Common questions regarding the medical marijuana industry and legal climate.

  • What is MCRSA and AUMA?

    The Medical Cannabis Regulation & Safety Act (“MCRSA”) is the product of three bills: AB 266, AB 243, and SB 643. It was signed into law by the Governor on October 9, 2015. MCRSA created a state licensing system for medical cannabis commercial cultivation, manufacturing, retail sale, transportation, delivery, distribution and testing.

    The Adult Use of Marijuana Act (“AUMA”) legalized the adult recreational use of cannabis, by means of Proposition 64. AUMA was approved by California voters on November 8, 2016.

  • What is MAUCRSA?

    The Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA) is the governing law for both medical and adult use cannabis in California. MAUCRSA effectively repealed portions of the Medical Cannabis Regulation and Safety Act (MCRSA) and added portions to the Adult Use of Marijuana Act (AUMA or Prop 64) to form one regulatory framework. MAUCRSA harmonizes the MCRSA and AUMA rules and regulations creating one cohesive regulatory framework. MAUCRSA took effect on July 1, 2017 when Governor Jerry Brown signed SB 94 into law.

  • Who is in charge?

    Responsibility for state licensing is shared between many agencies. However, the three lead agencies are:

    • Bureau of Cannabis Control (“BCC“)
      • Housed within the Department of Consumer Affairs
      • The BCC is the lead agency in regulating the cannabis industry in California
      • The BCC is responsible for licensing retailers, distributors, testing labs, and microbusinesses
    • CalCannabis Cultivation Licensing (“CalCannabis“)
      • Housed within the Department of Food and Agriculture
      • CalCannabis is in charge of licensing cultivators and establishing a track-and-trace program
    • Manufactured Cannabis Safety Branch (“MCSB“)
      • Housed within the Department of Public Health
      • MCSB licenses manufacturers of cannabis products, such as edibles.
    • The best way to stay up to date on all of the most recent news from these three authorities is via the California Cannabis Portal.
  • What type of licenses are available under MAUCRSA?

    There are a total of twenty-six license types available. The types of licenses for adult and medical use are the same, and applicants will have to designate whether their license is for medical (Type M) or adult use (Type A) by affixing an “M” or an “A” in their application. Under MAUCRSA, a person can hold both an “M” and an “A” License.

    CalCannabis adjusted its mixed-light cultivation licenses based on the amount of artificial light used:

    • Tier 1 are for those who use less than six watts per square foot;
    • Tier 2 are for those who use between six and 25 watts per square foot.
    License Type Size Distinction
    Type 1 – Cultivation – Specialty Outdoor, Small Up to 5,000 sq. ft. or up to 50 mature plants on noncontiguous plots No artificial light
    Type 1A – Cultivation – Specialty Indoor, Small 501-5,000 sq. ft. Artificial light
    Type 1B – Cultivation – Specialty Mixed Light, Small 2501-5,000 sq. ft. Combination of natural and artificial light
    Type 1C – Cultivation – Specialty Cottage Up to 2500 sq. ft. for mixed light, up to 25 outdoor mature plants, or 500 sq. ft. of indoor cultivation Combination of natural and artificial light, all on one premise
    Type 2 – Cultivation – Small Outdoor 5,001-10,000 sq. ft. No artificial light
    Type 2A – Cultivation – Small Indoor 5,001-10,000 sq. ft. Artificial Light
    Type 2B – Cultivation – Small Mixed Light 5,001-10,000 sq. ft. Combination of natural and artificial light
    Type 3 – Cultivation – Outdoor 10,001 sq. ft. – 1 ac. No artificial light
    Type 3A – Cultivation – Indoor 10,001 sq. ft. – 22,000 sq. ft. Artificial light
    Type 3B – Cultivation – Mixed Light 10,001 sq. ft. – 22,000 sq. ft. Combination of natural and artificial light
    Type 4 – Nursery No size designation currently available Producing clones, immature plants, and seeds
    Type 5 – Large Outdoor + 22,000 sq. ft. No artificial light
    Type 5A – Large Indoor + 22, 000 sq. ft. Artificial light
    Processor No size restrictions Conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis and nonmanufactured cannabis products. Cultivation of cannabis plants is prohibited
    Type 5B – Large Mixed Light + 22,000 sq. ft. Combination of natural and artificial light
    Type 6 – Manufacturer 1 No size restrictions Using non-volatile solvents
    Type 7 – Manufacturer 2 No size restrictions Using volatile solvents
    Type N – Manufacturer Produce edible products or topical products using infusion processes but not extraction. May also package and label cannabis products on the licensed premises
    Type P – Manufacturer Only package or repackage cannabis products or label or relabel the cannabis product container.
    Type S Manufacturer* (These are not currently available ) CDPH announced that they are in the process of developing a Type S license, which will allow businesses to share facility space.
    Type 8 – Testing No size restrictions Cannot own any other license type
    Type 9 – Delivery only Non-Storefront Retailer license Shall be closed to the public Delivery only licenses must follow the same regulations and application requirements as retailers. Delivery vehicles are limited to $3,000 of cannabis product at any time and must be tracked by GPS at all times
    Type 10 – Retailer No size restrictions Sells cannabis products to end users
    Type 11 – Distributor No size restrictions Distributes cannabis products between producers and retailers
    Distributor Transport Only Can only transport its own cannabis and cannabis products, or transport for other licensees, but does not perform any of the other functions of the distributor (quality control or tax collection). Transportation to retail licensees is prohibited by this license, unless the licensees are transporting immature plants and seeds from a nursery to a retailer
    Type 12 – Microbusiness Up to 10,000 sq. ft. of cultivation, no size restrictions on distributor and retailer license types under this category May also be a licensed distributor and retailer
    Event Organizer The Cannabis Event Organizer license, which in turn allows a licensee to apply for Temporary Event. Events are limited to 4 days maximum. Onsite consumption and sales will be authorized at the events, provided your local jurisdictions grants permission
  • Do I need a local license or permit?

