​Proposition 64 recently passed in 2016 in California and legalized “recreational marijuana for persons aged 21 years or older under state law and establishing certain sales and cultivation taxes”. 

On June 27, 2017, Governor Brown signed SB-94, a budget trailer bill that makes significant changes to California’s commercial cannabis regulatory scheme. The new law, called the “Medicinal and Adult Use Cannabis Regulation and Safety Act” (MAUCRSA) combines the medical and adult-use cannabis systems into one licensing structure with the same regulatory framework governing medical and adult use facilities.

There are a number of revisions, additions and deletions from the original “Medical Cannabis Regulation and Safety Act (MCRSA) that we will cover in a series of blog posts, but today we will focus on delineating the license types.
Under MAUCRSA, the following commercial cannabis licenses will be available starting January 1, 2018, so long as the applicant has the approval of their local jurisdiction. Licenses will be designated as either “M” (medical) or “A” (adult-use), except for Testing facilities.

Cultivation licenses (Types 1-4) are broken down into four categories based upon the size of the grow, and the type of light used-i.e., natural (outdoor), exclusively artificial (indoor), or mixed (a combination of natural and supplemental artificial).

Type 1 – Cultivation; Specialty Outdoor; Small- up to 5,000 sq. ft., or up to 50 mature plants on non-contiguous plots

Type 1A – Cultivation; Specialty Indoor; Small – up to 5,000 sq. ft.

Type 1B – Cultivation; Specialty mixed-light; Small -up to 5,000 sq. ft.

Type 1C – Cultivation; Specialty Cottage; Small – up to 25 mature plants for outdoor; up to 500 sq ft for indoor; or up to
2,500 sq ft for mixed-light

Type 2 – Cultivation; Outdoor; Small – 5,001 to 10,000 sq ft

Type 2A – Cultivation; Indoor; Small – 5,001 to 10,000 sq ft

Type 2B – Cultivation; Mixed-light; Small – 5,001 to 10,000 sq ft

Type 3 – Cultivation; Outdoor; Medium – 10,001 sq ft to one acre

Type 3A – Cultivation; Indoor; Medium – 10,001 to 22,000 sq ft

Type 3B – Cultivation; Mixed-light; Medium – 10,001 to 22,000 sq ft

Type 4 – Cultivation; Nursery; Outdoor/Indoor/Mixed-Light – up to one acre

Type 5 – Cultivation; Outdoor; Large -Greater than one acre, inclusive, of total canopy size on one premises, but no license issued before January 1, 2023

Type 5A – Cultivation; Indoor; Large -Greater than 22,000 square feet, inclusive, of total canopy size on one premises, but no license issued before January 1, 2023

Type 5B – Greater than 22,000 square feet, inclusive, of total canopy size on one premises, but no license issued before January 1, 2023

Manufacturing licenses are separated into two categories based upon the type of solvent used.

Type 6 – Manufacturing Level 1; Using non-volatile solvents – Extraction and/or infusion processes, including processing, preparing, making, packaging, or labeling of cannabis

Type 7 – Manufacturing Level 2; Using volatile solvents – Extraction and/or infusion processes, including processing, preparing, making, packaging, or labeling of products containing cannabis (i.e. concentrates, edibles, and oils)products (i.e. concentrates, edibles, and oils)

Testing licenses are designated Type 8.  The DPH is responsible for ensuring that all cannabis is tested prior to delivery to dispensaries or other businesses, and will specify how such testing will be conducted. Type 8 license holders must test for THC, cannabinoids, contaminants, microbiological impurities, among other compounds

Type 8 – Testing Laboratory – Perform quality assurance testing re compliance with state law regarding content (i.e. THC, CBD, CBDA, etc), pesticide residue, contaminants, impurities, and labeling.
Dispensary licenses:

Type 10 – Dispensary General; Retailer -Licensed to sell/deliver cannabis or cannabis products.
Distribution:

Type 11 – Distributor – Licensed to store, provide cannabis transport, arrange for
testing, and to conduct quality assurance regarding labeling and packaging prior to delivery to retailer.

Type 12 – Microbusiness – Licensed to cultivate (less than 10,000 sq. ft.), distribute/transport, manufacture, and retail on a small scale.
California Licensing Agencies Under Prop 64​​​​​ and Released Regulations. 

CALIFORNIA BUREAU OF CANNABIS CONTROL

Licensing for California dispensaries under Prop 64 will begin January of 2018. One year after this (January 2019), the collectives and cooperatives that we see today will be deemed ILLEGAL. If you plan on operating as a dispensary in California past 2019, you will need to apply for a new license with the California Bureau of Cannabis Control.

The BCC requires that a seed-to-sale, “track and trace” program is used for all cannabis businesses, including growers, testers, and dispensaries. The California Department of Food and Agriculture will establish the track-and-trace program for medical and nonmedical cannabis. This program will allow the movement of cannabis to be documented from the moment it’s planted in the ground (by cultivators), to when it’s tested (by testing facilities), to when it’s sold (by dispensaries). ​Licenses are limited, and the cities are giving them out to the most equipped professionals. Click here for the most recent BCC Fact Sheet

CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE

Cultivators are licensed by the California Department of Food and Agriculture. This is not the only agency Cultivators will have to deal with. There are requirements from The California Department of Pesticide Control, California Department of Fish and Wildlife to various Water Control Boards. The maze of regulations is complex and confusion. Let us help step you through the maze. It can take up to six months to get local licensing. It is not a fast process and the sooner you begin the better. Click here for the most recent CDFA Fact Sheet.

