AUMA (Prop 64)*
AUMA (2016) Adult Use of Marijuana Act (Prepared by California NORML (including comments))
Prop 64 includes licensing that mimics much of AB 266 however there are differences (for example, applicant qualifications). Please call and make an appointment with my office to discuss these matters and how and where you can obtain a license under the new legislation
AUMA is an elaborate, 62-page initiative which writes hundreds of new provisions and regulations into state law. Its basic thrust is to:
(1) allow adults 21 years and older to possess up to one ounce of marijuana and cultivate up to six plants for personal use;
(2) regulate and tax the production, manufacture, and sale of marijuana for adult use; and
(3) rewrite criminal penalties so as to reduce the most common marijuana felonies to misdemeanors and allow prior offenders to petition for reduced charges.
Due to its unusual length and complexity, AUMA contains a few glitches and inconsistencies that will have to be ironed out by the courts or the legislature. It also includes a number of restrictions and oversights that many users find objectionable (for example, it makes it illegal to consume in any public place except for specifically licensed premises; continues to let local governments ban medical marijuana cultivation and sales; bans vaporization in non-smoking areas; and imposes an unduly high, 15% + tax increase on medical marijuana). Fortunately, Section 10 of the act allows for most provisions to be modified by the legislature.
Prop 64 will not be the last word on marijuana reform; further changes in state and federal law will be needed to guarantee affordable medical access, protect employment and housing rights, facilitate banking and allow interstate commerce. Regardless of these problems, Prop 64 compares favorably to similar legalization measures in other state.
Note From Bruce:
CA NORML is currently supporting legislation (AB 2069) that will bar California employers from discriminating against workers (including firing or hiring) solely because of their status as a medical marijuana patient, or due to testing positive for medical marijuana use on a workplace drug test.
In general, AUMA makes it lawful under both state and local law for adults 21 or over to possess, process, transport, obtain, or give away to other adults no more than one ounce (28.5 grams) of marijuana (AUMA Sec. 11362.1).
The initiative sets inconsistent limits for marijuana concentrates, allowing possession of up to 8 grams in Sec. 11362.1 (a)2 , but penalizing more than 4 grams in Sections 11357(a), (b) and (c) and 11360. This contradiction will have to be resolved by the courts or the legislature.
Adults could cultivate up to six plants and possess the marijuana from these plants at their residence for personal use (Sec. 11362.1(3)). No more than six plants per residence. (N.B: These limits don’t apply to medical users, who may in principle grow whatever is necessary for their medical use under Prop. 215. However, local governments may restrict and even prohibit cultivation in some circumstances by local nuisance ordinances, Prop. 215 notwithstanding. Othwerwise, MMRSA allows patients up to 100 square feet of growing space per person, with collective gardens limited to 5 patients unless they obtain a state license).
All plants and harvested marijuana in excess of one ounce must be (1) kept with the person’s private residence or on its grounds, (2) in a locked apace, and (3) not visible from a public place. (11362.2). Violations of (1) – (3) are punishable as infractions with a maximum $250 fine. Cities and counties may regulate and restrict personal use cultivation, but cannot completely prohibit cultivation inside a private residence or accessory structure that is “fully enclosed and secure.” Local bans on outdoor cultivation are permitted at present, but only until such time as federal law is changed to allow adult use marijuana (11362.2(b)).
The initiative makes it lawful to smoke or ingest marijuana, but forbids consumption in any public place except for licensed dispensaries when authorized by local governments. Violations are a $100 infraction. “Public place” is commonly construed broadly to include any business or property that is open to the public. This will greatly reduce the locations where medical patients can inhale their medicine, as they can presently consume legally in streets and public areas where smoking is permitted. Also forbidden is consumption within 1,000 feet of a school or youth center while children are present, except on residential property or on licensed premises and provided the smoking is not detectable by the kids. (11362.3(a)3).
