners of successful brands want to rest assured that other parties will not be able to exploit their brand without the brand-owner’s permission. But on the other hand, trademarks are extremely important from a consumer protection standpoint. From a public policy perspective, we want consumers to know where the goods and services they purchase are coming from, and to make informed purchasing decisions based on factors like quality and safety. The primary way for consumers to distinguish the goods of one company from the goods of another is via branding.

There are three ways in which a brand owner can establish trademark rights:

  1. By using the mark in connection with their goods or services (legally) in commerce (which establishes common law trademark rights);
  2. By registering the mark with the United States Patent and Trademark Office (USPTO) (which establishes more robust, statutory rights); and
  3. By registering the mark with an appropriate state trademark registry.

Registering a trademark with the USPTO is the best way to protect one’s mark, but, as we’ve discussed before, because cannabis is still illegal under federal law, and because one requirement for registration of a federal trademark is that the applicant has made “legal use” of the mark in commerce, the USPTO has continually refused to register marks for use on cannabis and any other goods and services that violate the Controlled Substances Act (CSA). Under the CSA, it is unlawful to sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia, i.e., “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under the CSA.” These attempted registrations will almost always fail.

So how do cannabis businesses go about protecting their brands when federal trademark protection is unavailable to marks used on federally illegal goods and services? One way is to obtain registration for ancillary goods or services that do not violate the CSA. For example, if you manufacture a cannabis-infused beverage AND you produce and sell a non-infused version of that beverage, it may be possible to secure a federal trademark registration that will cover your non-infused beverages. The strategy here is to then assert a “likelihood of confusion” argument against any would-be infringers in order to prevent them from using your mark.

Another strategy we advise our clients to use is the state trademark registration process. Though the protection afforded by a state trademark is geographically limited to the state of the registration, at best, state trademarks tend to provide more extensive geographic protection and legal remedies than common law rights. Common law rights can be limited to the geographic area in which you are using the mark, meaning that if you only do business in San Francisco, your common law trademark rights could only protect you within the city of San Francisco. And if you want to avail yourself of the statutory remedies available to trademark owners in infringement cases, you will need to register your mark.

Regardless of whether you file for federal or state trademark protection, or whether you opt to develop a brand without ever registering anything, it is critical to ensure that your brand does not infringe on the rights of any third party. A mark does not need to be exactly the same as another mark in order to infringe that mark: the standard is “confusing similarity,” which is comprised of multiple factors and is highly subjective. This is why, prior to investing in brand development, consulting a trademark attorney and obtaining a comprehensive search report on your proposed mark is key. A thorough search is necessary to establish that your brand or logo will not infringe any other trademark, whether registered or not.

As we’ve stated before, the federal illegality of cannabis makes brand protection and trademark law particularly complex in this industry. Navigating state and federal trademark laws to protect your mark is possible, but requires some ingenuity.

california cannabis events
Coming soon to a cannabis friendly town near you?

We receive calls on a weekly basis from clients and prospective clients who want to know what steps they must take to host a cannabis event. We’ve heard plans for cooking classes, dinner parties, shows at art galleries with on-site consumption, and the list goes on. And while the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”) does provide for state temporary event licenses, those licenses are unfortunately extremely limited.

Pursuant to MAUCRSA, a state licensing authority may issue a state temporary marijuana event license to a licensee authorizing onsite cannabis sales to, and consumption by, persons twenty-one years of age or older at a “county fair or district agricultural association event, provided that certain other requirements are met.” No other venue is allowed.

The hypothetical events I listed above do not constitute a “county fair” or a “district agricultural event,” and so technically, even if a local jurisdiction were entirely willing to issue a special event license for one of these types of events, it would not be permissible under state law. Assembly Bill 2641, introduced on February 15th, seeks to remedy this problem.

AB 2641 would authorize the Bureau of Cannabis Control (“BCC”) to issue the temporary event licenses, and would authorize a state temporary event license to be issued for “an event to be held at any other venue expressly approved by the local jurisdiction.” The BCC would not be authorized to approve a state temporary cannabis event license for a given event unless the local jurisdiction in which the event is to be held has approved.

