California cannabis lawyers

Our California cannabis lawyers are constantly asked how big sales and tax revenues will be in California once adult use cannabis becomes legal there. With recent reports of increased sales in Colorado and Nevada, everyone is expecting California – with its population of nearly 40 million people – to dwarf the sales of other adult use cannabis states. Many see California sales exceeding Colorado and Washington sales (together!) by at least ten times. To say our law firm is bullish on California would be an understatement; we literally cannot find good lawyers fast enough for our two California offices (Los Angeles and San Francisco).

When Californians voted for the Adult Use of Marijuana Act (a/k/a AUMA or Prop 64), you could smell the enthusiasm. Our California offices were deluged with a flood of investors looking to invest in California cannabis businesses. Then Governor Brown and the California legislature removed Prop 64’s in-state residency requirement with the enactment of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (a/k/a MAUCRSA or SB 94) this past June. With residency requirements removed, my firm saw a significant increase in interest from clients outside California seeking to obtain cannabis business licenses in the Golden State.

Unfortunately, local legislators in California’s cities and counties have not kept pace with the enthusiasm on the business side. Prior to SB 94, the legal cannabis landscape consisted of California jurisdictions focused on their medical cannabis ordinances in step with the Medical Cannabis Regulation and Safety Act of 2015(MCRSA). The MCRSA was California’s first attempt at establishing a statewide regulatory and licensing regime. The MCRSA also allowed medical cannabis businesses to operate as for-profit businesses starting in 2018.

With most local jurisdictions playing catch-up with the MCRSA, it’s unlikely Californians will be able to purchase recreational cannabis on January 01, 2018. That’s because most California cities and counties are waiting on the state’s main cannabis regulatory agencies – the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health – to publish their emergency regulations before they enact their own adult use cannabis ordinances. The emergency regulations should be released in mid to late November and the Bureau of Cannabis Control has stated that cannabis businesses will be able to apply for temporary permits online in December.

Though it might take a little longer than expected before adult use cannabis sales in California become commonplace, we are seeing local regulators moving in the right direction. In our Cannabis Countdown series, we keep our readers apprised of cannabis ordinance developments on the local level and the below is an updated snapshot of what’s going on across the state regarding adult-use commercial cannabis activities:

Los Angeles: On March 07, 2017, Los Angeles residents came out in full force and voted for Proposition M, a much-needed effort at clearing up Los Angeles’s previously confusing, complicated, and unfriendly position towards medical cannabis businesses. On June 8th of this year, the Los Angeles City Council released draft requirements for commercial cannabis activities – which we covered here. After the release of these draft requirements, there was a 60-day comment period and on September 22nd, the City Council revised the draft requirements – which we covered extensively here. On September 25th the City Council Rules Committee requested the Los Angeles City Attorney prepare and present a draft ordinance addressing the changes made in the revised draft regulations. Though Los Angeles will authorize seed to sale license types (indoor cultivation, non-volatile and volatile manufacturing, distribution, and retail) it’s unlikely it will have an adult use cannabis permitting process in place by the start of 2018.

San Francisco: The city of San Francisco (where I am located) proposed draft cannabis legislation on September 26th of this year. The proposed legislation requires creating an equity program, authorizes the issuance of temporary local licenses for medical cannabis businesses, and will have seed to sale license types (including the microbusiness license). It also allows for medical and adult use cannabis licenses, but adult use licenses won’t be issued until the equity program is in place. The ordinance does not cap the number of permits to be issued citywide, nor does it limit the number of licenses a person can hold – except that testing licensees cannot hold other cannabis licenses. However at a recent stakeholder meeting I attended, it was discussed that the Board of Supervisors (BOS) may revisit the issue of licensing caps (at the individual applicant and citywide level). It’s paramount that cannabis supporters stay politically active and fight complacency — don’t let what happened in San Luis Obispo happen in your city. San Francisco’s Office of Cannabis is to provide the BOS with an equity report, a medicinal access report, and a proposed fee schedule by November 1st of this year. Much like Los Angeles, San Francisco has proposed a cannabis-friendly ordinance that likely will not be ready for 2018.

