Calif. Legislators Pass Bills to Regulate the Medical Marijuana Industry

Updated: Sept. 15, 2015, 10:09 a.m.

By Noelle Skodzinski

Late Friday, California legislators made history, passing three bills—SB643, AB243 and AB266—that will bring regulations to the state's medical marijuana industry, nearly 20 years after medical marijuana was legalized there. The bills, which are expected to be signed into law by Governor Jerry Brown, will establish a state licensing authority, enable taxation of cannabis-related activity and regulate cannabis cultivation like agriculture, including mandating product testing.

A group representing California cannabis cultivators sees this as a positive step toward giving the marijuana industry to mainstream business status. "The state government has finally recognized us – and everyone in the state is finally beginning to acknowledge our industry’s value, the jobs we provide and the economic benefit we create for our communities," wrote Hezekiah Allen, executive director of the Emerald Growers Association, this weekend in a letter to the group's constituents.

Hezekiah Allen, Executive Director, Emerald Growers Assoc.

Hezekiah Allen, Executive Director, Emerald Growers Assoc.

"California’s independent farmers are big winners today, one step closer to the professional goals and respect we’ve sought for more than three decades. Other big winners include patients, our communities, and watersheds," he continued.

According to Allen, licensing categories have been established based on size and style of farming (indoor, mixed-light and outdoor), and businesses have two years to become compliant with the new licensing regulations.

"The three most important policy breakthroughs from cultivators perspective is regulatory oversight from the Department of Food and Ag, specific licensing tools for specialty and small cultivators, and the ability to establish appellation controls to protect the small farm heritage," Allen told Cannabis Business Times Monday. "Without a doubt the single most important breakthrough from a policy perspective is that—for the first time—California's robust, diverse, statewide community of cultivators began to organize, came to the table and stayed focused, measured and disciplined throughout the entire process. From day one way back in December to the final hour, our community was represented with integrity, in a transparent and accountable way," he said.

"The most remarkable thing about this bills passage," Allen told CBT, "is breadth of the coalition of groups that came together on common ground. With courageous leadership by representatives in the Assembly and the Senate, the table was set with seats for all to work together to seek balance and compromise. Our state owes a tremendous debt to the lawmakers that rose to this challenge and finally broke through the doldrums. Now the real work begins: rulemaking and implementation, and the coalition and relationships that were forged over the last year should give California great hope that improvements will come quickly to the medical cannabis industry, to public safety, and to the natural environment."

With changes that are being called nothing shy of monumental coming to an industry that has operated unregulated for nearly two decades, at least one well-know industry veteran has expressed concerns. "Steve DeAngelo, co-founder of the ArcView Group, mammoth marijuana-investment firm, and the Harborside Health Center, a nonprofit dispensary in the state, said in a statement Saturday that the time pressures made it impossible for state legislators to adequately consider the impact the new law will have on patients who depend on medical cannabis,"  reports the International Business Times (IBT). "'[S]ome of the language in the bill is unclear or may be in conflict with prior legislation,' said DeAngelo, also the health center’s executive director. He added that the center hopes to work with lawmakers in the next session to address and resolve what he called 'outstanding issues,'" IBT reported.

Here are a few highlights of the bills:

AB243 will:

•  "require a state licensing authority to charge each licensee under the act a licensure and renewal fee, as applicable, and would further require the deposit of those collected fees into an account specific to that licensing authority in the Medical Marijuana Regulation and Safety Act Fund, which this bill would establish."

• "require the Department of Food and Agriculture, the Department of Pesticide Regulation, the State Department of Public Health, the Department of Fish and Wildlife, and the State Water Resources Control Board to promulgate regulations or standards relating to medical marijuana and its cultivation, as specified. The bill would also require various state agencies to take specified actions to mitigate the impact that marijuana cultivation has on the environment. By requiring cities, counties, and their local law enforcement agencies to coordinate with state agencies to enforce laws addressing the environmental impacts of medical marijuana cultivation, and by including medical marijuana within the Sherman Act, the bill would impose a state-mandated local program."

AB266 will:

•  "enact the Medical Marijuana Regulation and Safety Act for the licensure and regulation of medical marijuana and would establish within the Department of Consumer Affairs the Bureau of Medical Marijuana Regulation, under the supervision and control of the Director of Consumer Affairs. The bill would require the director to administer and enforce the provisions of the act. This bill would also require the Board of Equalization, in consultation with the Department of Food and Agriculture, to adopt a system for reporting the movement of commercial cannabis and cannabis products."

•  require, in accordance with the California Public Records Act and the Information Practices Act of 1977, each licensed business to provide "on the Internet information regarding the status of every license issued by that entity ... [including] information on suspensions and revocations of licenses issued by the entity and other related enforcement action ... and an address of record (which can be a post office box for the purposes of public disclosure on the Internet).