Legal Alerts Sep 20, 2017

The Smoke Clears? AB 133 Passes

Bill Makes Numerous Changes to California Cannabis Laws — Effective Immediately

The Smoke Clears? AB 133 Passes

Further amendments to California law regarding licensed commercial cannabis businesses were enacted when Gov. Jerry Brown signed AB 133 on Sept.16. Going into effect immediately, AB 133 removes the requirement that different commercial license types of cannabis businesses (e.g., cultivators, manufacturers, retailers, etc.) maintain “separate and distinct” premises. By removing that requirement, a single physical location can now hold multiple state licenses, subject to applicable local ordinances.

AB 133 comes just months after the State approved legislation that consolidated the state licensing scheme established for the medical cannabis industry, passed by the Legislature in 2015, with the provisions of the Adult Use of Marijuana Act, adopted as Proposition 64 by California voters last November. The now-titled “The Medicinal and Adult-Use Cannabis Regulation and Safety Act” contains 20 different license categories of commercial cannabis businesses, each of which will be designated “M” or “A” for authorized medicinal or adult-use activities, respectively. MAUCRSA previously authorized a person to apply for and hold multiple state licenses, but required the licensed premises to remain “separate and distinct” for each license type. AB 133 now allows operators to conduct multiple and different types of commercial activities within a single licensed premises, including the possibility that both medicinal and adult-use retail sales occur at the same location.

AB 133 makes numerous additional amendments to MAUCRSA, many of which appear minor but have substantive impacts on allowable cannabis business operations. For example, the bill amends the definition of “delivery” to remove the requirement that use of a technology platform by a retailer must be owned and controlled by the retailer. AB 133 also removed the word “physical” from the requirement that licensees maintain a “physical copy” of customers’ delivery requests, opening the door for use of electronic methods. Additionally, AB 133 removed the restriction that medicinal cannabis manufacturers only manufacture products for sale by medicinal retailers.

AB 133 also makes changes to the state-based application process itself. For example, the bill states that applicants who voluntarily submit a valid, unexpired local license will be presumed to be in compliance with “all local ordinances,” unless otherwise notified by the local jurisdiction. The state licensing authorities will be required to notify local jurisdictions when an applicant voluntarily submits a valid local license. AB 133 also extends the deadline from July 1 to Oct. 31 for proposed cannabis cultivators to submit to the State the required statements of water diversion and applications to appropriate water.

Other amendments made by AB 133 include increasing the amount of concentrated cannabis a person may possess from four to eight grams before criminal penalties may be triggered and authorizing patients 18 years or older, holding a valid medical recommendation and medical ID card, and/or primary caregivers, to enter licensed cannabis businesses that hold both adult use and medical licenses. The bill also clarifies that, for purposes of tax collection, only finished, harvested products that have met all quality assurance and testing requirements are subject to the state cultivation tax. It also removes the requirement that the state excise tax on cannabis be displayed separately from the total on invoices provided to purchasers of cannabis product.

AB 133 represents a further evolution of the cannabis regulatory scheme in California that will have significant impacts in local communities that choose to permit commercial activities related to medical and/or adult recreational cannabis use within their borders.

If you have any questions about this law or how it may impact your agency, please contact the authors of this Legal Alert listed to the right in the firm’s Municipal Law practice group, or your BB&K attorney.

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Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

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