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In another surprising twist, the California Legislature passed a new and improved bill called Senate Bill 94, otherwise known as MAUCRSA, or the Medical and Adult-Use Cannabis Regulation and Safety Act. This budget bill, presented to the legislative body in the beginning of June by Governor Jerry Brown, rescinds the previously implemented Medical Cannabis Regulation and Safety Act (MCRSA) and redesigns the AUMA, or the Adult Use of Marijuana Act to fit within the parameters of SB 94. It was passed by a thirty-one to three vote in the state legislature.

Basically, SB 94 merges the MCRSA, the AUMA, and Proposition 64 into one regulatory framework that will control and mandate both medical and recreational marijuana use.

Effective January 2, 2018, an adult twenty-one years of age and older will be able to purchase recreational cannabis in retail stores or via delivery. Medical marijuana patients eighteen years old and older (younger if accompanied by an adult) will also be able to walk into that same dispensary and purchase medical-grade cannabis. This means that the same dispensary will be able to hold a license that allows the sale of either category of marijuana.

It has taken a few years, three to be exact, for lawmakers to devise a system of regulation and taxation for the cannabis industry in California that satisfies the needs the state, the lobbyists, and the general public.

At a state level, regulating licensure and proper taxation are two key topics that needed to be addressed, and have been in SB 94.

Previously, lobbyists, including law enforcement agencies as well as numerous non-profit organizations in California, had been wary of both AUMA and MCRSA, citing issues of public health and safety. Hezekiah Allen, of the California Growers Association, had doubts about the possibility of one grower or retailer being able to hold multiple licenses simultaneously, hypothesizing that it could lead to a more monopolistic economic climate, ultimately eliminating any chance of competition within the industry. Keeping big corporations out of the equation seems like an issue very much in the foreground of everyone’s minds.

Although Gov. Brown seems empathetic to all of these concerns, he is also painstakingly aware of the need to move forward with changes to the already proposed bills. Realistic regulatory rules needed to be set in place in order to create a working system for the future of cannabis production and sales in California, as did a structure of taxation, all which are addressed in SB 94.

Here is a rundown of some of the new and amended rules which will go into effect at the turn of the new year.

  • Excise tax for marijuana will be gauged by the “average market price” of the sale, rather than by the gross. This is a much more realistic approach to the taxation of cannabis, as it will allow for price fluctuation and fair mark-up. Moving forward, as setup by Prop. 64, there will be two separate taxes levied; a cultivation tax of $9.35 per ounce of flowers collected from the growers at the time of harvest, as well as a fifteen percent excise tax calculated by the already mentioned average market price, rather than by gross of retail sales.
  • Retailers who, prior to MAUCRSA, could only hold one license for either medical or recreational marijuana, can now old two simultaneously, allowing them to sell to both patients and also recreational users.
  • Retail owners can now open a “brick and mortar” shop that exists solely as a delivery service and never opens its doors to the public.
  • The term “Owner” has changed meaning in SB 94. Now it is much more broad, including any of the following:
    1. Any person holding at least twenty percent ownership interest, which includes the person or persons applying for a license.
    2. Any individual who will have a hand in the management or control of the person applying for a license or of the facility itself
    3. Any CEO of a non-profit or other “business entity”
    4. Any member of the board of directors of said non-profit
  • Cannabis Cooperative Associations can now be formed by three or more people, the majority of whom are residents of the state of California. These will be setup similarly to non-cannabis agricultural cooperatives and will allow cultivation on up to four acres of land.
  • Temporary event licenses may now be applied for, allowing the sale and consumption of marijuana for all people twenty-one years of age and older at a state or county fair or any other exposition within the state.
  • All those licenses must not use any pesticide that is currently banned by the state of California.
  • By the year 2021, the California Department of Food and Agriculture will create an “organic designation” for marijuana, as well as carving out specific regions for cannabis, much like various areas in “wine country”. This will be a way of tracking specific cultivated strains and associating them with a certain region in the state.
  • Transportation licenses will no longer be issued. Effective January 2, 2018, all transport of any cannabis product will be done only by distributors.
  • A brand new agency will be created, called the Bureau of Cannabis Control. This agency, sometimes referred to as “the Bureau”, will hold regulatory power for all aspects of licensure in the entire process of transport, storage, distribution, testing, and sale of any cannabis-related product in California.
  • Residency requirements have been waived under SB 94. Although MCRSA never had this requirement, the AUMA did, making it impossible for any person or entity to open up shop, so to speak, in California. Now, the MAUSCRA will allow anyone, including those from out of state or even out of the country to start a marijuana-related business within the state. It is important to note, though, that each county and city in California also has the jurisdiction to implement their own standards and rules, citing local hierarchy and control. All applicants will have to contact their local authorities within each city and county where they are applying for a license/licenses. There will be a be, in each county, a local representative who will be responsible for disseminating any permit activity, as well as monitoring for compliance at a local level.
  • Packaging for all cannabis products must be opaque as a safety feature. They cannot be engaging or appealing to children.
  • The regulation of online advertising and the use of a single, universal symbol for edibles will be implemented. What that will look like remains to be seen.
  • Any limitation or prohibition of vertical integration that had been implemented by the MCRSA have been eliminated, leaving the door open for a single business entity to apply for a be awarded multiple licenses in more than one category, including distribution. It will be up to the state agencies to be on the lookout for and prohibit an “excessive concentration” of licenses in any given category so that monopolies cannot form. These large outdoor/indoor/mixed light cultivation licenses for both medical and recreational use will be issued beginning on January 1, 2023.
  • All types of licenses that were currently distributed under the MCRSA and the AUMA will continue to be given out for both medical and recreational, except for the producing dispensary and transporter licenses.
  • Quality Assurance Compliance Monitors, or QACMs, will be considered employees of the distributor and cannot maintain any other status. They will conduct random checks to guarantee compliance with all regulations and laws. Testing requirements of marijuana and all marijuana products prior to storefront sale or delivery is changing as well. Now, all cannabis will be stored on premises during the testing process and a separate employee will acquire the sample for testing, transporting them to a lab.
  • Quality assurance reviews will be conducted regularly to make sure that all labeling and packing requirements are maintained at all times.
  • The Bureau of Cannabis Control will not longer be able to regulate or dictate any aspect of industrial hemp. SB 94 dictates that, from now on, the Department of Food and Agriculture will have governing power over this delineation.
  • Three million dollars will now be marked for California Highway Patrol’s training of “drug recognition experts” to define and maintain “driving under the influence”, or DUI laws.

With the passage of SB 94 comes the recognition that, although there is still much work to be done in terms of licensing and distribution in the state of California, this is a very solid promising piece of legislation. Many California regulatory agencies, at both a state and local level, will have to rethink and redesign some of their already set in place rules and guidelines, and various nonprofits and lobbying voices within the community will have to come together to find the right balance of best practices and community consensus. Ever a leader in the country’s marijuana laws and policies, California continues to be on the forefront of change, finally bringing to light some of the important issues in this ever changing process of cannabis reform and legalization.