The Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA) creates a new licensing and regulatory structure for nonmedical marijuana activities, both personal and commercial. AUMA allows for substantial local control over the regulation of commercial marijuana activities, outdoor cultivation, and public consumption. The webinar focuses on impacts that the new law will have - and already is having - on local governments and private businesses involved in commercial marijuana activities. The presenters address the myriad of new regulations that cover a range of commercial marijuana activities, including cultivation, manufacturing, testing, distribution, transport, marketing, sales, as well as issues related to taxation, licensing marijuana retailers, and consumption of marijuana in retail establishments. Private businesses and public agencies face equally complex regulatory, compliance, and enforcement challenges in what is expected to be a confusing regulatory environment throughout the state.

1. December 1, 2016
Legalized Recreational Marijuana:
The New Wild Wild West for
Commercial Activities
Denise Bazzano, Senior Associate
Kate Cook, Associate

2. 2
• Overview of Regulatory Structure
• Commercial License Types
• Compare to Medical Marijuana Laws
• Considerations for Licensing Agencies
• Considerations for Local Agencies
Prop 64: Commercial Operations

3. 3
AUMA Creates Comprehensive
Regulatory Structure
Department
of Consumer Affairs
Bureau of Marijuana Control
Department of Public Health
State Board of Equalization
Department of Food
and Agriculture

4. 4
• January 2018 start date
• Illegal to operate without a
state license
• NOT a dual licensing
structure as with MCRSA
• Priority given: good actors,
California residents
• Anti-monopoly provisions
State Licenses

5. 5
• Type I =Cultivation; Specialty outdoor;
Small
• Type 1A=Cultivation; Specialty indoor;
Small
• Type 1B=Cultivation; Specialty mixed-
light; Small
• Type 2=Cultivation; Outdoor; Small
• Type 2A=Cultivation; Indoor; Small
• Type 2B=Cultivation; Mixed-light; Small
• Type 3=Cultivation; Outdoor; Medium
• Type 3A=Cultivation; Indoor; Medium
• Type 3B=Cultivation; Mixed-light;
Medium
• Type 4=Cultivation; Nursery
• Type 5=Cultivation; Outdoor; Large
• Type 5A=Cultivation; Indoor; Large
• Type 5B=Cultivation; Mixed-light; Large
• Type 6=Manufacturer 1
• Type 7=Manufacturer 2
• Type 8=Testing
• Type 10=Retailer
• Type 11=Distributor
• Type 12=Microbusiness
License Types
MARIJUANA LICENSE

6. 6
AUMA mirrors MCRSA, but differences exist:
Less prohibition on multiple licenses
600 feet from schools, day care or youth center
“Microbusiness” category
Overconcentration language
Effect of local license revocation on state license
Compare to MCRSA

7. 7
• Unreasonable restraints on competition
• Excessive concentration of licensees in city, county
• Perpetuate presence of illegal market
• Encourage underage use or adult abuse of marijuana
• Unreasonable risk of minors being exposed to
marijuana
• Would result in violation of environmental protection
laws
Considerations for Licensing Agencies

8. 8
Considerations for Local Agencies
• Public Input
– How did your jurisdiction vote on Prop 64?
– Have you heard from the marijuana industry?
• Education
– Staff, elected officials, and the public
• Regional Cooperation Opportunities
– Consider neighboring communities
– State considers overconcentration

9. 9
Local jurisdictions may adopt and enforce local
ordinances to regulate or completely prohibit
the establishment or operation of one or more
types of businesses.
Local Control

10. 10
• Development and Operational Standards
– Max number
– Location
– Building sizes, standards, max square footage
– Setbacks from sensitive uses
– Hours, security, storm water, discharge, air quality/odor control
• Licensee Qualifications/Permit Procedure
– Approval by staff or elected officials or special committee
– RFP process
– Priority for local residents and business owners
– New use permit category
Local Control (cont’d)

11. 11
• Regulations being developed by Department of Food and
Agriculture in cooperation with:
– Department of Pesticide Regulation
– Department of Fish and Wildlife
– State Water Resources Control Board
• No large cultivator licenses for first 5 years
• Local considerations
– Outdoor, indoor, mixed-light
– Mitigation for adjacent and sensitive uses
– Input from industry
– Environmental impacts
• Existing environmental review and regulations apply
Cultivation Licenses

12. 12
• Regulations being developed by
Department of Consumer Affairs
• “Retailers” includes licensed retail
stores, distributors, deliveries,
“microbusinesses,” and nonprofits
• Local considerations:
– Location, max number
– Allow consumption on site
– Delivery services and impacts on other
retailers
Retailers and Distributors

13. 13
• Department of Public Health will establish
regulations
• “Manufacture” is to compound, blend,
extract, infuse, or make marijuana products
– Edibles, drinks
– Extraction
• Local considerations
– Volatile/Nonvolatile issues
Manufacturers and Testing Laboratories

14. 14
• Under Department of Consumer Affairs
• AUMA does not require to be tied to “brick
and mortar”
• Local agencies may regulate, prohibit entirely
• Reality check
– Delivery is everywhere
– Enforcement difficult
Delivery

15. 15
• Suspension or Revocation of License
• Civil Penalties
• Criminal Penalties
Enforcement

16. 16
Questions
Q&A
16
Q&A

17. 17
Presenters
Denise Bazzano
Senior Associate
dbazzano@meyersnave.com
916.556.1531
Kate Cook
Associate
kcook@meyersnave.com
916.556.1531
Upcoming Prop 64 Webinars:
Land Use/Environmental Regulations
December 14, 2016
Employment Issues
January 4, 2017
Taxation/Ballot Measures
January 18, 2017
State Regulations & Potential Changes
February 1, 2017
For more information, visit meyersnave.com