The medical marijuana industry in California, established in 1996, is soon to be joined by a recreational market. When it does, California will have the largest marijuana market in the country. California voters approved Proposition 64, when they voted in the national election, by a much larger margin than medical marijuana.
Regulations for medical marijuana in California are well established. The state brings in an estimated average $50 million annually in tax revenue from medical marijuana, and there are currently more than 750,000 patients registered as qualified medical cannabis users.
The new laws governing the recreational market for marijuana were recently rolled out, and confusion soon followed. The state is now in the process of making changes to the new laws to reduce the conflict between the two. Some hope that when the medical and recreational marijuana laws are aligned, California will set the national standard for an integrated marijuana industry.
Marijuana Business Regulations
One area of conflict between the medical marijuana legislation and the new recreational cannabis regulations is for businesses. Under the medical marijuana laws, a business cannot hold a license to cultivate marijuana and sell it at the same time. The medical marijuana laws separated marijuana business licenses into several areas:
Regulations for recreational cannabis businesses are a little different. They allow a single entity to hold multiple types of marijuana business licenses. Cultivating and selling marijuana would be acceptable practices under the new law, though they are not currently under the medical marijuana law. The only license combination that would be restricted under the new law is cultivation and testing. No one entity could legally grow and test marijuana.
Governor Brown proposes to loosen the business restrictions on medical marijuana to align with the new regulations for recreational marijuana. There is also a proposed temporary restriction that would prevent any one entity from owning more than three retail stores and a farm that’s bigger than four acres. This would be intended to keep the marijuana industry in California from being monopolized by giant conglomerates.
A proposed tax structure for the recreational marijuana industry includes a 15% sales tax and a tax by weight for growers. Marijuana production and sales would be open to taxes and fees by the local municipalities. Medical marijuana patients would remain exempt from marijuana sales tax.
Personal Possession and Home Cultivation
Under Proposition 215, medical marijuana patients were allowed to grow and possess whatever amount of cannabis they required for medical purposes, within reason. Proposition 64 limits recreational users to six or fewer plants to be grown indoors, with a limit of six plants total in one house.
Recreational marijuana will be treated like alcohol — anyone who is a legal adult can have access. Consuming marijuana will be restricted to private locations or licensed public locations designed for that purpose. These restrictions are not different from the rules for medical marijuana.
Reconciling Medical and Recreational Marijuana in CA
There are a number of proposed bills designed to regulate recreational marijuana use in California in a way that doesn’t conflict with medical marijuana or confuse the public. Some changes are proposed to medical cannabis regulations, but the goal is to operate two separate programs in California for marijuana users.
Here’s a look at the proposed marijuana bills:
Assembly Bill 389 — This bill is focused on public education. It would require the Bureau of Medical Cannabis Regulation to make marijuana user information available on their website and also publish a consumer guide. The guide would cover such topics as recreational marijuana purchase, public consumption and other similar rules.
Assembly Bill 416 — Geared more toward medical marijuana concerns, this bill would draft specific rules for cannabis cultivation with increased amounts of CBD. Medical marijuana with higher ratios of CBD to THC provides medical benefits without producing the characteristic cannabis high.
Assembly Bill 420 — Advertising is an important part of this growing industry in CA. This bill would require advertisers to include the seller’s license number somewhere in the ad. The rule would apply to both medical and recreational marijuana.
Assembly Bill 350 — This bill would put restrictions on recreational marijuana products so they do not appeal specifically to children. Edibles, for example, would be prohibited from taking the shape of people, animals, fruit, insects or other figures commonly associated with candy. However, companies shaping edibles like their logo would be acceptable.
Assembly Bill 238 — Attempting to keep unions from monopolizing aspects of the marijuana industry, this bill would make it illegal for marijuana businesses to require their employees to join a union.
Senate Bill 148 — Cannabis is a cash business because federal law precludes national banks and credit card companies from servicing the industry. This bill seeks to make it safer and more convenient for marijuana businesses to pay their state taxes and other fees without driving large amounts of cash great distances. The bill would designate county offices and other locations to accept cash payments of these taxes and fees.
Senate Bill 175 — A truth in labeling measure, this bill would prohibit marijuana companies from using the name of any California county, town or area in their labeling and advertising unless the cannabis was actually produced in that area.
Assembly Bill 64 — This bill covers a number of areas that would align the current medical marijuana laws with the recreational marijuana provisions approved in Proposition 64. It would expand the restriction on keeping cannabis billboards off highways that cross state lines to all interstate and state highways. The bill would also develop a way for businesses to trademark medical and non-medical marijuana products at the state level, dedicate funds toward better testing for people driving under the influence of marijuana, provide a legal path for delivery services and make room for both for-profit and nonprofit entities to operate in the industry.
The California legislature is working to align the newly approved recreational marijuana rules with those of the successful medical marijuana business. The measures approved by voters in 2016 were in many ways broader than the scope of medical marijuana, and the state is attempting to deliver what the voters asked for while maintaining a fair business environment and public safety.