CALIFORNIA DEPARTMENT OF PUBLIC HEALTH

The California Department of Public Health (CDPH) is one of three state licensing authorities charged with licensing and
regulating commercial cannabis activity in California. CDPH is responsible for regulation of the manufacturing component
of the industry, which it will do through the Manufactured Cannabis Safety Branch.
  Click here for the most recent CDPH Fact Sheet.

Prop 64 is allowing recreational dispensaries to open for business and sell marijuana to adults (21 and older) and is phasing out the “collective” and “cooperative” business models that dispensaries are using in California today. There are strict guidelines that these new dispensaries will need to abide by and there will be limited licenses available on a city-by-city basis. 

On June 27, 2017, the Governor signed MAUCRSA, which creates one regulatory system for both medicinal and adult-use cannabis. Prior to that law’s passage, state licensing authorities had released proposed regulations to govern the implementation of the Medical Cannabis Regulation and Safety Act. The public hearings and comments from a broad cross section of stakeholders that were informing that regulatory process have also been taken into consideration in the drafting of these proposed emergency regulations. The licensing authorities expect the emergency regulations to be effective in December 2017. The implementation date for the issuance of the state commercial cannabis licenses remains the same: January 1, 2018. However, California will only be able to license those businesses that are in compliance will all local laws.
 
In addition, the Business, Consumer Services and Housing Agency will hold a workshop with state-chartered banks and credit unions next month to discuss regulatory and compliance issues, as well as potential approaches to banking cannabis-related businesses.


Bureau of Cannabis Control Proposed Text Regulations Relesed November 21, 2017

California Department of Food and Agriculture Emergency Regulations for Cannabis Cultivation Released November 21, 2017

California Department of Public Health Cannabis Manufacuturing Licensing Regulations Released November 21, 2017
 
Multiple Agencies Are Involved in the Licensing and Inspection Process

  • You have to obtain local jursdiction approval. If your site is located in a an "incorporated city" you need approval from the relevant City Counsil. If you are in an incorporated city or area of a County you will revieve approval from the regulations approved by the County Supervisors. 
  • The Bureau of Cannabis Control licenses for practicle purposes operations that are typically conducted inside a building. These in include dispenaraies, distributors, testing labs and microbusiness. Click here for the most recent BCC Fact Sheet.
  • The California Department of Food and Agriculture regulates and licenses cultivators. Cick here for the most recent CDFA Fact Sheet. 
  • The California Department of Public Health inspects and licenses manufactures. Click here for the most recent CDPH Fact Sheet

WHO, WHAT, WHERE, WHY and HOW to proceed and WHO to contact is confusing and complex. We can assist you and your company to navigate the maze of agencies and licensing rwequirements to get you company offi the ground. 

What Will Happen to Medical Users and Dispensaries

First, for medical marijuana users, the medical marijuana card program will not be going away. The California Department of Public Health (CDPH) will continue to print ID cards and maintain a database of qualified users for verification. Secondly, for medical marijuana growers, your medical marijuana cultivation licenses WILL NOT be valid for recreational cannabis growth. You will need to apply for a nonmedical cultivation license under Business and Professions Code Section 26053. Thirdly, medical marijuana dispensaries will not be allowed to sell non-medical cannabis to individuals without a doctor’s recommendation. Only from January 2018 will individuals be allowed to start applying for non-medical cannabis licenses and once these businesses open then adults over 21 can purchase recreational cannabis.

Collectives and Cooperatives Will No Longer Be Legal

Under California’s new laws, the Bureau of Medical Cannabis Regulation (BMCR) has made it very clear that they plan on “phasing-out” the collective model. One year after BCC starts accepting applications for the new dispensaries, collectives and cooperatives will be illegal to run in the state of California. This is extremely important for those business-owners that want to continue their growth; be on the lookout for the new licenses and be constantly reviewing regulations being drafted and modified by numerous counties and incorporated cities. 

California Dispensaries Need to Have Local and State Approval

California is known for it’s diversity and dense population. Along with that comes cities and counties that have banned or restricted commerical cannabis activity and business in their jurisdictins. Cannabis business owners need to be mindful of where they are conducting business or planning on conducting business. BCC is requiring local (city/county) approval prior to applying for the state license. Not all cities/counties will be on board with the new laws; we will provide a list of cities/counties that are banning recreational sales as they come out.

How We Can Assist


  • Our team helps direct cannabis and ancillary businesses throughout the state comply with the specific laws governing state licensing, corporate and regulatory compliance, and navigating local laws and regulations in their cities and counties. Our state licensing, regulatory and review services include:
  • State license application assistance
  • Site review, Land Use and Zoning
  • Coordination with local agencies
  • Review of local regulations and zoning requirements
  • Drafting and managing of operational plans to be submitted to state and municipalities for operational licenses
  • Advice and assistance on local permitting and licensing processes
  • Periodic legal compliance audits
  • Monitoring existing and changing state and local regulations for marijuana businesses
  • Monitoring Federal regulations
  • Guidance regarding compliance with state regulations and the interplay between governing state agencies
  • Business plan development
  • Education regarding ongoing compliance with applicable regulations
  • Development of required manuals and handbooks to meet state regulations
  • Financial reviews to ensure compliance with state regulations
  • License application assistance for cultivators, manufacturers, distributors and retailers