Marijuana Initiative Qualifies for Ballot: Key Points for Local Governments

The California Secretary of State announced that the Control, Regulate and Tax Adult Use of Marijuana Act, commonly known as the Adult Use of Marijuana Act (“Initiative”), has sufficient signatures to qualify for the November 8, 2016 ballot.  The 62 page Initiative covers a broad range of topics.  This Client Alert discusses the provisions of greatest interest to local government.

Personal Use

The Initiative legalizes the recreational use of marijuana in California for individuals 21 years of age and older.  Individuals could possess up to 28.5 grams (slightly over one ounce) of non-concentrated marijuana.  The Initiative regulates smoking or ingesting marijuana in public places, and prohibits the use of marijuana while operating or being a passenger in a moving vehicle, or being within 1000 feet of a school, day care center, or youth center.

Local Control

Commercial:  The Initiative recognizes both commercial and personal use of marijuana.  The extent of local control differs in these two areas.  As for commercial or business use of marijuana, the Initiative allows cities and counties to regulate or “completely prohibit the establishment or operation of one or more types of businesses licensed” by the Initiative.  Those 19 categories of businesses are identified below.

Personal:  As for personal use, a key area of local control relates to cultivation.  A local jurisdiction may regulate or prohibit outdoor cultivation at a person’s private residence.  However, a local jurisdiction can only adopt reasonable regulations, but not prohibit, the planting, cultivating, harvesting, drying or processing of up to six living plants within a single private residence or in a locked space on the grounds of that private residence.  The Initiative defines a “private residence” as a house, apartment unit, mobile home or similar dwelling.

Transportation and Delivery:  A local jurisdiction may not prevent the transportation of marijuana or marijuana products on public roads by a business licensee acting in compliance with the terms of the Initiative.  A local jurisdiction may not prevent the delivery of marijuana or marijuana products on public roads by a business licensee acting in compliance with the terms of the Initiative and local law.

Marijuana-Related Businesses

The Initiative creates a state regulatory scheme for the licensing and control of all marijuana-related businesses, including both nonprofit and for-profit businesses.  The Initiative renames the existing Bureau of Medical Marijuana Regulations as the Bureau of Marijuana Control, and directs the Bureau to establish standards for packaging, labeling, testing, inspection, advertising, and tracking of marijuana and marijuana related products.

State agencies would also be responsible for the licensing of businesses conducting marijuana- related activities in 19 categories, such as cultivation (which include 13 different types of cultivation businesses, both indoor and outdoor, and of varying sizes), manufacturing (two categories), testing, retail, distribution, and microbusiness.  Importantly, the Initiative prohibits a person or entity from applying for a state license unless that applicant has received any necessary local license, permit, or authorization.  However, an applicant is not required to provide documentation that the applicant has obtained any such required local license or permit.

Taxation

The Initiative would implement a 15% excise tax on all marijuana products, except for medical marijuana.  There would also be a cultivation tax on all marijuana entering the commercial market of $9.25 per dry weight ounce of marijuana flowers, and of $2.75 per dry weight ounce of marijuana leaves.  These taxes are in addition to any other taxes imposed by a city or county.