The bill would also authorize the BCC to issue a temporary cannabis retailer license to a licensed cannabis manufacturer or a licensed cannabis cultivator for the retail sale and deliver of cannabis or cannabis products to customers at a licensed temporary cannabis event, and the license would be valid only for the duration of that particular temporary cannabis event.

Temporary cannabis retailer licensees would need to be valid manufacturing or cultivation licensees. A temporary cannabis retailer licensee would only be authorized to sell cannabis or cannabis products manufactured or cultivated by that licensee. And of course, temporary cannabis retailer licensees must comply with all other requirements imposed on retailers.

Perhaps because cannabis events are such a desirable option for many people, AB 2641 is not the only bill of its kind. Last week, we covered Assembly Bill 2020, which also gives local jurisdictions the right to approve and permit events. The bills are quite similar, with AB 2641 slightly more detailed on requirements that event licensees sell only cannabis that they themselves have cultivated.

Given the demand for a wide array of cannabis events, we see the overlapping proposals of AB 2641 and AB 2020 as a welcome moves that would grant local jurisdictions flexibility in determining what types of special events they wish to approve. And it may mean that soon, our clients will finally be able to host all those creative events they’ve been planning.

Santa Barbara marijuana cannabis
Get ready for a LOT of cannabis rules.

On February 6th, the Santa Barbara County Board of Supervisors met to consider an ordinance and policy amendments for land use activities associated with commercial cannabis. Currently and historically, all commercial cannabis activities have been prohibited within unincorporated Santa Barbara County. The Board of Supervisors approved the proposed ordinances “in concept,” together with some revisions regarding buffer zones, a delay in instituting energy conservation plans, an elimination of odor control requirements on certain large parcels in the AG-2 zone, a limit on where outdoor marijuana cultivation is allowed, and a cap on the number of retail locations. The ordinances will receive a second reading at the next meeting on February 13th, and will likely be adopted.

One of the highlights from the meeting was the decision to cap the number of available marijuana retail licenses at eight. These licenses will certainly be prized. Note that initially, the county had no cap, and there would have been 284 parcels where retail stores were allowed, a number that the Board of Supervisors deemed excessive and “outrageous.”

Here are some of the highlights from the proposed ordinances:

  • No commercial cannabis activity will be allowed in the areas of Montecito that are subject to the Montecido Land Use and Development Code (MLUDC) regulations.
  • For areas subject to the MLUDC’s regulations, the following would be allowed.
    1. Commercial cannabis cultivation and nurseries, subject to a Land Use Permit (LUP) in the AG-I, AG-II, C-3, M-RP, M-2 and M-2 zones;
    2. Non-volatile manufacturing, subject to an LUP, in the AG-I, AG-II, C-1, C-2, C-3, CS, SC, M-RP, M-1, M-2, MU, CM-LA, OT-R/LC, and OT-R/GC zones;
    3. Volatile manufacturing subject to a Major Conditional Use Permit (CUP) in the AG-I-AG-II, M-1, and M-2 zones;
    4. Testing, subject to an LUP in the C-3, PI, MR-P, M-1, and M-2 zones;
    5. Retail sales, subject to an LUP, in the C-1, C-2, C-3, SC, M-1, MU, CM-LA, OT-R/LC, and OT-RGC zones;
    6. Distribution subject to a Minor CUP (MCUP) in the AG-1 zone, and subject to an LUP in the AG-II, C-3, M-RP, M-1, and M-2 zones; and
    7. Microbusinesses, subject to a CUP in the AG-II, C-1, C-2, C-3, CS, M-1, and M-2 zones.
  • For areas subject to the Coastal Zoning Ordinance (CZO) regulations, the following would be allowed:
    1. Commercial cannabis cultivation and nurseries subject to an LUP in the AG-I, AG-II, and M-RP zones;
    2. Non-volatile manufacturing subject to an LUP in the AG-I, AG-II, C-1, C-2, and M-RP zones;
    3. Volatile manufacturing subject to a CUP in the AG-I and AG-II zones;
    4. Testing subject to an LUP in the PI and MR-P zones;
    5. Retail sales subject to an LUP in the C-1 and C-2 zones;
    6. Distribution subject to a MCUP in the AG-I zone, and subject to an LUP in the AG-II and M-RP zones; and
    7. Microbusinesses subject to a CUP in the AG-II, C-1, and C-2 zones.
  • Commercial cannabis cultivation, nursery, non-volatile manufacturing, distribution, or retail uses would not be permissible within 600-feet of a school, day care, or youth center.
  • Volatile manufacturing would not be permissible within 1,200-feet of a school, day care, or youth center.
  • Manufacturing and distribution uses would only be permissible as accessory uses to cannabis cultivation in the AG-I and AG-II zones.
  • Commercial cannabis cultivation on lots that are located in an Existing Developed Rural Neighborhood (EDRN), as well as cultivation that would require the use of a roadway located within an EDRN as the sole means of access to the lot on which the cultivation would occur, would require a CUP.
  • Commercial cannabis activity would also be subject to general development standards including:
    1. Compliance with state and local regulations;
    2. Preparation of archaeological and paleontological surveys;
    3. Preparation and implementation of an energy conservation plan;
    4. Fencing and security plan;
    5. Landscape and screening plan;
    6. Lighting plan;
    7. Noise plan;
    8. Odor abatement plan; and
    9. Tree protection, habitat protect, and wildlife movement plans.

