UPDATE July 17, 2017. New California State Regulations

The Governor has signed a new bill, SB 94, entitled the Medical and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which took effect immediately. MAUCRSA integrates the state’s medical-only regulations passed by the legislature (a.k.a. MCRSA) with the adult-use rules approved by the voters under Prop. 64, a.k.a. AUMA (Adult Use of Marijuana Act). For the most part, MAUCRSA follows the more flexible, industry-friendly rules of AUMA, such as allowing applicants to get licenses in different phases of the industry—cultivation, manufacture, distribution and retailing—rather than restrict so-called vertical integration by allowing just a single kind of license, as under MCRSA. It also eliminates MCRSA’s independent distributor requirement, authorizes the issuance of temporary special-event licenses, and drops the California residency requirement for license applicants.

Under MAUCRSA, applicants have the choice of applying for a medical “Type M” or adult-use “Type A” license in any category (cultivating, manufacture, etc.). It requires a medical and adult-use business to operate separately, but a provision to allow co-location of adult and medical use facilities has been incorporated in a separate regulatory clean-up bill, AB 64.

AB 64 would:

(1) allow medical and adult-use licenses to operate on the same premises;

(2) amend California’s Model State Trademark Law to allow trademarks for cannabis products; and

(3) allow existing medical collectives, which must still operate as not-for-profits under SB 420 pending state regulation, to operate on a for-profit basis immediately.

The new language was inserted into SB 94 as part of the 2017-18 California budget. The MAUCRSA has several new updates.  Here are some of the highlights.

Repealed MCRSA Provisions Get a Second Chance in the MAUCRSA

In general, the MAUCRSA effectively repeals the Medical Cannabis Regulation and Safety Act of 2015(MCRSA). Despite being reversed, the MCRSA provisions didn’t go completely to waste. Many of the provisions from MCRSA were reinserted in MAUCRSA. Not only that, MAUCRSA clarifies that commercial cannabis activity is lawful in California so long as it is done under a valid state license, local approval (if any), and complies with state regulations. This is perhaps one of the most important additions given the current federal climate regarding cannabis.

Priority, Temporary and Unlimited licenses

Under MAUCRSA, priority review license applications are to be given to applicants that demonstrate compliance with Prop 215 and its implementing laws before September 1, 2016. With every application, the state may issue a temporary license until the application is approved or denied. The state can award temporary licenses to applicants until January 1, 2019. Also notable, the Type 5 unlimited canopy licenses remained through the various versions of MAUCRSA. Type 5, 5A, and 5B will not be available until 2023.

Local Approval Still Required for State Licensing

One of the most heated areas of debate is the state requirement of a local permit. Applicants will still need to check in with their local authorities prior to applying for a state license. In an effort to involve local officials, MAUCRSA requires all jurisdictions to have a local contact that will be responsible for communicating any local permits/bans on commercial cannabis activity and the applicant’s compliance with local laws.

Notable Provisions in the MAUCRSA

General Revisions

  • Definition of premises: a contiguous area occupied by one licensee that is designated in the application as to where commercial cannabis activity will be conducted.
  • Definition of owner: one with an aggregate ownership interest of 20% or more; the CEO; a member of the board of directors of a nonprofit; or, someone who will be participating in the direction, control, or management of the facility.
  • Temporary event licenses: allows the sale and consumption of cannabis for those 21+ years old at events such as the Cannabis Cup.
  • Colocation: Medicinal and Adult-Use may operate in one location.
  • Residency: MAUCRSA repeals a residency requirement.
  • Cross Licensure: There are no cross-licensure restrictions, except for testing laboratories and the new quality assurance compliance monitor.
  • Saturation of Business: State agencies must prevent excessive concentrations of businesses and monopolies.

 Cultivation

  • Pesticides: Licensees are prohibited from using pesticides banned by the state.
  • Cooperatives: Cannabis cooperative associations are allowed for groups of three or more cultivators, similar to non-cannabis agricultural cooperatives.

Delivery and Packaging

  • Delivery: Delivery-only retailers are allowed. Although they must have a brick and mortar facility, they do not have to be open to the public.
  • Packaging: Retailers must use opaque exit packaging for products.

Distributors and Transportation

  • No Transportation: Transportation licenses are no longer available. Transportation may only be done by distributors.
  • Quality Assurance: Quality assurance compliance monitors (QACM) was added as a new license type. QACMs are employees of the distributor and cannot hold or have interest in a cannabis license or licensed premises. QACMs conduct random checks to ensure compliance with laws and regulations.

Testing

  • Consumer Products: All testing must be done on products in the final form that is sold to consumers.
  • Untested: Untested products may still be sold if they are clearly labeled as such for the time allowed by BCC.

 Manufacturers

  • Volatile solvents: no longer just butane, but include all solvents that are/ produce flammable gas or create explosive or ignitable mixtures in the air.

Cash Money

  • The MAUCRSA also mandates several state authorities to collaborate to establish a safe and viable way to collect cash payments.

 

For further updates or inquiries, please contact our office at (916) 446-1974 or via email: mitch@abdallahlaw.net.