STRUCTURE OF THE CALIFORNIA CANNABIS INDUSTRY

CULTIVATORS

California Code of Regulations, Title 3 (Food and Agriculture), Division 8 (Cannabis Cultivation), Chapter 1, Section 8000(h) defines cultivation as “any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.” Persons involved in these activities include landowners, lessees, executives and workers who develop, grow and service cannabis plants. License types are classified by whether the cultivation is indoor or outdoor and the size of the cultivation, not to exceed one acre of total outdoor canopy and 22,000 square feet of indoor canopy. Applicants for licenses must provide proof of a license, permit or authorization from the local government where the premises are located. Licenses are limited to single location, are valid for 12 months, must be prominently displayed and cannot be transferred. A licensee may hold both an A (adult use) and an M (medical) license on the same premises, provided the inventory for each license type is kept separate and distinct. Cultivators and other business in the industry are supported by Facilitators.

 

PROCESSORS

Section 8201(f) of the temporary Cultivation Regulations: “Processor” is a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis and nonmanufactured cannabis products, requiring a separate license. The category of Processors is authorized by Business and Profession Code section 26012(b): “The licensing authorities shall have the authority to collect fees in connection with activities they regulate concerning cannabis. The licensing authorities may create licenses in addition to those identified in this division that the licensing authorities deem necessary to effectuate their duties under this division.” However, a cultivation site for planting, growing and harvesting, need not get a separate license for “drying, curing, grading or trimming” cannabis if conducted on the same site. “Cultivation site” means a location where commercial cannabis is planted, grown, harvested, dried, cured, graded, or trimmed, or that does all or any combination of those activities.” (Reg. 8201(f))

 

MANUFACTURERS

“Manufacturing” or “manufacturing operation” means all aspects of the extraction and/or infusion processes, including processing, preparing, holding, storing, packaging, or labeling of cannabis products. Manufacturing also includes any processing, preparing, holding, or storing of components and ingredients. License type 6 is for extractions using mechanical methods or nonvolatile solvents and type 7 for extractions using volatile solvents. Type N is for manufacturers that produce edible products or topical products using infusion processes, or other types of cannabis products other than extracts or concentrates, but that do not conduct extractions. A Type N licensee may also package and label cannabis products on the licensed premises. A Type P license is for manufacturers that only package or repackage cannabis products or label or relabel the cannabis product container. Manufacturers that engage in packaging or labeling of cannabis products as part of the manufacturing operation do not need to hold a separate Type P license.

 

DISTRIBUTORS

Distributers provide transportation of cannabis between licensees, but not products other than cannabis; they may provide storage, but batches must be separate for testing; they may package, re-package, label or re-label cannabis for sale. Cultivators and manufacturers may also distribute.

 

 

RETAILERS

Retailers accept delivery from Distributers. Age appropriate identification (21 or 18 for medical use) is required. A separate retail area is required; there are limits on hours of operation (6 a.m. to 10 p.m.). Retailers require security and have display restrictions. The sale of seeds and immature plants is permitted and other products as allowed by local law, except alcohol or tobacco. Retailers can’t offer free goods, except to medical patients. They may not package or label cannabis goods. Type 9 license is for delivery services with GPS tracking and route restrictions. Record keeping is required and a retailer may not sell in a single day sell more than 28.5 grams of non-concentrated cannabis, 8 grams of concentrated cannabis, including concentrated cannabis contained in cannabis products, or 6 immature cannabis plants. A medicinal cannabis patient, or to a patient’s primary caregiver purchasing medicinal cannabis on behalf of the patient, is limited to a single day purchase of no more than 8 ounces of medicinal cannabis, 12 immature cannabis plants, unless a physician has recommended more.

 

MICROBUSINESS

Type 12 licensees must engage in at least three (3) of the following commercial cannabis activities: cultivation, manufacturing, distribution, and retail sale, but all must be at the same licensed premises.

 

FACILITATORS

Except for Laboratories and Cannabis Event Organizers, facilitators need not be licensed by the Bureau of Cannabis Control. Facilitators include Landlords, who must consent to the use of premises for cannabis, Investors, Lenders, Bankers, Security Services, Attorneys, Accountants, Real Estate Agents, Insurance Agents (Bonding, Casualty, Liability), Labor Union representatives (CA requires a labor peace agreement for 20 or more employees), Data processing, including track and trace systems and technical support, Advertising and Promotion, Cannabis Event Organizers, Electricians, Plumbers, Odor Suppression technicians, suppliers of cultivation and processing equipment, suppliers of packaging products, waste management operators and Testing Laboratories, which must be accredited and licensed to test for cannabinoids; heavy metals; microbial impurities; mycotoxins; residual pesticides; residual solvents and processing chemicals; and if tested, terpenoids. Trade associations, patient’s advocacy and political action organizations, as well as media outlets sustain the industry.

 

 

REGULATORS

California Bureau of Cannabis Control, the primary licensing and enforcement agency, California Department of Food and Agriculture (for cultivation), Department of Public Health (for manufacturing, packaging and labeling) California Water Board, Fish and Wildlife, the Bureau of Pesticides, and the Department of Tax and Fee Administration, as well as city and county regulatory and enforcement agencies.

 

 

 

CONSUMERS

Medical users are still protected by Proposition 215. However, the regulatory structure is now the same as for adult use. Proposition 64, the Adult Use of Marijuana Act made it legal for any adult 21 or over to: Possess, process, transport, purchase, obtain, or give away to persons 21 or older, not more than one ounce of cannabis or 8 grams of concentrated cannabis [HSC 11362.1(a)(1) and (2)] and to

cultivate, possess, plant, harvest, dry or process not more than six live plants and possess the produce of the plants [HSC 11362.1(a)(3) Provided that (a) Any cannabis in excess of one ounce is stored in the person’s private residential property, in a locked space, and not visible from a public place and (b) No more than six plants are planted at any one residence at one time. Furthermore, local governments may impose reasonable restrictions on cultivation, but may not forbid cultivation indoors in a residence or accessory structure that is fully enclosed and secure. Local governments are free to prohibit outdoor cultivation altogether until such time as adult use is made legal under federal law. (HSC 11362.2(b)). Violation of restrictions on personal use cultivation is a $250 infraction for six plants or less [HSC 11362.4(e)].

 

 

CA ELECTIONS 2016: MAKING MARIJUANA LEGAL, THE ROAD PAST PROP 64

In 1913 California became the first state to criminalize marijuana use and possession. Over the years increasing penalties exacted on a state and federal level led to significant incarceration, particularly of non-white populations. Despite attempts in 1972 and 2010 CA voters have refused to decriminalize marijuana. Since then Alaska, Colorado, Oregon and Washington have done so. This year polls show this is likely to happen in CA as well. Arizona, Maine, Massachusetts and Nevada are also facing this choice. Attorney and expert on the history and legal process of California’s war on this substance, Seymour Weisberg, joins Glen Mowrer to discuss not only the past social destruction but the probable way forward if California joins the increasing number of states that have legalized this product for personal recreational use.  

Do local jurisdictions have say over the distribution of the product in their communities?

Will licensing lead to “safer” products?

Will users be a threat on the road?

Is Prop 64 a threat to medical marijuana and will it increase the cost of cannabis to users overall?

What are the tax and revenue expectations?

What will the federal government’s response be?

These and other questions are analyzed by Attorney Weisberg and Glen.

Air Times: 
The Next Step is broadcast on cable channel 17 in the Santa Barbara area on the following schedule:
Saturday at 1:00 p.m., Sunday at 4:00 p.m., Monday at 7 p.m., Tuesday at 10 a.m., Wednesday at 6:00 p.m., Thursday at 12:30 p.m.
Friday at 1:00 p.m.