    Yes. MAUCRSA emphasizes that although the State of California may legalize certain aspects of the cannabis market, local jurisdictions have the authority to set their own local ordinances to regulate or prohibit cannabis activity in their jurisdiction.

    MAUCRSA also requires local jurisdictions to provide information related to their regulation of commercial cannabis activity to the three state licensing authorities. The state licensing authorities must deny an application for any commercial cannabis activity which the local jurisdiction has notified the bureau is prohibited. In the short term, the BCC can only issue licenses if the applicant has a valid license, permit, or other authorization issued by the local jurisdiction.

  • Is there a California residency requirement?

    There is not a residency requirement to own or operate a medicinal or adult-use cannabis business under MAUCRSA. The residency required by AUMA has been repealed. MAUCRSA allows for medical and recreational owners to be California residents, out of state residents, or residents of another country.

  • What does MAUCRSA say about delivery services?

    A retailer is someone engaged in the retail sale and delivery of cannabis or cannabis products to customers. A retailer must have a licensed premises which is a physical location from which commercial cannabis activities are conducted. A retailer’s premises may be closed to the public. A retailer may conduct sales exclusively by delivery.

    In the traditional sense, “Delivery” means the commercial transfer of cannabis or cannabis products to a customer. However, “Delivery” also includes the use by a retailer of any technology platform owned and controlled by the retailer.

    As always, any person seeking to offer cannabis delivery services must first obtain approval from their local jurisdiction before they begin operating.

  • Can I apply for multiple licenses?

    Applicants may apply for more than one license. Testing laboratories are they only license type limited to holding only a single license (Type 8), however a testing lab may test both medicinal and adult-use cannabis.

  • What if I have a criminal record – may I still apply for a State license?

    The state may deny a license to any applicant who “has been convicted of an offense that is substantially related to the qualifications, functions, or duties of the business or profession for which the application is made…”

    In determining which offenses are substantially related to the qualifications, functions, or duties of the license type, among others, the state will consider the following:

    • A violent felony conviction
    • A serious felony conviction
    • A felony conviction involving fraud, deceit, or embezzlement
    • A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling, any controlled substance to a minor; or selling, offering to sell, furnishing, offering to furnish, administering, or giving any controlled substance to a minor
    • A felony conviction for drug trafficking with enhancements

    With a few exceptions, a prior conviction, where the sentence, including any term of probation, incarceration, or supervised release, is completed, for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance is not considered substantially related and will not be the sole ground for denial of a license.

  • Will there be testing and packaging requirements?

    Beginning in 2018, California will require testing cannabis for contaminants including but not limited to pesticides, chemicals, mold, mildew, and insects. MAUCRSA explicitly prohibits the use of banned pesticides and sets standards for certification of organic cannabis.

    Under MAUCRSA, distributors are placed with the responsibility of ensuring that all packaging and labeling meets all state regulations. Prior to delivery or sale to a retailer, cannabis and cannabis products shall be labeled and placed in a resealable, tamper-evident, child-resistant package and shall include a unique identifier for the purposes of identifying and tracking cannabis and cannabis products.

    For an extensive list of packaging requirements see §26120.

  • When can we submit applications?

    The BCC recently announced that it will be issuing temporary licenses. A temporary license is a conditional license that allows a business to engage in commercial cannabis activity for a period of 120 days and may be extended for additional ninety (90) day periods if a complete application for licensure has been submitted to the department pursuant to Section 8102. The BCC requires an applicant have a valid license, permit, or other authorization issued by the local jurisdiction.

    Additional requirements for temporary licenses can be found here and here.

    The BCC intends to start issuing temporary licenses January 1, 2018 and expects to begin accepting applications prior to that date. The BCC, CalCannabis, and MCSB released their emergency regulations on November 16,2017 and can all be found here. It is critical to remember that these are emergency regulations and that in early 2018 we will still see a package of final regulations! The BCC anticipates that it will release annual license applications shortly.

  • What are the taxes under MAUCRSA?

    Under MAUCRSA, the excise tax on retailers is no longer measured by gross receipts. Instead, the excise tax imposes a 15% tax on the average market price of the retail sale.

    A separate cultivation tax will be imposed on the cultivator after the cannabis is harvested and enters the commercial market. The cultivation tax is $9.25 per dry weight ounce and the leaf tax is $2.75 per dry weight ounce.

    Finally, a county may impose an additional tax on a variety of aspects involving commercial cannabis throughout the supply chain including cultivating, manufacturing and sales.

  • Will there be a transition period?

    In order to help facilitate a smooth transition of business into our newly regulated market, the BCC announced a transition period. Beginning January 1, 2018 through July 1, 2018, licensees may do the following:

    • Conduct business with other licensees irrespective of whether they have an M (Medical) or A (Adult-use) license.
      • After July 1, 2018, commercial businesses may only do business with other licensees in the same category. The exception is testing labs, which may test cannabis goods for both license types.
    • Transport cannabis goods that don’t meet labeling requirements laid forth in MAUCRSA so long as a sticker with the appropriate warning statement is affixed.
    • Sell cannabis goods held in inventory that are not in child-resistant packaging if the retailer places them in child-resistant packaging upon sale
    • Sell and transport cannabis good that have not undergone lab testing if a label stating that they have not been tested is affixed to each package
    • Individually package and sell dried flower held in inventory by the retailer at the time of licensure
    • Testing will also be Phased-In with different testing requirements January 1, 2018, July 1, 2018 and cannabis harvested and cannabis products manufactured on or after December 31, 2018.

Areas of Practice