Since the passage of Prop 64 by a margin of 57-43, state and local lawmakers have been racing against the clock to implement California’s new cannabis laws in time to begin issuing commercial licenses by January 1, 2018.
As the historic non-profit structure gives way to a comprehensive regulatory framework, it will require the engagement of all interested community members to implement the will of California voters in a sensible, responsible fashion.
OVERVIEW OF CANNABIS LAWS
The Adult Use of Marijuana Act (AUMA) governs commercial recreational marijuana activity. The Medical Cannabis Regulation and Safety Act (MCRSA), enacted in 2015 and signed into law by Governor Jerry Brown in September 2016, regulates medical cannabis.
Because AUMA was written with MCRSA in mind, the laws are largely similar in language and effect. While there are currently some differences between the two laws with regard to licensing structure, state authorities are taking steps to clean up both bills and eliminate differences through California Assembly Bill 64. The result will be that medical and recreational marijuana use will be regulated nearly identically.
Both laws allow possession of up to 1 ounce of marijuana and personal at-home cultivation of up to 6 plants. Local governments cannot restrict possession or consumption by adults aged 21 and older. Nor can they ban at-home cultivation, though some have tried.
AUMA and MCRSA also legalize the full life-cycle of commercial marijuana: from cultivation, manufacturing and testing, to transportation, distribution and retail sales. Local governments may ban any and all commercial cannabis activity, including delivery to and from a banned municipality. However, they cannot prevent marijuana from merely being transported through a banned area.
Local governments can also cap the number of licenses they will issue and place stricter requirements on businesses than what the state requires.
Dual Licensing Mandate
One of the most important requirements to come out of MCRSA and AUMA is the dual licensing mandate. This requirement dictates that all cannabis businesses must obtain a local business license, permit or other authorization in order to apply for state licensing. Businesses that are unable to get local approval will not be eligible for a state license.
Local jurisdictions now have until January 1, 2018 to decide whether to prohibit or regulate local marijuana activities. Failure to make a decision or choosing to ban cannabis will leave many businesses without an opportunity to apply for state licenses. Without both a state and local license, these businesses will, unfortunately, fall squarely outside the law. The dual licensing mandate makes local decisions about cannabis extremely important.
LOCAL REGULATION & WHY IT MATTERS
Local Rule-making Process
Local regulation starts with an ordinance. A local ordinance is a piece of legislation enacted by a county or municipal authority. A new ordinance is drafted into a proposal, where it’s introduced by the local city or county council or a specialized committee.
Proposed ordinances will typically go between the council and special committees several times before they’re finalized. Special committees such as Planning Commissions will research proposed ordinances, report their findings and make recommendations. City councils review committee findings and consider committee recommendations.
Local governments may be required to hold public hearings where public comments are invited. California’s Brown Act only requires 72-hour notice for local rulemaking meetings. So when a city or county decides to regulate cannabis, the process can move swiftly and interested parties should be informed and prepared.
After public hearings and final discussions, the council votes on the proposed ordinance. Some localities have additional requirements such as approval by the mayor. If an ordinance passes, it will be enacted according to the specific local process in place. Ordinances can be reversed or changed at any time.
Implementing the Will of Voters
Now that both AUMA and MCRSA have passed, the complicated work of erecting a comprehensive regulatory structure at the local level is ongoing. Implementing the will of the voters is where the rubber meets the road. This is where the clear desires of 57% of California voters either become a reality or are ignored.
Cities and municipalities are taking a hard look at how a decision to ban or regulate will affect their communities. Some of the original “carrots” promoted during the Prop 64 campaign, such as tax revenue, have not always enough to sway local governments in favor of regulating. A deeper understanding of local pain points is necessary.
Local representatives need to see community members at meetings voicing their support for sensible regulation. Those who can’t attend meetings can submit letters of support for sensible ordinances or contact their local representatives directly.
Effect on Businesses/Investors
For cannabis businesses and investors, the importance of local regulation and local government activity cannot be overstated. Because cannabis is a highly regulated substance, cumbersome and poorly constructed local regulations can knock out businesses and shutter investment opportunities. Bans are even worse.