Humboldt County: As part of the famed Emerald Triangle, Humboldt County is a cannabis business-friendly jurisdiction. On September 7th, Humboldt County’s Planning and Building Department released a draft cannabis ordinance that provides for the following:

  • Licenses all seed to sale commercial activities (including non-volatile and volatile manufacturing);
  • Allows farm-based retail sales, subject to receiving a retailer’s license from the state (we’ll have to see what the Bureau of Cannabis Control has to say about that);
  • Authorizes temporary special events for cannabis sales and consumption;
  • Allows on-site consumption for retailers and microbusinesses (for persons 21 years of age and older); and
  • Allows for cannabis tours and cannabis farm stays.

This proposed ordinance cements Humboldt’s reputation as a place that thinks outside the box when it comes to attracting cannabis businesses. Humboldt’s proposed ordinance was up for review and public comment on October 18 and we expect its enactment by early December. We are not sure whether Humboldt will allow current medical cannabis businesses to convert over to adult use and for-profit enterprises before January 01, 2018.

Though some of California’s biggest population centers will take their time before enacting adult use cannabis ordinances, we envision some of the more sparsely populated (and tax-starved) California jurisdictions will be the first to move into the adult use cannabis marketplace.

We will be sure to keep you posted on new developments in our Cannabis Countdown series.

California cannabis lawyersCalifornia’s Bureau of Cannabis Control (the “BCC”) held public licensing workshops in three cities in California last week. If you didn’t get a chance to make it, don’t worry. We did and we’ve got you covered.

At the Los Angeles event, hundreds of people showed up to the point where most did not even get inside the building.The workshop focused on licensing information and resources available for people planning on applying for California state cannabis licenses. The BCC staff passed out flyers with the information required for temporary license applications. Temporary licenses will be effective starting January 1, 2018, and will allow businesses to engage in commercial cannabis activity for a period of 120 days.

Local jurisdiction authorization is still paramount to receiving a temporary license. If your business has not yet received this, it will delay your ability to receive a state temporary license. A license or permit issued by the local jurisdiction will be sufficient to show the applicant is allowed to conduct commercial cannabis activity at the location.

Other information required are names of the applicant (either individual or entity); license type; license designation; contact information; names of the owners; physical address and authorization to use the location for commercial cannabis activity; and a premises diagram showing the layout of the proposed location.

The last of the public licensing workshops was held in Sacramento this past Tuesday before a packed house at the Convention Center. Representatives from all of the state’s cannabis licensing agencies – California Department of Public Health (“CDPH”), California Department of Food and Agriculture (“CDFA”), and the BCC – were in attendance to answer the public’s questions. There were also representatives from the following departments:

  • California Department of Tax and Fee Administration;
  • California Department of Fish and Wildlife;
  • California Department of Insurance;
  • California Secretary of State;
  • California Employment Development Department;
  • California Department of Industrial Relations; and
  • Sacramento’s Office of Cannabis Policy and Enforcement.

The scene in the Sacramento’s Convention Center can be described as polite chaos as the public made its way through the tables staffed by these departments. Cannabis businesses, advisors, and investors were all hoping to gather as much information and clarification as possible in what is still an evolving California cannabis regulatory landscape. The lack of clarity is a source of consternation for many cannabis businesses worried about their business model going forward and I highly recommend California cannabis business owners (and all interested stakeholders) review the proposed medical regulations released in April of this year; you can find the BCC’s here, the CDPH’s here and the CDFA’s here. I then recommend you review how each department summarized and responded to public comments when the proposed medical regulations were withdrawn. You can find the BCC’s response here and here (the latter on testing facilities), the CDPH’s here, and the CDFA’s here. Get a pot of coffee brewing and delve into those weeds (too many puns I know but I just couldn’t help myself).

