HOW TO START A MEDICAL MARIJUANA BUSINESS IN CALIFORNIA - 2018
How to kick ass in the marijuana business - Here's the plan Stan (or Stanette)
You can apply for a marijuana seller permit at the CALIFORNIA CANNABIS CPA. Before you apply, you must have a good chat with your local town hall official that oversees bylaws and permitting in your local town or county.
By following this guide, you'll be better prepared mentally and tactically to take on the operation of a medical marijuana business in California or Nevada. After you complete your business plan as recommended here, you will be in the position to instruct a consultant and lawyer and provide them with much of the information, that they would have billed you for.
HOW TO PROCEED
Make a plan now
Do additional research, YouTube, visit dispensaries, ask questions
Hire consultant and lawyer and tweak
Execute the Plan
** Much of the reference data for your business plan are contained in the Further Reading section.
Somewhere around the end of this year (2017), the California Government and the associated agencies get their act together and finalize the rules and procedures for 2018, when recreational sales becomes legal. If you want to enter the business, you can get started on your own, taking the following steps. Once you complete these prophetic steps, then you can reconsider, recalibrate, reload and then step onto the battlefield.
Also, you may conclude that you don't want to go into business at all. No, or a rejection may be the best move you've ever made. We're sure that after the last tickets on the Titanic were sold, there were many sad faced people, who we not so sad when they read the paper reporting the epic disaster.
You don't need to superhuman to succeed. The key elements are; consistency, common sense, sanity, which are pretty much within the grasp of most of us, but remains elusive to many, at this point in our evolution.
What Discipline Really Means - Jocko Willink
Highly recommended is Jocko Willink; for simple and effective motivation advice, that cuts through the crap. We also highly recommend that you intertwine your own personality and humane nature into your business persona. Among the worst people on the planet is the fake hippie businessman or smooth sociopath the frequents and infects every business sector.
In the beginning, you want to be very pragmatic and watch your dollars until the business is stable. However, once you're goin' strong, you can build your Karma is very well by seeking out people and worthy causes. That is, if you value Karma.
STEP 1 - ADJUST YOUR MENTAL FOCUS
When you start to look at all the things that are required to set up a dispensary, your brain will be boggled, confused. At that point, most everyone's focus is compromised and the process becomes inefficient and non-enjoyable.
It is easy to tackle complex issues by breaking it down into chunks. Then tackle each chunk in order. Initially, simply list a few main points. If you came to an issue you can't figure out, just type in, don't know, lack of info, etc. The first draft of your plan should be very brief, bullet points. Force yourself to come to the best logical answer, and, when you don't have an answer, then type in, don't know.
After your first draft plan is complete, just go through the list of don't know items. Print it off and go to the beach, park or mountain with it. Then mull it over. Some things will clarify in your mind. Then Google each item on the don't know list and read through three articles on each topic. Don't worry if you are not certain how to go at this point.
According to the archaeological record Marijuana, has been cultivated and used as a medicine, food and textile for ten thousand years. Also, hemp and marijuana were legal and its cultivation was encouraged in the years 1767 to the 1900. George Washington, Ben Franklin, and Thomas Jefferson were all heavily involved in the cannabis industry. It is now well known that big business interests conspired to prohibit marijuana use in 1934. Fast forward to today, where the American population has reclaimed its birthright to benefit from the amazing marijuana plant.
Cannabinoids and other ingredients, particularly THC (psychoactive) and CBD (non-psychoactive) account for its versatile medicinal action. These compounds moderate (dial up and down) receptors on many kind of cells, nervous system and body, that control many functions. Cannabinoids are very safe to use because over-activity of the affected receptors does not cause lethal, nor long term damage. This is why you never hear about marijuana overdose deaths.
Marijuana is dispensed in California and Nevada only to medical marijuana patients that have received a 420 evaluation for their conditions and symptoms which often include;
ADD & ADHD, AIDS, Alzheimer's Disease, Anorexia Nervosa, Anxiety & Stress, Arthritis, Asthma, Atherosclerosis, Autoimmune Disorders (AND),Cachexia, Wasting,Cancer, Cardiovascular, Disease, Crohn's Disease, Epilepsy, Fibromyalgia, Gastrointestinal Disorder, Glaucoma, Hypertension, Manic Depression, Migraines, Multiple Sclerosis, (MS)Muscular Dystrophy, Neurological Disorders, Parkinson's, Phantom Pain, PMS, PTSD, Schizophrenia & Psychosis, Spinal Injury Tinnitus, Tourette's Syndrome, Cramps, Depression, Exhaustion, Headaches, High Blood Pressure, High Eye Pressure (IOP), Inflammation, Insomnia, Nausea, Pain, Poor appetite, Seizures, Spasms, Spasticity, Stress.
