California Lawmakers Vote to Adopt Statewide Medical Marijuana Regulations

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By John Schroyer

Under the gun and almost out of time, lawmakers in California approved historic regulations on the state’s medical marijuana industry late Friday night, setting the stage for the largest MMJ market in the country to finally adopt comprehensive rules on cannabis businesses.

Legislators approved a package of three separate bills, all of which were contingent upon each other, just as the 2015 legislative came to a close.

The bills head now to Gov. Jerry Brown, who is expected to sign them.

The measures – Assembly Bills 266 and 243, and Senate Bill 643 – call for a whopping 17 types of business licenses, including 10 separate cultivation permits based on the size of the grow and whether the operation is indoor or outdoor. Businesses that handle marijuana also reportedly would be able to register as for-profit entities instead of operating solely as nonprofits, making the market much more attractive to investors and entrepreneurs.

“After two decades of no regulation, we will finally have a comprehensive regulatory framework for medical marijuana,” state Sen. Mike McGuire, who sponsored SB 643, said in a statement. “These regulations are long overdue.”

Nate Bradley, the executive director of the California Cannabis Industry Association, praised lawmakers for getting the trio of bills through.

“We’re very excited that the state finally made it a priority to pass legislation, and while it’s not perfect or everything the industry wanted to get, there are a lot of workable parts in it,” Bradley said.

The state’s governor can now bring to an end nearly two decades of uncertainty for California MMJ business owners, who in many cases have had only local regulations – or no rules at all – to guide them. The new system, though it may prove time-consuming and expensive to comply with, would provide businesses with assurance that they’ll be allowed to continue operating as long as they play by the rules.

It also would introduce some long-term stability to one of the most turbulent markets in the country.

The bills include some of the most wide-ranging regulations in the entire nation for MMJ. Some highlights:

  • Aside from the 10 different types of cultivation licenses, there would two separate licenses for edibles manufacturers and another two for dispensaries. The state would also require licenses for testing labs, distributors and transporters.
  • Mandatory testing would be required for all MMJ products, and testing labs would have to follow strict guidelines.
  • The state would enact limits on water use for growers and require distributors to meet quality assurance rules.
  • Delivery services would only be allowed if directly tied to a dispensary.
  • Businesses could not use packaging that’s attractive to children, and labels would need to include a warning that the products include a Schedule 1 controlled substance.
  • The state would set rules on pesticide use, and cannabis businesses would need to keep detailed records of all commercial MMJ activity for a minimum of seven years.

Under the measures, businesses would have to obtain both state and local licenses in order to operate, and local governments could still exercise veto power over commercial marijuana operations in their jurisdictions.

The bills would create a new Bureau of Medical Marijuana Regulation within the state Department of Consumer Affairs, though other agencies – such as the Department of Food and Agriculture and the Water Resources Control Board – would also help oversee the industry. Further rulemaking would likely play out for the industry over the next year or so, including specific licensing fees.

Lt. Gov. Gavin Newsom said in a statement that the MMJ regulations will also pave the way for recreational cannabis legalization in 2016, SFGate reported.

Though the rules themselves aren’t expected to go into full effect until early 2018, Bradley said, there’s a lot of groundwork still to be done in coming years.

“We’re looking forward to working with the state over the next few years on cleanup legislation and regulations,” Bradley said.

He added that he expects the new regulatory clarity to help the industry grow, since a lot of California towns and counties banned MMJ operations due to a lack of state rules.

“There are a lot of towns that didn’t do it because it’s a huge gray area, and now, if they want to make any tax money off of (MMJ), they’re going to have to regulate it,” Bradley said.

The legislative victory can be chalked up to literally dozens of stakeholders involved in closed-door negotiations that lasted weeks, if not months, including the California League of Cities, the law enforcement lobby, at least two unions, dispensary owners, the California Cannabis Industry Association and California NORML.

Gov. Brown got involved this past week as well, suggesting some new bill language that he reportedly assured lawmakers that he would support.

California has tried to pass statewide medical cannabis regulations multiple times over the years, but deep differences among lawmakers and key stakeholders over what rules should look like sunk previous attempts.

John Schroyer can be reached at