Lori Ajax, the Chief of the BBC, did speak briefly and reiterated that the state will issue emergency regulations in mid to late November and that the state’s licensing agencies will accept temporary license applications online in early December. Ms. Ajax was not able to say what the cost of the temporary permit would be (the fees will be released with the emergency regulations) but did stress that the temporary permit fee will be separate from the annual license application fee.

When the emergency regulations are released in November, our California cannabis attorneys expect a flurry of activity as cannabis businesses seek to gain temporary licensure and an early foothold in what will be the new California cannabis landscape. However, current cannabis businesses and new entrants should take this time to review their business model and entity structure. We’ll be sure to stay on top of this for you and we’ll continue with our popular California cannabis webinar series when the emergency regulations are released.

Stay tuned!

Santa Cruz Cannabis
Will Santa Cruz lead on cannabis?

With less than three months until the end of the year and the commencement of California’s medical and adult use cannabis licensing program, most local jurisdictions are still without regulations to govern adult use commercial cannabis businesses. This has created concern throughout the industry that despite the Bureau of Cannabis Control’s (BCC) promise that it will begin issuing licenses on January 1st, few — if any — adult use commercial cannabis businesses will have secured the requisite local approvals for state licensing. Last month San Francisco, for example, introduced legislation confirming the city would not allow recreational cannabis sales by January.

San Francisco’s stance on adult use commercial cannabis activity is echoed across the state, with cities and counties waiting for state guidance before drafting, adopting and implementing their own adult use regulations. Though Proposition 64 gave local jurisdictions broad authority to adopt cannabis regulations, without draft rules from the state, cities and counties are in a tough place. It doesn’t necessarily make sense to put resources into drafting regulations when the state rules could necessitate hefty revisions.

But last week, the City of Santa Cruz recommended to its City Council amendments to the local zoning ordinance and the Local Coastal Program to regulate adult use commercial cannabis businesses. The Bay Area in particular lacks local regulation of adult use commercial cannabis businesses, so adoption of these recommendations could provide opportunity for those looking to open a recreational business.

The City’s recommendations are broken down by retail sales, manufacturing and cultivation, and delivery. Here are the highlights of the proposed regulations for each category:

Retail Sales

  • Retail uses should be limited to the same zoning districts that currently allow medical marijuana dispensaries: CC, CT, IG, and IG-Per 2.
  • There should be a 600-foot buffer between marijuana retail outlets, with the City maintaining discretion to consider smaller separations when certain findings are met;
  • Based on the MAUCRSA locational restrictions (600 feet from any K-12 school, childcare center, or youth center), the definition of “youth center” is broad and should include parks with playgrounds or those that provide youth programs, both athletic and educational. The city has provided a map indicating the locations where retail outlets would be allowed.
  • The city may limit the number of retail outlets to a maximum of five. This would include both medical and adult use retail stores. The two currently operating legal medical marijuana dispensaries in Santa Cruz may be allowed to sell recreational cannabis in addition to medical cannabis.
  • Applications should be reviewed with consideration to factors of importance to the community, including local preference, preference for women- and minority-owned businesses, and treatment of employees (living wage and benefits).
  • Licenses should be non-transferrable.
  • Onsite consumption, including smoking lounges, should not be allowed.

Manufacturing and Cultivation

  • Commercial outdoor cultivation should not be allowed within city limits.
  • Marijuana testing, manufacturing, distribution and warehousing, and indoor cultivation should be allowed in industrial districts only (IG and IG-Per 2) with approval of an Administrative Use Permit at a public hearing by the Zoning Administrator.
  • The 600-foot MAUCRSA buffer would not apply to commercial uses that are not open to the public, except for manufacturing that uses volatile solvents.
  • Indoor cultivation should be limited to a maximum of 10,000 square feet.

