Lawfully Operating Medical Cannabis Dispensaries Protected By Federal Ruling

Lawfully Operating Medical Cannabis Dispensaries Protected By Federal Ruling

In a historic move, U.S. District Judge Charles Breyer ruled to protect those medical marijuana dispensaries which operate in accordance with state law. A rider attached to the omnibus spending bill, passed by Congress in 2014, withdrew permission for the department of justice to spend federal funds to raid lawfully operating medical marijuana dispensaries.

This is the first ruling to defend marijuana dispensaries under an amendment approved through Congress, and therefore it is huge news for those in the legal medical cannabis industry. Although the spending bill was approved in 2014, the department of justice was still ignoring the new law by continuing to raid dispensaries until at least April 2015.

“It defies language and logic for the government to argue that it does not prevent California from implementing its medical marijuana laws by shutting down these … heavily regulated medical marijuana dispensaries,”

Judge Breyer said.

While many argue that closing down one or more dispensaries will not prevent the growth of the medical marijuana industry in California, the San Francisco judge claims the evidence that medical marijuana supplies in general have been substantially impeded by the closing of dispensaries.

In 1996, with the approval of Proposition 215, California became the first to legalize medical marijuana, and now new laws regulating the industry were just approved in the Golden State.

California Regulates Medical Cannabis

California Regulates Medical Cannabis

After nearly 19 years of relatively unregulated legal medical marijuana, California’s governor Jerry Brown on October 9 signed new legislation that specifies grow limits and other provisions.

Since Proposition 215, also known as the Compassionate Use Act, became law in 1996 — the first modern era medical cannabis legislation to be passed in the U.S. — the Golden State’s cultivators, processors, dispensaries, and patients have been relatively liberated, but also mired in legal and regulatory ambiguity.

The legislation signed by Brown was passed by the California Legislature in September and is quite comprehensive. It creates detailed oversight of what has become a multi-billion dollar industry, even if one considers only the 39 million residents of this celebrated West Coast state. The law details:

“…virtually every aspect of the business in California — from licensing and taxation to quality control, shipping, packaging, and pesticide standards.”

Some experts claim California currently sports about 4,000 cannabis dispensaries, with one source claiming 2,500 in January 2011. One of the biggest problems for the past almost two decades has been a lack of uniformity between counties and municipalities when it comes to the regulation of medical cannabis cultivation and sales. This has been confusing and frustrating for not only dispensary customers and the businesses that serve them, but also law enforcement and prosecutors. Now that the legislature in Sacramento has finally acted, much of this disparity in regulations between different areas of California should gradually disappear.

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After signing the legislation, Brown told the media that the new rules will help ensure that patients have access to medical cannabis while also satisfying the need for government oversight through standardization, accountability, and reporting. The law, which includes a detailed tracking system, according to Brown:

“…sends a clear and certain signal to our federal counterparts that California is implementing robust controls not only on paper, but in practice.”

One Act of Three Bills

California’s new medical cannabis law is actually comprised of three separate pieces of legislation: Assembly Bills 266 and 243 and Senate Bill 643. Collectively labeled the Medical Marijuana Regulation and Safety Act (MMRSA), these laws synergize to create a regulatory structure with oversight for state and local licensing, taxation, and commercial medical cannabis cultivation — as well as manufacturing, distribution, transportation, testing, and even sales of cannabis and cannabis products. It’s a system that could easily be applied to recreational sales if the state’s ballot measure passes in November 2016.

Unfortunately, the licensing segment of this act won’t be ready for prime time until roughly January 2018. When available, business applicants must choose from 17 types of annual businesses licenses, including those for indoor and outdoor cultivation facilities, processors/manufacturers, testing labs, and dispensaries. This progressive legislation even recognizes what is, for most states, a new class of business license: Distributors.

Distributors Recognized

Cannabis distributors are defined by the state of California as licensed parties responsible for all secure transport of medicinal cannabis between cannabis-related businesses. The law literally overnight creates a new niche industry that will eventually employ thousands of hard working, tax-paying Californians and undoubtedly improve the economy by decreasing unemployment and increasing tax revenues.

