California Cannabis Law History

California established the nation’s first medical marijuana program, enacted by Proposition 215 in 1996, but the program lacked a statewide framework. In 2015, California enacted three bills: AB 243 (Wood, Chapter 688); AB 266 (Bonta, Chapter 689); and SB 643 (McGuire, Chapter 719).  Together, they established a thorough state regulatory framework for the licensing and enforcement of cultivation, manufacturing, retail sale, transportation, storage, delivery and testing of medicinal cannabis. The group of bills were referred to as the Medical Cannabis Regulation and Safety Act (MCRSA).

The Adult Use of Marijuana Act (AUMA), also known as Proposition 64, legalized the adult use of marijuana with a 57% “yes” vote and established a comprehensive set of regulations governing the adult use of cannabis. In June 2017, Senate Bill 94 was passed. It repealed and replaced the MCRSA and AUMA, with the combined Medicinal and Adult‐Use Cannabis Regulation and Safety Act (MAUCRSA). The MAUCRSA constructed a single regulatory system to govern both medical and adult use markets.

Adult use sales began on January 1, 2018.

License Types

There is not currently a cap on the number of licenses an applicant may obtain, other than a temporary restriction on Type 3 medium-sized cultivation licenses, where a person is limited to just one until 2023. Additionally, if someone holds a testing license, they may not hold any other type of license. A separate license must be obtained for each physical location that the license holder wishes to operate. Other than Type 8 testing laboratories, licensees must hold an A-license to engage in adult-use commercial cannabis activity and an M-license to engage in medicinal commercial cannabis activity.

Applicants may seek a temporary license (valid for 120 days) or a annual license (valid for one year). A temporary license can be eligible for up to two 90-day extensions if the licensee has already applied for an annual license and is waiting for their approval. Applications for temporary licenses have much lower requirements than applications for annual licenses, and temporary license-holders will not have to use the METRC track and trace system.

The following types of licenses are available:

 

California Department of Food and Agriculture (CDFA)

  • Type 1 Cultivation – Specialty Cottage
  • Type 2 Cultivation – Small
  • Type 3 Cultivation – Medium
  • Type 4 Cultivation – Nursery
  • Type 5 Cultivation – Large
  • Type P – Cultivation Processor

 

California Department of Public Health (CDPH)

  • Type 6 – Tier 1 Manufacturer
  • Type 7 – Tier 2 Manufacturer
  • Type N – Infusion
  • Type P – Packaging
  • Type S – Shared Facilities

 

Bureau of Cannabis Control (BCC)

  • Type 8 – Testing Laboratory
  • Type 10 – Retailer (Storefront and Non-Storefront)
  • Type 11 – Distributor (Self-Transport, Transportation, Distribution)
  • Type 12 – Tier 1 Manufacturer

Key Dates

  • July 1st, 2018: Lab Testing Phase II begins, Transition Period ends
  • December 31st, 2018: Lab Testing Phase III

Application Fees/Start-up Costs 

The CDFA has priced their application fees based off the size of applicants and their methods of cultivation (see the table below). While the CDFA has a wide range of application fees for annual licenses, both the BCC and the CDPH have a standardized $1,000 fee per annual application.

CDFA License Type

Fee Per Application

Specialty Cottage Outdoor

$135

Specialty Cottage Indoor

$205

Specialty Cottage Mixed-Light Tier 1

$340

Specialty Cottage Mixed-Light Tier 2

$580

Specialty Outdoor

$270

Specialty Indoor

$2,170

Specialty Mixed-Light Tier 1

$655

Specialty Mixed-Light Tier 2

$1,125

Small Outdoor

$535

Small Indoor

$3,935

Small Mixed-Light Tier 1

$1,310

Small Mixed-Light Tier 2

$2,250

Medium Outdoor

$1,555

Medium Indoor

$8,655

Medium Mixed-Light Tier 1

$2,885

Medium Mixed-Light Tier 2

$4,945

Nursery

$520

Processor

$1,040

After paying the fee to submit an application, licensees will need to pay their annual license fee, which will be based off the size of their operation, and in the case of cultivation applications, style of cultivation being used.

BCC License Type

Fee Per License

Operations ($ Max. Per License)

Testing Laboratory

$20,000

up to 50 million

 

$45,000

greater than 50 million to 500 million

 

$90,000

greater than 500 million

Distributor

$1,200

up to 2 million

 

$5,000

greater than 2 million to 8 million

 

$36,000

greater than 8 million to 80 million

 

$125,000

greater than 80 million

Distributor Transport Only Self-Distribution

$500

up to 2 million

 

$2,000

greater than 2 million to 8 million

Distributor Transport Only

$800

up to 2 million

 

$2,500

greater than 2 million to 8 million

Retailer

$4,000

up to 0.5 million

 

$12,000

greater than 0.5 million to 1.5 million

 

$36,000

greater than 1.5 million to 4.5 million

 

$72,000

greater than 4.5 million

Microbusiness

$5,000

up to 0.5 million

 

$15,000

greater than 0.5 million to 1.5 million

 

$42,000

greater than 1.5 million to 4.5 million

 

$120,000

greater than 4.5 million

CDPH License Type

Fee Per License

Operations ($ Max. Per License)

Tier I

$2,000

up to $100,000

Tier II

$7,500

gross revenue of $100,001 to $500,000

Tier III

$15,000

gross revenue of $500,001 to $1,500,000

Tier IV

$25,000

gross revenue of $1,500,001 to $3,000,000

Tier V

$35,000

gross revenue of $3,000,001 to $5,000,000

Tier VI

$50,000

gross revenue of $5,000,001 to $10,000,000

Tier VII

$75,000

over $10,000,000

CDFA License Type

Fee Per License

 

Specialty Cottage Outdoor

$1,205

 

Specialty Cottage Indoor

$1,830

 

Specialty Cottage Mixed-Light Tier 1

$3,035

 

Specialty Cottage Mixed-Light Tier 2

$5,200

 

Specialty Outdoor

$2,410

 

Specialty Indoor

$19,540

 

Specialty Mixed-Light Tier 1

$5,900

 

Specialty Mixed-Light Tier 2

$10,120

 

Small Outdoor

$4,820

 

Small Indoor

$35,410

 

Small Mixed-Light Tier 1

$11,800

 

Small Mixed-Light Tier 2

$20,235

 

Medium Outdoor

$13,990

 

Medium Indoor

$77,905

 

Medium Mixed-Light Tier 1

$25,970

 

Medium Mixed-Light Tier 2

$44,517

 

Nursery

$4,685

 

Processor

$9,370

 

In addition to the application and/or annual fees, each licensee must also have a $5,000 surety bond payable to the State of California to cover the cost of destruction of cannabis goods.

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       Photo by Wikimedia user Rich Niewiroski Jr.

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