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

novato california marijuana cannabis
Local policy may be influenced by nearby metropolitan choices.

Do you live in a jurisdiction where commercial cannabis activities are prohibited? Under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), local jurisdictions in California are free to decide whether they will regulate or prohibit commercial cannabis activities. As we have covered before, the City of Novato, located in the northern part of Marin County, currently falls in the prohibition camp.

Novato passed a moratorium banning all commercial cannabis activities except for two pre-existing laboratories. There is also a carve-out in the moratorium for medical cannabis deliveries from operators licensed outside of Novato. The City’s moratorium is scheduled to expire in November, leaving the City with two options: Either continue the prohibition, or decide to regulate and license the industry.

Last week I attended two meetings sponsored by the City and HdL Companies (a company that partners with local agencies to develop cannabis policies) that discussed the future of cannabis licensing in Novato. With reports that only one in three California cities authorize any type of cannabis businesses, it’s important for cannabis supporters to actively engage with local regulators when cannabis policies are on the legislative agenda. The cannabis meetings in Novato presented an inside look in how a small a city, in close proximity to metropolises with cannabis friendly policies (Novato is less than thirty minutes from San Francisco and Oakland if the traffic Gods are shining upon you), approaches the future of cannabis activities in their town. Here is some insight from the meetings:

  • There were a number of dispensary operators from nearby jurisdictions, all with different viewpoints on what Novato’s cannabis ordinance should look like, but there was unanimous consent on one particular point: A medical-only storefront retailer will not thrive with adult-use jurisdictions nearby (San Francisco, Oakland, Santa Rosa, Sebastopol, and Vallejo just to name a few). Medical-only dispensaries will lose tourists and curious customers willing to try cannabis for the first time to their adult-use competitors.
  • The double-edged sword of commercial property values. If your town has a large number of decrepit and vacant buildings, then commercial cannabis businesses can be instrumental in revitalizing those neighborhoods. On the other hand, since landlords can extract a significant amount more in rent from cannabis businesses, long-time local businesses may see their rents increase or their leases not renewed. This problem is exacerbated if a city enacts restrictive zoning regulations, thereby further limiting where a cannabis business can operate.
  • There was a lot of support for an ordinance that includes a social equity component. Should a cannabis ordinance give priority to owners from disadvantaged groups? Should there be a requirement that a certain percentage of employees be local residents? For further context on social equity programs, we covered what Los Angeles is doing here, and what San Francisco and Oakland are doing, here.
  • Educating and informing the public is paramount to turning a prohibitionist jurisdiction green. Misinformation and scare tactics run rampant at many public hearings (see our coverage on Sonoma County, here), so cannabis supporters must be prepared to correct the record.

Right now, it’s too early in the process to tell which way Novato will go with its cannabis policy. The City is holding two more public meetings in August: One on August 8th and the other on August 16th (both will be from 6pm-8pm at City Hall). If Novato residents want to see the City lift its cannabis prohibition, they will need to study up and prepare their talking points: The first two meetings were cannabis friendly but trust me, there will be opposition. But most importantly, cannabis supporters must continue to show up and vocalize their support! Mark your August calendar, Novato.

California cannabis lawyersWe’re a couple of weeks into summer and in California that means county fair time! In populous counties, county fairs can include extravagant firework shows and platinum selling musicians coming into town. In smaller counties, a tractor-trailer show may be the biggest event. Regardless of their size, all county fairs have at least two things in common: 1) They are open to the public (entry fees do vary); and 2) Vendors sell their products to, and connect with, the consumer. In California, cannabis events are hoping to tap into the Golden State’s love of county fairs and our California cannabis attorneys are seeing an increase in the number of businesses looking to expand their reach into cannabis events.

California’s Bureau of Cannabis Control (“BCC”) regulates and licenses temporary cannabis events. Under the BCC’s readopted emergency regulations (permanent regulations were recently proposed, which we covered here), obtaining a cannabis event is a two-part process in California. Before you can host a cannabis event, you first have to secure a cannabis event organizer license. Obtaining an organizer’s license is no easy feat, as applicants face the same daunting application requirements that cannabis retailers, delivery-only retailers, distributors, and testing laboratories face. These requirements require they provide the following:

  • A list of funds belonging to the applicant’s cannabis event organizing business held in savings, checking, or other accounts maintained by a financial institution;
  • A list of loans made to the applicant for its use in cannabis event organizing activities;
  • A list of investments made into the applicant’s cannabis event organizing activities;
  • A list of all gifts of any kind given to the applicant for its use in cannabis event organizing activities;
  • A complete list of every individual with a financial interest in the cannabis event organizing business; and
  • A complete list of every owner.