PLEASE NOTE THAT DUE TO TECHNICAL PROBLEMS AT TVSB THIS SHOW IS NOT CURRENTLY AVAILABLE ON YOUTUBE OR USTREAM.  IT IS STREAMING AT:

 

  http://vp.telvue.com/preview?id=T05099&video=292852&autoplay=true

 

The Next Step is a half hour political commentary program addressing social justice issues and is produced at TVSB and broadcast on cable channel 17 in the Santa Barbara area.  The program is hosted by Glen Mowrer and regularly includes informed guests who address specific issues.  To be removed from this mailing please contact the sender of the message.

 
  This program is Directed by Juanita Chatham assisted by Ken Baxter.

California Sales and Use Tax Law to transactions involving the growth and distribution of medical marijuana

The following is an email sent to the State of California Board of Equalization requesting advice regarding the proper application of the California Sales and Use Tax Law:

A group of people who are all authorized medical cannabis patients organize to cultivate cannabis collectively using multiple communal gardens throughout California. Though some actively participate in the actual gardening more then others, every member of the group agrees that the cannabis cultivated is owned by all members of the group collectively. At times some members of the group choose to contribute more labor or resources then others to ensure all members of the group have adequate medication to sufficiently fulfill each members medical needs. The group keeps records of all the expenses incurred in producing and providing cannabis to the members and each member contributes to the costs and expense incurred, and shares in the cannabis produced. Thus the group produces the cannabis together, and none of the cannabis will change ownership from the group to anyone outside the group.

In a scenario such as that described above, in the opinion of the California State Board of equalization, has a ‘sale’ taken place that would require the collection of sales tax?

Here is the reply from the State of California Board of Equalization:

Thank you for your electronic correspondence (e-mail) requesting our advice regarding the proper application of the California Sales and Use Tax Law.

 As a preliminary matter, section 6596, “Excusable Delay–Reliance on Advice,” of the California Sales and Use Tax Law grants taxpayer’s relief from future liabilities if the underreported tax is based on incorrect written advice provided by a Board representative.  The answer given is intended to provide general information regarding the application of tax based on the information provided and will not serve as a basis for relief of liability under Revenue and Taxation Code (RTC) section 6596.

 For your general information, the RTC imposes a sales tax upon retailers for the privilege of selling tangible personal property at retail in the State ofCaliforniaand is measured by gross receipts from retail sales.  The use tax is complementary (and mutually exclusive) to the sales tax and is imposed upon the storage, use, or other consumption in this state of tangible personal property, not subject to the sales tax.  Either the sales or the use tax applies to all retail sales of tangible personal property to consumers inCalifornia, unless otherwise exempted by statute or type of transaction.  The retailer (seller) is liable for sales tax.  The obligation to pay the use tax is on the consumer.

 In your e-mail you requested guidance on the proper application of California’s Sales and Use Tax Law to transactions involving the growth and distribution of “medical marijuana.”  You explained that a group of people who are all authorized medical cannabis patients organize to cultivate cannabis collectively in multiple communal gardens throughoutCalifornia.  Though some actively participate in the actual gardening more than others, every member agrees that the cannabis cultivated belongs to all of them collectively.  The group keeps records of all the expenses incurred in producing and providing cannabis to the members, and each member contributes [his or her] equitable share of the costs and expense incurred, and shares in the cannabis produced.  Thus the group produces the cannabis together, and none of the cannabis will change ownership from the group to anyone outside the group.

Specifically, you asked whether a “sale” has taken place.  In order to provide you with a response, I have made several assumptions.  Please be aware that if the factual scenarios and the assumptions upon which I base my response differ from your actual circumstances, my analysis would be different and the application of tax may be different. 

RTC section 6006, in pertinent part, defines a “Sale” to mean and include: 

  • Any transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration. “Transfer of possession” includes only transactions found by the board to be in lieu of a transfer of title, exchange, or barter.

 If a transaction does not involve any transfer of tangible personal property for consideration, then the transaction is not subject to sales or use tax inCalifornia.  Your e-mail states and we assume that each member contributes an equitable share of the costs and expenses incurred.  We assume this means that the contribution to costs and expenses is in proportion to the share of the cannabis that is received.  Furthermore, we assume that all members participate in the cultivation, although you point out that some may participate more than others.  We assume that no one pays any amount above and beyond his or her equitable share of the costs and expenses.

We further assume that any tools, consumables, or other supplies are not purchased for resale, by the collective or any individual, and that tax or tax reimbursement is paid at the time of purchase. Finally, you state that only those involved in sharing the expenses and cultivation will receive cannabis in a proportionate share, and no one outside the group will receive any cannabis.

 You do not explain the ownership interest each member of the collective has to the cannabis while it is being cultivated.  We assume that each member of the collective has an ownership interest in the cannabis, prior to its harvest, proportionate to his or her contribution.  Consequently, we understand that the member has title to cannabis he or she harvests prior to harvest.  As such, there is no transfer of title and no sale occurs.

Under the scenario described above, since there has been no “sale” of cannabis, there is no sales or use tax liability that occurs in connection with the growth and harvest of the cannabis by the medical cannabis collective.  However, if the collective changes the way it operates, the application of tax may also change. 

 On the other hand, sales of medical marijuana in California are subject to tax.  The BOE’s Legal Division determined that marijuana furnished in compliance with the Compassionate Use Act of 1966 and the Medical Marijuana Program, qualifies as  “medicine” within the meaning of Sales and Use Tax Regulation 1591, Medicines and Medical Devices, subdivision (a)(9)(B).  However, qualifying as a medicine is only one of the requirements for the sale to be exempt.  To qualify for exemption from tax under Regulation 1591, the sale of the medical marijuana must also be sold or furnished in accordance with Regulation 1591(d)(1)–(6).  Thus, even though medical marijuana qualifies as a medicine, sales by marijuana cooperatives, cannabis clubs, and other sellers of marijuana are subject to tax even if the marijuana is sold to qualified patients and caregivers unless the sale otherwise qualifies for exemption from tax.  Therefore, if the cooperative makes any sales of medical marijuana separate from the scenario described above, those sales would be subject to tax.    

 I hope this information is helpful.  If you have any further questions regarding this or any other issue, please write or call our Taxpayer Information Section at (800) 400-7115.  You may also visit our website at www.boe.ca.gov.

To assist with sales and use tax return filing, the Board of Equalization offers a free, web-based, electronic filing service.  It is easy to use and will provide an online record of all of your returns.  To learn more and to register for BOE-file, please visit our Sales and Use Tax E-File Information Center.

Medical Cannabis Dispensary (MCD) Regulations for Preparation of Edible Cannabis Products

City and County of San Francisco

DEPARTMENT OF PUBLIC HEALTH

1. No edible cannabis products requiring refrigeration or hot-holding shall be manufactured for sale or distribution at an MCD, due to the potential for food-borne illness. Exemptions may be granted by the San Francisco Department of Public Health on a case-by-case basis. For such exempted edible cannabis products, DPH may require a HACCP (Hazard Analysis and Critical Control Points) plan before approving the distribution of such medical cannabis products at MCDs. Such products requiring a HACCP plan may include ice cream and other dairy products.

2. Baked medicinal products (i.e. brownies, bars, cookies, cakes), tinctures and other non-refrigerated type items are acceptable for manufacture and sale at MCDs.