Despite some routine controversy and political maneuvering, the new act goes a long way toward protecting businesses and employees from criminal law and asset forfeiture — as long as they comply with the regulations. For those willing to play within the system and accept a law that, like all legislation, is a compromise intended to satisfy both conservative and progressive lobbyists and voters, the business of medical cannabis is definitely improving in California.

Environmentalists and Patients Happy

One of the biggest debates in California, even among advocates of medical and recreational cannabis, is the environmental impact of large outdoor grows, especially those operated by unscrupulous cartels, organized crime seeking only profit, or sloppy amateurs. State and federal authorities have busted many large outdoor cultivation efforts to find damage to the local landscape, including use of water diverted from local streams and rivers (sometimes sucking them dry and negatively impacting the local ecosystem).

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Under the state’s new regulations, marijuana farms will be required to track and report all water use, including providing the state with documentation regarding the sources of their water. This is a big win for environmentalists and conservationists who have pointed out for years how some rogue farmers in California had been diverting wild streams to propel their profitable pot plants.

Assemblyman Jim Wood, a Democrat from Healdsburg, helped craft part of the legislation that makes environmental concerns a priority, giving California’s nine regional water quality boards the authority to regulate the use of water by cultivators. These boards will also be regulating any chemicals or sediment that are released into the environment by a cultivation facility.

Wood added that, although the new, very detailed regulations will definitely increase operational costs for businesses in the industry, they will also better protect patients. He suggested that the new regs are a good tradeoff, saying:

“There’s a price to pay, and part of that is the regulatory structure that goes along with that.”

Patients and their advocates are also happy because of the testing requirements stipulated by the new laws. Cannabis dispensed to patients will be required to be batch tested for potency, which will likely include cannabinoid and terpene profiles, information that’s critical for understanding medical efficacy and high type and maintaining a sincere, successful dispensary infrastructure. Laboratory testing will also be required for contaminants, such as pesticides and solvent residue from the manufacture of concentrates like BHO.

According to Lauren Vazquez, Deputy Director of Communications for the Marijuana Policy Project:

“New guidelines for testing and labeling products will ensure patients know what they are getting and that it meets appropriate standards for quality.”

Industry-standard labeling and tamper-resistant security packaging will also be required by California’s medical dispensaries in the future. The combination of thorough and commercial-scale testing with packaging and labeling that helps prevent diversion, theft, and access by children or unauthorized users lends powerful protection to patients pursuing pot — while also helping to keep the feds at bay by illustrating the state’s attention to detail and industry best practices.

In other words, these new laws are, in some respects, California’s way of sending a message to the federal government: “You can stop hassling our medical cannabis patients and businesses now, we finally have it under control.” Unfortunately, the new act will unlikely prevent future raids by the DEA throughout the state.

Deliveries and Plant Tracking

California has been home to a burgeoning cannabis delivery business. Often catering exclusively to medical patients, but sometimes counting recreational consumers among their customers, services like Speed Weed in Los Angeles (which employs 25 drivers and boasts 19,000 enrolled patients), California Cannabis Delivery, also in L.A., and Medithrive Direct and Foggy Daze, both in San Francisco, are using 21st century Web 3.0 tools to establish viable businesses. They are applying bleeding edge mobile app tech and social media know-how to what has been legal in California for nearly a quarter century.

It has been reported that there are more than 2,600 cannabis delivery services nationwide, often serving the customers of an individual dispensary, like how mainstream pharmacies sometimes offer delivery services to their sick or elderly customers who are housebound. This number reflects a 300 percent increase in only three years, with only 877 such businesses on the scene back in 2012.

While the ability of large licensed dispensaries to deliver to their customers is protected under the Compassionate Use Act, municipalities are still allowed to ban delivery — although they cannot ban transport through their area to reach another. Riverside, outside of Los Angeles, is just one of dozens of examples of communities that currently ban cannabis deliveries. Often, municipalities that ban sales also prohibit deliveries within their borders.

California will be joining a slew of other medical cannabis states, such as Maryland and Nevada, that require seed-to-sale tracking. Such tracking involves a potent dose of IT wizardry, database-driven systems, and cloud-synced storage to trace the path and real-time status of a plant from seedling or clone through the vegetative and flowering stages of growth, including drying and curing during harvest. Such systems, employing batch or lot numbers that also tie into a variety of types of lab testing, also track cannabis through processing, packaging, labeling, distribution, and retail sale. This makes any adverse reactions among patients traceable to an exact batch produced by a particular cultivator or processor, enabling determination of root cause and helping ensure safe access.