Once you’ve submitted all of the required BCC’s cannabis organizer application information you cannot pass go, nor do you get to collect two hundred dollars. Au contraire, you must submit a non-refundable annual license fee. This fee is five thousand dollars ($5,000) for an organizer planning one to ten events and fifteen thousand dollars ($15,000) for organizing more than ten events in a year.

Assuming you’ve cleared the BCC’s regulatory hurdles and secured your organizer’s license, you can now move forward with your application for a temporary cannabis event. We previously covered the regulations for temporary cannabis events here, but they are worth revisiting since the BCC released their new proposed regulations.

  • A temporary cannabis event license shall only be issued for a single day or up to 4 consecutive days.
  • Onsite consumption is allowed if authorized by the local jurisdiction.
  • Any compensation paid from a retailer to a cannabis event organizer for participation in a temporary cannabis event shall not be determined, based on, or be contingent on, the sale of cannabis goods.
  • Cannabis goods being stored by a licensee at a temporary cannabis event shall not be accessible to the public and shall not be left unattended. Licensees may share the secure, locked container; however, each licensee using the container shall be held responsible for any violations of this section and subject to disciplinary action.
  • A temporary cannabis event may only be held on the grounds of a county fair or district agricultural association. This is holdover from the previous regulations but we are seeing progress at the state level with Assembly Bill 2020 (which we covered here) to amend the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) so that all local jurisdictions can host temporary events in authorized locations.
  • Each sale at a temporary cannabis event shall be performed only by a retailer or microbusiness authorized to sell cannabis to retail customers. This is another holdover from the previous set of regulations, but just like with AB 2020, we are seeing state legislators push for change. Assembly Bill 2641 (covered here) would authorize licensed cultivators and manufacturers to sell their cannabis and cannabis products directly to the public at temporary cannabis events.

As of this writing, the BCC has issued approximately forty-three (43) cannabis event organizer licenses so we can expect to see new and exciting cannabis events this summer and throughout the year. Assembly Bills 2020 and 2641 are next up for hearings in front of the Senate Appropriations Committee on August 6th and we expect the Committee will vote to expand the number of cannabis businesses and locations that can participate in cannabis events. Until then, enjoy your summer and your county fair!

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 cover who is banning cannabis, who is embracing cannabis (and how), and everyone in between.  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 the City of Antioch, and before that the City of San Jose, the City of Cotati, the City of San Luis Obispo, the City of Redding, the City of San Rafael, the City of Hayward, Alameda County, OaklandSan FranciscoSonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Today’s post is on the County of Contra Costa. Welcome to the California Cannabis Countdown.

contra costa cannabis california

LocationHome to Mt. Diablo, Contra Costa County occupies the northern portion of the East Bay with its county seat in Martinez. The County has two cannabis friendly cities within its border: Richmond and El Cerrito. During the hot days of summer, you can make your way to Six Flags Hurricane Harbor in Concord.

History with Cannabis: Contra Costa County did not embrace cannabis businesses like many of its other Bay Area neighbors (San Francisco, Oakland, Berkeley, and Santa Rosa to name just a few). In 2008, the Board of Supervisors adopted an ordinance prohibiting the establishment of medical marijuana dispensaries. On October 24, 2017, the County passed an ordinance prohibiting commercial cannabis activities and regulating personal cultivation. However, because nearly sixty-one percent (61%) of the County’s residents voted in favor of the Adult-Use of Marijuana Act (a /k/a Prop 64), an outright prohibition was not feasible in the long-term. Regular readers of this series can guess what happened next: The County held a number of hearings, with input from a number of local departments, to study the issue. It’s been a slow haul but the County’s been moving in the right direction – incremental progress is better than no progress.

Recent Cannabis Laws: On June 26, 2018, the Board of Supervisors held a public hearing on a cannabis ordinance regulating commercial cannabis activities in the County. The ordinance passed and Contra Costa County joined the enlightenment era — Welcome! The ordinance will not take effect for thirty (30) days. It will take some time before the County is issuing cannabis licenses to businesses but it is always good news when a new jurisdiction revokes its prohibition. The new ordinance does the following:

  • Authorizes up to four (4) storefront retailer permits. Storefront retailers are authorized to make deliveries;
  • Authorizes up to ten (10) cultivation permits (outdoor, mixed-light, and indoor are allowed). However, if a licensee holds both a retailer and cultivation permit, that cultivation permit will not count against the cap;
  • Authorizes up to two (2) manufacturing permits (non-volatile only) in an agricultural zoning district. However, manufacturing permits in non-agricultural districts and those integrated with a cultivation permit in an agricultural district will not count against the cap;
  • Authorizes distribution. The ordinance does not address whether there will be a cap on distribution permits;
  • Authorizes testing facilities. The ordinance is also silent on a cap for testing facilities;
  • Delivery retailers licensed outside the County are permitted to make deliveries within it so long as they obtain a County business license;
  • The County will develop procedures and scoring criteria for prospective cannabis businesses;
  • Requires a cannabis business to obtain a health permit from the County; and
  • Cannabis permits will have an initial term of five years;

