California’s proposed medical cannabis regulations give a glimpse of what’s to come

header-organizationAll eyes are on California right now as the state moves aggressively to take the extraordinary steps to reconcile two sets of laws (one for medical cannabis and one for recreational, or “adult use” cannabis), draft and approve regulations for laws that are probably not final yet, create regulatory, licensing, and “track and trace” systems, and review and approve applications to allow licensed businesses to operate by January 1st, 2018.

Sound challenging? A California legislator likened it to “flying an airplane while it is still being built.”

The California Bureau of Marijuana Control (BMC) took two major initial steps last month to move these multiple tasks forward by releasing proposed “trailer” legislation to be included in the budget bill as well as proposed regulations for the medical marijuana system. To help you understand how all of these pieces fit together, below is a high-level timeline on cannabis laws and regulations in California.

  • 1996: Voters approve Prop 215, legalizing the use of medicinal cannabis. Since then, little regulation was established, and most of that was done by local governments.
  • 2015: Legislature enacts three bills – AB243, AB266, ad SB643. These bills became known collectively as the Medical Cannabis Regulation and Safety Act, or MCRSA.
  • 2016: Legislature enacts SB 837, which builds on the MCRSA framework to add environmental safeguards to protect streams and rivers.
  • 2016: Voters approve Prop 64, other wise known as Adult Use of Marijuana Act, or AUMA.
  • April, 2017: Department of Consumer Affairs, Bureau of Cannabis Control introduces Proposed Trailer Bill Legislation. This proposed language is meant to consolidate the differences between AUMA and MCRSA by combining the two laws into a single code that would regulate both medical and adult-use cannabis.
  • April, 2017: Department of Public Health, through their new Office of Manufactured Cannabis Safety, drops regulations for medical cannabis manufacturers.
  • April, 2017: Bureau of Marijuana Control sends out a Notice of Proposed Rulemaking with proposed regulations for medical cannabis use for distributors, transporters, and dispensaries.
  • April, 2017: Department of Food & Agriculture’s (CDFA) CalCannabis Cultivation Licensing division, which is responsible for regulating cannabis cultivation, introduces proposed regulations for medical cannabis cultivation.

The proposed regulations for medical cannabis are the first glimpse into the details of what the Bureau of Marijuana Control (BMC) has in mind for regulating cannabis in California. However, it’s important to note that these regulations are very likely subject to change, so therefore should be used primarily as a guide for what is to come. If the legislature passes the proposed trailer legislation either as-is or with modifications, the law would change and the various departments would have to issue new regulations for the consolidated system. So, although you should expect changes coming from the legislature, the medical regulations are helpful for now as a roadmap for what’s to come for California’s cannabis regulatory system.

In future posts, we’ll break down the 58-page medical cannabis regulations (as well as the “trailer” legislation) for distributors, transporters, and dispensaries. These regulations create the rules under which businesses can operate, including details about how to get licensed (get ready to open the kimono!), what details are required for the track and trace system, which information is required for labeling, and generally which activities are permitted and which are prohibited.

One thing to keep an eye on here in particular is the issue of “vertical integration”. In the world of beverage alcohol, most states enforce a “three tier” system that prohibits businesses from owning licenses in multiple tiers (production, wholesale distribution, and retail). AUMA (full integration) and MCRSA (limits on integration) are at odds on whether to allow full vertical integration for cannabis businesses in California. Advocates on both sides of this issue are debating it furiously.

The bottom line here is that things are moving extremely quickly in California right now and it’s time to pay attention and provide feedback to the regulatory authorities before bills are codified and regulations are finalized. We’ll be keeping up with the changes here and breaking down the different parts to help you better understand what’s going on.

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