SMOKING AND VAPORIZERS RESTRICTED: Smoking cannabis is prohibited except in tobacco smoking areas (11362.3(c)). Violations are a $250 infraction. Smoking is defined to include the use of vaporizers and e-cigs, despite compelling scientific evidence that smokeless electronic vaporizers pose no public health hazard. The initiative goes on to declare that this section does not override laws regarding medical use; however, no state laws currently protect patients’ right to vaporize or consume in non-smoking areas, so this point is moot except in the handful of localities (San Francisco, Sebastopol) that have local ordinances allowing on-site medical marijuana smoking or vaporization in dispensaries.
USE IN VEHICLES:
Current laws against driving while impaired are unchanged. Consumption or possession of an “open container” of marijuana or marijuana products is prohibited while driving or riding as a passenger in a motor vehicle, aircraft, vessel, or other transportation vehicle. Violations are a $100 infraction. It is not clear what constitutes an “open container” of marijuana, for example, in the case of edibles or e-cigs. (Note: at present, there is no law prohibiting legal Prop 215 patients from possessing medical marijuana in open containers.) Exception: AUMA permits consumption in the passenger compartment of vehicles specially licensed for on-site consumption (11362.3(a) 4,7-8).
DRIVING WITH MARIJUANA:
Sec. 11362.1 states that it is lawful for adults to transport one ounce of marijuana for personal use. This provision is intended to override an existing law (VC 23222(b)) that makes it a $100 infracction to drive in possession of marijuana. It is possible that some law enforcement officers might wrongly try to issue citations for VC 23222(b) after Prop 64 passes, but such charges should be dismissable in court.
Possession or use on school grounds is banned while children are present, as is already the case under current law. (11362.3a(5)).
MANUFACTURE WITH VOLATILE SOLVENTS Unlicensed manufacture of concentrates using volatile or poisonous solvents (not including CO2 or ethanol alcohol) are subject to heavy felony penalties, as under current law (11362.4(a)6).
The initiative does not interfere with the right of employers to discriminate against marijuana users, medical or otherwise, both on and off the job (11362.45(f )).
Marijuana accessories would be legal for adult use and manufacture. (In practice, paraphernalia offenses are rarely prosecuted in California since passage of Prop 215). 11362.1 (a) 5.
The initiative does not alter the protections of the Compassionate Use Act of 1996 (Prop 215) allowing medical use of marijuana (11362.45(i)). Physician recommendations must conform to minimal standards already established under MMRSA and current medical marijuana legislation (11362.712).
Both AUMA and current law allow patients to voluntarily obtain official state medical marijuana identification cards from their county board of health. Under AUMA, patients who do obtain ID cards are exempted from the 7.5+% sales tax currently imposed on marijuana sales (34011(g)) effective immediately. However, beginning in Jan, 2018, all marijuana will be subject to an additional 15% excise tax plus a $9.25/ ounce cultivation tax. No card is required to enjoy the standard legal protections of Prop. 215. The cost of the state patient ID card is limited to $100, or $50 for Medi-Cal patients; free of charge for indigent patients (11362.755) effective immediately; this is a reduction from the prevailing fees in most counties. Identifying information in the ID cards is made subject to the Confidentiality of Medical Information Act (11362.713).
Qualified patients may not be denied child custody rights merely because of their status as medical marijuana users. 11362.84.
PHYSICIAN RECOMMENDATIONS (SB 643): There are several new provisions clarifying the duties of medical cannabis physicians; however, they don’t substantially affect or impair patients’ current access to medical recommendations:
- The Med Board’s enforcement priorities are amended to include “repeated acts of clearly excessive recommending of cannabis for medical purposes, or repeated acts of recommending without a good faith of prior exam” (SB 643, 2220.05). This is identical to existing language regarding controlled substances, which has generally been assumed to apply to MMJ heretofore.
- It is unlawful for physicians to accept, solicit, or offer remuneration to or from a licensed facility in which they or a family member have a financial interest.
- The Med Board shall consult with the California Center for Medicinal Cannabis Research in developing medical guidelines for cannabis recommendations.
- This recommending persona shall be the patient’s “attending physician” as defined in HSC 11362.7(a). Contrary to popular misconception, this is nothing new and in no way limits patients to their primary care physician. It merely restates current language in SB 420.
