By Nira F. Doherty, Burke, Williams & Sorensen, LLP
On June 27, 2017, the Governor of California approved AB 110/SB 94 (the Medicinal and Adult-Use Cannabis Regulation and Safety Act, or the MAUCRSA), the latest set of laws regulating marijuana in California. Marijuana lawmaking took root in California in 1996, with the adoption of Proposition 215,¹ and in 2004, with the adoption of SB 420.2 Since then, the legislature, voters and California courts have on many occasions clarified the scope of marijuana rights in California.
The MAUCRSA was introduced as a trailer bill in April 2017 but received negative press for jettisoning many provisions of the Medical Cannabis Regulation and Safety Act (MCRSA), which created a state licensing system for marijuana businesses. The trailer bill was amended and reintroduced in June 2017 to maintain those provisions of the MCRSA not in conflict with the Adult Use of Marijuana Act (AUMA), which was approved by the voters in 2016 and legalizes the use, possession, cultivation and manufacturing of non-medical marijuana.
The MAUCRSA aligns all licensing types under the MCRSA and the AUMA. License types that were available for one type of activity are now available for both medicinal and adult-use activities, but producing dispensary and transporter licenses are no longer available. The MAUCRSA originally prohibited multiple license types from being located on the same premises. However, AB 133, which was signed by the governor on September 16, 2017, removes this prohibition and allows multiple license types on a single property. This also means that medicinal and adult-use activities can take place in the same location.
The MCRSA limited the combinations of licenses that a licensee could hold. With the exception of testing laboratory licenses, the MAUCRSA has eliminated these limitations and now permits licensees to engage in multiple types of commercial marijuana activities. Additionally, licensees can now be out-of-staters—the MAUCRSA repeals the AUMA residency requirements that prohibited those from outside California from obtaining marijuana licenses.
The MAUCRSA also establishes new testing standards and provides additional requirements for advertising marijuana products. But the advertising regulations may be further amended by SB 162, which is making its way through the Assembly after passing the Senate unanimously. SB 162 would restrict marijuana advertising by prohibiting licensees from advertising products through use of branded merchandise, including clothing, hats, or merchandise with the name or logo of the marijuana product.
Finally, the marijuana excise tax will now be measured by the “average market price,” as opposed to gross receipts of retail sales, as it had been measured under the AUMA. The Bureau of Cannabis Control will determine the “average market price” every six months.
Though the MAUCRSA purports to establish a single system of administration for marijuana laws in California, the act does not repeal Prop. 215 or SB 420, and there remains uncertainty as to whether medicinal and adult-use marijuana activities can occur in the same location. While the act may indeed be seen as friendly to marijuana businesses, it may not serve all the goals it set out to accomplish, and many elements of state marijuana regulations remain hazy.
¹ Proposition 215 authorized the use of medical marijuana. 2 SB 420 provided a criminal defense for collective sales of marijuana.
About the Author
Nira F. Doherty, a partner in Burke, Williams & Sorensen’s Oakland office, regularly advises cities on marijuana regulations. She has successfully defended medical marijuana lawsuits and has drafted numerous marijuana ordinances. Nira speaks throughout California on marijuana legislation, marijuana property–related matters, and issues facing local governments. Nira is the Assistant City Attorney for the cities of St. Helena, Pacifica, and South Lake Tahoe.
This article will also appear in The VIEW, the quarterly publication jointly curated by the three Bay Area chapters of Commercial Real Estate Women (CREW)—CREW San Francisco, CREW East Bay, and CREW Silicon Valley. CREW is a nationwide business networking organization dedicated to the advancement of women in commercial real estate. For chapter news, events, and membership information, visit the Bay Area member organization websites at crewsf.org, creweastbay.org, and crewsv.org.