 3. (Items noted in this section are advisory only, as DPH does not intend to regulate edible cannabis production occurring in one’s home.) Preparation may be completed in a home-type kitchen equipped with a sink available for hand washing (this sink may be a dishwash sink), liquid soap, and paper towels. No other food preparation should take place during the production of edible cannabis products, in order to avoid cross-contamination. During preparation, children and pets should not be in the kitchen/preparation area. Clean and sanitize all utensils, equipment, and food contact surfaces before and after preparation. Equipment and food contact surfaces should be in good, cleanable condition. Ingredient storage areas should be kept clean and vermin-free.

4. All items shall be individually wrapped at the original point of preparation. Labeling must include a warning if nuts or other known allergens are used, and must include the total weight (in ounces or grams) of cannabis in the package. A warning that the item is a medication and not a food must be distinctly and clearly legible on the front of the package. The package label must have a warning clearly legible emphasizing that the product is to be kept away from children. The label must also state that the product contains medical cannabis, and must specify the date of manufacture.

 5. Packaging that makes the product attractive to children or imitates candy is not allowed. Any edible cannabis product that is made to resemble a typical food product (i.e. brownie, cake) must be in a properly labeled opaque (non see-through) package before it leaves the dispensary. Deliveries must be in properly labeled opaque packages when delivered to the patient.

6. Individuals conducting the manufacturing or sale of products shall thoroughly wash their hands before commencing production and before handling the finished product. Gloves must be worn when packaging edible cannabis products.

7. In order to reduce the likelihood of foodborne disease transmission, individuals who are suffering from symptoms associated with acute gastrointestinal illness or are known to be infected with a communicable disease that is transmissible through foodstuffs are prohibited from preparing edible cannabis products until they are free of that illness or disease, or are incapable of transmitting the illness or disease through foodstuffs. Anyone who has sores or cuts on their hands must use gloves when preparing and handling edible cannabis products.

8. Edible cannabis products for sale or distribution at an MCD must have been prepared by a member of that MCD. No non-member edible cannabis products are allowed for sale or distribution at an MCD.

A patient/caregiver who produces edible cannabis products that are sold at more than one MCD in San Francisco must become a State certified food handler. If more than one person is involved in producing edible cannabis products at one home or facility, only one person needs to be certified. The valid certificate number of the member who has prepared the edible cannabis product must be on record at the MCD where the product is sold or distributed, and a copy of the certificate kept either on-site, or made available during inspections if kept off-site.

 
* ADDENDUM ADDED MAY 4, 2011

 In light of recent observations during routine inspections at San Francisco Medical Cannabis Dispensaries (MCDs), the Dept of Public Health has established the following policies that expand and clarify existing regulations regarding edible medical cannabis products. These policies specifically seek to clarify what is meant by prohibiting packaging that is attractive to children, as required in MCD Regulations for Preparation of Edible Cannabis Products, item 5.

 A.  Photos or images of food are not allowed on edible medical cannabis product labels.

B.  If the edible medical cannabis product is identified on the label using a common food name (i.e. Brownie, Honey, Chocolate, Chocolate Chip Cookie, or Green Tea), the phrase “MEDICAL CANNABIS” must be written before the common food name. This phrase must be as easy to read as the common food name (i.e. same font size).

 C.  Only generic food names may be used to describe the product. As an example, using “Snickerdoodle” to describe a cinnamon cookie is prohibited.

 As you know, only medical cannabis is allowed to be distributed at MCDs in San Francisco. With this in mind, this new policy seeks to make it clear that the edible cannabis products you distribute are solely for medical cannabis patients, and the marketing of these products should NOT be a factor in the labeling of the products.

DPH realizes that this will cause a change in the labeling for most edible cannabis products currently distributed at MCDs in San Francisco. For this reason, we are allowing a 60 day transition to the new requirements. In the meantime, currently available edible medical cannabis products may continue to be distributed with their current labels if the package includes “MEDICAL CANNABIS” before the common food name, either pre-printed, or on a sticker. In addition, all such products must also state, as is now required, the following information:

Manufacture date 

The statement “Keep Out Of Reach Of Children” 

The statement “For Medical Use Only” 

Net weight of cannabis in package 

Thank you for your cooperation in this matter. If you have any questions, please contact Larry Kessler at 415-252-3841. 

Sincerely yours, 

Richard Lee, Director of Environmental Health Regulatory Programs
Department of Public Health, Environmental Health Services

 

Closed-Circuit Circuity

The Attorney General’s Guidelines regarding medical marijuana collectives or cooperatives states: “Nothing allows marijuana to be purchased from outside the collective or cooperative for distribution to its members.  Instead, the cycle should be a closed-circuit of marijuana cultivation and consumption with no purchases or sales to or from non-members.”  (Page 10)

The foregoing statement is incorrect for several reasons.  First, nothing in California’s Health and Safety or Penal laws prohibits the purchase or act of buying marijuana.  Assuming that a person may lawfully possess or use marijuana, there is no law that makes it unlawful for him or her to buy it, even though the seller may be violating the law.  As Yogi Berra said, “sometimes you have to see what isn’t there.”

Secondly, there is nothing in the Compassionate Use Act or the Medical Marijuana Program Act that prohibits the purchase of marijuana by a qualified patient or caregiver from any source.

Moreover, as the Court observed in City of Garden Grove v. Superior Court (Kha) (2007) 157 Cal.App.4th 355, at 374, “Nothing in the CUA or MMP appears to require a qualified patient to provide evidence regarding the source of his or her marijuana.”

Furthermore, it is impossible for a lawfully formed and operated collective or cooperative to begin cultivating marijuana without starting with a seed, clone or cutting from an outside source.  A literal reading of this guideline would nullify both the CUA and the MMP.

If exchanges between members of a medical marijuana collective or cooperative are legal, why should exchanges between such lawful collectives or cooperatives be illegal?  In both cases, there has been no diversion from marijuana grown for medical use to the unlawful use of marijuana.  Excess production by one collective should be available to patients belonging to another cooperative whose crop has failed.

While the Attorney General may wish to deter unlawful cultivation and sale of marijuana, the guideline in question goes too far. It tries to accomplish the impossible by restricting the rights of medical marijuana patients.  It is enough that the unlawful cultivator and seller to qualified patients may be punished (People v. Galambos (2002) 104 Cal.App.4th 1147, 1167 (“[W]e reject defendant’s claim that Proposition 215 can be construed to imply an exception for furnishing marijuana to a marijuana buyers’ cooperative.”) To punish qualified patients or caregivers who short the closed-circuit is contrary to the purposes of the CUA and the MMP.

 

 

The Medical Use of Concentrated Cannabis is Lawful Under the Compassionate Use Act

In 2001, I represented a client who was charged with possession of concentrated cannabis in violation of California Health and Safety Code section 11357(a), a felony.  Despite the fact that my client had obtained, before he was arrested in possession of hash, a letter from his physician recommending the use of “medical cannabis,” the Santa Barbara County District Attorney claimed that because section 11362.5 (CUA) refers only to “marijuana,” it does not include “concentrated cannabis,” and therefore a medical marijuana patient is subject to felony punishment for possession of hash, and presumably, oil or edibles.

I am happy to report that the judge rejected this argument and dismissed the charge against my client.  Health and Safety Code section 11018 defines marijuana to include “the resin extracted from any part of the plant [Cannabis sativa L.] and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin.”  “‘Concentrated cannabis’ means the separated resin, whether crude or purified, obtained from marijuana.”  (Section 11006.5) The lesser is included in the greater.  (The federal definition of marijuana in 21 U.S.C. 802(16) also includes both derivatives and preparations of marijuana.) For the purposes of criminal punishment only, section 11357 differentiates concentrated cannabis, marijuana by weight, whether the offender possessed marijuana on school grounds and, if so, whether the offender was a minor.  This distinction has nothing to do with a lawful possessor or cultivator of “marijuana for medical purposes.”