The Downside

As noted above, no law regarding any industry, especially one as inherently controversial and potentially emotional as cannabis, is without compromise. The MMRSA is no exception. Unfortunately, the act will phase out collectives and cooperatives, forcing them to regroup or become in violation of the new law when enforcement begins for collectives on January 1, 2018. How this will affect decades-old operations like WAMM in Santa Cruz, the nation’s oldest continuously operating medical cannabis collective, remains unknown.

While patients are still permitted to cultivate limited quantities of their own cannabis, the size of grow spaces has been capped. Gardens will be limited to 100 square feet. In addition, registered patients would be prohibited from selling or even donating cannabis to another person (unless they are licensed). An inability to gift cannabis to a friend, especially if grown by oneself, is a harsh penalty in a progressive state like California that has successfully spearheaded many cannabis campaigns and set trends nationwide in terms of the kind herb. Fortunately, this provision of the act is difficult to enforce.

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At the production level, cultivation restrictions will vary according to the type of grow facility; outdoor gardens will be limited to one acre, while indoor cultivators will be prohibited from exceeding a half acre. This will effectively ban large-scale cultivation corporations, like those appearing to serve other states, from entering California (with the exceptions of existing companies).

Local municipalities will enjoy new power and responsibility and will be required to issue a permit to any business that desires to legally operate under the new act within its jurisdiction. In other words, cannabis-related businesses will be required to obtain the blessing of the local government. With so many communities already having banned sales, this permit granting authority may, in some cases, result in businesses being unfairly shut out of particular communities due to competitive forces or a city council populated by elected officials of a prohibitionist mindset. (It is estimated that 70 percent of counties and municipalities in Colorado have banned all marijuana sales.)

While the legislation will prevent certain types of vertical integration, such as a single company owning multiple types of businesses (i.e. cultivation and processing facilities), it will allow limited cross-ownership, including permitting some cultivators to also own and operate one or more dispensaries. Businesses that have been granted the right to currently operate in multiple license categories would be grandfathered exceptions to the new act, guaranteeing them the ability to continue legal operation until 2026. This is a big win for established canna-businesses trying to create brand awareness and expand market share.

Patient Protection and Industry Standards

In addition to better protecting patients with cannabis industry standards like seed-to-sale tracking and real, laboratory-grade testing, California’s new MMRSA will also resolve several areas of ambiguity for the businesses serving them. In addition, police and law enforcement officials will now have a more precise and detailed set of state laws to act as a better determinant of their policies when they are forming their enforcement strategy.

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The creation of a cannabis distribution industry, as well as the encouragement of small business and plentiful market competition, will surely lead to maintaining or improving the quality of cannabis and related products across the board for California’s patients, including improvements to its economy and ecology. The new MMRSA will ensure safe access to cannabis in a more democratic and egalitarian environment. The act will also create a more even playing field for medical cannabis businesses, encouraging powerful competition, one of the regulatory and market factors that has made Colorado a leader in legal herb.

Unfortunately, while the act will not prevent individual municipalities from banning sales or deliveries within their borders, it will allow for the identification and possible prosecution of companies that fail to live up to the state’s new patient-focused and environmentally conscious medical cannabis laws.

Photo credit: infostormer

Oregon Begins Legal Recreational Cannabis Sales

Oregon Begins Legal Recreational Cannabis Sales

On Thursday, October 1, Oregon joined the ranks of those rare, but increasingly prevalent states that sell cannabis through dispensaries and retail outlets to citizens who are 21 and older. When Oregon passed Measure 91 in 2014, which legalized recreational cannabis possession and consumption for fans of the culture in the Beaver State, all stakeholders knew it would probably be 2016 before adults were actually able to legally walk into a safe, regulated retail outlet without a medical exemption and purchase cannabis.