Since 2015 the Feds have stopped raiding dispensaries. Even then, the percentage of dispensaries that were taken out by the Feds was low. With that said, Jeff Sessions and the DEA continues to talk shit, threatening again to waste more billions on the War on Drugs. The bet here, and it is a bet, is that Trump not challenge California marijuana laws.
What is more likely is that the Feds could continue to screw up the banking industry and limit the access to doing business via credit card, and use certain banks. What happens when the Feds do knock on your door, they freeze your bank account (never mind your rights), your family's accounts, confiscate whatever they want from your business and home. Then you're left penniless to defend yourself in court. It is very common to win against the Fed in court in these situations if you are State legal and are not actually doing anything criminal.
Every business should protect themselves from unwanted, illegal surveillance, who can get into your bank accounts, sell your personal information, put you one blacklists and so on. See our article on how to protect your privacy and do commerce on the internet here.
Federal agents will no longer raid medical, retail dispensaries, the sale of marijuana is still technically illegal at the federal level. This means that the legality of establishing and running a medical marijuana dispensary is a complicated issue that needs to be carefully navigated. Producing and selling marijuana in these dispensaries has become a booming industry, but there are many things to keep in mind if you decide you want to set up your own.
Should you Start a Dispensary?
You need to understand the state's medical marijuana laws, which are a work in progress. See further reading (end of article) for the current state of affairs about California's marijuana laws 2017-2018 and specific information about your city or county. Be prepared for minor changes.
Contact and confirm which banks will accept your business cash.
Setup PayPal accounts, Bitcoin securely and privately - see further reading about how.
Understand that certain future employers can and will stigmatize participants in the marijuana sector.
Understand the risks of operating a dispensary, that can be shut down by any level of government for either legal or illegal activities on your part.
Understand the rules and regulations to transport, store and secure marijuana. Consider relationships with reliable third parties for the above as required by law.
Get your paperwork and forms to become a medical dispenser.
Realize that you will be on file with the state government and in open public records.
Understand fully the 2018 laws regulating the sale of marijuana, and know that you cannot simply sell openly with a license.
Understand that profit in the first six months is unlikely.
Determine whether it is legal to establish a medical marijuana dispensary in your area. See the further reading section for a link to your city or county's website that addresses marijuana issues. You need to obtain a seller’s permit in California because medical marijuana dispensaries are subject to tax Many counties and cities may require an additional permit, such as zoning permit and/or business license. You do want to finish your business plan and then go over it with a consultant or marijuana lawyer before you apply. You don't want to put in an application and have it rejected, and then have to reapply and wait, wait, wait.
Find out what local zoning laws are. Because a dispensary is a business, it will must be located in a commercial zone. In some areas there may be additional restrictions. In California cities, its dispensaries are not permitted within 1,000 feet of child care center, within 500 feet of residential; within 1,000 feet of a park or library; or within 250 feet of any adult business that sells “drug paraphernalia” (pipes, bongs, etc.).
"This is no business to go into half cocked."
After reading all of the information included within, reassess whether you are a good candidate for running a dispensary business. There is a significant level attached to any startup, and there is still a small chance the Federal Gov will be a negative factor. Remember that you may have a stigma attached to your name, as a drug dealer, as there are still about 25% of Americans that don't approve of marijuana use.
Dispensaries can be a target of vandalism and theft, and if you have to deal with larger sums of cash, then you need to have the appropriate security in place. i.e. like a bank. If you are disorganized or are not well equipped with financing and know how, then the chances you'll be stressed out are nearly 100%.
You'll need a background check on all operators, investors and owners of your dispensary. Previous felony convictions, as well as other drug-related charges, may disqualify you (excluding trivial marijuana possession) getting a operating license. If you have prior convictions for marijuana, you want to immediately apply for .
You can train yourself very well and go to work in a dispensary, or at least hang around them often. With that said, once you kind of know what you're doing, then you need to seek out a great consultant, an expert, and finally get a lawyer. When you interview your lawyer, discuss some issues that you feel confident about. If your lawyer does not know more than you then look for another.
You should become well versed in the basics in the arts and sciences of marijuana cultivation. Many dispensaries grow their own marijuana on site -- in some states, it’s a legal requirement, so understanding how to run a growing operation is crucial to your dispensaries success.