- Physician ads must include a warning notice that MMJ is still a federal Schedule I substance.
- Identifying names of patients, caregivers, and medical conditions shall be kept confidential (AB 266,19355).
Along with Senate Bill 643, AB 266 establishes the following license types:
Type 1: Cultivation; Specialty outdoor. Up to 5,000 sq ft, using exclusively artificial lighting • Type 1A: Cultivation; Specialty indoor. Up to 5,000 sq ft, using exclusively artificial lighting • Type 1B: Cultivation; Specialty mixed-light. Up to 5000 sq ft, using combination of artificial & natural light Type 2: Cultivation; Small outdoor. 5001 – 10,000 sq ft
- Type 2A: Cultivation; Small indoor. 5001 – 10,000 sq ft
- Type 2B: Cultivation; Small mixed – light. 5001 -10,000 sq ft
Type 3: Cultivation; Outdoor. 10,001 sq ft – 1-Acre
- Type 3A: Cultivation; Indoor. 10,000 – 22,000 sq ft
- Type 3B: Cultivation; Mixed-light. 10,001 – 22,000 sq ft
Type 4: Cultivation; Nursery
Type 6: Manufacturer 1 for products not using volatile solvents
Type 7: Manufacturer 2 for products using volatile solvents
Type 8: Testing
Type 10: Dispensary; General
- Type 10A: Dispensary; No more than three retail
Type 11: Distribution
Type 12: Transporter
*See Page 26 regarding licensing provisions for patients and adults under AUMA Prop 64*
SB 420 COLLECTIVE DEFENSE SUNSET: The provision in SB 420 affording legal protection to patient collectives and cooperatives, HSC 11362.775, shall sunset one year after the Bureau posts a notice on its website that licenses have commenced being issued. After that date, all cannabis collectives will have to be licensed, except for individual patient and caregiver gardens serving no more than five patients.
REGULATION AND SAFETY
The Bureau of Medical Marijuana Regulation in the Department of Consumer Affairs is renamed the Bureau of Marijuana Control and given chief authority to regulate the industry. The Bureau/ DCA is charged with licensing transport, distribution and sale; the Dept of Food and Agriculture with licensing cultivation; and the Dept of Public Health with licensing manufacturing and testing (Sec 26010-12).
The Bureau is to convene an advisory committee of knowledgeable stakeholders to help develop regulations and issue reports (26014).
The Governor is to appoint an independent, three-member Appeals Board to adjudicate appeals subject to standard procedures (26040).
TRACK AND TRACE PROGRAM: The DFA shall implement a unique identification program for all marijuana plants at a cultivation site, to be attached at the base of each plant. The information shall be incorporated into a “track and trace” program for each product and transaction (SB 643, 19335 and AB 243 11362.777(e)). Cultivation in violation of these provisions is subject to civil penalties up to twice the amount of the license fee, plus applicable criminal penalties.
The initiative establishes 19 different license categories parallel to those in MMRSA, covering cultivation, manufacturing, testing, distributing, retailing, and distributing. Licenses for adult use facilities are distinct from those for medical facilities issued under MMRSA. (26050)
A new category of Type 5 “Large” cultivation licenses is created for farms over the MMRSA limit of ½ acre indoors or 1 acre outdoors. No limit is set on the size of Type 5 gardens. No Type 5 licenses are to be issued before Jan 1, 2023. (26061(d)).
A new category of Type 12 microbusiness licenses is established for small retailers with farms not exceeding 10,000 sq. ft. ( 26067 (e) 2). and to act as a licensed distributer, Level 1 (non volatile solvent ) manufacturer, and retailer. Like licensed retailers, licensed microbusinesses may deliver cannabis and a local jurisdiction may allow for the smoking , vaping, and ingesting of cannabis or cannabis products on the prevmises of a licensed microbusiness .