Proposed Cannabis Laws: The Board of Supervisors will hold a hearing today on a proposed tax schedule for cannabis businesses (Come on, you knew taxes were on the way). If the Board approves the tax measure it will be placed on this November’s ball and require the approval of a majority of voters in the County to take effect. The proposed taxation schedule is as follows:

  • Indoor cultivation: $7 a square foot up to $10 a square foot;
  • Greenhouse cultivation: $4 a square foot up to $7 a square foot;
  • Outdoor cultivation: $2 a square foot up to $4 a square foot;
  • Nurseries: $1 a square foot up to $2 a square foot;
  • Manufacturing: 2.5% of gross receipts up to 4% of gross receipts;
  • Distribution: 2% of gross receipts up to 3% of gross receipts; and
  • Retailer: 4% of gross receipts up to 6% of gross receipts.

For its foray into regulating cannabis activities, this is a big step for the County and we applaud the fact that it will authorize seed-to-sale license types. Would we like to see the removal of permit caps? Sure, but with local jurisdiction prohibitions still being one of biggest impediments to the cannabis industry in California, we will gladly welcome Contra County into the fold.

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 cover who is banning cannabis, who is embracing cannabis (and how), and everyone in between.  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 the City of San Jose, and before that the City of Cotati, the City of San Luis Obispo, the City of Redding, the City of San Rafael, the City of Hayward, Alameda County, OaklandSan FranciscoSonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Today’s post is on the City of Antioch.

Welcome to the California Cannabis Countdown.

LocationAntioch is the second largest city in Contra Costa County and its location on the banks of the San Joaquin River links it with the San Francisco/East Bay region, Sacramento, and the Central Valley. Although Antioch is not home to any of the major tech companies found throughout the Bay Area (Kaiser Permanente is the City’s largest employer), its low cost of living (for Northern California) and new public transportation options will likely attract new residents and businesses.

History with Cannabis: When it comes to cannabis, Antioch lags far behind some of its progressive Bay Area neighbors. While Oakland, San Francisco, Richmond, and Berkeley (just to name a few) are continuously working on their cannabis ordinances and licensing procedures, Antioch’s been busy extending moratoriums. The City Council passed its first moratorium on medical marijuana facilities back on April 26, 2011. The City then extended the moratorium on May 24, 2011, and passed an ordinance permanently barring medical marijuana facilities on October 22, 2013. Antioch did have an exception allowing for limited medical cultivation but when the City amended their cannabis ordinance on January 20, 2016, they added cultivation to the prohibited list of cannabis activities. When the Adult-Use of Marijuana Act (“AUMA”) made it onto the California ballot in 2016, Antioch followed its normal course of action: It passed multiple moratoriums prohibiting adult-use cannabis activities. However, there’s proof out there that Antioch is starting to come around on its view of cannabis. Much like the progress we’re beginning to see on the federal level with pro-cannabis measures, California jurisdictions that used to have bans in place are now deciding to regulate (and tax) commercial cannabis activities. You can now add Antioch to that list (hopefully).

Proposed Cannabis Laws: On May 2, 2018, Antioch’s Planning Commission held a public hearing and recommended that the City Council amend the City’s Municipal Code to establish a cannabis business zoning overlay district for commercial cannabis activities. The amended ordinance passed its first City Council reading on May 22, 2018, and will hopefully be adopted later this evening. Here are some of the ordinance’s highlights:

  • Would allow commercial cannabis activities in the eastern waterfront industrial area between the San Joaquin River and east 18th street, as well as along the business park area around Verne Roberts Circle;
  • Establishes and defines a cannabis business as “a person, partnership, corporation, company, association, collective, or cooperative which engages in commercial cannabis use(s)”;
  • Establishes and defines cannabis retail as “a cannabis business that distributes, dispenses, stores, exchanges, packages, re-packages, labels, sells, makes available, transmits, or gives away cannabis or cannabis products for either medical or recreational use and is operated in accordance with state and local law and regulations”;
  • Prohibits cannabis businesses with 600 feet of a school, residential area, or public park; and
  • Allows cannabis uses upon approval of a Use Permit from the City Council and the recommendation of the Planning Commission.