SHARES IN RELATED BUSINESS
Growing marijuana is farming, with the same agricultural issues, such as pests, fungus and mold growth on plants, and poor harvests. With that said, the availability of the internet has led to widespread sharing of practical methods to eliminate most every issue. It's a great time to be alive, in that sense. While becoming an expert in outdoor grows is not necessary these days, if one goes el-natural, one needs to realize the risks of mother nature and her shifting moods, i.e. the weather.
Hire a good lawyer who is well spoken, professional and personable. To reduce your billings, work with a lawyer who allows you to do some of the leg work. If you notice the lawyer having two meetings when one would clearly do, and you've been billed, then have a discussion with your man. If he does not come up with as satisfactory explanation for the billing issue, then send him on his way.
A dispensary can be designed using the templates of a convenience store - jewelry store model.
The cash lock system is great in minimizing the loss or temptation for robbery. You definitely want handy glass displays, with easy access - to pull out product - and show customers and converse in a sociable manner. You want a physically secure facility, without it looking like a red-light district entity.
US SMALL BUSINESS ADMIN - RESOURCES
The U.S. Small Business Administration offers a website full of resources and information on writing a business plan. According to a survey conducted by See Change Strategy, a financial news and information firm, 24% of dispensary operators had difficulty securing financing from investors. Banks are still reluctant to lend money to people wanting to open dispensaries.
Startup costs vary depending on location, with an average start-up cost average about $250,000, but $500,000 is not uncommon. This figure includes license, securing a storefront, growing or purchasing product, insurance, and other expenses.
Even with a great business plan, it may be difficult to secure traditional financing, so ideally you want to have the necessary cash in place before you start. With that said, if you don't have the cash, you can still get the business plan and look for the cash in the meantime.
If the regulations in your area allow, you can entertain investment from a partner/s. The best kind of investor is a silent one, who is experienced in business and you are solid and know what you're doing. Then, with a little luck, your partnership will be golden. See further reading FUBAR article for the many ways to crash and burn in business and how to avoid human stupidity.
ACCOUNTS UNDER FULL CONTROL
Hire a bookkeeper to come in once a week and get all your accounts up to date. Review all the numbers, so you have no excuse ever, if your accountant, partner or bookkeeper extort money from you. Hire a Certified Public Accountant to file the appropriate tax forms and oversee your bookkeeper's activities. Because marijuana dispensaries are illegal at the federal level, they run a higher risk of being audited by the IRS.
"Keep meticulous records. Because of the uncertain legal status of many dispensaries, it’s vital that you keep careful records not only of your expenses, but also of all of the product, who interacts with it, at what growing and processing stages, and the patients who purchase it. This information will help protect you in the event that you encounter legal trouble."
If your accounting system is squeaky clean, in the time of an audit, your bookkeeper and CPA can run through the numbers with the auditor making your participation minimal, sometimes to little more than a nice hello and goodbye (to the auditor).
"There are tools you can find online such as traffic pattern information, demographic data (household size, income, etc.), and traffic "generators" such as other businesses and recreational locations in the area. These will help you determine what location will receive optimal traffic for your dispensary."
DEVELOPING THE BUSINESS
Maintain a respectable image. Dispensaries can face significant social and community pressure, and if you don’t maintain a respectable, friendly image, you may well find yourself out of business. Make sure that you and your employees are always pleasant and respectful to your neighbors. Don't use street drug terminology or hippy drug-style signs, symbols, and images, especially on the outside of your premises.
Hire security guards as required to keep loiterers and riff way away, but you don't want to hire thugs, who get aggressive with potential customers and worse yet, harass neighbors. Keep the outside, especially clean and kempt.
If you go too squeaky clean and pharmaceutical like, then you'll look like the enemy who kisses big-corp ass, selling GMO weed or some other eugenics herb. Think of a fine wine shop, art gallery, or quaint coffee shop, with subtle emblematic marijuana tones thrown in.
NETWORKING & MARKETING
Network with local government and police offices and give them the impression you are ready to cooperate. Let them know you are strictly a respectable, community-minded small-business owner.
Market your business. Social media outlets, such as Facebook and Google, do not allow marijuana-based businesses to advertise with them. There are aother avenues like Yelp, Weedmaps and rapidly rising blogs. You can reach out to local doctors’ offices that provide referrals, and promote yourself on websites such as Hemp American Media Group. And of course, you want to build word-of-mouth through great customer service and quality products.
