Distilling California's Adult Use of Marijuana Act (Proposition 64)

By Gregory D. Thomas, Esq.

Last week, California passed the Adult Use of Marijuana Act (“Act”) by a vote of 56% to 44%. Conventional wisdom dictates that legalized recreational marijuana in the United States’ most populous state and the sixth largest economy in the world will have a significant influence on how marijuana is accepted and administered in the various states moving forward. On a federal level, it is anticipated the passage of Proposition 64 will, among other things, put pressure on the US government to reclassify or de-schedule marijuana to help marijuana businesses better conduct their operations, with greater access to banking services.

Below are some of the important details behind California’s new marijuana law that a prospective licensee should be aware of (in no particular order):

• Adult use and medical marijuana will be regulated and licensed by the California Department of Consumer Affairs, Bureau of Marijuana Control.

• Licenses for cultivating (growing), manufacturing (infusing), testing, retailing (dispensing), and distributing recreational marijuana will be issued starting in January 2018.

• Adults 21 years and older will be allowed to purchase and possess up to one ounce of plant or dry form marijuana and eight grams of marijuana in concentrated form.

• Marijuana sales will be subject to a 15% excise tax, a cultivation tax on a price-per-dry weight basis, and local (city or county) taxes. Tax proceeds will cover the cost of administering the new law and provide funds to invest in public health programs that educate youth to prevent and treat serious substance abuse, train local law enforcement to enforce the new law with a focus on DUI enforcement, invest in communities to reduce the illicit marijuana market and create job opportunities, and provide for environmental cleanup and restoration of public lands damaged by illegal marijuana cultivation.

• Local jurisdictions may opt out of the Act and prohibit otherwise legal marijuana operations within their boundaries.

• Public consumption of marijuana will be illegal except in areas that are licensed for such use.

• An adult may possess up to six living marijuana plants in their private residence.

• The standard dosage of a manufactured (infused) product will contain ten milligrams of THC per serving.

• Licenses will only be issued to persons (or entities controlled by persons) who have been California residents from or before January 1, 2015. This rule will sunset on December 31, 2019.

• Priority in issuing adult use licenses shall be given to applicants who demonstrate they operated in compliance with California’s medical marijuana laws.

• It is the intent of the Act to strengthen (not abolish) the state’s existing medical marijuana system.

• The Act will create strict environmental regulations governing the use of pesticides and minimization of water usage.

• For the first five years, the adult-use industry will be built around small to medium sized businesses; large-scale cultivation operations of greater than 22,000 square feet total canopy size will be prohibited until January 1, 2023.

• Efforts to keep marijuana away from children will include, but are not limited to, marketing restrictions, school buffer zones, child-resistant packaging, and warning labels.

• While licensing fees have not been quantified, they will be set on a scaled basis depending on the size of the marijuana business.

For additional consultation on the above or related matters, please contact an experienced professional at Feldmann Nagel Margulis at 866-477-8616 toll-free.