California’s laws regulating cannabis were substantially revised in  2017 by comprehensive new legislation known as the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA).

MAUCRSA establishes a uniform licensing regime for both medical and adult-use cannabis effective Jan 1, 2018. Consisting of two separate bills sponsored by the Governor’s office, SB 94 and AB 133, MAUCRSA supplants prior legislation known as MCRSA (formerly MMRSA),which applied only to medical cannabis. It also makes adjustments to California’s legalization law, the Adult Use of Marijuana Act (AUMA) a.k.a. Prop 64, consistent with the intent of the initiative.

Key Provisions

• Protections for Businesses and Employees. The new framework expressly protects business owners, employees, landlords, and others from both criminal law and civil asset forfeiture so long as they follow the requirements.

• Many Types of Licenses. Seventeen different types of annual businesses licenses would be available, including indoor and outdoor cultivators of different sizes, plant nurseries, processors, testing labs, and dispensaries. A new class of business licenses — distributors — would be responsible for all transport between businesses.

• Patients Can Still Grow Their Own. Patients could continue to grow their own medical marijuana (except where local governments have banned personal cultivation). However, grow space would be limited to 100 square feet, and patients would be prohibited from giving, selling, or donating medical cannabis to another person without becoming licensed. Caregivers — which are narrowly defined under California’s voter-enacted law — could grow for up to five patients, and would be limited to 500 square feet. (Note: California legislation cannot legally amend a voter-enacted law. Thus this limitation would almost surely be overturned to the extent (if any) it was found to conflict with Prop. 215.)

• Cultivator Space Would Be Capped. Licensed outdoor cultivators would be limited to one-acre spaces, while indoor cultivators would be limited to one-half acre.

• Testing and Labeling Required. Medical cannabis sold to patients would be subject to specific requirements, including testing for potency and contaminants, tamper-resistant packaging, and labeling.

• Local Government Authority is Broad. Local government must issue a permit to a local business in order for it to lawfully operate. Local governments could also assist in enforcing state law, creating their own standards in addition to state standards, and taxing business activity.

• Some Vertical Integration is Allowed. It is possible for some types of businesses to have licenses in more than one category (for instance, some cultivators could own a dispensary), although the ability to own multiple types is limited. Businesses that are allowed to operate in several different categories by July 1, 2015 could continue to do so until at least 2026.

• Criminal Histories Could Be a Problem. A business license applicant could be denied a license if he or she has a felony record that includes offenses considered to be related to the qualifications, functions, or duties of the business. These include a conviction for the illegal possession for sale, sale, manufacture, transportation, or cultivation of marijuana.

• Deliveries Are Allowed — Except Where They Aren’t. By default, the larger dispensary license holders can make deliveries to their patients. But local government can ban deliveries via ordinances. There is no separate license for delivery services. Deliveries or shipments through areas that otherwise prohibit businesses would be protected. This may change under the latest draft of the proposed regulations. 

• Medical Cannabis Tracked During the Process. The system would impose a “track and trace” system that requires that medical cannabis be tracked from the earliest stages through sale. Identifying names of patients and medical conditions would be confidential.

• For-Profit and Non-California Investors and Owners Allowed. Unlike current law, businesses would not be prohibited from cultivating or distributing marijuana for profit. In addition, there are no requirements that investors or owners be residents of California.

• New Standards for Cultivators. The California Department of Food and Agriculture would issue pesticide standards and a standard for organic medical cannabis.

Not all the provisions are ideal, but taken as whole, the legislation passed by California’s lawmakers is a thoughtful and reasonable approach to regulation.

MAUCRSA adopts the same basic framework as MCRSA/MMRSA, but with a number of significant revisions. In particular, MAUCRSA:

• Changes references to “marijuana” to “cannabis” throughout California law and renames the chief regulatory agency the Bureau of Cannabis Control.
• Extends the basic license types in MCRSA (cultivator, manufacturer, retailer, distributor, testing) to both medical and non-medical applicants. Includes both specialty cottage and microbusiness licenses for small-scale producers. Eliminates the separate transporter license in MCRSA. Provides for large-scale cultivation licenses pursuant to AUMA (Prop 64) as of Jan 1, 2023.
• Requires separate license applications for medical and adult-use facilities, but lets applicants combine the two in the same facility.
• Authorizes the Bureau to issue 12-month temporary licenses during the transition time when licensing begins in 2018.
• Allows applicants other than testing labs and large-scale cultivators to file for any combination of licenses, repealing previous MCRSA restrictions on vertical integration. In particular, allows cultivators and manufacturers to operate as their own distributors, which was forbidden in MCRSA.
• Deletes a provision in MCRSA authorizing counties and cities to ban deliveries into their jurisdiction from state-licensed delivery services. Attorneys are uncertain as to whether such local bans are still legal. Local governments must allow transport of cannabis by licensees on public roads , but “transport” doesn’t necessarily include “delivery.” (BPC 26090(e))
• Specifies that retailers can conduct sales exclusively by delivery. (BPC 26070 (a)1)
• Repeals AUMA’s prohibition on licenses to out-of-state applicants.
• Repeals the area-based 100 square ft. per patient medical cultivation guideline from MCRSA, as well as the collective cultivation provision allowing 5 patients to grow up to 500 square feet together without a state license. However, Prop. 64 added Section 26033 to the Business and Professions Code, protecting patients and primary caregivers who cultivate an unspecified amount for themselves or no more than five patients, if they receive compensation only under Subdivision (c) of Section 11362.765 of the Health and Safety Code. Under Prop 215, patients are still entitled to grow and possess whatever amount of marijuana is consistent with their medical need, though this is subject to local limits and land-use restrictions, including bans. As previously mandated by MCRSA, California’s current SB 420 law authorizing collective medical cultivation is scheduled to sunset one year after the Bureau gives notice that it is issuing licenses (December 2018). From that point forward, unlicensed commercial medical cannabis collectives will have no explicit legal protection under California law.
• Redefines “volatile solvent” as one that “is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures” (eliminating mention of alcohol, which was in AUMA). (HSC 11362.3)
• Authorizes existing non-profit medical cannabis corporations under SB 420 to re-organize as for-profits in conformity with the new law (BPC 26231).