California is quickly growing into the epicenter of the cannabis world and the recent changes to the legal cannabis market creates uncertainty about how to comply with the complex laws and regulations that govern the industry. To grasp the nuances and intricacies that surround the regulations, understanding the laws and the history behind them is the first step towards operating in this lucrative space.
This budding market has immense medical, economic, and social potential, and for many entrepreneurs, these benefits vastly outweigh the cost or the effort needed to establish a cannabis business. The challenges are unique, but the rewards can be substantial so long as you build a solid foundation from which to grow.
Cannabis has become a heavily regulated product in California and other states. The complex laws governing cannabis-related businesses are outlined in the comprehensive legislation. They can be difficult to decipher, and the only way to produce, manufacture, distribute, or sell these products in the Golden State is to ensure you follow the voluminous state and local laws.
At Soliman Law Group, PC we’ve fostered a thorough understanding of California’s cannabis laws and regulations. Our knowledge of both the market’s history and its current realities place us at the forefront of cannabis law. Accordingly, we’ve developed a unique platform from which we assist businesses as they navigate these murky waters and confusing bureaucratic requirements.
Cannabis law changes often as the regulators work to finalize the rules and set the foundation for the industry. In this ever-changing environment, you need someone on your side who understands the market and how to protect your investments for the long-haul. Soliman Law Group, PC provides the support and legal expertise that you will need to move forward confidently in this booming industry.
Whether you’re thinking of entering the market or looking to expand your business, our team at Soliman Law Group, PC is here oversee your compliance with the laws of California so you can focus on what matters most to you: your business.
History of California Cannabis Law
By knowing where we came from, we prepare for the future in this ever expanding market. From the beginning, California took an innovative and forward thinking approach to cannabis as one of the first states to legalize the use of cannabis. In 1996, the state passed a medical marijuana law titled Prop. 215. It legalized the use of marijuana for persons of any age so long as they had a valid physician’s prescription and typically limited possession to up to 8 ounces of cannabis.
Under Prop. 215, medical patients and their primary caregivers were permitted to grow and cultivate marijuana in a private place for medical use. There was also no age limit or restriction on the use of medical marijuana, although minors under 18 needed the permission of a parent or guardian. This early start set the stage for what was to come.
In 2015, California Governor Jerry Brown passed the Medical Cannabis Regulation and Safety Act (“MCRSA”) creating a comprehensive medical cannabis licensing system that was long overdue. The MCRSA established the Bureau of Medical Cannabis Regulation in Sacramento, currently known as the Bureau of Cannabis Control (“BCC”), the agency delegated with rolling out cannabis licensing throughout the state.
In 2016, California voters passed what is known as the Adult Use of Marijuana Act (AUMA). Under AUMA, it is legal for adults ages 21 and over to possess, privately use, or give away up to one ounce of marijuana. Additionally, adults ages 21 and over can cultivate for personal use up to six marijuana plants at their residence.
After various comments by the public and industry leaders, Gov. Jerry Brown authored and finalized the trailer bill language (TBL), Senate Bill 94, in the summer of 2017 which effectively repealed the MCRSA and combined its provisions with those of Prop 64, codified as Medical and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”). MAUCRSA clarifies that commercial cannabis activity is lawful in California so long as it is done under a valid state license, local approval, and complies with both city and state regulations. This is perhaps one of the most important additions given the current federal climate regarding cannabis. These commercial activities include the commercial cultivation, distribution, production, testing and retail sale of cannabis.
While these laws seem straightforward, they are heavily regulated and controlled. For example, although MAUCRSA authorizes the legitimacy of a regulated commercial cannabis space, it requires approval/licensing on the local level as well. Commercial cannabis is therefore subject to different bans by local city and county governments. Without a lawyer at your side, it is not difficult to violate these complex laws.
Prohibited Uses of Cannabis in California
Although cannabis use is legalized in many ways in California, there remains several prohibited activities across the state, and understanding what you can and can’t do is the first-step in protecting your business. These activities include:
- Smoking, vaporizing or ingesting cannabis in a public place, including hallways, lobbies, restaurants and anywhere else that smoking is prohibited. This includes the location directly outside your business where the most eager customers may be excited to try their new purchase.
- Smoking, vaporizing or ingesting cannabis within 1,000 feet of a school, day care or youth center while children are present. This law does not apply if the activity occurs in a private residence.
- Consumption of cannabis while driving or riding as a passenger in a vehicle.
- Driving under the influence of cannabis. It remains illegal in California, as in every other state, to drive a vehicle while under the influence of an impairing substance.
