State of Cannabis: California

californiaThis is proving to be a big year for cannabis. As a result, we are ranking the fifty states from worst to best on how they treat cannabis and those who consume it. Each of our State of Cannabis posts will analyze one state and our final post will crown the best state for cannabis. As is always the case, but particularly so with this series, we welcome your comments. As a result of the overwhelming success of many cannabis initiatives this November, all the remaining states in this series have legalized the adult use of recreational marijuana. This week we cover the Golden State: California.

Our previous rankings are as follows: 5. Alaska; 6. Massachusetts;  7. Maine; 8. New Mexico; 9. Nevada; 10. Hawaii; 11. Maryland; 12. Connecticut; 13. Vermont; 14. Rhode Island; 15. Kentucky; 16. Pennsylvania; 17. Delaware; 18. Michigan; 19. New Hampshire; 20. Ohio; 21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah;  31. South Carolina; 32. Tennessee; 33. North Dakota; 34.Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas; 41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.


Recreational marijuana. On November 8, 2016 California voters approved the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). California is the largest state in the nation and after the AUMA is fully implemented, the 38 million people (children excluded) who reside in California will have access to legal marijuana. Needless to say, this is huge.

The AUMA is a complicated, 62-page measure. At its most basic, the AUMA allows adults (21 and over) to possess roughly an ounce of cannabis flower, eight grams of concentrate, or up to six plants. It also creates a regulated market for the production, manufacture, and sale of marijuana.

The AUMA creates 19 distinct cannabis licenses:

  1. Type 1 = Cultivation; Specialty outdoor; Small.
  2. Type 1A = Cultivation; Specialty indoor; Small.
  3. Type 1B = Cultivation; Specialty mixed-light; Small.
  4. Type 2 = Cultivation; Outdoor; Small.
  5. Type 2A = Cultivation; Indoor; Small.
  6. Type 2B = Cultivation; Mixed-light; Small.
  7. Type 3 = Cultivation; Outdoor; Medium.
  8. Type 3A = Cultivation; Indoor; Medium.
  9. Type 3B = Cultivation; Mixed-light; Medium.
  10. Type 4 = Cultivation; Nursery.
  11. Type 5 = Cultivation; Outdoor; Large.
  12. Type 5A = Cultivation; Indoor; Large.
  13. Type 5B = Cultivation; Mixed-light; Large.
  14. Type 6 = Manufacturer 1.
  15. Type 7 = Manufacturer 2.
  16. Type 8 = Testing.
  17. Type 10 = Retailer.
  18. Type 11 = Distributer.
  19. Type 12 = Microbusiness.

The AUMA allows for vertical integration of these licenses, with the exception of testing licensees; if you have a testing license, you cannot hold another type of license. This means one entity may hold licenses in multiple stages of production, possibly controlling cannabis from seed-to-sale.

State residency is required for licensure, as indicated by the following text in the AUMA:

No licensing authority shall issue or renew a license to any person that cannot demonstrate continuous California residency from or before January 1, 2015. In the case of an applicant or licensee that is an entity, the entity shall not be considered a resident if any person controlling the entity cannot demonstrate continuous California residency from and before January 1, 2015.

This provision expires on December 31, 2019, unless the California legislature extends it. This essentially creates a three-year residency requirement for California applicants. It is not clear who will be considered a “controlling” person of an entity and we expect the state to provide guidance on this issue as the AUMA is implemented.

Medical Marijuana. Twenty years ago, California became the first state to implement a workable medical marijuana program and the laws and rules have developed over time. In California, a patient may use medical cannabis upon receiving a approval from a physician. Patients may possess enough cannabis necessary for their personal medical use, but this amount must be reasonable and in compliance with any local ordinances that may limit personal amounts. Patients can purchase cannabis from cooperatives and dispensaries. Patients have the option to obtain a state ID card showing they are allowed to use medical cannabis. Under the AUMA, these ID cards may also allow for a local tax exemption.

The AUMA is intended to regulate the non-medical use of marijuana but, there will be some overlap in the agencies regulating cannabis under the AUMA. The “Bureau of Marijuana Control”, a sub-agency of the Department of Consumer Affairs will regulate and license California’s recreational marijuana market. This sub-agency is distinct from the Bureau of Medical Cannabis Regulation (BMCR) which oversees the medical market. However, the AUMA makes clear that it will “consolidate and streamline regulation and taxation for both non-medical and medical marijuana.” This means the BMC may eventually subsume the BMCR. The AUMA also reinforces stricter requirements on physicians who authorize medical marijuana use.

Californians should look at the cannabis progression in Washington State as an example of what may end up happening with recreational marijuana legalization in California.  When Washington Initiative 502 passed in 2012 and legalized recreational marijuana, many medical marijuana activists were concerned about its impact on medical pot and on July 1, 2016, the two markets (recreational and medical) officially merged. California is distinct from Washington because medical cannabis is already regulated by state and local agencies. Washington’s medical market was largely unregulated when I-502 passed. Time will tell what impact the AUMA has on California’s medical marijuana, but there is a good chance that California too will eventually see a merger of its medical and recreational cannabis regimes.

Bottomline. California legalized medical marijuana in 1996, becoming the first state to allow cannabis for medical use.  The AUMA is a detailed measure that should lead to a robustly regulated marijuana market. California legalization may be the tipping point that leads to legalization at the federal level. California has the potential to be the top cannabis state in the nation (by far), and we expect California’s ranking among the states to only rise. But for now, we rank it number 4, making it  our top state that has yet to implement a recreational program, but behind the three states that already have full-on recreational cannabis programs in place — Colorado, Oregon and Washington.

Our California cannabis attorneys are constantly writing about California’s cannabis laws and so if you want to read more about California, click California cannabis for all of our California articles.