Conduct customer surveys. There are hundreds of varieties of marijuana and a wide variety of ways to consume it, including smoking, edible products such as brownies and dried flowers, and oils. While there aren't many wide-scale, rigorously scientific studies available about what types and forms of marijuana are best for which conditions, your customers may have preferences or may have been told to find a certain type by their physician. Conducting some market research by doing surveys will help you stock the products your customers want the most of.
Be aware that no health insurance company in the United States currently covers medical marijuana, so patients must pay out-of-pocket. This means you will need to price your product competitively (usually, between $20 to $60 for one-eighth of an ounce, or about three “joints”) to maintain repeat business.
You can keep tabs on local prices by regularly visiting dispensaries in the area and also going online and viewing WeedMaps suppliers.
A starting pricing policy would be to match local pricing and have specials from time to time. Also, rewards to VIP customers is a very good idea in any business. For example, VIP customers could get first pick of new or exotic strains with limited availability. A newsletter of new product arrivals - only useful and wanted info - to your best customers is suggested.
Make your site interactive, up to date, simple and own it. Don't follow the big-corporate model for marketing, which is dead. That model only worked because they were in a monopoly situation. An average good Podcast from a youtuber gets as many hits as the average CNN multi-million dollar production. It's a great time to be alive, in many respects.
You want a simple, non-generic and to the point, no bullshit, no fluff website. Do not try and sell things the way they maket in magazines, TV and such. Don't use click bait and other bullshit. The market wants real people with the real goods. Make a great service and tell people about it. Collect testimonials and publish them. Make a blog and put one or more articles up per week, consistently. You can hire a blogger from your customer base and pay in weed. Whatever you do, make the content useful and no fluff.
Make sure that your clients can quickly find about your inventory. You want clients to ask questions if they are confused, and you want your bud tender to respond to questions nearly real time. If your bud tender is too busy, get your BT an assistant that can respond, as in, are we out of Blue Dream, when does the next batch come in? what is the THC level?
Do I need to own the property that I open a marijuana dispensary in?
- No, in most cases, you can rent. Your landlord will have to approve of and note that the property will be used as a dispensary.
How long does it take to get a license.
- This is a good question to put to your lawyer and / or consultant. Who knows really, as the entire marijuana system in Cali if being revamped? We expect that, based in past performance, your license could take six months to one year, if all is in order.
Do you need a business degree or other qualification?
- Not as yet..
Can I get a franchise for a medical marijuana dispensary?
- No, not as yet. This is because each dispensary is viewed as a separate business entity that is approved on a case by case basis.
"California lawyer heavy legislators completely resembles the failed Obama administration - with their fee-driven mindset that over-regulates everything, and this would include marijuana today. Obama just set a new record for regulations, 527 pages in just one day, despite being shown his way to the door. Trump doesn't need a pen and phone to reverse that burdensome legislation, he needs a meat axe." - Mmjdoc
The goods; buying, possession, firearms, children, divorce, out of State use, employers, drug tests .... The lowdown on California's MMJ laws, regulations, buy, sell, possession, firearms, children, divorce, employers, drug test, arrest, criminal record.... ``The California State CANNABIS ID card system safeguards patient privacy.`` - California NORML
This extends to doing business of any kind on the web. How to protect your business - and cash - from anyone.
"To buy weed (or anything) privately online, you only need two things to get going. Tor (browser) and Bitcoin (internet money)."
Do you want to buy weed legally on the web without getting spied on? Imagine buying CBD oil, which is completely non-psychoactive (won't get you stoned), yet some spook can place you on a Federal list, a person that consumes and possesses a narcotic. That's right, the Feds declared CBD to be schedule I, which is a dangerous narcotic like heroin.
HELLO TRUMP- 75% OF AMERICANS FOR MARIJUANA
"Good people don't smoke marijuana." - Frigid Jeff Sessions - Trump Admin DEA
"Good people don't get sick." - Sarcastic Roger Stone - Former Trump Advisor
At the end of the day, we see Donald Trump appeasing the minority of the population by having his gofers like Jeff Sessions squawk about going after marijuana. Meanwhile, the marijuana community rises up in arms, then Trump steps in and saves the day and reschedules marijuana (something like Schedule 3), and tells the DEA to focus on marijuana interstate issues. Nonetheless, it is our job to raise a bit of hell and light the fire under Trump to get marijuana sorted now, not later, because the country cannot afford more War on Drugs bullcrap.
