New Medical Marijuana Regulations in California: The Medical Marijuana Regulation and Safety Act

Introduction

On October 9, 2015, Governor Jerry Brown signed AB 266, AB 243, and SB 643 into law, which together comprise the new California Medical Marijuana Regulation and Safety Act (MMRSA). This is the first piece of legislation impacting California's medical marijuana laws since the passage of SB 420 in 2003 (the Medical Marijuana Program Act).  The MMRSA heavily regulates the medical cannabis industry by creating a comprehensive state licensing system for the commercial cultivation, manufacture, retail sale, transport, distribution, delivery, and testing of medical cannabis.  License holders are protected from arrest, prosecution, and other legal sanctions. However, the MMRSA imposes civil sanctions for failing to comply with its requirements.  

The biggest changes coming out of the MMRSA are:  (1) individuals must apply for one of seventeen types of new licenses in order to grow, transport, manufacture, and/or sell medical cannabis (for non-personal use), etc.; (2) the "collective" and "cooperative" language contained in SB 420 (H&S 11362.775) will be phased out once licenses begin to be issued; (3) background checks will be required for licensees; and (4) for-profit entities are implicitly allowed to apply for licenses and grow, cultivate, manufacture, and sell medical cannabis.

This new regulatory framework may serve as a building block for the stream of regulations that will certainly come if marijuana is legalized in California in 2016.   

Licensing Scheme

AB 266 establishes a new Bureau of Medical Marijuana Regulation under the Department of Consumer of Affairs.  The Bureau is responsible for keeping track of licensees under the MMRSA and for tracking the movement of medical cannabis.  AB 266 allows for-profit entities to apply for licenses with the Bureau in order to engage in the medical cannabis business.  AB 266 and SB 643 codify the following seventeen different types of licenses (some of which may be held in combination with others):

  1. Type 1 = Cultivation; Specialty outdoor.  Up to 5,000 sq. ft. of canopy, or up to 50 non-contiguous plants;
  2. Type 1A = Cultivation; Specialty indoor.   Up to 5000 sq. ft.; 
  3. Type 1B = Cultivation; Specialty mixed-light. Using exclusively artificial lighting; 
  4. Type 2 = Cultivation; Outdoor. Up to 5000 sq. ft.,  using a combination of artificial and natural lighting; 
  5. Type 2A = Cultivation; Indoor. 5001 -10,000 sq. ft.; 
  6. Type 2B = Cultivation; Mixed-light. 5001 -10,000 sq. ft.; 
  7. Type 3 = Cultivation; Outdoor. 10,001 sq. ft. - 1 Acre;
  8. Type 3A = Cultivation; Indoor. 10,001 - 22,000 sq. ft.;
  9. Type 3B = Cultivation; Mixed-light. 10,001 - 22,000 sq. ft.;
  10. Type 4 = Cultivation; Nursery;
  11. Type 6 = Manufacturer 1 for products not using volatile solvents;
  12. Type 7 = Manufacturer 2 for products using volatile solvents;
  13. Type 8 = Testing;
  14. Type 10 = Dispensary; General;
  15. Type 10A = Dispensary; No more than three retail sites;
  16. Type 11 = Distribution;
  17. Type 12 = Transporter.

Restrictions on Cultivation/License Holding

Certainly the most controversial language of the MMRSA is its restrictions on cultivation, the constitutionality of which is already being challenged in California.  The maximum allowable outdoor cultivation site is 1 acre (Type 3 License), and maximum allowable indoor site is 22,000 sq. ft. (Type 3A & 3B Licenses).  Further, certain types of license holders are ineligible to hold other types of licenses.  For instance, Type 3-4 licensees cannot apply for manufacturing licenses.  

Type 1-2 licensees may hold Type 6-7 licenses or Type 10A retail licenses, but may only maintain three dispensaries.  Type 10A licensees can apply for both manufacturing and cultivation licenses, provided their total cultivation area doesn't exceed 4 acres.  Type 11 distributors and Type 8 testing facilities are not allowed to hold any other kind of licenses. However, cultivation and manufacturing licensees may have their own labs for in house testing. 

Distributors

All cultivators and manufacturers (License Types 1-12) are required to submit their product to the newly established Type 11 Distributors.  Distributors are responsible for quality assurance and testing. In addition, all Type 11 Distributors must submit all product they receive to Type 8 Testing laboratories for batch testing and certification.  The Type 8 Testing labs then send the product back to the Type 11 distributors for final inspection and execution of the contract between the cultivator and manufacturer or manufacturer and retailer.

Power of Cities to Regulate

California cities may still use their zoning power to flat out ban the medical cannabis industry from operating in their municipalities, as Temecula, Murrieta, and many other cities in Riverside County have done.  As such, this legislation will mean little to patients and persons engaging in the medical cannabis industry in Temecula or Murrieta, at least until the cities revisit their hostile stance toward the medical cannabis industry.  Further, licensees must acquire the necessary local licenses and permits from their respective city in order lawfully operate under the MMRSA.

background checks on license applicants

This is perhaps the most troubling piece of all of the new legislation.  The MMRSA requires all licensee applicants to submit their fingerprints to the Department of Justice for a background check. The Bureau may deny licensing to an applicant if the applicant has been convicted of an offense substantially related to their necessary qualifications, including:  (1) ANY felony controlled substance offense; (2) violent or serious felonies; or (3) felonies involving fraud, deceit, or embezzlement.  

Once again, California has enacted legislation that will disenfranchise felons from participation in society.  Under the new rules, anybody convicted of a felony controlled substance offense (including any felony marijuana conviction) may be denied a license to cultivate, manufacture, etc. 

Tracking and tracing marijuana

The Department of Food and Agriculture (DFA) will implement a unique identification program for all cannabis plants at a cultivation site, which will be fixed to the base of each plant.  The identification cards will be logged into the "track and trace" program, so that the DFA can monitor the movement of the plants from cultivation site, to manufacture site, to distributor site, to lab site, and eventually to retail.  

delivery of medical cannabis

Qualified patients may have cannabis delivered to them only by dispensaries and only in cities or counties where not prohibited by local ordinance.  All deliveries must be documented.  No city or county can bar transportation of medical cannabis through its territory.  Further, transporters of medical cannabis must acquire the proper type of license (Type 12).   

testing of medical cannabis

The Department of Public Health is required to ensure that all medical cannabis is tested prior to being delivered or sold to qualified patients.  Licensees are required to test for cannabinoids (THC, CBD, etc.), contaminants, microbiological impurities, and other compounds.  Licensees may conduct tests for individual qualified patients, but cannot certify product tested in house for resale or transfer to other licensees.

Personal use/cultivation

Thankfully, qualified patients can lawfully operate outside of the new regulatory scheme and continue growing for their own personal medical use.  The MMRSA provides that qualified patients may cultivate up to 100 square feet of cannabis for medical use.  Primary caregivers with five or fewer patients are allowed up to 500 square feet of growing room.  The 100 square foot limitation is most likely not a limitation at all, given the holding of People v. Kelly.  However, if a qualified patient grows more than 100 square feet of marijuana, they should be ready to explain why their personal medical needs require the cultivation of more than 100 square feet of marijuana.    

This article scrapes the surface of the host of new regulations promulgated by the MMRSA.  If you have any questions regarding the MMRSA or would like to consult with me regarding compliance with it, please use the contact form below.  

The full text of each of the bills are available here:  AB 266, AB 243, and SB 643

Posted by Mike Donaldson.