STRUCTURE OF THE CALIFORNIA CANNABIS INDUSTRY

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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

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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: 
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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.

 
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Closed-Circuit Circuity

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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

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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