Thereafter, an Opinion of the Attorney General of California, issued on October 21, 2003, stated that:  “Concentrated cannabis or hashish is included within the meaning of “marijuana” as that term is used in the Compassionate Use Act of 1996.” (Attorney General Opinion No. 03-411)  Furthermore, in 2004, with the enactment of Health and Safety Code section 11362.77(d), the legislature clarified that the possession of concentrated cannabis, within limits, by qualified patients is immune from prosecution.  That section provides that: “Only the dried mature processed flowers of the female cannabis plant or the plant conversion shall be considered when determining allowable quantities of marijuana under this section.”  (emphasis added)

Since then, two cases have been decided that, while not directly on point, support an inclusive definition of marijuana.  In People v. Bergen (2008) 166 Cal.App.4th 161, 167-168, the Court concluded that “section 11358 applies as a general matter to the extraction of marijuana resin to produce concentrated cannabis,” but the manufacture of concentrated cannabis by chemical extraction was still prohibited by section 11379.6(a).

Likewise, in People v. Harris (2006) 145 Cal.App.4th 1456, the defendant surrendered to do jail time in possession of 72 wafers containing cannabis extract, three ounces of cannabis extract in olive oil, and proof that he was a qualified medical marijuana patient.  The Court treated the cannabis as “marijuana” and therefore a “controlled substance.”  Although Harris’ felony conviction was reversed, the Court reserved judgment on whether he might have been prosecuted under a different statute.

            My impression is that qualified patients and caregivers are no longer being prosecuted in California for possession and manufacture of concentrated cannabis, within limits and not by chemical extraction.  Please let me know if you know otherwise.

Seymour

 

California Medical Marijuana Laws

Summary by Seymour Weisberg

COMPASSIONATE USE ACT (CUA)

On November 4, 1996, California voters passed Proposition 215, codified as Health and Safety Code section 11362.5.

Subdivision (a) states that it may be cited as the Compassionate Use Act.

Subdivision (b) is a preamble in three parts declaring the purposes of the Act:

(A)  To ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person’s health would benefit from the use of marijuana in the treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief.

(B)   To ensure that patients and their primary caregivers who obtain and use marijuana for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction.

(C)  To encourage the federal and state governments to implement a plan to provide for the safe and affordable distribution of marijuana to all patients in medical need of marijuana.

Subdivision (b)(2) states: “Nothing in this section shall be construed to supersede legislation prohibiting persons from engaging in conduct that endangers others, nor to condone the diversion of marijuana for nonmedical purposes.”

Subdivision (c) provides protection to physicians by stating: “Notwithstanding any other provision of law, no physician in this state shall be punished, or denied any right or privilege, for having recommended marijuana to a patient for medical purposes.”

Subdivision (d) is the heart of the Act.  It states: “Section 11357, relating to the possession of marijuana, and Section 11358, relating to the cultivation of marijuana, shall not apply to a patient, or to a patient’s primary caregiver, who possesses or cultivates marijuana for the personal medical purposes of the patient upon the written or oral recommendation or approval of a physician.”

Subdivision (e) defines “primary caregiver,” as “the individual designated by the person exempted under this section who has consistently assumed responsibility for the housing, health, or safety of that person.”

In People v. Mentch (2008) 45 Cal 4th 274, the California Supreme Court held that the defendant whose caregiving consisted principally of supplying marijuana and instructing on its use and sometimes taking patients to medical appointments could not qualify as a “primary caregiver.”

SB 420

On October 12, 2003, the governor signed into law, effective January 1, 2004, SB 420, sponsored by Sen. Vasconcellos and called the Medical Marijuana Program, adding an entire Article 2.5 (from Health and Safety Code § 11362.7 to § 11362.83) to Chapter 6, Division 10 of the Code.

SB 420 impacts, modifies and clarifies the CUA in several significant areas of misunderstanding and ambiguity in order to promote uniformity within the state and to address issues not included in the CUA, “pursuant to the powers reserved to the State of California and its people under the Tenth Amendment to the United States Constitution.”

MEDICAL MARIJUANA PROGRAM

Section 11362.7, for the purposes of implementing the “voluntary program for the issuance of identification cards” (§ 11362.71(a)(1)), sets forth definitions of “attending physician,” “primary caregiver,” “qualified patient,” “serious medical condition,” and “written documentation.”

EXPANDED EXEMPTIONS

In addition to limited immunity from prosecution for violations of Section 11357 (possession) and 11358 (cultivation), Health and Safety Code Section 11362.765(a) provides to specified individuals no criminal liability under Sections 11359 (possession for sale), 11360 (transportation or sale), 11366 (maintaining places for drug sales or use), 11366.5 (persons facilitating unlawful use of such places) or 11570 (declaring such places to be nuisances).

Subdivision (b) of Section 11362.765 designates such individuals as:

(1)   A qualified patient or a person with an identification card who transports or processes marijuana for his or her own personal medical use.

(2)   A designated primary caregiver who transports, processes, administers, delivers, or gives away marijuana for medical purposes, in amounts not exceeding those established in subdivision (a) of Section 11362.77, only to the qualified patient of the primary caregiver, or to the person with an identification card who has designated the individual as a primary caregiver.

(3)   Any individual who provides assistance to a qualified patient or a person with an identification card, or his or her designated primary caregiver, in administering medical marijuana to the qualified patient or person or acquiring the skills necessary to cultivate or administer marijuana for medical purposes to the qualified patient or person.

Subdivision (c) provides:  “A primary caregiver who receives

compensation for actual expenses, including reasonable compensation incurred for services provided to an eligible qualified patient or person with an identification card to enable that person to use marijuana under this article, or for payment for out-of-pocket expenses incurred in providing those services, or both, shall not, on the sole basis of that fact, be subject to prosecution or punishment under Section 11359 or 11360.”

Section 11362.7 sets forth definitions of the terms used and subdivision (f) states: “‘Qualified patient’ means a person who is entitled to the protections of Section 11362.5, but who does not have an identification card issued pursuant to this article.”

LIMITS

Section 11362.77(a) sets a default limit of eight ounces of dried marijuana.  “In addition, a qualified patient or primary caregiver may also maintain no more than six mature or 12 immature marijuana plants per qualified patient.”  However, subdivision (b) states that if a qualified patient or primary caregiver has a doctor’s recommendation that this quantity does not meet the patient’s medical needs, he or she “may possess an amount consistent with the patient’s needs.”  Subdivision (c) provides that counties and cities may enact guidelines that exceed the state limits.  Subdivision (d) states:  “Only the dried mature processed flowers of the female cannabis plant or the plant conversion shall be considered when determining allowable quantities of marijuana under this section.”  Subdivision (e) states that the Attorney General may recommend to the Legislature modifications to the possession or cultivation limits (by 12/01/05) “based on currently available scientific research.”  Finally, subdivision (f) states that a qualified patient or a person holding a valid identification card or the designated primary caregiver of such person may possess amounts consistent with this article.

In People v. Kelly (2010) 47 Cal.4th 1008, the California Supreme  Court ruled that the legislature could not amend Proposition 215 by setting limits, but it could prevent the arrest of holders of state issued medical marijuana identification cards who did not exceed the limits.

COOPERATIVES AND COLLECTIVE CULTIVATION

Section 11362.775 states:  “Qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570.”