Unlike MMRSA, AUMA does not prohibit vertical integration of licenses. In general, a licensee may hold any combination of licenses: cultivator, manufacturer, retailer, and distributor. Exceptions are testing licenses, and type 5 large cultivators, who may not hold distribution or testing licenses (26061(d)). In contrast, MMRSA allows applicants to have at most two different license types, effectively prohibiting direct farm-to consumer sales (AB 266, B&P Code 19328)
Unlike MMRSA, AUMA does not prohibit licensed distributors (Type 11 licensees) from obtaining other kinds of licenses, except for large-scale Type 5 cultivation licenses. Thus other cultivators, manufacturers, and retailers may apply to be distributors themselves.
(SB 643, 19322) Applicants must provide proof of local approval and evidence of legal rights to occupy proposed location. Applicants shall submit fingerprints for DOJ background check. Cultivation licensees must declare themselves “agricultural employers” as defined by the Alatore-Zenovich Dunlap Berman Agricultural Labor Relations Act.
Licenses may be denied based on various factors, including restraints on competition or monopoly power, perpetuation of the illegal market, encouraging abuse or diversion, posing a risk of exposure to minors, environmental violations, and excessive concentration in any city or county (26051).
“Excessive concentration” is defined quite loosely to include any concentration in a local census track that is higher than elsewhere in the county (26051(c)). Taken literally, this would include any new facility in a county that doesn’t already have one. An exception is made for denying applications that would “unduly limit the development of the legal market.” The overall effect is to give regulators a blank check to determine for themselves what constitutes excessive concentration. Local governments can also impose their own limits on concentration.
APPLICANTS WITH PRIOR CONVICTIONS:
Licenses may be denied for convictions of offenses “substantially related” to the business, including serious and violent felonies, felonies involving fraud or deceit, felonies for employment of a minor in controlled substance offenses. Except in rare cases, a prior conviction for a controlled substance offense may not in itself be the sole grounds for rejecting a license (26057(b)5). This is a departure from MMRSA, which makes past CS offenses valid grounds for license denial. CS offenses subsequent to licensing are grounds for revocation.
Note: Under Prop 64, convictions for marijuana offenses are not a basis for disqualification for licensing.
RESTRAINT OF TRADE: Licensees are barred from price fixing, restraint of trade, price discrimination between different locations, and selling at less than cost to undercut competitors. (26052)
NO ALCOHOL OR TOBACCO LICENSES may be held by marijuana licensees (26054(a)).
SCHOOL BUFFER ZONES:
No licensee shall be located with 600 ft. of a school or youth center in existence with the license was granted, unless a state or local licensing authority allows otherwise. (26054(b)).
All licensees must be continuous California residents as of Jan 1, 2015. This restriction sunsets on Dec 31, 2019 (26054.1).
PRIORITY TO EXISTING OPERATORS:
Licensing priority shall be given to applicants who can demonstrate they have acted in compliance with the Compassionate Use Act since Sept 1, 2016 (26054.2(a)).
TRANSPORT & DELIVERY:
Unlike MMRSA, AUMA does not have a separate license category for transportation between licensees. The Bureau shall establish standards for types of vehicles and qualifications for drivers eligible to transport commercial marijuana (26070(b)). Local government may not prevent delivery of marijuana on public roads by licensees in compliance with the initiative and local law (27080(b)). Like MMRSA, AUMA does require a special license for retail deliveries to customers. Under MMRSA, local governments are entitled to ban deliveries of medical marijuana to residents in their jurisdiction. There is nothing in AUMA to change this by requiring local governments to allow deliveries.
The Bureau is to investigate the feasibility of creating nonprofit license categories with reduced fees or taxes by Jan 1, 2018 (Sec.27070.5). In the meantime, local jurisdictions may issue temporary local licenses to nonprofits primarily providing marijuana to low income persons, provided they are registered with the California AG’s Registry of Charitable Trusts. This section is of questionable effect because marijuana non-profits are not allowed on the registry due to federal law. Nonetheless, there is nothing to prevent non-profits from registering as commercial entities under the act.
MANUFACTURING and TESTING LABS are regulated by the Dept. of Public Health along similar lines as MMRSA. (26100)
LABELS & PACKAGING:
Products shall be labeled in tamper-evident packages with warning statements and information specified in Section 19347.
