California Cannabis Law Overview

In 1996, California voters passed Proposition 215, the Compassionate Use Act, allowing the use of medical cannabis. Seven years later, Governor Davis signed Senate Bill 420, the Medical Marijuana Program Act, permitting patients and caregivers to grow and distribute medical cannabis collectively as nonprofits. Essentially these laws operate as a defense to prosecution rather than a legal structure for business operations.

In 2015, Governor Brown signed into law three separate bills (AB 266, AB 243 and SB 643), which outline a comprehensive state system with seventeen different license types for medical cannabis operations, including cultivation, manufacturing, retail sale, transport, distribution, delivery, and laboratory testing. In 2016, a subsequent cleanup bill (SB 837) changed the name to the Medical Cannabis Regulation and Safety Act (MCRSA).

On January 1, 2016, MCRSA officially went into effect; however, state regulatory agencies have until January 2018 to release rules and procedures for obtaining state licenses. State medical licenses under MCRSA will be available for cultivation, manufacturing, distribution, testing, transportation, and dispensaries. There are complicated restrictions to prevent vertical integration under MCRSA. In general, licensees can only hold licenses in two separate categories.

In November 2016, voters passed Proposition 64 to tax and regulate adult use of marijuana. While personal use of recreational cannabis is now allowed, state licenses will not be available until after 2018. The state legislature will likely alter the Proposition 64 in the coming session.

Under both MCRSA and Proposition 64, local jurisdictions may enact separate rules for medical and recreational operators as well as personal use. MCRSA establishes a dual licensing system in which applicants must first obtain a local permit and then apply for a state license. Currently, many localities have passed bans or are undergoing cannabis policy development.