- Posted by Laura Croft, Esq
- On March 23, 2017
- Adult Use of Marijuana Act, AUMA, California, Cannabis licenses and permits, Medical Marijuana, permits, Prop 64, regulations
The Adult Use of Marijuana Act is the adult Cannabis legalization initiative that appeared on the November 8, 2016 California ballot as Prop. 64. Californians voted to pass Prop 64, supporting the decriminalization of the adult use of Cannabis, with a margin of 56 percent to 44 percent.
The initiative establishes 19 different license categories mirroring many of those set forth in California state law regulating medical Cannabis, Medical Cannabis Regulation and Safety Act (MCRSA), AB 266; AB 243; and SB 643. However, licenses for adult Cannabis use facilities are distinct from those for medical facilities issued under MCRSA. (26050).
Permits and Licenses A-Plenty
The license structure for legalized recreational use includes 13 cultivation licenses, depending on the type and size of cultivation (indoor/outdoor/mixed light). There will also be one license for testing, one for retail, one for distribution, two for manufacturing and one for microbusiness.
AUMA Chapter 5. Licensing 26050, includes:
(1) Type 1 = Cultivation; Specialty outdoor; Small.
(2) Type 1A = Cultivation; Specialty indoor; Small.
(3) Type 1B = Cultivation; Specialty mixed-light; Small.
(4) Type 2 = Cultivation; Outdoor; Small.
(5) Type 2A = Cultivation; Indoor; Small.
(6) Type 2B = Cultivation; Mixed-light; Small.
(7) Type 3 = Cultivation; Outdoor; Medium.
(8) Type 3A = Cultivation; Indoor; Medium.
(9) Type 3B = Cultivation; Mixed-light; Medium.
(10) Type 4 = Cultivation; Nursery.
(11) Type 5 = Cultivation; Outdoor; Large.
(12) Type 5A =Cultivation; Indoor; Large.
(13) Type 5B = Cultivation; Mixed-light; Large.
(14) Type 6 = Manufacturer 1.
(15) Type 7 = Manufacturer 2.
(16) Type 8 = Testing.
(17) Type 10 = Retailer.
(18) Type 11 = Distributor
(19) Type 12 =Microbusiness
After Prop 64 has been in effect for five years, a new license will become available that will allow farmers to cultivate as much Cannabis as they desire, as long as they meet all of the land and water use regulations, and obtain the corresponding permits. This is good news for big business and by far the most concerning aspect of the initiative for small cultivators. However, no Type 5, Type 5A, or Type 5B cultivation licenses may be issued before January 1, 2023. Prop AUMA 26061(d).
AUMA 26061(e) states:
“Commencing on January 1, 2023, Type 5, Type 5A, or Type 5B licensee may apply for and hold a Type 6or Type 7 license and apply for and hold Type 10 license. A Type 5, Type 5A, or Type 5B licensee shall not eligible to apply for or hold a Type 8, Type 11, or Type 12license.”
Moreover, under 26053(c) the ability for multiple licensing is written into the statute and under 26061(e) when the Type 5 licenses kick in in 2023, the only licenses off limits to those with a Type 5, 5A, or 5B license will be a Type 8, Type 11, or Type 12 license.
Vertical Integration: Unlike MCRSA, AUMA does not prohibit vertical integration of licenses. Instead, a licensee may hold a combination of licenses permitting cultivation, manufacturing, and retail licensing with distribution. The one exception is type 5 large cultivators, who may not hold distribution or testing licenses (26061(d)). In contrast, MCRSA allows applicants to have at most two different license types, effectively creating a forced middleman to distribute and prohibiting direct farm-to-consumer sales (AB 266, B&P Code 19328).
Distributors: Unlike MCRSA, AUMA does not prohibit licensed distributors (Type 11 licensees) from obtaining other kinds of licenses, except for large-scale Type 5 cultivation licenses. Thus other cultivators, manufacturers, and retailers may apply to be distributors themselves.
Microbusinesses present a desirable option for small and craft cultivators. A new category of Type 12 microbusiness licenses is established for small retailers with farms not exceeding 10,000 sq. ft. (26067 (e) 2). This is essentially an all-inclusive license that allows any business occupying less than 10,000 square feet to act as cultivator, distributor, and retailer. “Testing,” meanwhile, must be wholly independent, and theoretically speaking, all Cannabis will be tested with a mass spectrometer for a variety of fertilizers, pesticides, and other chemicals including THC and CBD/CBN content. Testing and product information will be available on every Cannabis product label, and consumers will know exactly what they are smoking.
Permitting and licensing under AUMA can be an intimidating legal quagmire of questions, water resource considerations, and an overall regulatory headache. The cliche “the devil is in the details” seemingly could not be more applicable to moving forward with the permitting process.
We invite you to contact CannaBusinessLaw for expert assistance in compliance with Cannabis licensing, permitting and the application process relating to commercial Cannabis in California.