The act prescribes specific label warnings on every package of marijuana and marijuana products (26120):
“GOVERNMENT WARNING: THIS PACKAGE CONTAINS MARIJUANA, A SCHEDULE I CONTROLLED SUBSTANCE. KEEP OUT OF REACH OF CHILDREN AND ANIMALS. MARIJUANA MAY ONLY BE POSSESSED OR CONSUMED BY PERSONS 21 YEARS OF AGE OR OLDER UNLESS THE PERSON IS A QUALIFIED PATIENT. MARIJUANA USE WHILE PREGNANT OR BREASTFEEDING MAY BE HARMFUL. CONSUMPTION OF MARIJUANA IMPAIRS YOUR ABILITY TO DRIVE AND OPERATE MACHINERY. PLEASE USE EXTREME CAUTION.”
(The Schedule I warning is to be deleted if the federal government reschedules).
MINORS MAY BE SNITCHES:
As in the alcohol industry, minors may be employed as peace officers to try to entrap marijuana dealers into illegal sales. (26140)
Misleading claims and marketing to minors are banned. No billboards along interstate highways, and no use of cartoon characters, language, or music known to appeal to kids. (26150-5).
No person shall engage in commercial activity without BOTH a state license and a license, permit, or other authorization from their local government (AB 266, 19320(a); AB 243, 11362.777(b)).
Local governments may restrict or completely prohibit any type of business licensed under the act, as is also true under MMRSA (26200).
However, local governments stand to lose grant funding under Section 34019 (f ) 3(C) if they prohibit retail sales or cultivation, including outdoor personal use cultivation. Section 34019 (f ) C authorizes state grants to local governments to assist with law enforcement, fire protections, or other public health and safety programs associated with implementing AUMA.
Local governments may permit on-site consumption at licensed retailers and microbusinesses provided: access is prohibited to persons under 21, consumption is not visible from any “public place” or non-age-restricted area, and sale or consumption of alcohol or tobacco aren’t allowed (this effectively ends the current practice of allowing beer and wine at medical marijuana expos (26200(d)).
LABOR LAWS IN EFFECT:
The Division of Labor Standards Enforcement and Occupational Safety and Health shall apply the same labor standards as apply to medical producers under MMRSA, including the requirement that all businesses with 20 or more employees have a labor peace agreement (34019(a)7).
Cultivation regulations are similar to those established under MMRSA:
- Cultivators must comply with conditions set by Dept. of Fish and Wildlife and State Water Resources Control Board, plus all other state and local environmental laws (26060, 26066).
- The Dept. of Pesticide Regulation is to issue standards for use of pesticides.
- The state shall establish an organic certification program and standards for recognizing regional appellations of origin (26062-3).
- Marijuana to be regulated as an agricultural product by the Dept of Food and Agriculture (26067).
- The Dept. shall establish an identification program with unique identifiers for every marijuana plant.
All retail sales, medical and non-medical, are subject to a 15% excise tax in addition to the regular state sales tax, effective Jan 1, 2018.
All marijuana is also subject to a cultivation tax of $9.25/ounce dry-weight for flowers or $2.75 for leaves, effective Jan 1, 2018. Other categories of harvested product are to be taxed at a similar rate based on their relative price to flowers (34012).
Patients with state ID cards are exempt from the current 7.5+% sales tax (effective immediately), but not from the excise or cultivation taxes. (34011)
Cities and counties are free to impose their own additional business taxes on facilities cultivating, manufacturing, processing, selling, distributing, providing, storing, or donating marijuana (34021). Many cities already impose such taxes on medical marijuana. (Technical exception: AUMA does not allow cities to impose an extra, BOE-collected “sales and use” tax on marijuana).
The board and other law enforcement officers may inspect any place where marijuana is sold, cultivated, stored to assure taxes are collected. (34016).
Tax Revenues are allocated to a new California Marijuana Tax Fund. (34018).
Proceeds go to:
- Reasonable enforcement costs of the Bureau and other regulatory agencies not compensated by other fees (34019)
- $10 million per year from 2018 thru 2028 for California public universities to study and evaluate the
implementation of the act
- $3 million per year from 2018 thru 2022 to the California Highway Patrol to establish protocols to determine whether drivers are impaired.