With recent legalization, Marijuana stands to rival Silicon Valley in revenues in the world's 6th largest economy. In the coming years, there seems to be little doubt that the marijuana industry in California will grow into a $10 billion dollar plus industry. Medical Marijuana is already legal in California, but the passage of Proposition 64 means that California is now poised to become the World’s largest legal weed marketplace, but the marketplace has rules.
Nightmare on Weed Street - FUBAR
"If you don't take care, you're going to need to be like a cat with 9 lives to survive."
If you want to grow weed as a business, there is a lot you need to know. Once you've been around the block several times, you'll get to know the well known traps, the open manholes and minefields that are ready to go off in your face at any time. Rather than learn the hard way, we recommend you refer to this compact business warfare manual, to protect you from your own exuberance and naivety. So here it is, our I Told You So list.
Crowdfunding Marijuana - Cashing in Together. Crowdfunding is a way to raise money in small amounts from a large number of people.
"To get your arms around this, last year the global online crowdfunding industry raised $5.1 billion for thousands of cash strapped businesses, charities, and startups." Forbes Magazine
What and the ins and outs of crowdfunding and how can I use it to fund my marijuana business? On the hand, as an investor, maybe you're really, really sick of Wall Street and those too big to fail investments. Instead, people are turning to the real free market system. With crowdsourcing, you can invest in an upstanding, achieving member of the community who's put out a very interesting crowdsourcing investment opportunity.
LAWS CALIFORNIA CITIES AND COUNTY'S 2017
Alhambra - Anaheim - Antioch - Bakersfield - Berkeley - Buena Park - Burbank - Carlsbad - Carson - Chico - Chino - Chula Vista - Citrus Heights - Clovis - Compton - Concord - Corona - Costa Mesa - Daly City - Downey - El Cajon - El Monte - Elk Grove - Escondido - Fairfield - Fontana - Fremont - Fresno - Fullerton - Garden Grove - Glendale - Hawthorne - Hayward - Hemet - Hesperia - Huntington Beach - Indio - Inglewood - Irvine - Jurupa Valley ,La Mesa - Lake forest - Lakewood - Lancaster - Livermore - Long Beach - Los Angeles - Menifee - Merced - Mission Viejo - Modesto - Moreno Valley - Murrieta - Newport Beach - Norwalk - Oakland - Oceanside - Ontario ,Orange - Oxnard - Palmdale - Pasadena - Pomona - Rancho Cucamonga - Redding - Redwood City - Rialto - Richmond - Riverside - Roseville - Sacramento - Salinas - San Bernardino - San Diego - San Francisco - San Jose - San Leandro - San Marcos - San Mateo - Santa Ana - Santa Barbara - Santa Clara - Santa Clarita - Santa Cruz - Santa Maria - Santa Monica - Santa Rosa - Simi Valley - South Gate - Stockton - Sunnyvale - Temecula - Thousand Oaks, Torrance - Tracy - Vacaville - Vallejo - Ventura - Victorville - Visalia - Vista - West Covina - Westminster - Whittier .
The Governor has signed into law AB 2516 by Asm. Jim Wood to authorize a new “specialty “cottage” license for home growers with no more than 2,500 square feet of outdoors space.
SB 837 changed the name of the Medical Marijuana Regulation and Safety Act and the Bureau of Medical Marijuana Regulation to the Medical Cannabis Regulation and Safety Act and the Bureau of Medical Cannabis Regulation, and makes other changes.
Key Government Websites:
The new Medical Cannabis Regulation and Safety Act consists of three separate bills which were enacted together on Sept 11, 2015. The bill creates a comprehensive state licensing system for the commercial cultivation, manufacture, retail sale, transport, distribution, delivery, and testing of medical cannabis. All licenses must also be approved by local governments.
The law went into effect on January 1, 2016; however, the state has said it will need until January 2018 to set up the necessary agencies, information systems, and regulations to actually begin issuing licenses. In the interim, local governments may choose to adopt new ordinances to permit or license local businesses in preparation for state licensing. Facilities currently operating in accordance with state and local laws may continue to do so until such time as their license applications are approved or denied. In the meantime, prospective applicants are strongly advised to apply to the state Board of Equalization for a Resale Permit, and to prepare for seeking approval from their local governments.
Text of Medical Cannabis Regulation Safety Act (three parts):
AGENCIES AB 266 establishes a new Bureau of Medical Cannabis Regulation under the Department of Consumer Affairs. The Bureau is to establish a comprehensive internet system for keeping track of licensees and reporting the movement of commercial cannabis and cannabis products.
