Things are changing in the state of California. Proposition 64, or AUMA licensing applications are set to be available from the state on January 1, 2018 and, with that will come a sweeping overhaul to non medical cannabis regulations in the state.
Currently, the MCRSA already has in place a comprehensive state licensing standard for commercial medical cultivation, manufacture, transport, distribution, delivery, testing, and sale of medical cannabis.
Although there are many similarities between the two laws, there are also a number of dramatic differences that can seem confusing in their legislative jargon. There are differences in licensing timelines, distributorships, license categories and types, local approval for licenses distributed, requirements of residency and ownership, and limits on vertical integration.
Recently, Governor Brown sent a monumental budget trailer bill proposal to the state legislature amending previous state regulations. His goal appears to be more of an organic merging of the MCRSA and the AUMA so that the issue of consumer and general public safety is addressed.
The fact sheet attached to the budget trailer bill proposal states that one regulatory structure in place will be much less confusing and more uniform. It says, “…one regulatory structure for cannabis activities across California is needed to maximize public and consumer safety.”
Ultimately, the goal is synchronization.
Here is a brief overview of the proposed changes;
- The licensing process will allow local governments to have the final say in approval. If the trailer bill passes as its written you could be required to apply on to the state of California if you locality has not banned your cannabis activity and also does not have a application process. The Police unions and the California League of Cities are strongly against this provision.
There will now be two separate licenses. If an applicant wants to open a medical marijuana business, he will apply for an “M-License”. If the business is recreational, the license type will be an “A-license”. Both licenses can be applied for simultaneously, but both of the business cannot be in the same location. Jerry Browns goal with this provision was to ensure in the case of a federal crack down on Recreational cannabis businesses your medical operation would stand alone.
The continuous residency requirement will be taken away, allowing for anyone to acquire a license, regardless of state of residency.
The AUMA’s almost complete vertical integration of licenses will remain, allowing for a business to hold more than two licenses for more than one stage of production. This is major and could be potentially risky, as it could allow more of a monopolistic structure to form. I’m personally conflicted on this provision. I understand the need to stop well financed companies from coming into California and owning dozens of licenses in multiple categories. But, after years of organizing small businesses I’ve seen dozens of operators start in one category and have success expanding their offerings. So although I do want to have a level playing field for all involved I would like to see small operators who are successful in one category have the ability to start in another.
The new proposed definition of an “owner” will be any person having at least twenty percent ownership, or anyone who is involved in control, management, or direction of the business or anyone with more the a 5% interest in a Publicly Traded Company.
Background checks will be enacted, requiring each business owner to go through a Dept. of Justice criminal background and fingerprinting check. It will also require that all people who are financially involved in any part of the business be reported to the D.O.J.
A new cultivation license will be added. It will be known as Type 1C, and it will be a specialty cottage license, which will bring the number of state licenses to twenty!
Distribution laws could change for MCRSA. Currently, a separate and independent distributor must deliver all products to the retailer, rather than allowing the grower to control that. Prop. 64 states that producers will be able to handle all products themselves, encouraging more of an open, growth market. Governor Brown would like to keep Prop. 64’s vision alive, although many would like to see that changed including the powerful alcohol distribution lobby.
There will be no more state issued identification cards for medical marijuana patients. The voluntary program would be ended. You would only need a simple recommendation for medical cannabis from a licensed doctor.
There are a number of other proposed changes, but these are the most important initially for a new cannabis startup and should be looked at the very carefully.
There is a long list of supporters of the new proposal. It reads like a laundry list of highly influential organizations, such as;
TUnited Food and Commercial Workers International Union
The California Cannabis Industry Association
The Law Enforcement Action Partnership
Americans for Safe Access
L.A. Cannabis Task Force
The International Cannabis Farmers Association
The California Cannabis Manufacturers Association
The Drug Policy Alliance
There are many high profile organizations and alliance on this list, and they all know that these are the initial stages of this process. And all will admit that there is much more work to be done before anyone can call this a “final product”, to be drafted into law.
There is much more work to be done. This is just a first draft and is not meant to be a final one. But Governor Brown would like to have this all worked out by the January 1, 2018. So the push is on.