Patient Collectives and Cooperatives

Health and Safety Code §11362.775 under Senate Bill 420 

On November 8th 2016, Prop 64 authorized sale of marijuana to paitient and adults over 21, by adults over 21 for profit coupled with taxation. Licensing laws will replace Senate Bill 420 on January 9th 2019, and will be regulated under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), subject to local regulations by cities and counties aurorizing their right to ban licensing and cultivation. See pages 29-34. 

The legislature had intended to “enhance the access of patients and caregivers to medical marijuana through collective,  cooperative cultivation projects.”  

SB 420 did NOT DEFINE collectives and cooperatives. Collectives and cooperatives that abide by local laws and guidelines exist throughout the state and can legally grow and  provide marijuana/cannabis to its members, until licensing is provided by the state of  California beginning in 2018. When that happens Senate Bill 420 will sunset, however  Prop 215 The Compassionate Use Act will remain in effect. Any individual responsible for assisting others in administrating marijuana/cannabis to patients and educating them about cultivation is also protected. Refer to Health and Safety Code §11362.765  (b)(3). See Page 17 regarding caregivers. 

In August 2008, the California Attorney General’s office published the “Guidelines for  the Security and Non-Diversion of Marijuana Grown for Medical Use.” These Guidelines are to provide a comprehensive understanding of collectives and cooperatives. They are NOT binding in court; instead, they are intended to guide cooperatives and collectives and to indicate various important factors necessary to take into account when operating a collective/cooperative. Courts are to refer to these guidelines before determining if the collective/co-op is operating legally. See Attorney General  Kamala Harris’ letter to the legislature on my website for more information regarding the uncertainty of the meaning of H&S §11362.775 and information on dispensaries,  the term “non profit” and edibles.  

Collectives and cooperatives are two distinct groups of qualified patients that may cultivate marijuana and provide it to their members. Cooperatives must follow the  California Cooperative Laws requirement that includes guidelines for setting up their group, maintaining records etc. Meanwhile, the law does not define collectives;  however, they are usually more informal patients groups who organize themselves to cultivate medical marijuana and to provide assistance to patients with medical needs.  

The Attorney General’s guidelines have concluded that both collectives and cooperatives are legal under the law. 

Pursuant to the California Attorney General’s Guidelines Opinion, collectives and cooperatives should be organized with sufficient structure to ensure security, non-diversion of marijuana to illicit markets, and compliance with all state and local laws: (1) collectives and cooperatives must be democratically operated by their members; (2) marijuana must not be diverted for non-medical purposes or diverted to individuals outside the operation; and, (3) none of the activities may be carried out for profit.  

In appellate cases, issues of profit have not been directly defined by the law or in the Attorney General’s guidelines. However,  the direct expenses of cultivating and distributing medical marijuana can be reimbursed. Court rulings do not exclude possible compensation for an individual’s work and effort; court rulings have held that the meaning of profit is a question subject to the jury. Profit is defined by Merriam-Webster as “the excess of returns over expenditures in a transaction or series of transactions.”  Any money in excess of the expenses should be returned to members, used to reduce the cost of medicine, or used to provide other medically related services to the members.

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