The state surprised everyone when, over the summer, it announced that it would make recreational cannabis sales legal through existing dispensaries to expedite the rollout of the recreational market and get a leg up on illegal dealers eager to supply a newly motivated and hungry population of consumers. Said Portland resident John Finley:

“Before, I had to go through potentially dangerous, weird people in motels, for instance. Or just people I didn’t want to deal with or don’t trust. It was legal, but I didn’t have any options.”

A Short History

In 1998, Oregon became the second state in the nation to pass a medical marijuana law that permitted and regulated the cultivation, processing, and dispensation of medical cannabis to patients with a wide range of ailments.

Roughly 200 of Oregon’s 345 medical dispensaries have registered with the state to expand their customer base to recreational consumers. On June 30, Oregon passed HB 3400, a law to regulate recreational sales, including a detailed seed-to-sale tracking system and the progressive expungement of thousands of non-violent cannabis offenses.

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Senate Bill 460, which Oregon governor Kate Brown signed during the summer, allowed recreational sales via dispensaries beginning on October 1 as a means of kickstarting the state’s recreational legalization while the Oregon Liquor Control Commission crafts regulatory language that will set the rules for all recreational marijuana sales in the state. Recreational sales will be tax-free until January 4, 2016, when a 25 percent tax will go into effect.

On July 1, Oregon’s recreational law went into effect, making it legal for millions of Oregonians to possess up to eight ounces of the herb, grow small amounts at home (four plants, if kept out of public view), and take up to an ounce outside their residence. But with only a network of medical dispensaries and no existing recreational retail outlets, cannabis consumers in the state have been trapped in a Catch 22, with no convenient and safe access to the herb that has finally been legalized.

By allowing medical dispensaries to also sell cannabis to recreational users, the state hopes to establish an advantage over the black market and cartels, pushing organized crime out of communities and generating much needed tax revenue. Unfortunately, the state will not even begin accepting applications from entrepreneurs and businesses for retail licenses allowing cultivation, processing, testing, and retail sales of cannabis and cannabis products until January 4, 2016. Recreational retail outlets are expected to begin opening later in 2016, most likely the third and fourth quarter.

Oregon joins Colorado, Washington, Alaska, and the District of Columbia to offer adults 21 and older the legal right to purchase, possess, and consume cannabis for non-medical purposes. Ironically, while California was the first state to establish a legal and semi-regulated environment for medical cannabis in 1996 with Proposition 215, technically speaking, recreational sales are still illegal in the state (a recreational ballot issue scheduled for 2016 is expected to pass). Like Oregon until now, Alaska, which has legalized possession and consumption for all adults, also has not begun legal sales of cannabis to recreational consumers.

The Downside

While pot sales between individuals remains illegal, gifting and sharing herb is permitted in Oregon. The new recreational law allows citizens to purchase “flower and dry leaf products, plants, and seeds,” according to Oregon.gov. Note the distinct exception of concentrates and edibles. Unfortunately, residents of Oregon who choose to take advantage of the state’s new recreational legalization will be limited to only seven grams (a quarter ounce) of flowers (buds) and related products (the same daily amount that Colorado allows tourists to purchase, while residents can purchase an ounce per visit).

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This restriction will be teasingly painful due to the fact that recreational consumers can currently legally shop only in certain medical dispensaries, most of which also sell edibles and concentrates to patients. While displayed direction in front of customers, dispensaries won’t be permitted to sell such prominently promoted products to recreational shoppers. Oregon’s recreational smokers and vapers simply won’t have legal, safe access to concentrates such as Butane Hash Oil (BHO) and its myriad variants (like wax, shatter, and crumble), tinctures, CO2 oil, and live resin.

For those thinking of purchasing and consuming recreational cannabis in Oregon who aren’t tapped into the details of what’s permitted, the Oregon Liquor Control Commission has published an infographic that may help. Those sad about a lack of legal access to edibles and concentrates can print out a copy and use it to blow their nose and wipe their tears of frustration.

Where Things Stand

Oregon has set a new record in the sparsely crowded field of states that allow recreational cannabis sales. It sold $11 million worth of non-medical weed after one week of sales. Compare this to what other recreationally legal states sold during their first week of legality:

  • Colorado: $5 million
  • Washington: <$1 million
  • Alaska: $0 (rec sales have not yet begun)

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