ID CARDS

Section 11362.71 establishes a voluntary program for the issuance of identification cards by the State Department of Health Services, administered by county health departments, to qualified patients, which can be verified by law enforcement through a 24 hour, toll-free telephone number pending development of an internet based system.  The section mandates that protocols be developed to implement the system.  Subdivision (e) provides:  “No person or designated primary caregiver in possession of a valid identification card shall be subject to arrest for possession, transportation, delivery, or cultivation of medical marijuana in an amount established pursuant to this article, unless there is reasonable cause to believe that the information contained in the card is false or falsified, the card has been obtained by means of fraud, or the person is otherwise in violation of the provisions of this article.”  Subdivision (f) provides: “It shall not be necessary for a person to obtain an identification card in order to claim the protections of Section 11362.”

Section 11362.78 states: “A state or local law enforcement agency or officer shall not refuse to accept an identification card issued by the department unless the state or local law enforcement agency or officer has reasonable cause to believe that the information contained in the card is false or fraudulent, or the card is being used fraudulently.”

PUBLIC SMOKING, EMPLOYMENT, JAIL AND INSURANCE RESTRICTIONS

Section 11362.785 states that no employer, jail or penal institution need accommodate medical marijuana use.  However, subdivision (b) states that a prisoner may apply for an identification card and subdivision (c) states that the jail or penal institution may permit the use of medical marijuana.  Subdivision (d) states that the article does not require the government or a private insurer or health plan to reimburse for the medical use of marijuana.

Section 11362.79 limits the places in which medical marijuana may be smoked.

 

PRETRIAL RELEASE, PROBATION AND PAROLE

Section 11362.795 allows for medical use while on bail, probation or parole.  It provides:

“(a)(1) Any criminal defendant who is eligible to use marijuana pursuant to Section 11362.5 may request that the court confirm that he or she is allowed to use medical marijuana while he or she is on probation or released on bail.

(3)   The court’s decision and the reasons for the decision shall be stated on the record and an entry stating those reasons shall be made in the minutes of the court.

(4)   During the period of probation or release on bail, if a physician recommends that the probationer or defendant use medical marijuana, the probationer or defendant may request a modification of the conditions of probation or bail to authorize the use of medical marijuana.

(5)   The court’s consideration of the modification request authorized by this subdivision shall comply with the requirements of this section.

(b)(1) Any person who is to be released on parole from a jail, state prison, school, road camp, or other state or local institution of confinement and who is eligible to use medical marijuana pursuant to Section 11362.5 may request that he or she be allowed to use medical marijuana during the period he or she is released on parole. A parolee’s written conditions of parole shall reflect whether or not a request for a modification of the conditions of his or her parole to use medical marijuana was made, and whether the request was granted or denied.

(2) During the period of the parole, where a physician recommends that the parolee use medical marijuana, the parolee may request a modification of the conditions of the parole to authorize the use of medical marijuana.

(6)   Any parolee whose request to use medical marijuana while on parole was denied may pursue an administrative appeal of the decision. Any decision on the appeal shall be in writing and shall reflect the reasons for the decision.

(7)   The administrative consideration of the modification request authorized by this subdivision shall comply with the requirements of this section.

CAREGIVER IMMUNITY

Section 11362.8 adds immunity to licensees other than physicians.  It provides:  “No professional licensing board may impose a civil penalty or take other disciplinary action against a licensee based solely on the fact that the licensee has performed acts that are necessary or appropriate to carry out the licensee’s role as a designated primary caregiver to a person who is a qualified patient or who possesses a lawful identification card issued pursuant to Section 11362.72. However, this section shall not apply to acts performed by a physician relating to the discussion or recommendation of the medical use of marijuana to a patient. These discussions or recommendations, or both, shall be governed by Section 11362.5”

NEW OFFENSES

Section 11362.81 adds misdemeanor criminal penalties to those who obtain a physician’s recommendation or identification card by misrepresentation or fraud; steal, forge or tamper with a card; or who breach the confidentiality requirements of the article.

PROXIMITY TO SCHOOLS

In 2010, the legislature added section 11362.768 to the Health and Safety Code.  It provides that: “No medical marijuana cooperative, collective, dispensary, operator, establishment, or provider who possesses, cultivates, or distributes medical marijuana pursuant to this article shall be located within a 600-foot radius of a school.”  This also applies to individuals, but only to those “authorized by law to possess, cultivate, or distribute medical marijuana and that has a storefront or mobile retail outlet which ordinarily requires a local business license.”  Local governments may “further restrict the location or establishment of a medical marijuana cooperative, collective, dispensary, operator, establishment, or provider.”  Furthermore, this law does not preempt previously passed local laws.

The 600-foot radius and “school” are defined.

Attorney General Guidelines

 

EDMUND G. BROWN JR. D E PARTMENT OF JUSTICE

Attorney General State of California

GUIDELINES FOR THE SECURITY AND NON-DIVERSION

OF MARIJUANA GROWN FOR MEDICAL USE

August 2008

In 1996, California voters approved an initiative that exempted certain patients and their primary caregivers from criminal liability under state law for the possession and cultivation of marijuana. In 2003, the Legislature enacted additional legislation relating to medical marijuana. One of those statutes requires the Attorney General to adopt “guidelines to ensure the security and non diversion of marijuana grown for medical use.” (Health & Saf. Code, § 11362.81(d).1) To fulfill this mandate, this Office is issuing the following guidelines to (1) ensure that marijuana grown for medical purposes remains secure and does not find its way to non-patients or illicit markets, (2) help law enforcement agencies perform their duties effectively and in accordance with California law, and (3) help patients and primary caregivers understand how they may cultivate, transport, possess, and use medical marijuana under California law.

I. SUMMARY OF APPLICABLE LAW

A. California Penal Provisions Relating to Marijuana.

The possession, sale, cultivation, or transportation of marijuana is ordinarily a crime under California law. (See, e.g., § 11357 [possession of marijuana is a misdemeanor]; § 11358 [cultivation of marijuana is a felony]; Veh. Code, § 23222 [possession of less than 1 oz. of marijuana while driving is a misdemeanor]; § 11359 [possession with intent to sell any amount of marijuana is a felony]; § 11360 [transporting, selling, or giving away marijuana in California is a felony; under 28.5 grams is a misdemeanor]; § 11361 [selling or distributing marijuana to minors, or using a minor to transport, sell, or give away marijuana, is a felony].)

B. Proposition 215 – The Compassionate Use Act of 1996.

On November 5, 1996, California voters passed Proposition 215, which decriminalized the cultivation and use of marijuana by seriously ill individuals upon a physician’s recommendation. (§ 11362.5.) Proposition 215 was enacted to “ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person’s health would benefit from the use of marijuana,” and to “ensure that patients and their primary caregivers who obtain and use marijuana for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction.” (§ 11362.5(b)(1)(A)-(B).)

The Act further states that “Section 11357, relating to the possession of marijuana, and Section 11358, relating to the cultivation of marijuana, shall not apply to a patient, or to a patient’s primary caregiver, who possesses or cultivates marijuana for the personal medical purposes of the patient upon the written or verbal recommendation or approval of a physician.” (§ 11362.5(d).) Courts have found an implied defense to the transportation of medical marijuana when the “quantity transported and the method, timing and distance of the transportation are reasonably related to the patient’s current medical needs.” (People v. Trippet (1997) 56 Cal.App.4th 1532, 1551.)

C. Senate Bill 420 – The Medical Marijuana Program Act.

On January 1, 2004, Senate Bill 420, the Medical Marijuana Program Act (MMP), became law. (§§ 11362.7-11362.83.) The MMP, among other things, requires the California Department of Public Health (DPH) to establish and maintain a program for the voluntary registration of qualified medical marijuana patients and their primary caregivers through a statewide identification card system. Medical marijuana identification cards are intended to help law enforcement officers identify and verify that cardholders are able to cultivate, possess, and transport certain amounts of marijuana without being subject to arrest under specific conditions. (§§ 11362.71(e), 11362.78.)