- $10 million per year beginning in 2018, increasing by $10 million per year to $50 million in 2022-23 to the Governor’s Office of Business and Economic Development for a community reinvestment program, at least 50% of which in grants to community nonprofits, for job placement, mental health and substance abuse treatment, legal and other services to communities disproportionately affected by the war on drugs.
- $2 million per year to the California Center for Medicinal Cannabis Research for research on efficacy and safety of medical marijuana.
- Of the remaining revenues:
- 60% are allocated to a Youth Education, Prevention, Early Intervention and Treatment Account for youth programs to prevent drug abuse.
- 20% to an Environmental Restoration and Protection Account for environmental cleanup and restoration.
- 20% to a State and Local Government Law Enforcement Account for CHP DUI programs and grants to local governments relating to enforcement of the Act. Only local governments that permit retail sales, cultivation, and outdoors personal use cultivation are eligible for these grants (34019(f )C3).
Current marijuana laws (Health and Safety Code 11357- 111360) are rewritten with a new penalty structure. In all cases, offenders under 18 are not liable to criminal punishment, but to drug education and community service.
POSSESSION (HSC 11357):
Illegal possession of an ounce by persons 18- 21 continues to be a $100 infraction. Illegal possession of more than an ounce by adults continues to be a misdemeanor, punishable by $500 and/or six months in jail. Possession of less than an ounce upon a school ground during school hours by a person over 18 is a misdemeanor punishable by a fine of $250, or $500 plus 10 days in jail for repeat offenses. In the case of concentrated cannabis, Section 11357 makes possession of more than four grams an infraction; however eight grams are authorized under Section 11362.1(a)2. According to AUMA’s authors, their intent was to allow eight grams; hopefully this will be affirmed by the courts.
CULTIVATION (HSC 11358):
Illegal cultivation of six plants or less by minors 18-21 is a $100 infraction. Illegal cultivation of more than six plants is a misdemeanor punishable by $500 and/or 6 months. The current mandatory felony penalty for cultivation is eliminated, but felonies may be charged in the case of repeat offenders, persons with violent or serious priors, and various environmental offenses.
POSSESSION FOR SALE (HSC 11359):
Penalties are dropped from current mandatory felonies to misdemeanors ($500 and/or 6 months). Felony enhancements allowed for repeat offenders, serious or violent priors, and sale to minors under 18.
TRANSPORTATION, IMPORTATION, SALE
OR GIFT (11360):
Penalties are dropped from current mandatory felony to misdemeanors ($500 and/or 6 months). Felony enhancements allowed for importing, exporting, or transporting for sale more than 1 ounce of marijuana or 4 grams of concentrate.
RELIEF FOR PRIOR OFFENDERS:
Persons previously convicted of offenses that would not be a crime or would be a lesser offense under AUMA may petition the court for a recall or dismissal of their sentence. The court shall presume the petiioner is eligible unless the state provides clear and convincing evidence to the contrary (11361.8).
INDUSTRIAL HEMP: SECTION 9
The initiative enables legal production of industrial hemp under California’s existing hemp law, which has been in suspense pending approval by the state Attorney General and federal government.
AMENDMENT: SECTION 10
The legislature may by a 50% majority vote (1) reduce any penalties in the act, (2) add protections for employees of licensees, or (3) amend Section 5 (Medical Use) or Section 6 (Regulation and Safety) consistent with the intent and purposes of the act. A 2/3 vote is required for other amendments, consistent with the intent and purposes.
INTERPRETATION: SECTION 11
No provision of this act shall be construed in a manner to create a positive conflict with federal law, including the Controlled Substances Act.
SEVERABILITY: SECTION 12
If any provision of this act is ruled invalid or unconstitutional, remaining provisions of the act remain in full force and effect.
*Prepared by California NORML
Contact the Law Office Of Bruce Margolin regarding cannabis business licensing, regulations and representation.
Call1-800-420-LAWS (5297) or 310-276-2231.