For additional information, please use these resources:
HdL Issue Update – Medical Marijuana Regulation and Safety Act
BOE Overview of Sales tax Information for Medical Marijuana (MMJ) Sales
California Department of Food and Agriculture Medical Cannabis Cultivation Program (MCCP)
California Department of Pesticide Regulation Guidance Regulating Pesticide Use on Cannabis Cultivation
California Department of Consumer Affairs Medical Marijuana Identification Card Program
On November 8, 2016, voters approved Proposition 64, the Adult Use of Marijuana Act (“AUMA”). What does this initiative allow?
AUMA generally legalizes the cultivation, possession, and use of non-medical (recreational) cannabis by adults 21 aged years and older. AUMA also allows commercial cultivation, manufacturing, distribution, and sales of non-medical cannabis by licensed businesses.
Now that Proposition 64 has passed, does that mean any adult 21 and over can walk into a dispensary after November 9, 2016 and purchase cannabis?
No. Dispensaries will still have to be licensed to sell non-medical cannabis. The initiative calls for licensing authorities to begin accepting applications and issuing licenses in January 2018. The Bureau of Marijuana Control (formerly the Bureau of Medical Cannabis Regulation) is the state agency responsible for licensing dispensaries.
The initiative calls for licenses to be issued by January 1, 2018. Is that possible?
The state agencies involved are taking appropriate action to meet the deadlines and requirements imposed by the initiative. Local agencies that permit cannabis-related businesses are actively starting applications processes ahead of the January 1, 2018 implementation date.
In addition to the state excise tax of 15% of the gross retail price on the sale of non-medical cannabis, what cultivation taxes would be imposed?
A state tax on cultivators of cannabis would include $9.25 per dry-weight ounce of cannabis flowers and $2.75 per dry-weight ounce of cannabis leaves. Local agencies that allow cannabis cultivators to operate within their jurisdictions may impose voter-approved cultivation taxes.
Is 15% of the gross retail price on the sales of non-medical cannabis the maximum amount of tax that can be imposed?
No. The state will impose an excise tax of 15% of the gross retail price and a state cultivation tax will be imposed. Additionally, the existing state and local sales tax will be imposed. Given that, the combined excise tax + sales tax at the retail level could approach 25% or higher.
Will medical cannabis be tax-exempt?
The sales and use tax exemption only applies to the retail sale of medical cannabis, medical cannabis concentrate, edible medical cannabis products, or topical cannabis by customers that have a state issued card. Of the estimated 715,000 medical cannabis patients in California, only 6,000 have a state issued card as given by the California Department of Public Healt
Will people be able to smoke non-medical cannabis anywhere, or will they need to follow similar tobacco smoking guidelines?
The initiative prohibits consumption of cannabis in a public place unlicensed for such use, including near K-12 schools and other areas where children are present.
Can a landlord ban the cultivation/smoking of cannabis on his/her property?
Yes. An individual or private entity may prohibit or restrict personal possession, smoking, and cultivation of cannabis on the privately-owned property.
Can a city ban personal indoor cultivation in all leased or multi-unit residences within a city?
No. However, because cities may reasonably regulate personal indoor cultivation, a city might be able to condition permit approval for personal indoor cultivation in a leased residence on the applicant receiving permission from his/her landlord.
Does a city’s ban on commercial cultivation, personal outdoor cultivation, or retail sales of cannabis or cannabis products make it ineligible for state grant monies for law enforcement, fire protection, or other local programs addressing public health and safety associated with the implementation of Prop 64?
Yes. If a city bans commercial cultivation, personal outdoor cultivation, or retail sales of cannabis or cannabis products it is ineligible to receive for state grant monies funded through the new state excise taxes that take effect on January 1, 2018.
Do cities that ban or regulate medical cannabis businesses need to update their ordinances to include non-medical cannabis?
Yes. State licensing authorities can not issue a license to a commercial non-medical cannabis business if operation of the business violates a local ordinance of the jurisdiction in which the business will operate.
Can cities ban deliveries of cannabis products?
Yes. Cities can ban deliveries within their territorial limits. However, cities cannot prevent the use of public roads for the delivery of cannabis to areas outside their territorial limits.
California will be allowing and regulating something that is still illegal under federal law. How does that work?
In 2013, the federal government issued the Cole Memorandum which outlines the federal government’s expectations for state and local governments enacting cannabis related law.
If you have additional questions, please feel free to contact: David McPherson, HdL Cannabis Compliance Director: email@example.com or Matt Eaton, HdL Cannabis Compliance Manager: firstname.lastname@example.org