It’s also important to note that as of right now Antioch is considering licensing all seed to sale license types, so interested cannabis entrepreneurs need to keep communicating with the City Council to keep all those cannabis activities available. The proposed ordinance does not specify the general requirements and operating procedures for obtaining a cannabis use permit. That issue will be addressed by local regulators in the future but in order to get to that point, the City Council needs to adopt the amended ordinance today! Let’s hope that Antioch takes a step in the right direction.

“What do you do?”

When meeting someone for the first time this is a pretty standard ice-breaker. Usually the responses are pretty innocuous: “I’m in sales” or “I’m in IT”. But if you add “…in the cannabis industry” to those answers you’re bound to get a number of follow up questions. When I tell people that I advise businesses, investors, and ancillary service providers in the marijuana industry, without fail the first question that I get is “Aren’t you worried about the federal government?” I then go into discussion on the Rohrabacher-Blumenaur Amendment (formerly the Rohrabacher-Farr Amendment), the history of the Cole Memo (which although rescinded still plays an important role in banking), and the importance of complying with your state’s cannabis regulations. Lastly, I talk about the change in the national discussion and perception of the cannabis industry. Gone are the days of the “lazy stoner” stereotypes (although perhaps not for U.S. Attorney General Jeff Sessions). Instead we have sophisticated cannabis businesses providing products to a large and diverse section of America – with more and more states looking to legalize either medical or adult-use marijuana activities this year.

For those of us who follow cannabis bills in the U.S. Capitol and in our state legislative houses, it’s clear that there is momentum towards ending America’s shortsighted and draconian war on cannabis (we covered recent developments on the federal level here). While Republicans and Democrats in Congress can’t seem to agree on anything nowadays, support for individual states to regulate cannabis activities as they see fit for their constituents is one of the few areas where bipartisan support exists. Every day, more Republicans in Congress are signing on as sponsors to bills that will support the cannabis and hemp industries (we see you Mitch McConnell!). And now we can add to the list of cannabis supporting Republicans: President Donald Trump?

Could Trump actually point us in the right direction?

Just last week, the President, while boarding a helicopter for the G-7 summit in Canada, mentioned his support for what Senator Cory Gardner (R-CO) is doing. What exactly is Senator Gardner doing you ask? He, along with Senator Elizabeth Warren (D-MA), and Representatives David Joyce (R-OH) and Earl Blumenauer (D-OR), have introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. You’ll recall that Senator Gardner didn’t take too well to A.G. Sessions rescinding the Cole Memo, so he vowed to block all Department of Justice appointments in return. After meeting with the President, Sen. Gardner put an end to his blockade (which we covered, here) when the President assured him that “he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.” At the time of the meeting there was no agreement as to what the “federalism-based legislative solution” would look like. Today there is. Here’s a list of what the STATES Act would and wouldn’t do:

  • It would amend the federal Controlled Substances Act (“CSA”) so that the CSA would not apply “to any person acting in compliance with state law relating to the manufacture, production, possession, distribution, dispensation, administration, or delivery of marihuana.”
  • It would also amend the CSA so that the same exclusion would apply to persons acting in compliance with the law of a federally recognized Indian tribe within its jurisdiction.
  • It would deschedule industrial hemp from the CSA entirely.
  • It would make access to banking easier for cannabis businesses as state legal cannabis sales and transactions would no longer be considered trafficking.
  • It would not change the law in states that continue to criminalize cannabis activities.
  • It would not apply to any of the other substances identified in the CSA.
  • It doesn’t guarantee that President Trump will keep his word.

That last point isn’t actually written into the bill, but it’s the 800-pound gorilla in the room that no one can ignore. The President, to be polite, has had a tenuous relationship with the truth and keeping his word, so it’s far from certain that he will throw his support behind the STATES Act. An off-the-cuff remark before meeting with G-7 allies (or are they adversaries now?) does not constitute unwavering support. We’ll have to see more consistent and direct support from the President before we can feel confident that the STATES Act will become law. The President’s support is necessary because he’s still very popular with the Republican base and can therefore give recalcitrant Republicans in Congress cover if they’ve been cannabis opponents previously.

Let’s keep our fingers crossed that the North Korea Summit meeting goes well (who cares about cannabis legalization if nuclear war’s broken out?), that Congress pushes this one through, and that the President carries that high over to the STATES Act.

Tomorrow, June 5th, Californians will go to the polls and vote on a number of state and local races, along with tax measures and other proposed laws. Cannabis will play a large role in many of them.