SB 643 & AB 243 give the Dept. of Food and Agriculture responsibility for regulating cultivation; the Dept. of Public Health for developing standards for manufacture, testing, and production and labeling of edibles; the Dept of Pesticide Regulation for developing pesticide standards; and the Depths. of Fish and Wildlife and State Water Board for protecting water quality. (Sec. 19332)
LICENSE TYPES The following license types are established under AB 266 (B&P code 19300.7)) and SB 643 (19331(g) and 19332):
(1) Type 1 = Cultivation; Specialty outdoor. Up to 5,000 square ft of canopy, or up to 50 noncontiguous plants
(2) Type 1A = Cultivation; Specialty indoor. Up to 5000 sq ft
(3) Type 1B = Cultivation; Specialty mixed-light. Using exclusively artificial lighting.
(4) Type 1C = Specialty Cottage, for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, of 2,500 square feet or less of total canopy size for mixed-light cultivation, up to 25 mature plants for outdoor cultivation, or 500 square feet or less of total canopy size for indoor cultivation, on one premises
(5) Type 2 = Cultivation; Outdoor. Up to 5000 sq ft, using a combination of artificial and natural lighting
(6) Type 2A = Cultivation; Indoor. 5001 -10,000 sq ft.
(7) Type 2B = Cultivation; Mixed-light. 5001 -10,000 sq ft
(8) Type 3 = Cultivation; Outdoor. 10,001 sqft - 1 Acre
(9) Type 3A = Cultivation; Indoor.. 10,001 - 22,000 sq ft
(10) Type 3B = Cultivation; Mixed-light. 10,001 - 22,000 sq ft
(11) Type 4 = Cultivation; Nursery.
(k) Type 6 = Manufacturer 1 for products not using volatile solvents.
(l) Type 7 = Manufacturer 2 for products using volatile solvents.
(m) Type 8 = Testing
(n) Type 10 = Dispensary; General
(o) Type 10A = Dispensary; No more than three retail sites
(p) Type 11 = Distribution
(q) Type 12 = Transporter
CULTIVATION SIZE LIMITATIONS The maximum allowable size is 1 acre (43,560 sq ft) outdoors (Type 3) or 22,000 sq ft indoors (Type 3A and 3B licenses). The DFA is directed to limit the number of Type 3, 3A and 3B licenses. (AB 243, 19332(g)).
VERTICAL INTEGRATION There are complicated restrictions to prevent vertical integration (AB 266, 19328). In general, licensees can only hold licenses in up to two separate categories. Small cultivation licensee Types 1 -2 may hold manufacturing or Type 10A retail licenses (limited to three dispensaries). It appears that Types 3-4 licensees can't apply for manufacturing licenses at all. However, Type 10A licensees can apply for both manufacturing and cultivation licenses, provided their total cultivation area doesn't exceed 4 acres. Also, facilities in jurisdictions that require or permit cultivation, manufacture and distribution to be integrated as of July 1, 2015 may continue to operate that way until Jan 1, 2026.
DISTRIBUTORS REQUIRED Type 11 distributors are a new kind of entity that has been created to regulate the flow of products. ALL cultivation and manufacturing licensees are required to send their products to a Type 11 licensee for quality assurance and inspection before passing them to the next stage of manufacturing or retailing. The Type 11 licensee in turn submits the product to a Type 8 laboratory for batch testing and certification. Afterwards, the sample returns to the Type 11 distributor for final inspection and execution of the contract between the cultivator and manufacturer or manufacturer and retailer. The Type 11 distributor charges a fee that covers the testing plus any applicable taxes (the act doesn't impose any new taxes, but anticipates that could happen in the near future) (AB 266, 19326)
Type 11 distributors and Type 8 testing facilities can't hold any other kind of licenses (however, licensees may have their own labs for in-house testing).
LOCAL PERMITS REQUIRED No person shall engage in commercial activity without BOTH a state license and a license, permit, or other authorization from their local government. (AB 266, 19320(a); AB 243, 11362.777 (b)).
LAWFUL ACTS Actions by licensees that are permitted by both a state license and local government are lawful and protected from arrest, prosecution, or other legal sanctions (AB 266, 19317).
GRANDFATHERING Facilities already operating in compliance with local ordinances and other laws on or before Jan 1, 2018 may continue to operate until such time as their license is approved or denied. (AB 266, 19321(c)). Facilities in operation before Jan 1, 2016 shall receive priority. Los Angeles may in any case continue to prosecute violations of Measure D.