- The AUMA does not repeal or replace any restrictions by employers, landlords, or other private individuals on cannabis use. These entities may still freely ban and prohibit the use of cannabis on their premises.
- The sale of cannabis by a non-licensed facility is a misdemeanor. California law does allow adults to give cannabis to another adult, but the amount transferred must be less than one ounce.
- The sale of any amount of cannabis to minors under the age of 18 is a felony.
- Employing a minor to assist illegally in cannabis sales is also a felony and is punishable by up to 3 years in prison.
With the passage of the AUMA, most marijuana offenses were downgraded from felonies to misdemeanors or infractions. A person with a previous conviction for marijuana related offenses prior to the AUMA may be eligible to have their conviction dismissed and their criminal record cleared, but the rules currently in place are heavily enforced and severe repercussions remain for those who break them.
Violating these rules could cost you thousands of dollars in fines and legal fees, or even lead to a felony and prison sentence. At Soliman Law Group, PC, we guide you through these laws so you understand what is and isn’t permissible and can rest easy and remain focused on your business.
Federal Cannabis Laws and Prohibitions
While California has changed its rules on cannabis, the federal government remains less enthused. For the average citizen, this poses minor concern, but businesses must be aware of the current federal position and the direction that position is moving.
Possession of cannabis remains illegal on federal territories, including state forests and parks, and the AUMA does not replace federal law. Under the United States Controlled Substances Act, it remains illegal to possess or consume marijuana in these areas. If you find yourself charged with marijuana possession on federal property, it is important to hire an experienced attorney immediately as federal criminal penalties can be severe. Soliman Law Group, PC is well-versed in theses differing state and federal government laws and can navigate these discussions to protect your rights.
Cannabis Licensing Approval Process
Whatever commercial cannabis space you occupy or would like to enter, there are several routes open to you. The market is small and tightly regulated, and the only way to legally conduct commercial marijuana business is through state and local licensing. Although there are different categories of licenses that you can obtain, there are two types of license designations.
1) The first type of license is an “M” use license. An “M” use license is a license for the medical sale of marijuana.
2) The second type of license is an “A” or adult use license. The A use license allows the sale of cannabis for personal, non-medical use.
On January 1, 2018, a new state law provided for commercial cannabis product licensing. All cannabis which is offered for sale must now first go through a distribution chain and state lab for processing. State taxes are also assessed on the products at the time they come through the chain. Under the new law, the following licensing types were established:
Type I: “Specialty Outdoor” -No artificial lighting and the plants are cultivated in an area less than 5,000 sq ft. This classification can apply to a maximum of 50 plants on non-contiguous plots
Tupe 1A:”Specialty Indoor” -Indoor cultivation using exclusively artificial lighting between 501 and 5,000 sq. ft.
Type 1 B: “Specialty Mixed-Light” -Combination of natural and artificial lighting between 2,501 and 5,000 sq ft.
Type 1 C: “Specialty Cottage” – 2,500 sq. ft or less of mixed light, or up to 25 mature plants outdoors or 500 sq. ft indoor cultivation
Type 2: “Small Outdoor” -No artificial lighting, 5,001 -10,000 sq ft.
Type 2A: “Small Indoor” -Exclusively artificial lighting, 5,001-10,000 sq. ft.
Type 2B: “Small Mixed-light” 5,001-10,000 sq. ft.
Type 3: “Medium Outdoor” 10,001 sq. ft.
Type 3A: “Medium Indoor” 10,001 – 22,000 sq. ft.
Type 3B: “Medium Mixed-Light” 10,001 – 22,000 sq. ft.
Type 4: “Nursery” -For cultivation
Type 5: “Large Outdoor” -Cultivation over one acre
Type 5A: “Large Indoor” -Over 22,000 sq ft.
Type 5B: “Large Mixed-Light” -Over 22,000 sq ft
** No type 5, 5A, 5 B licenses may be issued before Jan 1, 2023.
Type 6: “Manufacturer 1” -No use of volatile solvents
Type 7: “Manufacturer 2” -Use of volatile solvents
Type 8: “Testing Laboratory” -Testing laboratory may not hold any other kind of licenses.
Type 10: “Retailer”
Type 11: “Distributor” -Responsible for collecting taxes, testing, and transporting product to retailers. Retailers must purchase cannabis through a distributor.
Type 11: “Distributor Transport Only” (CA Code of Regulations Section 5014)
Type 12: “Micro-business” – Combination license allowing cultivation of less than 10,000 sq ft, manufacturing (Type 6 only), distribution, and retail sales (Must conduct a minimum of 3 activities).
