Proposed New Medical Marijuana Rules for California Industry

After two decades of little to no government oversight, Proposition 215 is back in the spotlight. Since the Medical Cannabis Regulation and Safety Act of 2015, the state is now striding toward extensive control of this industry. Under this law, businesses can expect changes to the medical marijuana rules of California, including mandates for stricter regulations, increased oversight, and forced compliance.

California’s New Laws for Medical Cannabis

The MCRSA introduced a bevy of regulatory tasks for marijuana business. To comply, companies are investing in specialized software to help them meet requirements. According to California Legislature, the Adult Use of Marijuana Act of 2016 also aims to control, regulate and tax recreational cannabis with similar fervor. New proposals under the MCRSA include mandating the following:

• Requirements for labeling and packaging.
• Compulsory quality testing.
• All aspects of product marketing.
• Cannabis lifespan tracking, from seed to sale.
• Restricting environmental impact.
• Limiting potency and canopy sizes.
• Restricting ownership and financing.

Impact of New Laws on Medical Marijuana Businesses

Recreational and medical uses of cannabis are very different to each other. For regulatory and control purposes, merging them is becoming a priority for Attorney General Jeff Sessions and other important lawmakers. Handling these two industries currently ranges from prioritizing recreational business and killing the medical side to dual licensing and regulation.

Neither option is particularly practical. For this reason, California is now combining regulatory and licensing systems for recreational and medical cannabis. Although similarities exist between MCRSA and AUMA, there are significant licensing, operational, and regulatory differences. Overcoming these parallel systems and merging them is the primary goal of the state, and they include the following:

• Timelines for licensing.
• Qualifications for licensing priority.
• Compulsory distributorships.
• Types of licenses and categories for them.
• Ability of jurisdictions to have approval authority over the state.
• Restrictions on ownership.
• Requirements for residency.
• Systems to track and trace cannabis plants from seed to sale.
• Limitations on concurrent licenses.

Proposals For New Laws for Medical Cannabis Industry California

Governor Jerry Brown responded recently to these conflicting differences in his Budget Trailer Bill. According to the California Department of Finance, public and consumer safety is the motivation behind creating a single regulatory structure for both medicinal and adult use of cannabis. For the medical marijuana industry, the Bill favors AUMA and its more liberal regulations, specifically the following:

• Combine AUMA and MCRSA into the single Medicinal and Adult Use Cannabis Regulation and Safety Act.
• Make it compulsory for recreational marijuana businesses to qualify for “A-Licenses,” while medical marijuana companies apply for “M-Licenses.” You can run both businesses and have both licenses, provided they do not operate from the same premises.
• Change the “continued residency” requirement of AUMA to January 1, 2015.
• Respecting jurisdictional laws and compliance by permitting licensees to get local approval before issuing state licenses.
• Create vertical integration of medical cannabis licenses in similarity to AUMA, except laboratory testing, which will require an independent license.
• Keep the open distributor model of AUMA by allowing medical cannabis companies to obtain multiple licenses for easier market access, heightened innovation, and legal compliance.
• Legal definition of “applicants” to become “owners applying for state licenses,” and “owners” will become anyone participating in the company’s management, control, or direction, or any persons in ownership of at least 20 percent of the business.
• Require all owners of marijuana businesses to pass criminal checks and fingerprinting by the Department of Justice. As the licensing authority requires, applicants must disclose anyone with any financial interest in their cannabis activities.
• Make medical allowances for the more liberal cultivation licenses of AUMA.
• Introduce the Type 1C cultivation allowance, called “specialty cottage,” to increase the number of marijuana business licenses available in California to twenty.
• Create requirements for microbusinesses to obtain regulatory approval from the Department of Food and Agriculture, the Department of Public Health, and the Bureau of Cannabis Control.
• Afford medical and recreational licensees the same environmental restrictions and protections.
• Task the Department of Food and Agriculture with the creation of the state’s appellation standards in advance of the January 1, 2020 deadline.

Ripple Effect of Medical Marijuana Rules Proposed in California

Currently, these new  laws for medical marijuana remain proposals, but by summer’s end, it is likely that this Bill will get the two-thirds vote it needs to pass legislature. If California merges AUMA and MCRSA effectively under the same oversight umbrella, other states will no doubt feel the impact of its tax and regulatory requirements in the very near future, as well.