Since 1996 California has seen a steady, incremental progression toward legalization, starting with the decriminalization of cannabis for qualified medical patients and caregivers by voters passing Proposition 215: The Compassionate Use Act. This allowed for the ‘collective’ association of patients and caregivers to produce and distribute cannabis to meet the needs of medical cannabis patients and was the first of its kind in the United States.
California SB 420, passed by the State legislature in 2004, clarified the scope of Prop 215 with the provision of guidelines, for patients and caregivers, and provided authority for local governments to regulate the cultivation and dispensation of cannabis amongst cannabis ‘collectives’.
The ‘collective model’ was further defined in 2008 when the California Attorney General issued guidelines for the ‘Security and Non-Diversion’ of Cannabis grown for medical use (“AG Guidelines”). This solidified an affirmative defense to criminal prosecution for patients and caregivers through the operation of mutual benefit non-profit corporations producing and distributing cannabis, so long as the mutual benefit collectives operated on a non-profit basis.
California residents at large were further insulated from criminal prosecution for the simple possession of less than an ounce of cannabis with the passage and adoption of Senate Bill 1449, regardless of any medical necessity. This bill made simple possession punishable only as an infraction with a maximum fine of no more than $100.
The Medical Cannabis Regulation and Safety Act (MCRSA) which became California law on January 1, 2016 created a framework for comprehensive regulation of medical cannabis businesses along with a state commercial licensing structure required for legal operation of such businesses. MCRSA also requires applicants for state licenses to be licensed in their local jurisdiction.
In November 2016, California Voters approved Prop 64, the Adult Use Marijuana Act (AUMA) which adopted a regulatory framework mirroring MCRSA, for recreational cannabis businesses. In 2017, the State legislature merged the two regulatory framework into a single, comprehensive set of cannabis regulations for both medical and adult use cannabis businesses through the passage of SB 94. In doing so, California established a comprehensive system to control and regulate the cultivation, distribution, transport, storage, manufacturing, processing, and sale of both of:
This is the framework within which our clients and cannabis businesses across the State operate.
California first legalized the use of medical cannabis in 1996 via voter approval of Proposition 215. In 2003, the California Legislature adopted Senate Bill 420, which established a perfunctory set of regulations for medical cannabis in the state. In 2015, the Legislature passed the Medical Cannabis Regulation and Safety Act (“MRSA”) in anticipation of a successful legalization effort the following year. This law provided the state’s first comprehensive regulatory regime for medical cannabis.
In November 2016, California voters approved the Adult Use of Marijuana Act (“AUMA”) via Proposition 64. The AUMA provided a detailed outline of the future of the adult-use industry – including regulations for cultivation, manufacturing, testing, and retail sale. In June 2017, the Legislature adopted the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which consolidated both medical and adult-use regulatory schemes. Recreational sales in California began on January 1, 2018.
Under federal law, cannabis remains an illegal Schedule 1 narcotic. Schedule 1 narcotics are substances with a high potential for abuse, have no accepted medical value, and cannot be used safely, even under a doctor’s supervision. In recent years, the United States Department of Justice has chosen not to prosecute most cannabis users and businesses that follow state and local laws. Despite stated changes in federal policy toward legal cannabis at the state level, in practice, the federal authorities’ “hands-off” approach persists.
On November 8, 2016, California voters passed AUMA by a 57% majority. AUMA directly addresses possession of recreational cannabis by legalizing the sale and use of cannabis by adults 21 years of age or older. AUMA also legalizes possession of up to 28.5 grams and recreational cultivation of up to six cannabis plants for personal use. The cannabis plants must not be visible from a public place. AUMA prohibits cities from banning personal indoor cultivation but authorizes cities to impose reasonable regulations on indoor cultivation. There is no statutory guidance to determine what regulations would be reasonable. Cities may still completely ban all outdoor cultivation.
Cities still have the right to regulate local businesses, enforce zoning rules, impose taxes and penalize unpermitted uses. State law explicitly requires any business to first obtain a local permit before getting a state license.
Cultivation licenses are issued by the Department of Food and Agriculture. Manufacturing, testing, distribution, and retail licenses are issued by the Bureau of Cannabis Control (“BCC”). Both the AUMA and MAUCRSA delegate rulemaking authority to various state agencies charged with regulating the cannabis industry.
In 2016, with no local regulations in place to accommodate cannabis entrepreneurs seeking opportunities in the regulated space, Zach Drivon set out to establish cannabis policy reform as an advisor to traditional California cannabis business operators. With a professional background in criminal defense, diverse cultural roots, and a rich family legacy in the legal field as a third-generation attorney in Stockton California, Drivon led the campaign leading to the adoption of one of the first local cannabis business ordinances in Northern California, Stockton’s Measure P. Structured as a citizens ballot initiative, Drivon engaged with industry stakeholders, City Council Members and senior staff to advance the placement of Measure P onto the Ballot for Stockton voters alongside Prop 64. As Chairman of the Yes on Measure P Campaign, Drivon worked on behalf of operators seeking to transition from the collective model into the regulated cannabis business space, influencing revisions that eliminated business pre-requisites that would have otherwise restricted new entrants to the space. Through hosting facility tours for local elected and executive staff from across Central California, Measure P’s passage served as the catalyst for policy reform across the region, creating opportunity for some of the first legally permitted cannabis businesses in the State.
DC’s network of cannabis entrepreneurs advancing towards new opportunities grew with numerous local jurisdictions adopting local cannabis business regulations across the State. As a result, DC’s scope of work was further defined by land use approvals, project development, and procurement of State licenses as opportunities advanced.
Forging this path developed DC’s expertise in representation of cannabis businesses by shaping local regulations, advocating for project approvals, overseeing development of approved projects, and refining compliance strategies to facilitate the full transition of both new and existing operations into the regulated model. Contact us now to learn more about our services.
Drivon Consulting delivers tailored solutions for navigating the complex cannabis industry, from licensing to compliance and beyond.
The Site cannot and does not contain legal advice. The legal information is provided for general informational and educational purposes only and is not a substitute for professional advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals. This Site Does Not Provide Any Legal Advice.
THE USE OR RELIANCE OF ANY INFORMATION CONTAINED ON THIS SITE IS SOLELY AT YOUR OWN RISK.
Please be aware that possessing, using, distributing and/or selling marijuana is a federal crime, and no legal advice we give is intended to provide any guidance or assistance in violating federal law nor will it provide any guidance or assistance in complying with federal law.
Please also note that we are not advising you regarding the federal, state or local tax consequences of engaging in any business in this industry.