It is mandatory that all counties participate in the identification card program by (a) providing applications upon request to individuals seeking to join the identification card program; (b) processing completed applications; (c) maintaining certain records; (d) following state implementation protocols; and (e) issuing DPH identification cards to approved applicants and designated primary caregivers. (§ 11362.71(b).)

Participation by patients and primary caregivers in the identification card program is voluntary. However, because identification cards offer the holder protection from arrest, are issued only after verification of the cardholder’s status as a qualified patient or primary caregiver, and are immediately verifiable online or via telephone, they represent one of the best ways to ensure the security and non-diversion of marijuana grown for medical use. In addition to establishing the identification card program, the MMP also defines certain terms, sets possession guidelines for cardholders, and recognizes a qualified right to collective and cooperative cultivation of medical marijuana. (§§ 11362.7, 11362.77, 11362.775.)

D. Taxability of Medical Marijuana Transactions.

In February 2007, the California State Board of Equalization (BOE) issued a Special Notice confirming its policy of taxing medical marijuana transactions, as well as its requirement that businesses engaging in such transactions hold a Seller’s Permit. (http://www.boe.ca.gov/news/pdf/medseller2007.pdf.)  According to the Notice, having a Seller’s Permit does not allow individuals to make unlawful sales, but instead merely provides a way to remit any sales and use taxes due. BOE further clarified its policy in a  June 2007 Special Notice that addressed several frequently asked questions concerning taxation of medical marijuana transactions. (http://www.boe.ca.gov/news/pdf/173.pdf.)

E. Medical Board of California.

The Medical Board of California licenses, investigates, and disciplines California physicians. (Bus. & Prof. Code, § 2000, et seq.) Although state law prohibits punishing a physician simply for recommending marijuana for treatment of a serious medical condition (§ 11362.5(c)), the Medical Board can and does take disciplinary action against physicians who fail to comply with accepted medical standards when recommending marijuana. In a May 13, 2004 press release, the Medical Board clarified that these accepted standards are the same ones that a reasonable and prudent physician would follow when recommending or approving any medication. They include the following:

1. Taking a history and conducting a good faith examination of the patient; |
2. Developing a treatment plan with objectives;
3. Providing informed consent, including discussion of side effects;
4. Periodically reviewing the treatment’s efficacy;
5. Consultations, as necessary; and
6. Keeping proper records supporting the decision to recommend the use of medical marijuana.

(http://www.mbc.ca.gov/board/media/releases_2004_05-13_marijuana.html.)

Complaints about physicians should be addressed to the Medical Board (1-800-633-2322 or www.mbc.ca.gov), which investigates and prosecutes alleged licensing violations in conjunction with the Attorney General’s Office.

F. The Federal Controlled Substances Act.

Adopted in 1970, the Controlled Substances Act (CSA) established a federal regulatory system designed to combat recreational drug abuse by making it unlawful to manufacture, distribute, dispense, or possess any controlled substance. (21 U.S.C. § 801, et seq.; Gonzales v. Oregon (2006) 546 U.S. 243, 271-273.) The CSA reflects the federal government’s view that marijuana is a drug with “no currently accepted medical use.” (21 U.S.C. § 812(b)(1).) Accordingly, the manufacture, distribution, or possession of marijuana is a federal criminal offense. (Id. at §§ 841(a)(1), 844(a).) The incongruity between federal and state law has given rise to understandable confusion, but no legal conflict exists merely because state law and federal law treat marijuana differently. Indeed, California’s medical marijuana laws have been challenged unsuccessfully in court on the ground that they are preempted by the CSA. (County of San Diego v. San Diego NORML (July 31, 2008) — Cal.Rptr.3d —, 2008 WL 2930117.)

Congress has provided that states are free to regulate in the area of controlled substances, including marijuana, provided that state law does not positively conflict with the CSA. (21 U.S.C. § 903.) Neither Proposition 215, nor the MMP, conflict with the CSA because, in adopting these laws, California did not “legalize” medical marijuana, but instead exercised the state’s reserved powers to not punish certain marijuana offenses under state law when a physician has recommended its use to treat a serious medical condition. (See City of Garden Grove v. Superior Court (Kha) (2007) 157 Cal.App.4th 355, 371-373, 381-382.)

In light of California’s decision to remove the use and cultivation of physicianrecommended marijuana from the scope of the state’s drug laws, this Office recommends that state and local law enforcement officers not arrest individuals or seize marijuana under federal law when the officer determines from the facts available that the cultivation, possession, or transportation is permitted under California’s medical marijuana laws.

II. DEFINITIONS

A. Physician’s Recommendation: Physicians may not prescribe marijuana because the federal Food and Drug Administration regulates prescription drugs and, under the CSA, marijuana is a Schedule I drug, meaning that it has no recognized medical use.  Physicians may, however, lawfully issue a verbal or written recommendation under California law indicating that marijuana would be a beneficial treatment for a serious medical condition. (§ 11362.5(d); Conant v. Walters (9th Cir. 2002) 309 F.3d 629, 632.)

B. Primary Caregiver: A primary caregiver is a person who is designated by a qualified patient and “has consistently assumed responsibility for the housing, health, or safety” of the patient. (§ 11362.5(e).) California courts have emphasized the consistency element of the patient-caregiver relationship. Although a “primary caregiver who consistently grows and supplies… medicinal marijuana for a section 11362.5 patient is serving a health need of the patient,” someone who merely maintains a source of marijuana does not automatically become the party “who has consistently assumed responsibility for the housing, health, or safety” of that purchaser. (People ex rel. Lungren v. Peron (1997) 59 Cal.App.4th 1383, 1390, 1400.) A person may serve as primary caregiver to “more than one” patient, provided that the patients and caregiver all reside in the same city or county. (§ 11362.7(d)(2).) Primary caregivers also may receive certain compensation for their services. (§ 11362.765(c) [“A primary caregiver who receives compensation for actual expenses, including reasonable compensation incurred for services provided . . . to enable [a patient] to use marijuana under this article, or for payment for out-of-pocket expenses incurred in providing those services, or both, . . . shall not, on the sole basis of that fact, be subject to prosecution” for possessing or transporting marijuana].)

C. Qualified Patient: A qualified patient is a person whose physician has recommended the use of marijuana to treat a serious illness, including cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief. (§ 11362.5(b)(1)(A).)

D. Recommending Physician: A recommending physician is a person who (1) possesses a license in good standing to practice medicine in California; (2) has taken responsibility for some aspect of the medical care, treatment, diagnosis, counseling, or referral of a patient; and (3) has complied with accepted medical standards (as described by the Medical Board of California in its May 13, 2004 press release) that a reasonable and prudent physician would follow when recommending or approving medical marijuana for the treatment of his or her patient.

III. GUIDELINES REGARDING INDIVIDUAL QUALIFIED PATIENTS AND PRIMARY CAREGIVERS

A. State Law Compliance Guidelines.

1. Physician Recommendation: Patients must have a written or verbal recommendation for medical marijuana from a licensed physician. (§ 11362.5(d).)

2. State of California Medical Marijuana Identification Card: Under the MMP, qualified patients and their primary caregivers may voluntarily apply for a card issued by DPH identifying them as a person who is authorized to use, possess, or transport marijuana grown for medical purposes. To help law enforcement officers verify the cardholder’s identity, each card bears a unique identification number, and a verification database is available online (www.calmmp.ca.gov). In addition, the cards contain the name of the county health department that approved the application, a 24-hour verification telephone number, and an expiration date. (§§ 11362.71(a); 11362.735(a)(3)-(4); 11362.745.)