In the gubernatorial primary race the two favorites, Lt. Governor Gavin Newsom and former Los Angeles Mayor Antonio Villaraigosa, are both Democrats and they both support the cannabis industry and social justice reforms to right the drug wars’ wrongs. California Treasurer John Chiang is also running for governor and he has made increasing banking opportunities (which we covered here) for cannabis businesses one of his most pressing goals. Even if Mr. Chiang doesn’t win, we hope he continues making progress on this front as lack of access to banking severely hampers cannabis business owners and needlessly creates a danger to public safety. The Republican candidates for governor, John Cox and Travis Allen, hold the same traditional shortsighted and draconian Republican position: cannabis is bad, lock everyone up. To quote the current eloquent speaker in the White House: SAD! Although both Republican candidates are longshots to make the statewide election in November, one of them could get lucky if the Democratic favorites split a large number of votes. That’s because California has an open primary system with the top two vote getters, regardless of party affiliation, moving on to the November election.

Keep the momentum going, California!

Making sure the top two gubernatorial candidates support the cannabis industry and social justice reforms is extremely important but there also a number of other races and measures to keep an eye on tomorrow:

  • Republican Congressman Dana Rohrabacher faces what looks like a tough race as he’s being challenged by a Republican and a Democrat. Mr. Rohrabacher is one of the biggest Republican supporters of the cannabis industry (If you’ve never heard of the Rohrabacher-Blumenaur amendment, we covered that for you here.) The best-case scenario is that Mr. Rohrabacher and one of the Democratic candidates receive the most votes. Worst-case scenario is that Mr. Rohrabacher and the other Republican candidate, Scott Baugh, move on the November election and Mr. Baugh wins. Mr. Baugh has chastised Mr. Rohrabacher’s support of the cannabis industry, so a Baugh-Blumenaur collaboration is highly unlikely.
  • Residents of the Southern California City of Jurupa Valley will vote on whether to allow commercial cannabis activities in certain commercial zones.
  • Ballot Measure CC in the City of Pasadena would authorize up to six retailers, four cultivators, and four testing laboratories to operate in the City. There will also be a cannabis tax measure on the ballot.
  • The City of San Rafael, which we recently covered in our California Cannabis Countdown series, will also place a tax measure on its ballot. Measure G would authorize the City to tax cannabis business up to 8%.
  • There’s also a tax measure on the County of Santa Barbara’s ballot, however Measure T’s passage carries more than just tax consequences – if Measure T fails then the cannabis ordinance passed by the Board of Supervisors that would allow commercial cannabis activities will not go into effect.
  • The County of San Luis Obispo will also put forth a tax measure on its ballot and just as in Santa Barbary County, if the tax measure doesn’t pass then commercial cannabis businesses will not be able to operate in SLO County.
  • Yolo County is proposing a tax measure that would place an initial four percent (4%) cultivation tax and an initial five percent (5%) tax on all other cannabis businesses.

There are other marijuana related measures that will be on ballots throughout California this Tuesday and it’s extremely important for current cannabis business owners, future entrepreneurs, and cannabis industry supporters to pay close attention to the language of the ballot measures–especially tax measures tied to the enactment of cannabis ordinances–and the cannabis positions on those running for elected office. The cannabis industry has made great strides recently and now is not the time to let up. Get out there on Tuesday and vote!

california cannabis marijuanaThe movement to legalize cannabis in the United States has come a long way since Californians started it all with the Compassionate Use of Act of 1996 (“Prop 215”). For many years after Prop 215, the pace of change was glacial. In California, it wasn’t until 2004 (8 years after Prop 215) that the California State Legislature passed Senate Bill (“SB 420”). SB 420 recognized the rights of qualified patients and their caregivers to collectively or cooperatively cultivate medical cannabis. Then it took an additional four years until the California Attorney General (who at the time was Jerry Brown, the state’s current governor) released the state’s guidelines (“Guidelines”) on medical cannabis enforcement in 2008.

The Guidelines created the framework for non-profit mutual benefits corporations, collectives, and cooperatives to provide medical cannabis to their patient members. Although the Guidelines were a step in the right direction, they still left many medical cannabis operators uncertain as to what was allowed. It took another seven years before California substantively addressed the cannabis industry when the State Legislature passed the Medical Cannabis Regulation and Safety Act in 2015 (“MCRSA”). But ever since the passage of the MCRSA and the Adult Use of Marijuana Act in 2016, the pace of change in California’s cannabis regulatory landscape is perhaps best described by a quote from Ernest Hemingway’s “The Sun Also Rises.” One of the characters, when asked how he went bankrupt, replied, “Two ways. Gradually and then suddenly.”

In California, we are firmly entrenched in the “suddenly” camp of cannabis regulations. The main reason cannabis operators are seeing a flurry of laws and regulations is because the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) allows for both state and local governments to regulate and license cannabis businesses. Keeping up with the state’s dual licensing regime is a never-ending endeavor. As an example, the state licensing agencies – the Department of Food and Agriculture, the Department of Public Health and the Bureau of Cannabis Control – just recently released and published readopted emergency regulations (which we covered, here).

