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History of Marijuana Laws in California

California first enacted laws protecting the use of medical marijuana in 1996. Since that time, and mainly during the last two years, there have been substantial changes in those laws, and a broadening of those protections to recreational or “adult-use" marijuana or cannabis.

Medical MarijuanaFirst, in 1996, California approved the country’s first medical cannabis program through the Compassionate Use Act (“CUA"), commonly known as Proposition 215, a ballot initiative passed by voters. The CUA exempts qualified medical marijuana patients, with valid recommendations from physicians for medical cannabis use, from criminal prosecution for possession and use of medical cannabis. The CUA was groundbreaking and cracked the door open for what has now become the legal cannabis industry in dozens of states more than two decades later.

Next, in 2003, the California Legislature passed the Medical Marijuana Program Act (“MMPA") through Senate Bill No. 420. The MMPA formalized California’s medical cannabis program by providing for patient identification cards issued by the Department of Health and the formation of patient "collectives" that can cultivate and distribute marijuana to approved patients who are members of the collective.

In the ensuing years, patients, cultivators, manufacturers, distributors, and dispensaries have relied on the CUA and MMPA to protect their activity in the medical cannabis industry under what is known as the “collective model." This model actually remains today, even with the recent passage of Proposition 64 and State legislation authorizing permitting and licensing of both medical and adult-use businesses.

Recent Changes to State Law

In October 2015, California enacted three bills (Assembly Bill No. 243, Assembly Bill No. 266, and Senate Bill No. 643) that made up the Medical Marijuana Regulation and Safety Act, later renamed the Medical Cannabis Regulation and Safety Act ("MCRSA"). MCRSA established "a comprehensive licensing and regulatory framework for the cultivation, manufacture, transportation, storage, distribution, and sale of medical marijuana." Under MCRSA, Medical cannabis would be subject to licensing and regulations by several State agencies within the Department of Consumer Affairs, including the Department of Food and Agriculture, Department of Public Health, and newly-created Bureau of Medical Cannabis Regulation. In November 2016, California voters approved Proposition 64, known as, the Adult Use of Marijuana Act (“AUMA"). AUMA legalized cannabis possession and consumption for individuals 21 years old and above and provided for a comprehensive licensing and regulatory framework for adult-use cannabis similar to that created by the MCRSA for medical cannabis. AUMA also provided for a reduction of certain qualifying crimes relating to adult-use cannabis from felonies to misdemeanors.

Medical MarijuanaIn June 2017, MCRSA and AUMA were combined into the Medical and Adult Use Recreation and Safety Act (“MAUCRSA") through Senate Bill No. 94 to provide a comprehensive licensing and regulatory system for both medical and adult use cannabis. As a result, beginning January 1, 2018, separate licenses or permits must be obtained both from local municipalities and the State to grow, manufacture, distribute, transport, test, and sell cannabis products. This dual jurisdiction licensing requirement allows counties and cities to license, regulate, and tax cannabis businesses, or even ban commercial activity in its entirety.

Additionally, as of 2019, the collective model ceased to offer protection for commercial cannabis activity; those businesses are required to have a license or permit to legally conduct its activity. Under MAUCRSA, cannabis is now regulated by several State agencies, including the Department of Food and Agriculture, Department of Public Health, and Bureau of Cannabis Control within the Department of Consumer Affairs. MAUCRSA requires cannabis businesses to meet complex development and operating standards and regulations, some of which have yet to be finalized. These include, among other requirements, security, fire, and safety measures; “seed-to-sale" tracking of medical cannabis; testing, labeling and packaging requirements to ensure products are safe for consumption; labor and employment law compliance; and even restrictions on where businesses may be located. While these measures will result in a vastly more stable and predictable business environment, they are nonetheless obstacles that require sophisticated legal advice to navigate.

California Cannabis State Licensing And Regulatory Agencies

Under the Medicinal and Adult Use Cannabis Regulation and Safety Act, commonly referred to as, "MAUCRSA" (pronounced "mao-ker-suh"), commercial cannabis activity is licensed and regulated by three different state agencies. Retailers (storefront and delivery), distributors, and testing labs are regulated by the Bureau of Cannabis Control (BCC), which is also the lead state agency for regulating cannabis.  Cultivators are regulated by the California Department of Food and Agriculture – CalCannabis. Manufacturers (extraction and infusion) are regulated by the California Department of Public Health – Manufactured Cannabis Safety Branch (MCSB).

Resources,

Bureau of Cannabis Control

Bureau of Cannabis Control

California Department of Public Health – Manufactured Cannabis Safety Branch


California Department of Food and Agriculture – CalCannabis


Additional Resources for Cultivators


Medical MarijuanaAs part of the licensing process, cultivators are required to obtain permits and authorization from a number of other state agencies. These include a Lake or Streambed Alteration Agreement from the California Department of Fish and Wildlife – Cannabis Cultivation Permitting, a Water Quality Protection Permit from the California Water Board - Water Boards Cannabis Cultivation Program, and a Weighmaster License from the California Department of Food and Agriculture – Division of Measurement Standards.

 

 

Links to State Agencies:
California Department of Food and Agriculture – Division of Measurement Standards
California Department of Fish and Wildlife – Cannabis Cultivation Permitting
California Water Board - Water Boards Cannabis Cultivation Program


CEQA Compliance

MAUCRSA requires that licensees demonstrate CEQA compliance. Each of California’s three cannabis licensing agencies (BCC, CDFA, and CDPH) set their own CEQA compliance demands.

The BCC conducted a broad initial study (IS) of the potential impact of its emergency regulations. Rather than issue an EIR, the BCC prepared an Initial Study/Negative Declaration.
CalCannabis issued a Program Environmental Impact Report (PEIR). The PEIR includes general findings that various impacts frequently associated with the statewide cultivation program. Notably, MCSB  opted not to issue any CEQA review documents related to its regulations for manufacturers.

 


Taxes

Two new state taxes apply to the cannabis industry. Both state taxes are administered by the California Department of Tax and Fee Administration (CDTFA), yet another agency with regulations affecting the cannabis industry.

For cultivators, the state imposes a cultivation tax. As of January 1, 2019, the cultivation tax rates are:

The cultivation tax is borne by the cultivator but is ultimately remitted to the state by the distributor. For cannabis flower and pre-rolls, that means the cultivator pays the tax to the distributor, who remits payment to the CDTFA. For manufactured products, the manufacturer collects the tax from the cultivator and then pays it to the distributor.

Resources

The state also imposes a cannabis excise tax on retailers, in addition to state sales tax. The cannabis excise tax is 15% of the "average market price." The burden of tax collection and payment to the CDTFA is shared among licensees, but the distributor is ultimately the licensee responsible for remitting payment of the cannabis excise tax to the CDTFA. The sales and use tax is paid by the retailer directly to the state.


Local Regulators

The regulatory framework established by MAUCRSA provides local jurisdictions—counties and cities—with the right to regulate and license cannabis businesses. In 2018, the City of Los Angeles created the Department of Cannabis Regulation (DCR) to administer its licensing and regulatory program. The County of Los Angeles created the Office of Cannabis Management
to implement a licensing and regulatory framework, but has not yet opened the process up for applications.

Links to Local Regulators
City of Los Angeles – Department of Cannabis Regulation
County of Los Angeles – Office of Cannabis Management
City of Santa Monica – Office of Finance
Culver City – Cannabis Permitting

West Hollywood – Cannabis Business Licensing