California’s Medical Marijuana Regulation and Safety Act: Preparing for the Future

[dropcap class=”kp-dropcap radius”]T[/dropcap]he California Legislature reached a historic agreement on a comprehensive regulatory framework for the cultivation and distribution of medical cannabis and medical cannabis products in the state of California. The medical cannabis regulation is based upon the passage of three bills: Assembly Bill 266, Assembly Bill 243 and Senate Bill 643. Collectively, these bills are the “Medical Marijuana Regulation and Safety Act.”

Under the “Medical Marijuana Regulation and Safety Act” (MMRSA), the Bureau of Marijuana Regulation will be established within the California State Department of Consumer Affairs.  The Department of Food and Agriculture will license cultivators, the Department of Public Health will license manufacturers and certified testing labs and the new Bureau will license distributors, collectives and transporters.

The Department of Consumer Affairs and other regulatory agencies have until January 2017 to adopt rules overseeing the industry, and those rules are expected to go into effect in 2018. Businesses may continue to operate as they do today until at least January 1, 2018, when the formal state licensing process is expected to begin. At that point, existing businesses could continue to operate until their application has been acted on.

There are many components of the MMRSA that still need to be determined. There are questions as to what the specific rules and requirements for licensing will look like. Another question on everyone’s mind is how much it will cost to obtain a license.  We do know that all license fees will be set on a scaled basis by the licensing authorities, dependent on the size of the business. Another huge uncertainty is whether cities will continue to ban cannabis activity; or if the new regulatory framework will be the needed push to finally enact local land use and zoning ordinances.  Remember, this new regulatory framework requires a local permit in order to be eligible for a state license, so it’s imperative that we begin to lobby our cities for proper zoning and permitting now.

Despite some of the uncertainty, there are steps that you can begin to take in order to prepare your business for the changes that lie ahead. Below, you will find a checklist that the Law Office of Kimberly R. Simms prepared to help with the transition.

General Advice:

-Read the bills! The new laws regulate every aspect of your business. It’s your responsibility to familiarize yourself with the content.

-Begin to strategize with your legal team to determine what corporate structures will best suit your business goals.

-If you have a criminal record, try to get it expunged. Criminal background checks will be required for applicants and the issuing agencies have a lot of discretion to deny a license based on criminal history.

-Keep accurate records of your commercial cannabis activity. Many cannabis businesses are very lax about record keeping. Under AB-266, a licensee will have to keep detailed records of commercial cannabis activity.

-Write operating procedures. All applications seeking licensure to cultivate, manufacture or distribute cannabis will include a detailed description of the applicant’s operating procedures for all of the following.

Cultivators:

-Build in the cost of quality assurance, inspection and testing into your overhead costs.

-Lab test dried flower. Dried flower shall, at a minimum be tested for concentration, pesticides, mold and other containments.

-Switch to tamper-evident packaging.

-Update your packaging and labeling to meet the requirements of AB-266.

-Become familiar with the Department of Pesticide Regulation and the State Water Resources Control Board. They will be developing regulations in connection with indoor and outdoor cultivation.

Manufacturers:

-Build in the cost of quality assurance, inspection and testing into your overhead costs.

-Lab test extracts at a minimum for concentration and purity of product.

-Switch to tamper-evident packaging.

-Update your packaging and labeling to meet the requirements of AB-266.

Collectives:

-Establish security requirements to both deter and prevent unauthorized entrance into areas containing medical cannabis.

-Develop standards for inventory control and reporting.

-If you will have more than 20 employees, understand what a labor peace agreement is all about.

-Determine whether you want to obtain a Type 10 or 10A license.