This week we also saw important legislation make progress on the state and local level. They are as follows.

State Level:  AB 2641 and Temporary Retailer Licenses.

On the state level we saw Assembly Bill 2641 make it out of committee. We previously covered AB 2641, here, but a brief recap will be helpful. Under MAUCRSA only a retailer, delivery-only retailer, or microbusiness (“Retailers”) can sell cannabis products to the public. Currently, cannabis cultivators and manufacturers have no way to directly sell their cannabis goods to their consumers – they are completely reliant on Retailers at the point of sale to tell the public about their product and company mission. AB 2641 would allow certain cultivators and manufacturers the ability to obtain temporary retailer licenses. These temporary licenses would authorize cultivators and manufacturers to sell their products directly to their consumers at temporary cannabis events that are authorized by the appropriate local jurisdiction. AB 2641 needs the approval of two thirds of the State Assembly for it to pass. You can find information on how to support AB 2641 through the California Growers Association website.

Local Level: Sonoma County Recommendations.

As previously mentioned, California is a dual licensing state and we cover local changes in our California Cannabis Countdown series. Each California city and county have their own internal processes for passing cannabis ordinances in their jurisdictions. For example: In Sonoma County, the Planning Commission, the Board of Supervisors (and their Ad Hoc Cannabis Committee), the Cannabis Advisory Group, and the public (through hearings and workshops) all play a role in shaping cannabis policy in Sonoma County. Ultimately it comes down to the Board of Supervisors and we covered one its more contentious hearings here. The County’s Permit and Resource Management Department just recently released a staff report (“Report”) with proposed changes to the county’s cannabis ordinance. Here are some of the Report’s recommendation highlights:

  • Allow adult-use cannabis operations;
  • Extend the life of new cannabis permits from one to two years;
  • Allow transferability of permits between operators;
  • Add processor, microbusinesses, self-distributor transport-only, and shared-use manufacturing as cannabis license types;
  • Amend whether a conditional use permit or zoning permit is needed depending on the zone and parcel size of the property; and
  • Create a cannabis inclusion zone for cultivation applicants that do not have eligible zoning, but which have unique characteristics that may make them eligible for a conditional use permit.

You can download the full Report from the County’s cannabis page, here. The Planning Commission will hold a hearing to discuss the Report’s proposals on June 7th at 1:30pm. AB 2641 and Sonoma County’s Report can provide instrumental lifelines to many cannabis businesses, so let’s do what we can to ensure they pass. Keep checking in as we’ll be sure to keep you posted on their developments.

california marijuana cannabis

Whenever government enacts new regulations there will always be some people and businesses that will be unhappy with the new changes. So, it came as no surprise when California embarked on its mission to create a state licensing regime for cannabis businesses (as well as personal use) that issues would arise. What made enacting cannabis regulations in California so difficult is that ever since Californians voted for the Compassionate Use Act in 1996 (a/k/a Prop 215), cannabis cultivators, manufacturers, and dispensaries were operating without regulations in what everyone conveniently called the legal “grey” area (a Michael Cohen area of practice).

That all changed when the state legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA) in 2015 and a majority of the good people of California voted in favor of the Adult Use of Marijuana Act in 2016 (AUMA). In June of 2017, California Governor Jerry Brown signed into law Senate Bill 94 (a/k/a the Medicinal and Adult-Use Cannabis Regulation and Safety Act a/k/a MAUCRSA). MAUCRSA merged medical and adult-use cannabis activities under one regulatory regime and empowered three state agencies to license and regulate the commercial cannabis industry: The California Department of Food and Agriculture (cultivators, processors, and nurseries); the Department of Public Health (manufacturers); and the Bureau of Cannabis Control (distributors, retailers, delivery-only retailers, microbusinesses, and testing labs). Each state agency released their emergency regulations in November of 2017, which we covered for cultivators, manufacturers, distributors, and retailers.

The emergency regulations were quite the departure from the previously unregulated “grey” market of the previous twenty years. They were however not without some hiccups: Such as the removal of the cultivation acreage cap or the steadfast intransigence of local jurisdictions in licensing commercial cannabis activities.

