Key Government Websites:
Department of Cannabis Control (DCC)
DPH Office of Medical Cannabis Safety
CDFA Medical Cannabis Cultivation Program
Secretary of State Cannabizfile website
CDTFA Tax Guide for Cannabis Businesses
State Water Board Cannabis Cultivation Program
As of January 1, 2018, Prop. 64 (Adult Use of Marijuana Act or AUMA), which legalized adult recreational marijuana in California and also re-codified medical marijuana regulatory laws, went into effect to regulate cultivation, sales, and distribution of cannaibis.
If you wish to operate a cannabis business, you should employ an attorney and also start working on gaining local support, because locals will have to license retail shops and cultivators, or at least not ban them. Join or start a local NORML chapter.
The provision in SB 420 affording legal protection to patient collectives and cooperatives, HSC 11362.775, ended on January 9, 2019. All cannabis collectives must now be licensed, except for individual patient and caregiver gardens serving no more than five patients.
Introduction and State Law
Local Regulation
Caregivers
Collective Cultivation
Federal Law
INTRODUCTION AND STATE LAW
Under state law, the California Compassionate Use Act of 1996 (Prop. 215) patients and their “primary caregivers” are protected from criminal prosecution under state law for personal possession and cultivation of marijuana, but NOT for distribution or sale to others. State law was expanded in 2004 by Senate Bill 420 (Health & Safety Code 11362.7-8). Among other things, SB 420 authorized patient cooperatives or collectives; to grow, distribute and/or sell medical marijuana on a non-profit basis to their members. However, those protections have gone away with the new licensing scheme in MAUCRSA and AUMA.
Hundreds of medical cannabis dispensaries, coops, collectives, and delivery services have been doing business in California since Prop. 215 and SB 420 passed. Although many were operating in legal accordance with state and local law, the sale of medical cannabis remains strictly illegal under federal law, and the DEA has conducted scores of raids against medical cannabis businesses. Efforts were made in the legislature by MAUCRSA and by Prop. 64 (AUMA) to conform with federal guidelines under which the federal government will allow cannabusinesses to operate.
Cannabis businesses must obtain state and local licenses to operate. Three main regulatory bodies govern licensing: the Department of Cannabis Control (DCC), which governs retailers and testing labs; the DPH Office of Medical Cannabis Safety, which governs manufacturers; and the CDFA Medical Cannabis Cultivation Program which governs cultivation. (These are in the process of being consolidated in 2022.) There is also CalOSHA.
Cannabis businesses are expected to file for a seller’s permit and pay sales taxes to the Board of Equalization. This is consistent with state law, which requires sales taxes for all medicinal herbs and drugs except those sold by a licensed pharmacist upon a doctor’s “prescription” (legally, doctors cannot “prescribe” marijuana, but only “recommend” or “approve” it). The CDTFA publishes tax guidelines and a link for obtaining online sales permits.
You should first check your name availability with the Secretary of State and register your name
LOCAL REGULATION
Many cities and counties have enacted ordinances aimed at licensing or regulating cannabis businesses. Many others have banned them altogether, or enacted moratoriums on them. Strict zoning regulations are in effect in many localities, preventing siting near schools or too close to other dispensaries. Other regulations that have been adopted include banning on-site consumption and limiting the quantity of marijuana that can be sold or kept on hand. In some cases, regulations have been deliberately devised to be so strict or costly as to preclude businesses from operating.
State law AB 2650 (Buchanan) prohibits medical marijuana collectives from operating within 600 feet of a school as of Jan 1, 2011. It covers all activities by dispensaries or other providers that have a storefront location or mobile outlet and are required to have a business license. The bill grandfathers dispensaries that are currently allowed to operate there under existing local regulations.
Anyone planning to open a cannabis business must seek a business license and comply with local zoning regulations. It is especially important that retail outlets be appropriately sited so as not to disturb neighbors. Neighborhood complaints are the number one cause of police raids.
It is important that cooperatives and collectives consult local regulations before trying to set up operation. The best sources for local regulation information are local Cal NORML attorneys and CannaRegs.com.