Delivery

  • Deliveries should be prohibited within the City from businesses located outside the City limits. Santa Cruz acknowledges the difficulty of enforcing this rule.
  • The ordinance should specifically prohibit deliveries from other than licensed retailers, microbusinesses or nonprofits.

The City Council will take up this issue this Thursday, October 19th, and we’ll be standing by to see whether the city adopts these proposed cannabis ordinance amendments.

California cannabis rules for deliveryLast week, California’s Bureau of Cannabis Control (“BCC“) finally announced the withdrawal of the MCRSA retailer, transporter, and distributor rules in light of the passage of the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA” a/k/a SB 94) this past June. With that announcement also came some insight from the BCC on what we can expect in the emergency MAUCRSA rules that will drop this November. Specifically, the BCC posted on the California Cannabis Portal website that:

The three cannabis licensing authorities are in the process of drafting emergency regulations based on the new law for the commercial medicinal and adult-use cannabis industries. The licensing authorities will consider the public comments received on the draft medical cannabis regulations and use the feedback to inform the draft emergency regulations. The emergency regulations are expected to be published in November 2017.

And with that website post, the BCC also included a “high level” stakeholder-focused summary telling the public what it learned from the public comments to the MCRSA rules and how it will address those comments in the forthcoming retailer, microbusiness and distributor MAUCRSA rules.

Ultimately, it appears that the majority of public comments will be squared away automatically by MAUCRSA. For example, one summarized public comment was that specialty licenses for “delivery only” or “special events” should be created under the MCRSA (Medical Cannabis and Recreation Act). MAUCRSA takes care of both of these by allowing delivery for only retail and by providing “a state temporary event license at a county fair or district agricultural association event in local jurisdictions that authorize such events.”

There were though some summarized public comments where the BCC’s responses tell us what to expect in the future:

  1. One summarized public comment was that “The regulations should specify which party in the supply chain of transactions (manufacturer, transporter, or dispensary) bears the risk of loss and how much liability should attach.” And the BCC’s response was that liability pretty much has to be negotiated between licensees, which is 100% the right answer. We’ve blogged multiple times about the dangers of product liability (and Prop. 65 violations) in the industry and how to prepare for and shift that risk in your goods and services contracts.
  2. There were several comments about changing the definition of “owner,” lowering the 600-foot buffer requirement, and removing the mandatory labor peace agreement if you have 20 or more employees, dropping the minimum bond requirement, and other MAUCRSA-mandated operational standards, but the BCC made clear that its hands are tied because they must follow SB 94 as written.
  3. The public requested the BCC convene a hotline for assistance with applications, and the BCC replied that “The Bureau will have a call center available to help answer applicant’s questions, as well as materials on its website with information to assist applicants, licensees, and the public.”
  4. Another comment was that “The regulations should provide applicants a streamlined process for converting a business from a not-for-profit business to a for-profit business,” and the BCC punted in its response by stating that MAUCRSA doesn’t require any particular business structure for operation (again, the old collective model is not mandatory for compliance with MAUCRSA, so, if your local jurisdiction permits it, you should begin to think about corporate conversion as application time ramps up).
  5. Colocation of multiple licenses at the same “premises” is still up in the air and the BCC will address it in the emergency rules. Helpfully, AB 133 removed the “separate and distinct” requirement for multiple licenses and licenses of different types.
  6. Regarding comments about continued operations to ensure no disruption of services and goods to qualified patients, the BCC’s response is that temporary licensing should serve to prevent that disconnect.
  7. The public commented that licenses should themselves be transferable and the BCC responded that “By law, each owner must meet certain requirements to hold a license, therefore, a new application is needed. The Bureau is evaluating if a notification, rather than a new application, is appropriate when changes in persons with a financial interest in the business do not include a new owner, who is required to submit fingerprints.” Given that the withdrawn MCRSA rules rendered licenses non-transferable, we’re likely to see that again in the MAUCRSA rules, which means business purchases will likely be the only way to get a hold of a license — as long as you notify the BCC beforehand and the BCC approves that ownership change request. In any event, you should be aware of California’s M & A red flags.
  8. Summarized public comment wanted the distributor license eliminated or small businesses be able to self-distribute. The BCC responded it can’t get rid of the distributor license because it’s required under MAUCRSA, but that it is considering creating another distributor license for transportation only. Not to worry folks, you can self-distribute and you don’t need to contract with a distributor anymore to make a sale to a retailer.
  9. The BCC is reviewing whether cannabis licensees will be able to engage in “other [non-cannabis] activities.” This review came from a summarized public comment that distributors should be able to store and distribute non-cannabis related products. In all other states, licensees are restricted to only commercial cannabis activity for their license type so it would be groundbreaking if California were to go against that norm by allowing California cannabis licensees to take on other lines of business.
  10. The BCC isn’t going to allow for delivery or transport of cannabis other than by enclosed motor vehicle with sufficient GPS tracking despite summarized comments that the BCC should relax restrictions to allow for bike couriers and other modes for transporting cannabis product.
  11. On delivery, public comments asked that the BCC allow delivery by third party contractors or couriers. The BCC batted back, citing to MAUCRSA, which only allows delivery by “an employee of a licensed retailer, microbusiness, or non-profit.”
  12. Summarized public comments also leaned towards asking BCC fees for licenses be set according to a sliding scale of total net revenue. In response, the BCC stated that “Business and Professions Code section 26180 requires that fees are set on a scaled basis based on the size of the business. The Bureau is examining what method is most appropriate to determine the scaled fee, including total net revenue.”

