California releases plan to regulate medical marijuana industry

California on Friday published detailed plans to regulate its multibillion-dollar medical marijuana industry for the first time since the Golden State legalized cannabis as medicine more than 20 years ago.

The proposed plan — drafted in three parts by three different state agencies — lays out standards for any marijuana business that wants to get licensed by the state, with rules for everything from how late pot shops can stay open to how big farms can be to how much weed shops will be allowed to sell to patients in a single day.

The 211 pages of regulations aren’t law yet. They’re now open for public comment. The state plans to take feedback in writing and through a series of public hearings over the next 45 days before getting a final set of rules in place in time to start issuing licenses by Jan. 1, 2018.

“The proposed licensing regulations for medical cannabis are the result of countless hours of research, stakeholder outreach, informational sessions and pre-regulatory meetings all across the state,” said Lori Ajax, chief of the Bureau of Medical Cannabis Regulation. “And while we have done quite a bit of work and heard from thousands of people, there is still so much more to do.”

A call to finally rein in the state’s unchecked marijuana market was set in motion in 2015, when Gov. Jerry Brown authorized a trio of bills known as the Medical Cannabis Regulation and Safety Act.

Lori Ajax, chief of California’s Bureau of Medical Cannabis Regulation, poses in the bureau’s office in Sacramento. (AP Photo/Rich Pedroncelli)

The bills mandate comprehensive regulations on medical marijuana, with requirements for all marijuana businesses to be licensed under strict criteria by the start of 2018. Those bills also created the Bureau of Medical Cannabis Regulation and the state’s first so-called “pot czar” — a position now held by former alcohol industry regulator Ajax — to oversee crafting specific regulations on the industry.

Ajax and her team have been working on detailed medical marijuana regulations for distributors, transporters, laboratories and retailers for roughly a year, gathering input from stakeholders at meetings held throughout the state to produce the 58-page document released Friday.

Meanwhile, the Department of Public Health has been crafting 95 pages of rules for companies that manufacture cannabis products, such as edibles and concentrates. And the Department of Food and Agriculture has been drafting regulations for the state’s thousands of marijuana cultivators.

The already tough task got more complicated in November, when Californians voted to legalize recreational marijuana under Proposition 64.

The state agencies now must also develop detailed regulations for that side of the market. Those plans are due out this fall.

Prop. 64 was shaped around the state’s new medical marijuana laws, so the two systems are largely similar. But there are some key distinctions, which have been causing turmoil in Sacramento between big unions, small business owners and entrepreneurs with big plans for the industry.

Earlier this month, Brown’s office released a 92-page plan for reconciling differences between the medical marijuana and recreational cannabis laws. In the budget trailer bill, he sided largely with free-market policies dictated by Prop. 64, drawing praise from trade groups such as the California Cannabis Industry Association and criticism from law enforcement and the League of California Cities.

The state agencies used Brown’s recommendations as a guide in developing the regulations released Friday, though discrepancies remain. The proposed medical marijuana rules still call for having a third-party distributor take cannabis from growers and manufacturers to retailers, for example, and they still require anyone applying for a state license to prove they first have a local license — neither of which is included in Prop. 64 or recommendations from Brown.

If Brown’s budget trailer bill gets passed by the legislature, the state agencies will likely have to come back and tweak their medical marijuana regulations so they comply.

The three sets of proposed regulations include detailed rules for businesses to track all marijuana products from seed to sale, for how marijuana can be transported, for the type of security measures dispensaries must take and more. Here are some specific regulations included in the proposals:

Dispensaries could only be open and deliveries could only take place from 6 a.m. to 9 p.m.
Shops could only sell up to 8 ounces of cannabis to one patient or caregiver on any single day.
Businesses would have to be at least 600 feet away from schools.
Edible products would have to be produced in serving sizes that have no more than 10 milligrams of THC and no more than 100 milligrams of THC for the total package.
Other manufactured products, such as tinctures and waxes, could have up to 1,000 milligrams of THC per package.
Shops could no longer give out free samples of weed or cannabis products.
Cannabis cultivators couldn’t farm on more than 4 total acres.
All products would have to leave shops in packaging that’s child resistant
The state would prioritize license applications for veterans and for businesses that were open in good standing with their local city or county by Jan. 1, 2016.
Applicants would have to list any past criminal convictions, plus provide a statement of rehabilitation for each one telling the bureau why they should still be considered for a license.
Businesses would get a six-month grace period. Anyone operating by Jan. 2, 2018 could continue to operate until July 2, 2018 if they’ve applied for a license and not been turned down. After that, they would need a license to stay open.
Shops could sell untested inventory for 180 after they get a license or until Dec. 31, 2018, whichever comes first, if they put a label on it saying that it hasn’t been tested in compliance with new state laws.

“We give them some time to get up and running,” Ajax said in a conference call Friday with reporters.

The bureau is also in charge of overseeing laboratory testing for all cannabis products. Detailed requirements for that process weren’t released Friday, but Ajax said they should be out May 5.

“The draft regulations represent a starting point for the state to begin to clean up what has become a highly unruly multi-billion-dollar unlicensed industry that is not subject to any regulations at all whatsoever,” said attorney Aaron Herzberg, who runs Santa Ana-based CalCann Holdings. He said more details are needed, but that the draft regulations “go a long way towards clarifying many issues that will be helpful for investors and the marijuana industry to better plan how to take advantage of the licensing opportunity that is now unfolding.”

The bureau also is in the process of putting together a cannabis advisory committee, which will help craft final regulations for both sides of the market.

Some lawmakers and industry insiders have expressed doubt that the bureau will get all of that done in time to start handing out licenses come Jan. 1. But Ajax insists they’ll meet that deadline, though she said they may have to issue temporary licenses in those early days while they wait to get background check results and to finalize other details.

“One of the big concerns was will the state be ready for this when we’re ready?” Nathan Whittington, secretary for the California Growers Association and a medical cannabis farmer just outside Ferndale, said after a quick review of the draft cultivation regulations Friday.

“We have a time to provide comment and really align those [regulations] with our county ordinance,” Whittington said. “It gives us a good opportunities to move forward as an industry, and I’m happy to see the state’s progress on this.”

Get involved

The public can submit written comments on the draft medical marijuana regulations for the next 45 days. They can also attend public hearings that will be held throughout the state in coming weeks.

For distributors, transporters, lab testers and retailers

10 a.m. to 1 p.m. June 1 at the Adorni Center, 1011 Waterfront Drive in Eureka
10 a.m. to 1 p.m. June 8 in the Junipero Serra Building at 320 W. Fourth Street, Los Angeles
10 a.m. to 1 p.m. June 9 in the Department of Consumer Affairs hearing room S-102 at 1625 North Market Boulevard, Sacramento
1 to 4 p.m. June 13 in the King Library at 150 E. San Fernando Street in San Jose

For cultivators

1 to 3 p.m. May 16 at the Delhi Center, 505 East Central Ave., Santa Ana
1 to 3 p.m. May 18 at the Visalia Convention Center, 303 East Acequia Ave., Visalia
1 to 3 p.m. May 25 at the Ukiah Convention Center, 200 South School St., Ukiah
1 to 3 p.m. June 14 at the California Department of Food and Agriculture Auditorium, 1220 N St., Sacramento