3. Proof of Qualified Patient Status: Although verbal recommendations are technically permitted under Proposition 215, patients should obtain and carry written proof of their physician recommendations to help them avoid arrest. A state identification card is the best form of proof, because it is easily verifiable and provides immunity from arrest if certain conditions are met (see section III.B.4, below). The next best forms of proof are a city- or county-issued patient identification card, or a written recommendation from a physician.

4. Possession Guidelines:

a) MMP:2 Qualified patients and primary caregivers who possess a state issued identification card may possess 8 oz. of dried marijuana, and may maintain no more than 6 mature or 12 immature plants per qualified patient. (§ 11362.77(a).) But, if “a qualified patient or primary caregiver has a doctor’s recommendation that this quantity does not meet the qualified patient’s medical needs, the qualified patient or primary caregiver may possess an amount of marijuana consistent with the patient’s needs.” (§ 11362.77(b).) Only the dried mature processed flowers or buds of the female cannabis plant should be considered when determining allowable quantities of medical marijuana for purposes of the MMP. (§ 11362.77(d).)

b) Local Possession Guidelines: Counties and cities may adopt regulations that allow qualified patients or primary caregivers to possess from the MMP on the ground that the statute’s possession guidelines were an unconstitutional amendment of Proposition 215, which does not quantify the marijuana a patient may possess. (See People v. Kelly (2008) 163 Cal.App.4th 124, 77 Cal.Rptr.3d 390.) The Third District Court of Appeal recently reached a similar conclusion in People v. Phomphakdy (July 31, 2008) — Cal.Rptr.3d —, 2008 WL 2931369. The California Supreme Court has granted review in Kelly and the Attorney General intends to seek review in Phomphakdy. medical marijuana in amounts that exceed the MMP’s possession guidelines. (§ 11362.77(c).)

c) Proposition 215: Qualified patients claiming protection under Proposition 215 may possess an amount of marijuana that is “reasonably related to [their] current medical needs.” (People v. Trippet (1997) 56 Cal.App.4th 1532, 1549.)

B. Enforcement Guidelines.

1. Location of Use: Medical marijuana may not be smoked (a) where smoking is prohibited by law, (b) at or within 1000 feet of a school, recreation center, or youth center (unless the medical use occurs within a residence), (c) on a school bus, or (d) in a moving motor vehicle or boat. (§ 11362.79.)

2. Use of Medical Marijuana in the Workplace or at Correctional

Facilities: The medical use of marijuana need not be accommodated in the workplace, during work hours, or at any jail, correctional facility, or other penal institution. (§ 11362.785(a); Ross v. RagingWire Telecomms., Inc. (2008) 42 Cal.4th 920, 933 [under the Fair Employment and Housing Act, an employer may terminate an employee who tests positive for marijuana use].)

3. Criminal Defendants, Probationers, and Parolees: Criminal defendants and probationers may request court approval to use medical marijuana while they are released on bail or probation. The court’s decision and reasoning must be stated on the record and in the minutes of the court. Likewise, parolees who are eligible to use medical marijuana may request that they be allowed to continue such use during the period of parole. The written conditions of parole must reflect whether the request was granted or denied. (§ 11362.795.)

4. State of California Medical Marijuana Identification Cardholders:

When a person invokes the protections of Proposition 215 or the MMP and he or she possesses a state medical marijuana identification card, officers should: a) Review the identification card and verify its validity either by calling the telephone number printed on the card, or by accessing DPH’s card verification website (http://www.calmmp.ca.gov); and b) If the card is valid and not being used fraudulently, there are no other indicia of illegal activity (weapons, illicit drugs, or excessive amounts of cash), and the person is within the state or local possession guidelines, the individual should be released and the marijuana should not be seized. Under the MMP, “no person or designated primary caregiver in possession of a valid state medical marijuana identification card shall be subject to arrest for possession, transportation, delivery, or cultivation of medical marijuana.” (§ 11362.71(e).) Further, a “state or local law enforcement agency or officer shall not refuse to accept an identification card issued by the department unless the state or local law enforcement agency or officer has reasonable cause to believe that the information contained in the card is false or fraudulent, or the card is being used fraudulently.” (§ 11362.78.)

5. Non-Cardholders: When a person claims protection under Proposition 215 or the MMP and only has a locally-issued (i.e., non-state) patient identification card, or a written (or verbal) recommendation from a licensed physician, officers should use their sound professional judgment to assess the validity of the person’s medical-use claim:

a) Officers need not abandon their search or investigation. The standard search and seizure rules apply to the enforcement of marijuana-related violations. Reasonable suspicion is required for detention, while probable cause is required for search, seizure, and arrest.

b) Officers should review any written documentation for validity. It may contain the physician’s name, telephone number, address, and license number.

c) If the officer reasonably believes that the medical-use claim is valid based upon the totality of the circumstances (including the quantity of marijuana, packaging for sale, the presence of weapons, illicit drugs, or large amounts of cash), and the person is within the state or local possession guidelines or has an amount consistent with their current medical needs, the person should be released and the marijuana should not be seized.

d) Alternatively, if the officer has probable cause to doubt the validity of a person’s medical marijuana claim based upon the facts and circumstances, the person may be arrested and the marijuana may be seized. It will then be up to the person to establish his or her medical marijuana defense in court. e) Officers are not obligated to accept a person’s claim of having a verbal physician’s recommendation that cannot be readily verified with the physician at the time of detention.

6. Exceeding Possession Guidelines: If a person has what appears to be valid medical marijuana documentation, but exceeds the applicable possession guidelines identified above, all marijuana may be seized.

7. Return of Seized Medical Marijuana: If a person whose marijuana is seized by law enforcement successfully establishes a medical marijuana defense in court, or the case is not prosecuted, he or she may file a motion for return of the marijuana. If a court grants the motion and orders the return of marijuana seized incident to an arrest, the individual or entity subject to the order must return the property. State law enforcement officers who handle controlled substances in the course of their official duties are immune from liability under the CSA. (21 U.S.C. § 885(d).) Once the marijuana is returned, federal authorities are free to exercise jurisdiction over it. (21 U.S.C. §§ 812(c)(10), 844(a); City of Garden Grove v. Superior Court (Kha) (2007) 157 Cal.App.4th 355, 369, 386, 391.)

IV. GUIDELINES REGARDING COLLECTIVES AND COOPERATIVES

Under California law, medical marijuana patients and primary caregivers may “associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes.” (§ 11362.775.) The following guidelines are meant to apply to qualified patients and primary caregivers who come together to collectively or cooperatively cultivate physician-recommended marijuana.

A. Business Forms: Any group that is collectively or cooperatively cultivating and distributing marijuana for medical purposes should be organized and operated in a manner that ensures the security of the crop and safeguards against diversion for non-medical purposes. The following are guidelines to help cooperatives and collectives operate within the law, and to help law enforcement determine whether they are doing so.

1. Statutory Cooperatives: A cooperative must file articles of incorporation with the state and conduct its business for the mutual benefit of its members. (Corp. Code, § 12201, 12300.) No business may call itself a “cooperative” (or “coop”) unless it is properly organized and registered as such a corporation under the

Corporations or Food and Agricultural Code. (Id. at § 12311(b).) Cooperative corporations are “democratically controlled and are not organized to make a profit for themselves, as such, or for their members, as such, but primarily for their members as patrons.” (Id. at § 12201.) The earnings and savings of the business must be used for the general welfare of its members or equitably distributed to members in the form of cash, property, credits, or services. (Ibid.) Cooperatives must follow strict rules on organization, articles, elections, and distribution of earnings, and must report individual transactions from individual members each year. (See id. at § 12200, et seq.) Agricultural cooperatives are likewise nonprofit corporate entities “since they are not organized to make profit for themselves, as such, or for their members, as such, but only for their members as producers.” (Food & Agric. Code, § 54033.) Agricultural cooperatives share many

characteristics with consumer cooperatives. (See, e.g., id. at § 54002, et seq.) Cooperatives should not purchase marijuana from, or sell to, non-members; instead, they should only provide a means for facilitating or coordinating transactions between members.