Case in point: San Diego County. The County recently issued a devastating blow to many in the community by voting 3-2 to ban all commercial cannabis activity. This decision reversed a six-year ordinance that allowed several medical marijuana businesses to operate in the county’s unincorporated areas.
Only two medical dispensaries survived the ban, but will be forced to shut down within 5 years. No new permits will be issued. Business owners were understandably very disappointed, expressing their frustrations at having played by the County’s rules for years, only to have the County “change the game.” Many operators nearly went broke trying to be legal and compliant with County regulations and now feel they have nothing to show for it. Others had plans to expand or improve their properties but these plans have been shuttered.
This case illustrates the impact that one elected official can have on the local process. Local advocates place a lot of the blame on newly elected official, Kristin Gaspar, who proposed the ban. With one vote she effectively thwarted the will of the 57% of San Diego County voters in favor of Prop 64.
Despite the setback, cannabis advocates are re-grouping and looking to the future. Because ordinances can be reversed, advocates plan to take up an effort to reverse the ban in 2018 when two of County Board of Supervisors seats will be up for election.
On the bright side, the City of San Diego City has decided to allow cannabis dispensaries. A sunset clause included in the legislation requires the City to either ban or approve cultivation and manufacturing within nine months of the January 31 decision. Although many advocates are cautiously optimistic the City will legalize and regulate the full cannabis supply chain, the case of San Diego County shows us anything can happen.
HOW TO GET INVOLVED
Keeping tabs on local regulations is extremely important for cannabis businesses and the communities they serve. Databases like CannaRegs, which lists all known local ordinances and a calendar of local meetings, can help make this task easier. Pro tip from CannaRegs founder Amanda Ostrowitz: Tuesday is the most popular city council meeting night in California.
There are a number of ways to get involved at both the state and local levels. Contact your representatives to voice your support for sensible regulation. Support local trade associations by attending meetings or donating your time or money. Attending legislative planning meetings is also a great way to have a concrete impact. Lastly, take the time to educate yourself and share your knowledge with your family and friends. The more supportive voices and votes, the better!
REGULATIONS TO WATCH
AB 64 is a “clean up” bill that aims to solve a number of issues with MCRSA and AUMA. For example, AB 64 would allow delivery businesses who were not contemplated in the original laws to apply for state licenses. This change will allow delivery businesses to apply for a dispensary license as a dispensary with a virtual/non-fixed location. AB 64 also includes plans to allow for more vertical integration by cannabis businesses.
While San Diego County now sits under a ban, the City of San Diego is making steady progress toward regulating the full supply chain of commercial cannabis activity starting with the approval of dispensaries.
The fate of cultivation and manufacturing hang in the balance, but advocates have taken the time to educate San Diego council members about the sensibility of allowing dispensaries to purchase products from San Diego businesses and have them tested by local laboratories. Otherwise, local businesses will have to ship product in from distant areas like Desert Hot Springs, which would negatively impact the City’s ability to meet its Climate Action Plan goals.
And while delivery businesses are quickly becoming one of the most popular marijuana business models, delivery faces extinction in San Diego City. The City may decide the fate of delivery at the same time it makes the final decision on cultivation and manufacturing.
Businesses and communities suffer when local governments ban cannabis. Not only do bans restrict access and drive up prices for deserving patients, they also shutter commercial investments that could breathe new life into areas that are hurting for commercial and tax revenue.
But building sensible regulations at the state and local level doesn’t happen automatically. Local governments weighing whether to regulate or ban cannabis need to be educated by the community and require guidance to address potential concerns.
Without involvement from the community, local authorities may lack the motivation to create a local legal framework for cannabis. If they believe residents don’t care, they are more likely to ban all activity, meaning that some areas will be stuck with a ban that voters weren’t in favor of — at least until the next election cycle. If you voted in favor of cannabis legalization, now is the time to speak up to make it a reality!
Originally posted 2017-05-03 15:40:11.