In November, California passed Proposition 64, the Adult Use of Marijuana Act (AUMA), allowing cannabis use for adults over the age of 21. The state is required to open applications to license recreational cannabis businesses on January 1st of 2018 – just over three months away. As the largest state in the US to move towards legal cannabis, California faces a number of regulatory hurdles on the way to implementing the plan. In fact, many Californians are wondering, where are we on the path to January sales? What problems have yet to be solved? And a whole host of other questions regarding the January 1 deadline.
Behind the scenes, regulators have been rushing to create a regulatory framework for sales, distribution, manufacturing, testing, and cultivation. The state will need to hire as many as 82 people and even write software to accept thousands of applications from entrepreneurs. Much of this burden is on the shoulders of Lori Ajax, director of the California Bureau of Cannabis Control. “The clock is ticking,” she said. “We all know what we have to get done and failure is not an option for us.”
In 2015, California overhauled its medical marijuana system with the Medical Cannabis Regulation and Safety Act (MCRSA), an attempt to clarify existing medical cannabis laws. That legislation even set a path in place to set standards for issuing licenses. Now, with AUMA, the state must choose how to reconcile the existing framework for medical cannabis with a new system for adult recreational use.
The big question was whether to allow for two separate regulatory tracks, MRSCA and AUMA, for medical and recreational respectively. This would resemble Washington state’s approach to the issue, which resulted in a messier rollout there. Specifically, weaker implementation on the medical side allowed recreational cannabis to succeed at the expense of medical. Colorado, which has seen a smoother transition, reconciled the two sets of rules into one regulatory system. In Colorado, the primary difference between medical and recreational is simply the tax rates for purchases.
In April Governor Brown proposed a one track system, similar to Colorado’s, with a budget trailer bill aiming to reconcile conflicting rules between AUMA and MRSCA. Called Senate Bill 94, or the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), it was passed in June, repealing and replacing MRSCA.
“I think it streamlines things and hopefully it will be less expensive” for businesses, Ajax said. The bill has been praised by the Drug Policy Alliance, an organization dedicated to the reform of outdated drug laws. They have called the bill "comprehensive" and "inclusive," adding that it respects "the voters' intent." Where the two frameworks conflict, MAUCRSA tends to favor the more permissive approach of AUMA. For instance, MRSCA requires businesses to receive state and local permits, while AUMA only requires them to abide by local laws such as zoning requirements, and to obtain local permits where applicable.
At the same time, the Bureau of Medical Cannabis Regulation, the Department of Public Health, and the Department of Food and Agriculture were working together to create regulations for the cultivation, manufacture, and testing of cannabis. After those agencies spent over a year crafting regulations and hearing public comments, state officials announced in early August that those rules would be temporarily scrapped and replaced with an “emergency rule-making process” that will bypass the standard public hearing phase, in order to ensure that the voter mandated January 2nd deadline is met. The regulations drafted by the three agencies wound up conflicting with elements of SB 94, particularly with regard to distribution and licensing issues.
Sonoma Assemblyman Jim Wood said the agencies planned to ultimately shift their regulations to fit with SB 94, instead of scrapping them entirely. “It may sound like a huge step backward, but the reality is that everyone has been planning for this,” he said. The emergency regulations for medical cannabis are expected to be published this fall, as well as regulations for recreational. The state cannabis bureau still plans to meet the January deadline however. Wood said he spoke with Lori Ajax last month, who said she was still confident that a framework would be in place by January. “Is the system going to be perfect? No, but the regulations will be in place and there will be a transition process from when the new [regulations] come online in 2018,” Wood said.
So for Californians wondering about January sales, the short answer is yes, officials still say they plan to meet the voter mandated deadline for cannabis sales. Constructing a regulatory framework for medical versus recreational cannabis may be one of the most significant challenges, but is just one of many hurdles to overcome.
While California growers are now producing far more than the state consumes, it’s still unclear whether there is enough cannabis properly tested for mold, pesticides, and potency available to supply retailers in January. Licenses for January will be temporary since the state won’t have time to process individual background checks. Very few of the state’s counties and cities have started work on their own ordinances, which could present problems. Conflicts also have yet to be resolved between the statewide ban on cigarettes and vaping in workplaces and the fact that smoking or vaping cannabis will be allowed at retailers, if local permits are granted for on-site use.
California is the largest state so far to opt for legalization, the largest state economy in the country, and the sixth largest in the world. Since California voted for AUMA, one-fifth of Americans will now live in states with legal adult use. This was always going to be a messy transition away of prohibition, but it looks as though the democratic process will likely overcome the bureaucratic hurdles ahead - at least, on a state level.