APPLICANT QUALIFICATIONS (SB 643, 19322): Applicants must provide proof of local approval and evidence of legal right to occupy proposed location. Applicants shall submit fingerprints for DOJ background check. Cultivation licensees must declare selves "agricultural employers" as defined by Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act.
Licensing authority MAY deny application if applicant has been convicted of an offense substantially related to qualifications, including ANY felony controlled substance offense, violent or serious felonies, or felonies involving fraud, deceit or embezzlement, or any sanctions by a local licensing authority in the past 3 years (SB 643, 19323(a)5).
FOR-PROFIT ENTITIES are implicitly allowed under the qualifications established above. These were previously "not authorized" under SB 420, but the new licensing provisions extend to individuals, partnerships, corporations, business trusts, etc. (under the definition of "person" in AB266, 19300.5 (aj)). Likewise, applicants no longer need be patients.
CULTIVATION LICENSING The DFA shall establish a medical cannabis cultivation program. All cultivation subject to local land use regulations and permits. [The following provision was repealed by the enactment of AB 21 in Feb, 2016: In cities and counties without cultivation regulations of their own, the state shall be the sole licensing authority as of March 1, 2016 (AB 243, 11362.777 (c)4).]
TRACK & TRACE PROGRAM The DFA shall implement a unique identification program for all marijuana plants at a cultivation site, to be attached at the base of each plant. The information shall be incorporated into a "track and trace" program for each product and transaction. (SB 643, 19335 and AB 243, 11362.777 (e)). Cultivation in violation of these provisions subject to civil penalties up to twice the amount of the license fee, plus applicable criminal penalties. Fines enacted daily for each violation (SB 243, 19360).
PATIENT EXEMPTION Qualified patients are exempt from the state permit program if cultivating less than 100 square feet for personal medical use. Primary caregivers with five or fewer patients are allowed up to 500 square feet (AB 243, 11362.777(g) and SB 643, 19319). Exemption under this section does not prevent a local government from further restricting or banning the cultivation, provision, etc. of medical cannabis by individual patients or caregivers in accordance with its constitutional police powers under Section 7, Article XI of the CA Constitution (11362.777(g)).
DELIVERIES Cannabis may be delivered to qualified patients only by dispensaries and only in cities or counties where not prohibited by local ordinance. All deliveries to be documented. No locality can bar transport of delivered products through its territory. Deliveries may be taxed by local county. (AB 266, 19340). [In a separate section (19334 (a) 4) it is confusingly stated that dispensers who have no more than three dispensaries (Type 10A) shall be allowed to deliver "where expressly authorized by local ordinance." It's unclear what conditions if any apply to other, Type 10 licensed dispensers.]
MANUFACTURERS are to be licensed by DPH. The DPH shall limit the number of Type 7 licenses that produce products using volatile solvents.
TESTING (AB 266, 19341-6) The DPH shall ensure that all cannabis is tested prior to delivery to dispensaries or other businesses, and specify how often such testing shall be conducted. *** Confusingly, 19346(c) says the costs of testing are to be paid by cultivators, whereas 19326(c) (3) states that distributors shall charge for the costs of testing; since distributors serve manufacturers as well as cultivators, it doesn't make sense that testing costs for the former should be charged to the latter. *** Licensees shall use standard methods established by International Organization for Standardization approved by an accrediting body that is signatory to the International Laboratory Accreditation Cooperation Mutual Recognition Arrangement (AB 266, 19342). Licensees shall test for cannabinoids, contaminants, microbiological impurities, and other compounds spelled out in Section 19344. Licensees may conduct tests for individual qualified patients, but not certify them for resale or transfer to other licensees.
SCHOOL ZONES Cultivation and dispensary facilities must be at least 600 ft from schools (with grandfathered exceptions specified in HSC 11362.768). (SB 643, 19322 (a) 4).
TRANSPORTATION Only licensed transporters can transport cannabis or cannabis products between licensees (AB 266, 19326(a)). The bill doesn't specify whether cultivators, manufacturers, or retailers can also have transport licenses, but 19328 (a) states they can generally have at most two separate kinds of licenses. Licensed transporters shall transmit an electronic shipping manifest to the state and carry a physical copy with each shipment (SB 643, 19337).
LABOR PEACE AGREEMENTS Required of all applicants with 20 employees or more (SB 643, 19322 a (6))
PACKAGING Products shall be labeled in tamper-evident packages with warning statements & information specified in Section 19347.