CAREGIVERS
A primary caregiver is narrowly defined under Prop. 215 to be “the individual designated [by a legal patient] who has consistently assumed responsibility for the housing, health, or safety of that person.” The law does not explicitly allow patients to have multiple caregivers. In contrast, a caregiver may serve more than one patient.
The State Supreme Court has ruled that defendants are not entitled to a caregiver defense if all they do is grow or supply medical marijuana to patients. In the case People v. Mentch (2008), the court ruled: “a defendant whose caregiving consisted principally of supplying marijuana and instructing on its use, and who otherwise only sporadically took some patients to medical appointments, cannot qualify as a primary caregiver.” The court went on to specify: “a defendant asserting primary caregiver status must prove at a minimum that he or she (1) consistently provided caregiving, (2) independent of any assistance in taking medical marijuana, (3) at or before the time he or she assumed responsibility for assisting with medical marijuana.”
COLLECTIVE CULTIVATION & POSSESSION GUIDELINES
Prop 215 allows individual patients and their caregivers to possess and cultivate as much as required for the patient’s own medical use. Because this criterion is vague and open to differing interpretations, it is difficult for patients and police to judge beforehand whether a particular garden is legal. All too frequently, police take a stingy interpretation of the law and bust patients or caregivers for gardens they deem excessive, thus leaving the matter to be settled in court at the defendant’s expense. Courts have ruled that local jurisdictions can ban all medical marijuana cultivation, and although they cannot criminalize personal cultivation, they can levy punitive fines and even place liens on property.
AUMA requires locals to allow six-plant personal gardens (per parcel, not per person), but the law allows locals to drive cultivation indoors or enact “reasonable regulations” on them. A recent case in Fontana helped set what is a reasonable regulation.
Under state law, medical patients or their caregivers may grow an amount required for their medical care, but there has been much backlash over doctors issuing so-called “cultivation certificates” for up to 99 plants (a number arrived at to avoid the mandatory minimum federal sentence of 5 years for 100 plants).
The provision in SB 420 affording legal protection to patient collectives and cooperatives, HSC 11362.775, ended on January 9, 2019. All cannabis collectives must now be licensed, except for individual patient and caregiver gardens serving no more than five patients, provided no money changes hands.
FEDERAL LAW
Posssession, sale, distribution and transportation of marijuana, medical or otherwise, remain completely illegal under federal law. Under the U.S. Controlled Substances Act (CSA), marijuana is currently classified as a Schedule I drug, meaning that it has no accepted medical use. In 2001 , the Supreme Court upheld a federal injunction ordering the Oakland Cannabis Buyers Cooperative and five other cannabis clubs to cease operations. The court overturned a Ninth Circuit Court of Appeals ruling that the OCBC was entitled to a “medical necessity” defense for distributing marijuana to its members. The court ruled for the government on the grounds that the CSA; did not allow for a necessity defense for distributors, but left open the question whether individual patients might invoke a necessity defense.
The Supreme Court turned back a more fundamental challenge to federal law in 2005, when it ruled that the CSA prohibits the private possession and cultivation of marijuana even by individual patients (Gonzalez v Raich). In particular, it reversed a ruling by the Ninth Circuit Court of Appeals which had found that the Congress’ constitutional authority to regulate “interstate commerce” did not extend to patients who grew and possessed their own marijuana at home. Although the Supreme Court in no way invalidated California’s state law on medical marijuana, it affirmed the federal government’s right to treat all marijuana as contraband. In a subsequent case (Raich v Gonzalez, 2007), the 9th Circuit Court of Appeals ruled that patients have no constitutional right to use medical marijuana even when their lives depend on it. In May 2009 the U.S. Supreme Court refused to hear a case from San Diego and San Bernardino counties challening the state ID card program, leaving in place an appeals court ruling upholding the program. That ruling does not overturn Raich.
As a result, medical marijuana remains completely illegal under current federal law. The DEA raided scores of medical marijuana growers, clubs and caregivers; in California since the enactment of Prop. 215, until MAUCRSA and Prop. 64 established licensing rules that conformed with federal law.