Medical Marijuana Regulation: First Round of Follow-Up Legislation

As we detailed in a prior post here, on October 9, 2015, Governor Brown signed into law three bills (AB 243, AB 266 and SB 643) that together establish a comprehensive state regulatory system for the commercial cultivation, processing, manufacturing, transportation and distribution of medical marijuana products. The law, known as the “Medical Marijuana Regulation and Safety Act” (“MMRSA”), became effective January 1, 2016.

Several inconsistencies, gaps, and errors in the legislation became apparent almost immediately after enactment. Chief among these was MMRSA’s requirement that local governments adopt implementing ordinances by March 1, 2016, or cede their local permitting authority to the state. This requirement, which was set out in AB 243 (Wood), sent many local governments scrambling to prepare and adopt ordinances before the deadline. Their task was complicated by the fact that MMRSA lacks important working details. The Legislature left state agencies, including the Department of Food and Agriculture, to fill in these details through implementing regulations that will not be adopted until later this year at the earliest. Other local governments simply moved to ban commercial marijuana activity outright. In late December, Assemblyman Jim Wood clarified that the March 1 deadline to adopt local regulations was “inadvertently included in AB 243”, and would be removed in January through emergency legislation. That letter is available here.

On January 4, 2016, Assemblyman Wood, along with coauthors Bonta, Cooley, Jones-Sawyer, Lackey and McGuire, gutted and amended an inactive bill, AB 21, to remove the existing March 1, 2016 deadline for local governments to adopt their own medical marijuana ordinances. That bill is available here. AB 21 simply deletes the March 1 deadline provision in MMRSA, and does not propose a new date by which local governments must act. The bill is designated an “urgency statute”, which means that it would take effect immediately after signature by Governor Brown. AB 21 is anticipated to be passed by the Legislature and signed into law later this month.

AB 21 is joined by two other follow-up bills. First, AB 1548 (Wood), available here, would impose a tax on distribution by a licensed cultivator of marijuana flowers, leaves, and immature plants. AB 1548 would direct collected taxes to a new state fund called the “Marijuana Production and Environment Mitigation Fund”, for distribution to local law enforcement agencies, to fund environmental cleanup and restoration, and to fund environmental restoration pilot projects.

Second, AB 1575 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood), available here, proposes several important changes to MMRSA, including changes intended to improve the medical marijuana industry’s access to financial services, to authorize possession and purchase of marijuana for use in research work by a research institution, and to require the state to adopt specific regulations concerning medical marijuana delivery. AB 1575 would also clarify that MMRSA applies to “virtual dispensaries”, and would limit licensees from holding licenses in more than two different license categories. Finally, the bill would clarify that licensees may operate as a for-profit business, as a non-profit, or both.

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