California's Proposition 64: Waiting on the world to change, Part II

Part II: With upcoming elections and the launch of Canopy's Berkeley, CA, cannabis startup accelerator, we've followed California's regulatory environment closely. The following blog post is part of a series dissecting California’s November 8^th ballot initiative commonly referred to as the “Adult Use of Marijuana Act (AUMA)", or Proposition 64. Part I discussed the AUMA's major objectives and next steps for regulated cannabis businesses. In Part II, several of the Act's provisions are highlighted, such as the allowance of hemp as an agricultural product, and an intensive licensing schedule.

Proposed State Agency Roles Related to Business

AUMA establishes the Bureau of Marijuana Control within the California Department of Consumer Affairs as the government entity to regulate and license the marijuana industry.

Managing Growth at the State and Local Levels

At the state level, the Act provides that commercial activities will be regulated through a comprehensive licensing system administered by a variety of agencies, specifying a minimum of 19 types of licenses. (*See Attachment 1)

The Act safeguards the rights of local governments to control marijuana-related activities within their jurisdiction. By legalizing marijuana activities, the state ensures that local governments will be able to control marijuana-related businesses just as they do other legitimate businesses, such as  zoning and commercial permitting requirements. Local governments will even be able to ban marijuana businesses by a vote of the people within a locality.

By legalizing commercial cannabis activities - cultivation, distribution, sale and use, etc. - businesses such as growers will have to comply with strict environmental regulations. This is to ensure that the marijuana is grown efficiently and legally, that pesticide use is regulated, and water usage minimized.

There are also two provisions that are more limited in scope:

1. The Act would allow industrial hemp to be grown as an agricultural product, and for agricultural or academic research. Hemp will be regulated separately from the strains of cannabis with higher delta-9 tetrahydrocannabinol concentrations. (See paragraph (aa) under Section 3 – Purpose and Intent)
2. AUMA also makes an important policy statement related to existing growers. The Act is intended to ensure that the non-medical marijuana industry in California will be built around small and medium sized businesses. Specifically, AUMA prohibits large-scale cultivation licenses for the first 5 years. (See paragraph J under Section 2. Findings and Declarations)

Part III: What are the uses for revenue, should this measure pass?

*Attachment 1 – Licenses Under “The Control, Regulate and Tax Adult Use of Marijuana Act”

The following are examples of the types of licensing currently proposed.

Chapter 5. Licensing

(a) The license classification pursuant to this division shall, at a minimum, be as follows:

(1) Type I = Cultivation; Specialty outdoor; Small.

(2) Type IA == Cultivation; Specialty indoor; Small.

(3) Type IB = Cultivation; Specialty mixed-light; Small.

(4) Type 2 = Cultivation; Outdoor; Small.

(5) Type 2A = Cultivation; Indoor; Small.

(6) Type 2B = Cultivation; Mixed-light; Small.

(7) Type 3 = Cultivation; Outdoor; Medium.

(8) Type 3A = Cultivation; Indoor; Medium.

(9) Type 3B = Cultivation; Mixed-light; Medium.

(10) Type 4 = Cultivation; Nursery.

(11) Type 5 = Cultivation; Outdoor; Large.

(12) Type 5A =Cultivation; Indoor; Large.

(13) Type 5B = Cultivation; Mixed-light; Large.

(14) Type 6 = Manufacturer 1.

(15) Type 7 = Manufacturer 2.

(16) Type 8 = Testing.

(17) Type 10 = Retailer.

(18) Type 11 = Distributor.

(19) Type 12 =Microbusiness.

(b) All licenses issued under this division shall bear a clear designation indicating that the license is for commercial marijuana activity as distinct from commercial medical cannabis activity licensed under Chapter 3.5 of Division 8.

(c) A license issued pursuant to this division shall be valid for 12 months from the date of issuance. The license may be renewed annually.

(d) Each licensing authority shall establish procedures for the issuance and renewal of licenses.

(e) Notwithstanding subdivision (c), a licensing authority may issue a temporary license for a period of less than 12 months.

Source:

December 7, 2015 letter to the Attorney General from Lance H. Olson, Olson, Hagel & Fishburn LLP

RE: Submission of Amendment to Statewide Initiative Measure Control, Regulate and Tax Adult Use of Marijuana Act, No. 15-0103