After the release of the emergency regulations, representatives from the three state cannabis licensing agencies travelled up and down the state to solicit public input on the regulations. The reason the state continued to solicit feedback from the public was due to the fact that the emergency regulations were actually just temporary regulations. All three state agencies were required to release permanent regulations later this year – when exactly the permanent regulations were going to be released was anyone’s guess. While current cannabis businesses and aspiring entrepreneurs have been busy figuring out how to navigate the licensing landscape, the state just went ahead and made changes to the emergency regulations. Just this Friday all three state agencies released new emergency regulations (nothing like a regulation drop on a Friday!). We’ll cover the changes in greater detail in future posts (stay tuned) but here are a couple of highlights:

  • Applicants can submit one application (and pay one fee) to obtain both an adult-use and medical cannabis license. Previously you had to submit two applications and pay two separate licensing fees if you wanted to operate in the medicinal and adult-use market. This applies to all three licensing agencies.
  • A licensee can now engage in commercial cannabis activities with any licensee, regardless of medical or adult-use designation. This is a permanent extension of the transition period in the emergency regulations that allowed medical cannabis licensees to contract with adult-use licensees and vice versa (the transition period was set to expire on July 1, 2018). This also applies to all three agencies.
  • The Bureau of Cannabis Control’s definition of financial interest holder was amended to specifically state that anyone that has an agreement to receive a portion of the profits of a commercial cannabis business will be considered a financial interest holder (there’s an exception for diversified mutual funds, blind trusts, and similar financial instruments).
  • The BCC regulations also specify that licensees authorized for retail sales may not sell or deliver cannabis goods through a drive-through window.
  • A retailer’s delivery employee can now carry cannabis goods valued up to $10,000 while making deliveries (the cap was previously set at $3,000).
  • The Bureau of Cannabis Control reduced the annual license fees for its licensees.
  • The Department of Food and Agriculture revised how it will measure canopy for indoor, mixed-light, and outdoor license types.
  • The Department of Public Health (DPH) formally incorporated the regulations for shared-use facilities, which we covered here.
  • The DPH specifically removed tinctures from the definition of a product containing alcohol. However, tinctures shall not be sold in a package larger than two fluid ounces and shall include a calibrated dropper or other measuring device.

The public will now have all of five days to comment on the re-adoption of the emergency regulations. The five day window for public comment will begin once the California Office of Administrative posts the emergency regulations on its website – which it can do no earlier than May 25, 2018. When these updated emergency regulations are formally adopted the licensing agencies will have 180 days to develop their final regulations. Be sure to check in as we update you with even more details on these emergency regulations and how they may impact your cannabis business.

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 cover who is banning cannabis, who is embracing cannabis (and how), and everyone in between.  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 the Town of Truckee, and before that the City of Cotati, the City of San Luis Obispo, the City of Redding, the City of San Rafael, the City of Hayward, Alameda County, OaklandSan FranciscoSonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey Countyand the City of Emeryville.

Today’s post is on the city of San Jose.

Welcome to the California Cannabis Countdown.

Surely there’s room for a few more licensed cannabis businesses?

Location. San Jose is the third most populous city in California and the largest city in Northern California. Located south of San Francisco and Oakland, San Jose is the county seat of Santa Clara county and the soon to be home of a massive new campus for Apple. San Jose is also home to the San Jose Sharks (get them next year) and the fervent fans of the San Jose Earthquakes.

History with Cannabis: Back in 2011, the City Council began the process to enact a land use and regulatory ordinance to govern  medical marijuana operations. Unfortunately, the City Council ended up suspending the land use ordinance and then repealing the regulatory ordinance – the effect of which meant that all medical marijuana collectives, cooperatives, and dispensaries operating in San Jose were doing so illegally. Then in June of 2014, the San Jose City Council passed their Medical Marijuana Program (“MMP”). The MMP was an amended attempt to correct the City’s failure to pass a medical marijuana ordinance back in 2011. The MMP went into effect on July 18, 2014 and gave medical collectives up until October 17, 2014 to submit their applications with the City.

At the time the MMP was passed there were an estimated 78 collectives operating in the San Jose, of which 50 collectives submitted applications with the City. Of those 50 medical marijuana collectives that submitted applications, only 16 were able to successfully navigate the application process and maintain their license in compliance with the San Jose’s regulations. Since the passage of the MMP, there have been no new cannabis licenses issued — only the 16 registered collectives have been authorized to cultivate, manufacture, and sell medical cannabis within city limits.

In November of 2017, the City Council passed Ordinances 30029 and 30030 authorizing adult-use cannabis activities. However, the adult-use ordinances did not open up licensing to new applicants — it only allowed the previously registered medical collectives to operate as adult-use businesses as well. These registered collectives have had a really good run as the only cannabis operators in town (legal operators anyway) but that may change as the City Council is considering opening registration to new cannabis operators for the first time since the MMP.

Proposed Cannabis Laws: This Monday, May 21 (6pm at City Hall), the City Council will hold a public hearing to discuss allowing new cannabis businesses to register and operate in San Jose. The City Council is considering allowing new businesses to register for the following types of cannabis licenses:

  • Manufacturing (volatile and non-volatile).
  • Distribution.
  • Testing laboratories.
  • Additional cultivation licenses are not currently on the agenda.