While these aren’t the most onerous local permitting requirements we’ve seen, they are certainly extensive. The Board of Supervisors recognized that enforcement against illegal cannabis operations in the County has been difficult, and has pledged, regardless of whether this ordinance passes, to significantly increase enforcement resources aimed at unlicensed cannabis operations. It will therefore be imperative for anyone operating or seeking to operate in Santa Barbara County to follow the development and adoption of these regulations, and to be prepared for the license application process once it begins. As always, we’ll be following these developments closely.

Last week, Santa Cruz County hosted two public meetings to discuss the County’s path toward regulating commercial cannabis cultivation, manufacturing and distribution within the County. The County presented a good deal of information for those interested in pursuing these non-retail commercial cannabis licenses that we’ll outline in this post.

One of the most significant proposals is a recommendation that project-level environmental review be required in lieu of Board certification of the current draft Environmental Impact Review, which provided exhaustive analysis of the existing and proposed commercial cannabis industry in Santa Cruz County. This means that each future non-retail commercial cannabis license would be considered a separate project, and would be subject to discretionary land use permit review and associated environmental review based on site-specific conditions.

The County also presented a proposed final Santa Cruz County Code (SCCC) 7.128, as well as amendments to SCCC 13.10 which will serve to regulate all non-retail cannabis cultivation, manufacturing and distribution in Santa Cruz County. SCCC 7.128 will establish operational requirements for cannabis businesses as well as a cannabis licensing program. And the amendments to SCCC 13.10 will establish zoning restrictions and land use permitting requirements for cannabis businesses.

The Planning Commission will meet again on February 28th to review proposed mitigation, monitoring and reporting measures in the form of a Best Management and Operational Practices Plan (BMOP) as well as an enforcement plan. According to the County, the BMOP will address issues including use of rodenticides, grading limitations, fencing requirements, neighborhood compatibility (lighting, site screening, etc.), and biological surveys among other topics.

The following is an overview of some of the important changes to these proposed ordinances:

  • New canopy limits;
  • Co-location of licensees will be possible in all zones subject to certain limits and CLO official approval;
  • Master planned facilities will be possible in all zones subject to certain limits and CLO official approval;
  • There will be limits to activity on Timber Production zoned properties, including no more than 0.25 acres of new expansion for any cannabis-related development, land clearing or grading.

For manufacturers, the County will offer three licenses types:

  • Class 1: Infusions (no extractions of any kind);
  • Class 2: Non-volatile extractions; and
  • Class 3: Volatile extractions.

And the following is an overview of some of the proposed changes to the SCCC 13.10 zoning ordinance:

  • All cannabis activity will require a discretionary permit in addition to a license (findings must be made and conditions of approval may be attached, and permits will be processed at the same time as applications).
  • Wherever possible, the permit process for cannabis activity mirrors the process for similar types of non-cannabis activities.
  • The activity allowed and the type of permit required depends on 1) the zone district; 2) the type and scale of the activity; and 3) whether the property is urban or rural, and in or outside the Coastal zone plus a one mile buffer.