2. Collectives: California law does not define collectives, but the dictionary defines them as “a business, farm, etc., jointly owned and operated by the members of a group.” (Random House Unabridged Dictionary; Random House, Inc. © 2006.) Applying this definition, a collective should be an organization that merely facilitates the collaborative efforts of patient and caregiver members – including the allocation of costs and revenues. As such, a collective is not a statutory entity, but as a practical matter it might have to organize as some form of business to carry out its activities. The collective should not purchase marijuana from, or sell to, non-members; instead, it should only provide a means for facilitating or coordinating transactions between members.

B. Guidelines for the Lawful Operation of a Cooperative or Collective:

Collectives and cooperatives should be organized with sufficient structure to ensure security, non-diversion of marijuana to illicit markets, and compliance with all state and local laws. The following are some suggested guidelines and practices for operating collective growing operations to help ensure lawful operation.

1. Non-Profit Operation: Nothing in Proposition 215 or the MMP authorizes collectives, cooperatives, or individuals to profit from the sale or distribution of marijuana. (See, e.g., § 11362.765(a) [“nothing in this section shall authorize . . . any individual or group to cultivate or distribute marijuana for profit”].

2. Business Licenses, Sales Tax, and Seller’s Permits: The State Board of Equalization has determined that medical marijuana transactions are subject to sales tax, regardless of whether the individual or group makes a profit, and those engaging in transactions involving medical marijuana must obtain a Seller’s Permit. Some cities and counties also require dispensing collectives and cooperatives to obtain business licenses.

3. Membership Application and Verification: When a patient or primary caregiver wishes to join a collective or cooperative, the group can help prevent the diversion of marijuana for non-medical use by having potential members complete a written membership application. The following application guidelines should be followed to help ensure that marijuana grown for medical use is not diverted to illicit markets:

a) Verify the individual’s status as a qualified patient or primary caregiver. Unless he or she has a valid state medical marijuana identification card, this should involve personal contact with the recommending physician (or his or her agent), verification of the physician’s identity, as well as his or her state licensing status. Verification of primary caregiver status should include contact with the qualified patient, as well as validation of the patient’s recommendation. Copies should be made of the physician’s recommendation or identification card, if any;
b) Have the individual agree not to distribute marijuana to non-members;
c) Have the individual agree not to use the marijuana for other than medical purposes;
d) Maintain membership records on-site or have them reasonably available;
e) Track when members’ medical marijuana recommendation and/or identification cards expire; and
f) Enforce conditions of membership by excluding members whose identification card or physician recommendation are invalid or have expired, or who are caught diverting marijuana for non-medical use.

 

4. Collectives Should Acquire, Possess, and Distribute Only Lawfully

Cultivated Marijuana: Collectives and cooperatives should acquire marijuana only from their constituent members, because only marijuana grown by a qualified patient or his or her primary caregiver may lawfully be transported by, or distributed to, other members of a collective or cooperative. (§§ 11362.765, 11362.775.)  The collective or cooperative may then allocate it to other members of the group. Nothing allows marijuana to be purchased from outside the collective or cooperative for distribution to its members. Instead, the cycle should be a closed circuit of marijuana cultivation and consumption with no purchases or sales to or from non-members. To help prevent diversion of medical marijuana to non-medical markets, collectives and cooperatives should document each member’s contribution of labor, resources, or money to the enterprise. They also should track and record the source of their marijuana.

5. Distribution and Sales to Non-Members are Prohibited: State law allows primary caregivers to be reimbursed for certain services (including marijuana cultivation), but nothing allows individuals or groups to sell or distribute marijuana to non-members. Accordingly, a collective or cooperative may not distribute medical marijuana to any person who is not a member in good standing of the organization. A dispensing collective or cooperative may credit its members for marijuana they provide to the collective, which it may then allocate to other members. (§ 11362.765(c).) Members also may reimburse the collective or cooperative for marijuana that has been allocated to them. Any monetary reimbursement that members provide to the collective or cooperative should only be an amount necessary to cover overhead costs and operating expenses.

6. Permissible Reimbursements and Allocations: Marijuana grown at a collective or cooperative for medical purposes may be:

a) Provided free to qualified patients and primary caregivers who are members of the collective or cooperative;
b) Provided in exchange for services rendered to the entity;
c) Allocated based on fees that are reasonably calculated to cover overhead costs and operating expenses; or
d) Any combination of the above.

7. Possession and Cultivation Guidelines: If a person is acting as primary caregiver to more than one patient under section 11362.7(d)(2), he or she may aggregate the possession and cultivation limits for each patient. For example, applying the MMP’s basic possession guidelines, if a caregiver is responsible for three patients, he or she may possess up to 24 oz. of marijuana (8 oz. per patient) and may grow 18 mature or 36 immature plants. Similarly, collectives and cooperatives may cultivate and transport marijuana in aggregate amounts tied to its membership numbers. Any patient or primary caregiver exceeding individual possession guidelines should have supporting records readily available when: a) Operating a location for cultivation; b) Transporting the group’s medical marijuana; and c) Operating a location for distribution to members of the collective or cooperative.

8. Security: Collectives and cooperatives should provide adequate security to ensure that patients are safe and that the surrounding homes or businesses are not negatively impacted by nuisance activity such as loitering or crime. Further, to maintain security, prevent fraud, and deter robberies, collectives and cooperatives should keep accurate records and follow accepted cash handling practices, including regular bank runs and cash drops, and maintain a general ledger of cash transactions.

C. Enforcement Guidelines: Depending upon the facts and circumstances, deviations from the guidelines outlined above, or other indicia that marijuana is not for medical use, may give rise to probable cause for arrest and seizure. The following are additional guidelines to help identify medical marijuana collectives and cooperatives that are operating outside of state law.

1. Storefront Dispensaries: Although medical marijuana “dispensaries” have been operating in California for years, dispensaries, as such, are not recognized under the law. As noted above, the only recognized group entities are cooperatives and collectives. (§ 11362.775.) It is the opinion of this Office that a properly organized and operated collective or cooperative that dispenses medical marijuana through a storefront may be lawful under California law, but that dispensaries that do not substantially comply with the guidelines set forth in sections IV(A) and (B), above, are likely operating outside the protections of Proposition 215 and the MMP, and that the individuals operating such entities may be subject to arrest and criminal prosecution under California law. For example, dispensaries that merely require patients to complete a form summarily designating the business owner as their primary caregiver – and then offering marijuana in exchange for cash “donations” – are likely unlawful. (Peron, supra, 59 Cal.App.4th at p. 1400 [cannabis club owner was not the primary caregiver to thousands of patients where he did not consistently assume responsibility for their housing, health, or safety].)

2. Indicia of Unlawful Operation: When investigating collectives or cooperatives, law enforcement officers should be alert for signs of mass production or illegal sales, including (a) excessive amounts of marijuana, (b) excessive amounts of cash, (c) failure to follow local and state laws applicable to similar businesses, such as maintenance of any required licenses and payment of any required taxes, including sales taxes, (d) weapons, (e) illicit drugs, (f) purchases from, or sales or distribution to, non-members, or (g) distribution outside of California.

1 Unless otherwise noted, all statutory references are to the Health & Safety Code.
2 On May 22, 2008, California’s Second District Court of Appeal severed Health & Safety Code § 11362.77