These are just the additional stages of the discussion that’s set to take place. It’s still to be determined whether the City will cap the number of additional licenses (or remove some of the proposed license types altogether) so it’s especially important for cannabis entrepreneurs to show up on May 21st and voice their opinions. All in all, it’s about time that new cannabis businesses get a chance to enter the cannabis market of California’s third largest city.

If you’ve been following the state of affairs of commercial cannabis licensing in California, you know that it really is a tale of two cities (or counties). Both the Medicinal Cannabis Regulation and Safety Act (passed by the California state legislature in 2015) and the Adult Use of Marijuana Act (passed as a ballot measure by a majority of Californians in November of 2016) granted absolute discretion to local jurisdictions in determining how they wanted to regulate commercial cannabis activities. This deference to local jurisdictions was included in Senate Bill 94 (a/k/a the Medicinal and Adult Use Cannabis Regulation and Safety Act), which merged California’s medical and adult-use cannabis regulations under one regulatory regime. Although granting local jurisdictions the authority to regulate cannabis businesses was a necessary concession to get statewide cannabis legislation passed, in practice it’s the local jurisdictions that have been a significant impediment to bringing cannabis operators into the regulated market (which we’ve covered here and here).

Very few of California’s 482 cities and 58 counties are allowing medicinal and adult-use commercial cannabis activities within their borders. Instead of seeing cannabis businesses operating evenly throughout the state, what we’re seeing is an undue concentration in just a select few jurisdictions. The fact that so many California jurisdictions have outright commercial cannabis bans in place is forcing cannabis operators to relocate to cannabis friendly jurisdictions if they want to participate in California’s legal cannabis market. Cities and counties that have been open to cannabis businesses are now starting to rethink their approach as they’ve been inundated with the number of cannabis applications they’ve received. We’re seeing this trend take shape in Sonoma county and the city of Sacramento may be next.

sacramento cannabis marijuana
Will Sacramento turn back the clock on cannabis?

Sacramento falls squarely in the camp of a cannabis-friendly jurisdiction (for now): It licenses both adult-use and medical cannabis businesses to go along with all seed to sale license types (outdoor cultivation and volatile manufacturing are the only prohibited cannabis activities). When you combine: the size of Sacramento’s population, its place as the state’s capital, its relatively inexpensive cost of living (compared to the Bay Area, Los Angeles, and San Diego), and their willingness to license all types of cannabis activities, then it shouldn’t come as a surprise that cannabis operators have been flocking to Sacramento.

Unfortunately, Sacramento legislators have noticed the inbound cannabis migration as well, and they do not seem happy about it. Like most California jurisdictions, Sacramento only allows commercial cannabis businesses to operate in a couple of zoned districts. According to the city these districts are being overwhelmed by cannabis applications.

Sacramento city legislators feel so strongly that some neighborhoods are home to too many cannabis businesses–specifically the area within the Power Inn Alliance Business Improvement District (PBID)–that they’ve introduced a proposed ordinance to curtail the number of cannabis businesses in the city. The proposed ordinance would prohibit a cannabis business from being issued a permit if the city’s cannabis decision maker finds that the proposed site will result in an undue concentration of cannabis establishments in the area. The proposed ordinance defines undue concentration as follows:

  • Any cannabis cultivation that it is located within the area bounded by Power Inn Road to the west, Folsom Boulevard to the north, and the city limits to the east and south; and will result in more than 2.5 million square feet of building floor space approved by a conditional use permit for cannabis cultivation use in that area; or
  • Any cannabis production facility (cultivation, distribution, or non-volatile manufacturing) in all other parts of the city that is located on a parcel within 600 feet of another parcel having a use permit for cannabis production or a cannabis dispensary, unless the decision-maker determines that there is an overriding public benefit in approving the use permit for the proposed location.

The PBID district already has approximately 2.8 million square feet in cannabis cultivation conditional use permit applications pending and over 1,169,090 square feet of cannabis cultivation has already been approved. If the proposed ordinance passes, then it will only be a matter of time before Sacramento closes its doors to new cannabis operators.

Unfortunately, this trend of curtailing cannabis permits is likely to become more common so long as a vast swath of California continues to prohibit commercial cannabis businesses from entering the legal market. Sacramento will hold hearings on its proposed ordinance tomorrow, May 8th (at 3pm before the Law and Legislation Committee) and on Thursday, May 10th (at 5:30pm before the Planning and Design Commission). If you want to make sure Sacramento keeps its doors open to cannabis businesses, it’s imperative you show up.