We will be following developments in Santa Cruz County closely, and expect to have more information following the Planning Commission’s meeting on February 28th. Stay tuned.

marijuana CBD california
When it comes to CBD, California is thinking ahead.

Earlier this month, the California Legislature introduced Assembly Bill 710, which will amend certain sections of the Business and Professions Code and the Health and Safety Code to account for any future changes in federal law regarding cannabidiol (CBD). The purpose of this bill is to ensure that patients are able to obtain access to CBD as a medical treatment as soon as federal law makes it available.

Under existing California state law, and pursuant to the California Uniform Controlled Substances Act, controlled substances are placed into one of five designated schedules, with the most restrictive limitations placed on controlled substances in Schedule I, and the least restrictive limitations placed on controlled substances in Schedule V. Cannabis, despite the passage of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), is still on Schedule I in California. Because CBD is a compound contained in cannabis, it is likewise designated as Schedule I.

Because of this designation, the prescription, furnishing, possession, sale, and use of CBD is restricted by existing law. AB 710 would, if one of certain specified changes in federal law regarding CBD occurs, deem a physician, pharmacist, or other authorized healing arts licensee who prescribes, furnishes, or dispenses a product composed of CBD in accordance with federal law, to be in compliance with state law governing those acts. And upon the effective date of a change in federal law regarding CBD, the prescription, furnishing, dispensing, transfer, transportation, possession, or use of CBD products in accordance with federal law would be for a legitimate medical purpose, and therefore authorized pursuant to state law.

Currently, the cultivation, processing, and sale of medicinal and adult-use cannabis in California, including CBD, is regulated by the MAUCRSA. AB 710 would expressly exclude from regulation under the MAUCRSA any medicinal product composed of CBD that has been approved by the federal Food and Drug Administration (FDA) and either placed on a schedule of the federal Controlled Substances Act (CSA) other than Schedule I, or exempted from one or more provisions of the MAUCRSA.

AB 710 is short and sweet:

SECTION 1. The Legislature finds and declares that both children and adults with epilepsy are in desperate need of new treatment options and that cannabidiol has shown potential as an effective treatments option. If federal laws prohibiting the prescription of medications composed of cannabidiol are repealed or if an exception from the general prohibition is enacted permitting the prescription of drugs composed of cannabidiol, patients should have rapid access to this treatment option. The availability of this new prescription medication is intended to augment, not to restrict or otherwise amend, other cannabinoid treatment modalities currently available under state law.”

The legislation will add the following Section 26002 to the Business and Professions Code:

“This division shall not apply to any product containing cannabidiol that has been approved by the federal Food and Drug Administration that has either been placed on a schedule of the federal Controlled Substances Act other than Schedule I or has been exempted from one or more provisions of that act, and that is intended for prescribed use for the treatment of a medical condition.”

And the following Section 11150.2 will be added to the Health and Safety Code:

“(a) Notwithstanding any other law, if cannabidiol is excluded from Schedule I of the federal Controlled Substances Act and placed on a schedule of the act other than Schedule I, or if a product composed of cannabidiol is approved by the federal Food and Drug Administration and either placed on a schedule of the act other than Schedule I, or exempted from one or more provisions of the act, so as to permit a physician, pharmacist, or other authorized healing arts licensee acting within his or her scope of practice, to prescribe, furnish, or dispense that product, the physician, pharmacist, or other authorized healing arts licensee who prescribes, furnishes, or dispenses that product in accordance with federal law shall be deemed to be in compliance with state law governing those acts.

(b) For purposes of this chapter, upon the effective date of one of the changes in federal law described in subdivision (a), notwithstanding any other state law, a product composed of cannabidiol may be prescribed, furnished, dispensed, transferred, transported, possessed, or used in accordance with federal law and is authorized pursuant to state law.”

This legislation obviously won’t mean much unless and until federal law regarding CBD changes. But AB 710 signals that the California legislature is taking this issue seriously, and is prepared to pivot on a moment’s notice to ensure that patients have unfettered access to CBD once those federal laws do finally change.