Except for testing labs and Type 5 large cultivators, individuals are allowed to hold any number or combination of licenses with no limitations.
Although dispensaries and businesses must be licensed at a state level, it is important to note that all state-licensed cannabis businesses must also possess a local permit allowing them to operate. Many cities and counties across California have allowed cannabis retail establishments to operate in their jurisdiction.
However, there are a number of places across the state which have refused to recognize these businesses and are not actively issuing permits. Prior to opening any cannabis business licenses or applying for a state permit, it is important to check that the local jurisdiction in which you intend to operate allows such activity as well.
You should also keep in mind that some municipalities issue licenses for some types of cannabis activities but not others. Additionally, several municipalities have displayed a preference for indoor cultivation over outdoor cultivation.
Before you invest in a cannabis business, the team at Soliman Law Group, PC can provide you with local information on permits and procedures so you can open and continue to operate without worry.
Establishing A Cannabis Business
If you are considering opening a commercial cannabis business, there are many aspects to consider. Potential cannabis business owners and operators should be prepared to deal with a variety of issue and provide an immense amount of documentation during the local licensing process, including:
- Business Plans: Potential owners should be prepared to show a business plan with projected revenues and operating costs, as well as a list of prospective suppliers and retailers. The plan should also include a list of company officials, including key management and officers.
- Zoning and Land Use: The property you plan to use must be located a minimum distance from certain areas such as daycares and schools, and the zoning type must be suited to the type of establishment you plan to run.
- Security: You should have a detailed plan for security, including alarms and guards.
- Insurance: Some local municipalities require proof of insurance, and it’s important to speak with your insurance provider to check that your coverage applies to a cannabis business.
- Site Plans: You may need to hire a civil engineer to provide site plans to provide to the local licensing board for review
- Criminal History: Your municipality could require a criminal background check of your and your employees prior to granting a permit.
- Tax Returns: The municipality may require individual as well as business tax returns if your entity has a business operating history.
As you can see, there are various state and local government agencies involved in the regulation of cannabis production and sale. It can seem confusing, but remember, the first step is acquiring a lawyer who can lead you through the process from initial conception to flourishing business. Once you’ve added Soliman Law Group, PC to your team, the next stage in the process of opening a cannabis business is to obtain a location and the proper licensing so that you can operate legally.
Our firm assists with the process of obtaining the necessary licenses and permits to operate any commercial cannabis business. We offer consulting and advisory services on the process of obtaining permits. We also help prospective business owners secure meetings with key city and local government decision makers who handle the issuance of permits.
Federal Enforcement of Cannabis Laws
One concern for some marijuana dispensaries is the continuing federal ban of marijuana as a controlled substance as stated under the Controlled Substances Act. During the Obama administration, a series of memos were issued from the Department of Justice which relaxed federal enforcement of cannabis laws.
In January, 2018 Attorney General Jeff Sessions issued the Sessions Memo which withdrew enforcement guidance put in place by the Obama administration. The Sessions Memo withdrew previous memos such as the Cole Memo, Ogden Memo, FinCen Guidance and Wilkinson Memo. All of the rescinded memos relaxed federal enforcement of state-legalized activities related to the sale and distribution of cannabis.
Despite the current administration’s approach to cannabis regulation, medical cannabis remains covered under the Rohrabacher-Blumenauer amendment. This amendment is a Congressionally-created budget amendment which bans federal prosecutions as they relate to the distribution activities of medical marijuana operations.
A similar amendment has been proposed to cover the activities of state-legalized recreational cannabis dispensaries. Although it has not yet been approved, this amendment hopefully signals a continuing downward trend in federal law enforcement relating to legal marijuana sales operations.
The volatile nature of D.C.’s approach to cannabis means you cannot bank on a lack of enforcement. Only by following the rule of the law can you protect your business, your investments, and yourself.
California Cannabis Attorneys
Cannabis law is complicated. Although California remains on the forefront of cannabis legalization, there are still many pitfalls for those unfamiliar with the intricate details of the law. From growing restrictions to complex licensing and regulation schemes, the laws are often too detailed for the average person to fully understand and apply in their daily lives.
Whether you are facing potential prosecution for a cannabis offense, are a medical provider, are seeking a cannabis use license, or want to open a cannabis dispensary or delivery service, you need the services of an experienced California cannabis attorney. At the Soliman Law Group, our attorneys have significant experience advising people through the complex maze of California cannabis laws. Please contact us today for a consultation and allow us to guide you successfully through your situation. We look forward to hearing from you.