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California Introduces New Cannabis Rules and Regulations

By Christopher Coble, Esq. on November 22, 2017 | Last updated on March 21, 2019

Legalizing it is no simple task. Just ask Colorado, Oregon, Washington, and other states that have legalized recreational marijuana: from licensing to labeling and from distribution to DUI tests, the regulation of legalized marijuana is a massive task. Still, those states -- and more every year -- have decided that the financial benefits from taxation and decriminalization are worth the regulatory headache during transition.

California was one of those states, voting to legalize marijuana last year. And 12 months later, the Golden State rolled out almost 300 pages of pot rules, set to go into effect January 1, 2018. Here are the *ahem* highlights:

Regulatory Backdrop

The new rules come from three different state departments that will have a hand in regulating recreational marijuana sales:

  1. The Bureau of Cannabis Control;
  2. The California Department of Food and Agriculture; and
  3. The California Department of Public Health.

And crafting the regulations was no easy task -- California was already trying to rein in its medical marijuana industry when voters passed Proposition 64, legalizing recreational marijuana. The state decided to resolve any conflicts between the recreational and medical marijuana industries on the recreational side and got to work in September drafting the rules that were published last week.

And while there wasn't time for public comment during the drafting process, Lori Ajax, chief of the Bureau of Cannabis Control, said the department plans to take public comment into 2018 and continue fine-tuning the rules in the future. "I think they're good, but I think there are improvements that can be made," she told the Orange County Register. "I think we're going to get a better idea once we start issuing licenses and see how implementation is going."

State Regs

Here are some main takeaways from the new rules, for both weed businesses and consumers:

  • The state will start accepting online applications for temporary business permits in December; the permits will be good for four months while business owners compile the information and paperwork necessary for permanent licenses, including business formation documents, security plans, and insurance bonds;
  • Costs for annual licenses will range from $800 to $120,000, depending on the type of activity the business undertakes;
  • Non-pot businesses will also be able to apply for a special license to host cannabis events;
  • Advertising is regulated, including a limitation allowing cannabis ads only in outlets where at least 71.6 percent of the audience "is reasonably expected to be 21 years of age or older";
  • Serving sizes for edible products can't contain more than 10 milligrams of THC and no more than 100 milligrams of THC for the total package; and

  • Shops may only give free cannabis products to medical patients or their caregivers.

A couple quick notes for you budding cannabiz entrepreneurs -- the state regulations aren't the only ones you need to worry about. In order to even apply for a temporary or permanent cannabis business license, you first need permission from the local city or county government. And many of those entities have yet to form their own rules for legal weed within their borders.

And, as we often mention when it comes to state legalization, marijuana remains a Schedule I drug under federal law. And while the feds have yet to interfere with state and local legalization efforts, the current administration does not appear as pot-friendly.

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