Given that California became the first state to legalize medical marijuana in 1996, everyone is wondering when the golden state will legalize and regulate its already omnipresent recreational black market. Although there will not be a cannabis initiative on the ballot in California this fall, many are speculating that 2016 will be the year that California legalizes recreational marijuana. In the meantime, here are the top ten questions our California cannabis business attorneys receive regarding marijuana in California.
1. Can I apply for a license to operate a medical marijuana dispensary in California? No. “Dispensaries” are not recognized under California law, despite the fact that medical marijuana “dispensaries” have been operating in the state for years. Business licenses for dispensing collectives are issued by cities and counties. Collectives and cooperatives, which must meet particular requirements, are authorized under state law.
2. What can I do to prepare for the eventual legalization of recreational marijuana in California? Most importantly, start lobbying now to shape the eventual regulations and legislation that will dictate California’s recreational marijuana structure. Familiarize yourself with the regulations of Washington and Colorado, paying attention to what has and has not worked. Developing and strengthening your brand is also crucial, particularly in a market as established as California.
3. Who is allowed to possess marijuana in California, and how much can they possess? Qualified patients and primary caregivers are the only parties allowed to possess marijuana legally in California. Patients must have a written or verbal recommendation from a licensed physician to use marijuana to treat a serious illness, including cancer, anorexia, AIDS, or one of several other serious and debilitating illnesses. A primary caregiver is a person designated by a qualified patient who “has consistently assumed responsibility for the housing, health, or safety” of the patient. Under California law, qualified patients and primary caregivers who possess an ID card may possess up to eight ounces of marijuana, and may maintain up to six mature marijuana plants per patient. Interestingly, California permits counties and cities to allow patients and primary caregivers to possess medical marijuana in amounts exceeding what is authorized by the MMP, so be sure to check your city and county codes.
4. How can I become a marijuana producer in California? California law provides that MMJ patients and caregivers “may associate within the State of California in order to collectively or cooperatively cultivate marijuana for medical purposes.” This means that a cooperative must file articles of incorporation and must conduct business “for the mutual benefit of its members.” Only patients and caregivers, as defined by the MMP, may produce marijuana in California.
5. If I am a marijuana business owner in California, do I need to pay taxes? Yes. Regardless of whether the individual or company makes a profit, all medical marijuana transactions are subject to sales tax. Keep in mind that you will also need to obtain a Seller’s permit and possibly a city and/or county business license. And do not forget your federal income taxes either.
6. Can my California marijuana business be for profit? No. According to both Proposition 215 and the MMP, there is no authorization for collectives, cooperatives, or individuals to profit from selling or distributing cannabis. Additionally, members may only be reimbursed by the cooperative or collective for amounts necessary to cover overhead costs and operating expenses.
7. From where may collectives acquire their product? Collectives and cooperatives are only permitted to obtain product from their members. Under the regulations, only marijuana grown by a patient or his/her primary caregiver may be lawfully distributed to other members of the same cooperative or collective.
8. What are the security requirements for a cooperative under California law? Unlike Washington and Colorado, California does not have detailed regulations regarding the specific security requirements for cooperatives and collectives. Rather, collectives and cooperatives are required to provide “adequate security.” The vagueness of current law is another reason why legalization and regulation is so important for California moving forward.
9. What steps can I take to ensure that my cooperative or collective complies with state law? The California State Attorney General’s office has stated that there are several “indicia of unlawful operation” that law enforcement officers are on the lookout for. These indicia include excessive quantities of marijuana, excessive amounts of cash, failure to maintain proper business licensing, failure to pay necessary taxes, weapons, illicit drugs, purchases from and sales to non-members, and distribution of marijuana across state lines.
10. When will California legalize recreational marijuana? Many are speculating that a well-drafted initiative will appear on the ballot in November 2016. This would coincide with the presidential election, which tends to draw a greater number of young voters to the polling booths. Capturing the vote of the younger demographic will be critical for pushing through legalization of recreational marijuana in California. Our concern is that the longer California waits on comprehensive state regulation, the greater the likelihood of the federal government making arrests.
For other state FAQs, check out the following: