There are bound to be a few old timers in the Bureau of Cannabis Control who are sticklers for detail. Hence, we judged it wise to summarize the situation now in force.

Laboratory Testing Is Now Mandatory

A licensed dealer may only sell cannabis goods that passed all legal and regulatory standards in a licensed laboratory. This applies retrospectively to old stock. If you have merchandise you acquired before 1 July 2018, you must destroy it. The law prohibits you from having it tested now.

However, if you are holding disqualified consignment stock you may return it to your supplier. In terms of the convoluted set of rules, the supplier may send the stock on to the manufacturer, and they may then ask a laboratory to test it. As Charles Dickens wrote into Mr. Brumble’s role, “the law is an ass” but a remarkably persistent one we add!

Packaging and Labeling Requirements

The Bureau of Cannabis Control requires all cannabis goods to have appropriate labels before they reach retailers. The latter must, therefore, refuse any erroneously labeled or non-labeled consignments. Furthermore, “A retailer shall not package or label cannabis goods, even if the cannabis goods were in inventory before July 1, 2018”.

The onus is on the retailer to return incorrectly labeled goods, and destroy any in stock prior to 1 July 2018. Moreover, they may not send the product to another licensee for packaging or labeling. The only relief is exit packaging no longer needs to be child resistant. Although the restriction still applies to merchandise on route to the retailer.

THC Limits For Edible and Non-Edible Products

Edible Products

“Beginning July 1, 2018, edible cannabis goods may not exceed 10 milligrams of THC per serving, and may not exceed 100 milligrams of THC per package.”

Non-Edible Products

“Beginning July 1, 2018, non-edible cannabis products must meet package THC restrictions. Non-edible cannabis products shall not contain more than 1,000 milligrams of THC per package if intended for sale only in the adult-use market.

Non-edible cannabis products shall not contain more than 2,000 milligrams of THC per package if intended for sale only in the medicinal market.”

Further Advice and Information Readily Available

California Dispensary Information offers expertise on everything from business formation and structure, licensing, city permits, and grow room design, to production methods, concentrates, and seed-to-sale tracking.

Virtually everything you need to know on how to start a collective in California. And for that matter, supplying medicinal and recreational cannabis goods in ways that keep the Bureau of Cannabis Control smiling.

The post California Cannabis Regulation Clocks In Finally appeared first on California Medical Marijuana Information.

This was not a major break with tradition. In 2009, AG David Ogden directed U.S. attorneys “not to focus federal resources in your states on individuals whose actions are in clear and unambiguous compliance with existing laws providing for the medical use of marijuana.”

However, it still came as little surprise when current AG Jeff Sessions unpicked Janes Cole’s wise words on January 4, 2018. While he appears to have stopped short of calling for a crackdown, CNN cites him describing the action as a return to the rule of law. Specifically, he directed federal prosecutors as follows:

“In deciding which marijuana activities to prosecute under these laws with the department’s finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions.

“These principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.”

On January 25, The Verge posted an opinion that California was not planning to attend any sessions on the subject lying down. We already have around 1,100 licensed businesses selling marijuana to persons aged over 21. The AG could tie his resources in knots for years if he wants to take them on simultaneously.

So we are back to shaking banners outside U.S. attorney’s offices, with military vets and the new generation of lawyers trumpeting their points clearly. We rather liked The Verge’s turn of phrase when it said the industry was treating Sessions’ move “like they would a speed limit sign along a deserted highway: a quick glance, a shrug, and more pressure on the accelerator.”

The question arises as to how this could turn out in practice for an industry fast becoming an integral part of the California economy. We doubt Jeff Sessions will risk a bruising encounter that could end up in the U.S. Supreme Court. We think he is more likely to nip at industry leaders’ heels and make himself a nuisance generally.

Our advice is to play the ball straight down the line with license applications and follow regular business practice upon approval. We consider it probable federal prosecutors will be alert for generic things like health and safety compliance, and taxation infringements. We are here to help if you need advice with setting up your marihuana business within the law.

The post California Pours ‘Cole Water’ On the Feds appeared first on California Medical Marijuana Information.

This week, the California Bureau of Cannabis Control announced plans for interim commercial cannabis licenses effective 1 January 2018. We note these are under the Medicinal and Adult Use Cannabis Regulation and Safety Act AKA MAUCRSA. Hence, we are still waiting for news of plans for cultivator and manufacturer licenses that will follow.

In mid-November, we expect the California Bureau of Cannabis Control to start accepting applications for commercial cannabis licenses. These will permit legitimate operations to commence on 1 January 2018, and continue for 120 days. During this period, commercial operators must apply for regular state licenses, and be able to provide the information we list below. If a situation beyond their control prevents this happening, they may apply for an extension(s).

For purposes of clarity, we post the preamble to the Bureau’s notice first, in full herewith:

“TEMPORARY LICENSE APPLICATION INFORMATION

Business and Professions Code section 26050.1 allows the Bureau to issue 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. The Bureau can only issue a temporary license if the applicant has valid license, permit, or other authorization issued by the local jurisdiction.

The Bureau intends to start issuing temporary licenses January 1, 2018 and expects to begin accepting applications prior to that date.

NO TEMPORARY LICENSE WILL BE EFFECTIVE PRIOR TO JANUARY 1, 2018”

Information Required of Applicants for Temporary Licenses

• A valid business license, authorization or permit from the local authority agreeing they may engage in commercial cannabis
• Whether they wish to trade in adult use, or medical cannabis: In other words, whether they want A or B-license type approval
• The name of the individual or business applicant, plus whether they require a retailer, micro business, or distributor, etc. license
• Comprehensive details of both the applicant and the business owner(s) – An ‘owner’ is a CEO, director, 20%-plus shareholder, or a person who exercises ‘direction, control, or management’.
• The physical address of the business, plus a title deed or consent of the premises owner, proving right to occupy and trade
• A diagram of the business layout at the premises, showing the subdivision of the space and the purposes thereof

Without local approval, all else is for naught. We recommend starting at this point, and chasing it down as fast as possible. We are available to assist with further information and advice as necessary. We wish you every success in your commercial cannabis endeavors.

The post Things are Moving Fast in California Cannabis Circles appeared first on California Medical Marijuana Information.

The Tax Guide for Cannabis Business does not address regulations contained in other state and local laws. A touch of wry humor shines through the comment “for the Federal Government’s guidance regarding marijuana enforcement, refer to the U.S. Department of Justice website” with a link provided.

The General Layout of the Guide

The main index tabs relate to filing returns, making payments, taxes & fees, forms & publications, permits & licenses, tax rates, and knowing your rights. The getting started section provides essential information concerning registration, returns filing, account maintenance, and other related topics.

There are separate sections for cultivators, manufacturers, distributors, and retailers, plus a resources section that takes the reader to publications, special notices, statutory and regulatory information, web-based seminars, and access to help from customer service representatives.

An Important Disclaimer to Note

The guide informs it is nothing more than that, by stating:

“Please note that the general information provided is not intended to replace any law or regulation. This website summarizes the law and applicable regulations in effect when it was published.  However, changes in the law or regulations may have occurred.  If there is a conflict between this document and the law, decisions will be based on the law.”

Therefore, we advise always using a fresh-downloaded version and following the links provided to authority government sources. Newcomers should consider availing themselves of the offer of personal consultations at their place of business.

Two New Cannabis Taxes to Know

Two new cannabis taxes will apply from January 1, 2018, onwards in California.

1. There will be a 15% tax on cannabis and cannabis products. Retailers must collect this, after calculating it based on the average market price of any retail sale, and pay it to their cannabis distributor.
2. There will be a tax imposed on cultivators, based on harvested material that enters the commercial stream. They must pay this to their manufacturer or distributor as follows:

• $9.25 per dry-weight ounce of cannabis flowers that enter the commercial market
• $2.75 per dry-weight ounce of cannabis leaves that enter the commercial market

Distributors must collect the cannabis excise tax from retailers, and the cultivation tax from cultivators or manufacturers, as applies and pay it to the California Department of Tax and Fee Administration.

Further Information on the Guide

Follow this link to the complete Tax Guide for Cannabis Businesses in California.

The post California Tax Guide for Cannabis Businesses Unveiled appeared first on California Medical Marijuana Information.

How We Came Into This Situation

Under Federal law the cultivation, transportation, sale, possession, and consumption of marijuana is a felony because the U.S. Food and Drug Administration lists it as a Schedule 1 substance with ‘no accepted medical use and a high potential for abuse’. This was not always the case though until 1970.

Around 1840, doctors decided Cannabis had medical value, and pharmacies sold it freely until the passing of the 1937 Marijuana Tax Act. This taxed the product until repeal the following year. Some folk believed the Act was a countermeasure by timber farmers because cheaper marijuana bark was threatening their business interests.

Things came to another crunch in 1970 with the passing of the Controlled Substances Act. Reasons for outlawing marijuana were (a) high potential for abuse, (b) no currently accepted medical use, and (c) lack of accepted safety for use under medical supervision. Unbelievably, on December 1, 1975, the Supreme Court ruled it was ‘not cruel or unusual for Ohio to sentence someone to 20 years for having or selling cannabis.’

How We Are Slowly Unraveling the Legacy

California took the first tentative steps forward in 1992, with the formation of a growers’ lobby called the San Francisco Cannabis Buyers Club. This drafted the Compassionate Use Act that opened the door to the medicinal use of marijuana. The federal authorities chose to ignore a new normal that is spreading like wildfire across America.

With recreational cannabis regulation now unfolding apace in California, we face a growing mountain of marijuana money. The banks can’t take this in as deposits, because it is, strictly speaking, the proceeds from a federal crime and could cause them to lose their licenses. Quartz.com reports state treasurer John Chiang is pushing hard for a public bank to close the gap.

This could potentially bring large investments into the California community. We could use the money to fund useful projects we collectively do not have the money for now. Low-interest loans for education and affordable housing come to mind. We do have a precedent in the form of the Bank of North Dakota.

Intriguing Possibility of a Bank of California

The state-owned Bank of North Dakota says it is ‘an agile partner creating financial solutions for current and emerging economic needs.’ Ironically, it formed in 1919 after North Dakota farmers of other crops were unable to obtain private bank loans under the federal system.

The State of Dakota insures the deposits as opposed to the Federal Deposit Insurance Corporation, and it is hence free of federal regulatory interference. Something similar might California commercial banking to change its position, which is overdue.

The post Could Marijuana Weed Out California’s Commercial Banking Sector appeared first on California Medical Marijuana Information.

This had been holding up the rules for licensing the recreational supply chain. Those problems thankfully belong to the past, now the California Senate has adopted the new hybrid Medicinal and Adult-Use Cannabis Regulation and Safety Act MAUCRSA. This repeals the MCRSA, while incorporating some of its provisions in this updated version of the AUMA.

We have more than a new acronym however to learn, since the changes are significant for California marijuana providers. In summary form:

• The Bureau of Cannabis Control is now the senior regulating authority
• Cannabis tax will be by average market price, as opposed to gross receipts.
• License applicants may submit proof of historic compliance with local laws. The obligation now falls on their county or city to indicate otherwise within 60 business days of license approval.
• The definition of owner is broadened to 20% or more ownership, ceo, board member, or anyone directing, managing, or controlling an applicant.
• The AUMA residency requirements have fallen away. Even overseas entities can operate freely. However individual cities may determine otherwise.
• The various AUMA license types remain, except these divide into adult use (A), and medicinal use (M) subclasses. In addition, there are several new niche licenses available.
• However, the old MCRSA transporter and producing dispensary licenses have fallen away.
• Multiple licenses are available to both A and M applicants, subject to safeguards for over-saturation, and protecting the interests of small licensees.
• The new MAUCRSA defines a solvent as producing a flammable gas or vapor that ignites or explodes ‘when present in the air in sufficient quantities.’
• Cultivators using water ‘from any diversion’ have until July 1 this year to lodge paperwork with the Water Sources Control Board.
• Retailers may now deliver marijuana from a physical shop that is otherwise closed to public access
• Quality assurance procedures are tighter. For example, distributors must have procedures for validating packaging and labeling.
• The MAUCRSA provides for future Department of Food and Agriculture standards, governing county origin appellations.
• There is also provision for a universal logo for edible marijuana, and for regulating advertising on the internet.

While the MAUCRSA puts regulatory agencies and some others back to square one, this is a defining moment for marijuana in California. Finally, the product begins to leave the political arena, and enter the mainstream business world, where it belongs.

The post Finally, One Set of Licensing Rules for Recreational and Medical Marijuana appeared first on California Medical Marijuana Information.

Criminal Background Checks and Disclosures

These rules apply equally to growers, distributors, transporters, and retailers. Their ‘owners’ must furnish details of post-juvenile convictions, excluding traffic citations. In addition, ‘owners’ of manufacturing enterprises must admit to all convictions with a significant bearing on their activity.

Financial Background Checks on Owners

‘Owners’ of distributor, transporter, and retailer enterprises must declare all business funds in accounts with financial institutions, and their own investments in the business. Furthermore, the regulator wants to know about all gifts deployed in the enterprise.

Order of Priority for Granting California Cannabis Licenses

Priority applies to businesses already operating by January 1, 2016. They must back this up by providing business documentation and accounting records. Moreover, the business must be in ‘good standing’ as attested by a local jurisdiction. All operations in business before January 2, 2018 may continue until the regulator reaches a decision. If denied, they must cease trading immediately and disband.

Regulating Agencies for Different Business Types

Cultivators fall under the remit of the California Department of Food and Agriculture. This administers 15 different licenses depending on the cultivation niche. Farms must be 600 feet away from schools, and they must list their water and energy resources.

The Department of Public Health issues Manufacturer licenses of four different kinds. They apply to anyone producing, processing, or compounding cannabis products by extraction or infusion. Only certain extraction methods are legal and a licensed engineer must certify them as appropriate and safe.

Retailers, Deliverers, Transporters and Distributors must apply for licenses at the Department of Consumer Affairs.

• Retailers must be 600 feet away from schools, may not sublet licensed premises, and must retain track-and-trace inventory records for seven years.
• Deliverers must deliver all product themselves between 6 a.m. and 9 p.m. They may not deliver to public-owned land or public agencies elsewhere. Total product value per route may not exceed $3,000.
• Transporters may only move cannabis products between licensees. They may not hold this on their premises for more than 72 hours. They must include detailed procedure descriptions with their applications.
• Distributors purchasing product from producers, and selling to manufacturers must submit detailed procedures for inventory management, quality assurance, and security practices.

Thorough Applications are Thus Essential

There is not an open-ended supply of licenses, and hence the authorities are not falling over their feet to issue them. Successful applicants will be those who understood the requirements, sought expert advice, and gave regulators no less, and no more than what they require.

For a very informative video on new MCRSA licensing please check out Canna Law Blog.

The post Summary of What’s Required for a California MCRSA Cannabis License appeared first on California Medical Marijuana Information.

Other unintended consequences included

• Consumption continued at 60% of the pre-prohibition rate, rising to 80% by the end of the failed experiment.
• Within one week, ‘grow your own’ stills were on sale throughout the country so people could make their own moonshine.
• In the first year, total crime increased by 23%, homicide by 12%, and drug addiction by a staggering 44%.
• Americans became accustomed to consuming stronger liquor because smugglers found it easier to conceal
• The exercise failed miserably in its primary goal of producing a generation believing in temperance.

The U.S. Government subsequently introduced a more rational program to regulate manufacture, import, transport, and sale of alcoholic beverages. It has however never managed to rein in the organized crime syndicates it inspired.

John D. Rockefeller Jr., who has supported prohibition later wrote, “… drinking has generally increased; the speakeasy has replaced the saloon; a vast army of lawbreakers has appeared; many of our best citizens have openly ignored prohibition; respect for the law has been greatly lessened; and crime has increased to a level never seen before.”

Recent attempts by the San Diego County Board of Supervisors to extend its ban on medical marijuana dispensaries in unincorporated areas is irrational given lessons learned during prohibition. While we support the basis of controlling marijuana access to children, there are already adequate regulations in place to achieve this.

The San Diego ban has had little success in constricting the supply chain. Illegal ‘dispensary’ numbers skyrocketed in the past year. They are in it for a quick buck. They show little reticence to sell marijuana to anybody, including minors. They don’t do health and safety checks, and they don’t pay taxes either.

This is a small sample of what will happen if San Diego continues with its policy, if the Attorney General cracks down, or both. Close to a century of marijuana prohibition has not even begun to achieve marijuana abolition. We agree wholeheartedly with the San Diego Union-Tribune that the Board of Supervisors should, “Accept the responsibility of honoring the will of the county’s voters.”

The post Marijuana Regulation and Control are Better than Prohibition appeared first on California Medical Marijuana Information.

The Term ‘Collective’ Does Not Appear in the Legal Lexicon

The situation dates back to 2008, when the California Attorney General stated that making profit from selling medical marijuana was illegal. Setting aside that quaint mind-set, this meant that medical marijuana dispensaries had to be non-profits. This left medical marijuana patients with only one legal workaround. They had to form collectives that barely covered costs.

California law treats these collectives as non-profit mutual benefit corporations, or NPMBC’s. By definition, these have no equity or stock to sell. Any intelligent buyer will run miles from that situation. This is because there is nothing to pay for. Except a quasi-right to a grow-your-own, in a situation that is, at best, somewhat fluid. The only workaround is transfer of rights and obligations of membership.

How Membership Transfer Works with California Non-profit Mutual Benefit Corporations’s

The legislators clearly never intended this to happen easily. Section 7230 of the Corporations Code states:

• All rights accruing from membership of an NPMBC terminate on death
• In the interim, no member may transfer a right or membership in an NPMBC

However, the legislation does allow one loophole. If the NPMBC’s articles allow for it, and the local bylaws permit it, its board may allow membership transfers without limitation. This includes when a member dies, or the non-profit undergoes restructuring. The board may however only change its position on approval of all the members.

This legacy of history means few medical marijuana collectives are set up to operate this way. Hilary Bricken thinks this is because criminal lawyers structured them with a view to averting prosecution. We agree with her conclusion that marijuana NPMBC’s may not be purchased, because there is no substance over which to take title.

Hence, be careful if you have your eye on a California medical marijuana collective, and want to become the sole member in exchange for sweeteners. The local bylaws and the founding statements of the NPMBC must permit this. Or else you could lose your money, and fall foul of the California Corporations Code while you do.

The post Can You Buy a California Medical Marijuana Collective? appeared first on California Medical Marijuana Information.

What follows is a summary of the most relevant points, including opinions expressed by Los Angeles Times and our own thoughts. Here is a link to the official document if you would like to study the long and detailed report.

• We currently have two official approaches towards regulating marijuana in California. These are (a) the Medical Cannabis Regulation and Safety Act of 2015, and (b) Proposition 64 of 2016 for Legalized Nonmedical Cannabis.
• Few doubt the eventual logic of combining the legislation as Gov. Jerry Brown suggests. However many are beginning to question whether there is time to do so before Proposition 64’s deadline of December 30, 2017 runs out.
• The State Legislative Analyst’s Office is urging cash flow restraint. While it agrees with Gov. Jerry Brown, is believes there is ‘significant uncertainty regarding the resource needs for departments to regulate and tax medical and nonmedical cannabis.’
• Its two main concerns are whether the Trump Administration will clamp down on the industry as it legally may do, and how many marijuana businesses will emerge, register, and contribute to their administrative cost by paying taxes. The Catch 22 is that merging the two systems will delay this benefit.
• According to Los Angeles Times, “the State Board of Equalization estimates there will be 1,700 dispensaries and retailers paying taxes, while the Department of Consumer Affairs, which will oversee the businesses, expects 6,000 pot shops, based on experience in Colorado.’
• In the light of this, the California Legislative Analyst’s Office reticence to support borrowing large sums of money becomes understandable. At this stage, we do not even know whether a method to license and tax sales will be in position on January 1, 2018 per proposition 64.

This puts us in the unfortunate position of being between a rock and a hard place. Do we put the cart before the horse, trust the industry will come to the party, and give the Department of Consumer Affairs the money it needs for the job?

Or should we do what the California Legislative Analyst’s Office suggests. It wants the state to borrow only what it needs to fund the 2017 / 2018 program. Its rationale is requirements in subsequent years might be less.

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