All in all, the BCC has its work cut out for it as it goes back to the drawing board on the MAUCRSA regulations. Many issues will be out of the BCC’s control because MAUCRSA requires certain unchangeable operational standards and restrictions. November will fill in many of the outstanding “don’t knows” that still remain for California cannabis rule-making, so stay tuned.

California Cannabis LawyersYesterday, at the California Cannabis Business Conference in Anaheim (attended by our Southern California cannabis attorneys), the California Bureau of Cannabis Control (the “Bureau”) released information regarding temporary license applications under the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”), which we now know will start to issue on January 1, 2018–see the Bureau’s brochure on temporary licensing details here, and note that the other agencies have not yet released any information on temporary licenses for manufacturers and/or cultivators.

The Bureau will likely begin accepting applications prior to that date, but no temporary license application will be effective before January 1, 2018. Additionally, the Bureau expects that the next round of draft (temporary) rules pursuant to MAUCRSA will issue sometime in mid to late November, coinciding with the release of the temporary license application.

A temporary license is a conditional license that will allow a business to engage in commercial cannabis activity for a period of up to 120 days (i.e., 4 months). Within that 120 day period, the business with a temporary license must apply for their full state license. If the operator is unable to finalize their state license within that period (through no fault of their own), the state will grant extensions to the temporary licensee until the full license is issued.

The requirements for obtaining a temporary license to engage in commercial cannabis activity are as follows:

  1. Local jurisdiction authorization. Applicants must provide a copy of a valid license, permit, or other authorization to operate issued by the applicable local jurisdiction that allows the applicant to conduct commercial cannabis activity at their proposed location.
  2. Name. Applicants must indicate the name of the individual(s) or business entity applying.
  3. License type requested. Applicants must specify which of the license types (Distributor, Retailer, Microbusiness, Etc.) they are applying for.
  4. License designation. Applicants must indicate whether they are applying for an adult use (A-license) or medicinal (M-license) license.
  5. Contact information. Applicants must provide a designated primary contact including first and last name, title, address, phone number(s) and email address(es).
  6. Owners. Applicants must provide the name, mailing address, and email address of each “owner” that meets the criteria of Business and Professions Code Section 26001 (i.e., you own 20% or more of the company, you’re the CEO, you’re a director on the board of a non-profit, or you exercise any direction, control, or management of the company).
  7. Physical address. Applicants must provide the physical address of the location at which they intend to operate.
  8. Authorization to use location. Applicants must provide a copy of the title or deed to the land where the proposed premises is located, or a document from the landowner, such as a lease agreement, stating that the applicant has the right to occupy the property and may use the property for commercial cannabis activity.
  9. Premises diagram. Applicants must provide a diagram of the business’s layout at the proposed location.

