FAQ: What business owners need to know about California’s new marijuana regulations

Posted by Naja Hayward on

Reprinted from Marijuana Business Daily Author: John Schroyer

John Schroyer can be reached at johns@mjbizdaily.com

The latest version of the California state marijuana market regulations were released earlier this month, and there’s a sea of particulars for cannabis entrepreneurs to wade through.

The California market – already the biggest on Earth – will officially launch on New Year’s Day, meaning that companies wanting to participate have a good bit of work in front of them to ensure their operations run smoothly.


Welcome To California

To get the most important highlights for companies looking to obtain recreational or medical licenses, Marijuana Business Daily spoke with four California experts who have been directly involved in crafting the regulations or have been tracking them closely:

  • Lori Ajax, chief of the California Bureau of Cannabis Control
  • Henry Wykowski, a longtime cannabis industry attorney based in San Francisco
  • Kenny Morrison, chairman of the California Cannabis Manufacturers Association and CEO of VCC Brands, a Southern California edibles maker
  • Chris Boudreau, a marijuana entrepreneur with an MMJ dispensary, delivery operation and Sunstone cannabis distributorship

The regulations cover a lot of ground, so only the business intelligence that affects the greatest number of entrepreneurs is covered here.

What’s the update on licensing deadlines?

The agencies in charge of licensing MJ businesses – Bureau of Cannabis Control, Department of Food and Agriculture, and Department of Public Health – will likely start accepting temporary license applications sometime in December and will begin issuing permits Jan. 1.

To obtain a temporary license, an existing business must prove to the state that it has community approval of some sort, whether a city permit or literally just a letter of support from local officials.

So far, only the health department – which is overseeing cannabis manufacturers and edibles makers – has issued a temporary license form for applicants to complete.

Once a company obtains a temporary permit – which will be good for 120 days but can be extended for 90 more – the next step is to file an application for a permanent business permit.

Those can be filed anytime starting Jan. 1, with priority going to companies that can prove they were in compliance with California’s state MMJ law before September 2016.

There also will be a transition period for the program’s first six months – until July 1 – during which businesses with temporary licenses won’t be required to fully comply with the new state regulations. This is to help ease the switch to the regulated market.

For instance, there will be two separate categories of MJ licenses – adult use (“A”) and medical (“M”) – but they’ll be allowed to do business with each other irrespective of license categories until July.

After that, “A” and “M” licensees may do business only with licensees that share their designation.

Will businesses be limited in size?

One of the biggest changes in the newest version of the regulations is a one-license limit per company for medium-sized cultivation operations.

That means a single grow operation can only get a permit for up to one acre of outdoor cultivation – or up to 22,000 square feet of indoor canopy.

A Department of Food and Agriculture spokesperson did not immediately return messages seeking clarification.

But several industry insiders told MJBizDaily they interpret the regulations to mean it will be legal for large commercial-scale cultivators to obtain multiple “Small” licenses – which allow for up to 10,000 feet of canopy – and stack them at a single location to have a much bigger grow operation.

Such a move would be costlier, since a business would have to pay for, say, 10 “Small” licenses to have 100,000 square feet of grow space at a single location.

The license cap expires in 2023.

By contrast, there’s no such limit for any other type of cannabis business license, so it probably won’t be long before retail chains begin emerging.



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