PRIVACY Identifying names of patients, caregivers, and medical conditions shall be kept confidential. (AB 266, 19355)
SB 420 COLLECTIVE DEFENSE SUNSET The provision in SB 420 affording legal protection to patient collectives and cooperatives, HSC 11362.775, shall sunset one year after the Bureau posts a notice on its website that licenses have commenced being issued. After that date, all cannabis collectives will have to be licensed, except for individual patient and caregiver gardens serving no more than five patients.
PHYSICIAN RECOMMENDATIONS (SB 643): There are several new provisions clarifying the duties of medical cannabis physicians; however, they don't substantially affect or impair patient's' current access to medical recommendations.
• The Med Board's enforcement priorities are amended to include "Repeated acts of clearly excessive recommending of cannabis for medical purposes,or repeated acts of recommending without a good faith prior exam." (SB 643, 2220.05). This is identical to existing language regarding controlled substances, which has generally been assumed to apply to MMJ heretofore.
• It is unlawful for physicians who recommend to accept, solicit, or offer remuneration to or from a licensed facility in which they or a family member have a financial interest.
• The Med Board shall consult with the California Center for Medicinal Cannabis Research in developing medical guidelines for MJ recs.
• The recommending person shall be the patient's "attending physician" as defined in H&SC 11362.7(a). Contrary to popular misconception, this is nothing new and in no way limits patients to their primary care physician. It merely restates current language in SB 420.
• Physician ads must include a warning notice that MMJ is still a federal Schedule One substance.
PESTICIDE STANDARDS shall be promulgated by DFA and Dept of Pesticide Regulation (SB 643, 19332).
ORGANIC CERTIFICATION will be made available by DFA by Jan 1, 2020, federal law permitting. (SB 643, 19332.5(a))
APPELLATIONS OF ORIGIN The bureau MAY establish appellations of origin for cannabis grown in California. No product may be marketed as coming from a county where it was not grown. (SB643, 19332.5(b-d)).
FEES and FUNDING Each licensing authority shall establish a scale of application, licensing and renewal fees, based upon the cost of enforcement. Fees shall be scaled dependent on the size of the business. (AB 243, 19350 (c)). A Medical Cannabis Regulation and Safety Act Fund is established in the state treasury to receive fees and penalties assessed under the act. $10 million is allocated to DCA to begin operations, with the possibility of an additional operating loan of $10 million from the General Fund (AB 243, 19352). The Bureau shall use the fund for a grant program to assist in state and local agencies in enforcement and remediation of environmental impacts from cultivation. (AB 243, 19351)
COUNTY TAXATION Counties may levy a tax on the cultivating, dispensing, producing, processing, distributing, etc, of medical cannabis subject to standard voter approval requirements. (Many cities already exercise this authority, but the authority of counties to do so has been unclear heretofore). (SB 643, 19348)
Text of Medical Cannabis Regulation Safety Act (three parts):
Sarah Armstrong, Directory of Industry Affairs for Americans for Safe Access, compiled this list of the deadlines in the bills:
July 1, 2015 – Date by which those claiming vertical integration had to be operating a vertically integrated business. (AB 266 Section 19328 (c1))
January 1, 2016 – date on which AB 266, AB 243 and SB 643 will take effect. (See: the end of the legislative summaries in all three bills)
January 1, 2016 – Beginning business operating date for cannabis businesses who are eligible for priority licensing. “In issuing licenses, the licensing authority shall prioritize any facility or entity that can demonstrate to the authority’s satisfaction that it was in operation and in good standing with the local jurisdiction by January 1, 2016.” (AB 266 Section 19321 (c))
January 1, 2017 - By January 1, 2017, the Division of Occupational Safety and Health shall convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations related to the activities of facilities issued a licensee. (AB 266 Labor Code Amendment Sec. 7 147.5)
July 1, 2017 - By July 1, 2017, the advisory committee shall present to the board its findings and recommendations for consideration by the board. (AB 266 Labor Code Amendment Sec. 7 147.5)
July 1, 2017 - By July 1, 2017, the board shall render a decision regarding the adoption of industry-specific regulations pursuant to this section. (AB 266 Labor Code Amendment Sec. 7 147.5)
January 1, 2018 – “a facility or entity that is operating in compliance with local zoning ordinances and other state and local requirements on or before January 1, 2018, may continue its operations until its application for licensure is approved or denied pursuant to this chapter.” (AB 266 Section 19321 (c))