It is important to note that local approval still reigns supreme–without the necessary city or county permits and/or licenses, applicants will not be able to obtain temporary or actual state licenses.

Unlike other states with recreational cannabis, Washington does not allow for home cultivation of recreational cannabis. However, that could change soon as SB 5131 requires the Washington State Liquor and Cannabis Board (LCB) to study the viability of home cultivation. The LCB will hold a public hearing on Wednesday, October 4, 2017, at 10:00 AM on whether the State should allow home grows of recreational marijuana.  Written public comments may be submitted through October 11 at rules@lcb.wa.gov or hard copy at PO Box 43080, Olympia, WA 98504.

The LCB will hold a public hearing on Wednesday, October 4, 2017, at 10:00 AM on whether the State should allow home grows of recreational marijuana.  Written public comments may be submitted through October 11 at rules@lcb.wa.gov or hard copy at PO Box 43080, Olympia, WA 98504.

The LCB must consider home cultivation in light of the Cole Memorandum, the Obama-era policy statement from the Department of Justice that tacitly permits states to legalize marijuana so long as those states enact strong and effective regulations. The Cole Memo outlines eight enforcement priorities:

  1. Preventing the distribution of marijuana to minors;
  2. Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
  3. Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  4. Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
  5. Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
  6. Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
  7. Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
  8. Preventing marijuana possession or use on federal property.

The LCB has opposed home cultivation in the past. In 2015, Washington lawmakers considered a bill that would have allowed cultivation of up to six cannabis plants. In response, the LCB sent a letter outlining the Board’s concern that unregulated home grows would increase the occurrence of all eight enforcement priorities outlined in the Cole Memo.

The LCB worries that home cultivation will lead to diversion. Washington producer, processors, transporters, researchers, and retailers must all use “seed-to-sale” traceability software. As the name suggests, a cannabis plant is monitored throughout its life to prevent cannabis from being diverted to other states, to minors, or to the black market.

The LCB is seeking public input on three proposed options:

  1. Tightly Regulated Recreational Marijuana Home Grows. This option would impose a strict regulatory framework. Home cultivators would need a permit to grow legally. Permit holders could then purchase plants from licensed producers. Each household would be allowed four plants and all plants would be tracked in the same traceability system used to monitor commercially grown cannabis.  The LCB would impose requirements to ensure security, preventing youth access, and preventing diversion. Both the LCB and local authorities would monitor home grows. Cannabis processing would be subject to the same restrictions as apply to medical cannabis (e.g., no combustible processing).
  2. Local Control of Recreational Marijuana Home Grows. Like Option One, this option would require a permit, require safeguards to prevent diversion, limit each household to four plants, and allow permit holders to purchase plants from producers. Option Two would not require home cultivators to use the State’s traceability system. It also would give greater authority to local jurisdictions to create more restrictions and to authorize, control, and enforce the home grown program.
  3. Recreational Home Grows are Prohibited. The third option is to maintain the status quo and prohibit home cultivation.

The LCB must report its findings to Washington’s legislature by December 1, 2017. Lawmakers provided the LCB with no additional funds, meaning the Board must conduct its study without expanding its budget. There is no guarantee that anything changes but this is could be the beginning of recreational home cultivation in Washington.

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

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

Today’s post is on Alameda County.

Welcome to the California Cannabis Countdown.

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

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

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

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

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

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

California cannabis processors

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

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

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

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

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

We’ll keep you posted on any new developments.

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!