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Why California’s New MMJ Laws are a Big Deal

Ryan Allway

October 13th, 2015

Policy, Top Story

California Governor Jerry Brown recently signed three bills into law that comprise the California Medical Marijuana Regulation and Safety Act – or MMRSA for short. Despite being the single largest market for legalized marijuana in the world, valued at over $1.3 billion by ArcView’s estimates, the state had woefully outdated laws surrounding its medical marijuana program that lacked basic components like state-mandated testing requirements.

The new medical marijuana laws will provide the state with one of the most comprehensive and complicated licensing regimes in the country, although some details must still be filled in before licenses are issued sometime in 2018. For example, the new bills didn’t outline licensing fees, edibles/infused regulations, residency requirements, and investment regulations.

Turning a Profit

California’s medical marijuana industry is a purely non-profit endeavor under existing laws, but AB 266 will permit for-profit business to obtain operational medical marijuana licenses from the state. Given the increasing investment in the industry, the move to permit for-profit enterprises in the state could open up a significant opportunity for investors in both public and private companies looking to capitalize on the largest legalized market in the country.

According to a NerdWallet analysis, California could become a $2.2 billion market for medical and recreational marijuana if it’s legalized in 2016, which represents approximately 16% of the entire U.S. market. Colorado, by comparison, comes in at just a $350 million market that accounts for just 2.5% of the U.S. total. By opening the door to for-profit companies in the MMJ business, regulators have set the stage for long-term potential with recreational use.

Regulatory Bodies

California’s new laws will establish the Bureau of Medical Marijuana Regulation – or BMMR – as a part of the Department of Consumer Affairs to develop and implement all rules necessary to enforce the MMRSA. In addition to the state’s laws, cities and counties will be permitted to regulate medical marijuana businesses, which includes the ability for cities and counties to ban medical marijuana businesses within their borders.

In addition, the Department of Consumer Affairs, Department of Food and Agriculture, and State Department of Public Health will all have the power to promulgate and pass any rules necessary to implement the MMRSA. The Department of Food and Agriculture will also be responsible for issuing and overseeing all cultivator licenses, which opens the doors for regulations on pesticide usage and other important areas.

Various state agencies will also be setup and become responsible for tracing cannabis product, record keeping, anti-diversion systems, quality assurance testing standards, labeling and packaging, safe product handling, and security requirements. In many cases, the rules and regulations surrounding these areas were adopted from other states that have legalized medical or recreational marijuana and have some experience in the matter.

Licensing Requirements

The MMRSA established 17 different kinds of medical marijuana operational license types and prohibiting vertical integration – with one exception. Under the new laws, a licensee may only hold a state license in up to two separate license categories and the state only permits certain combinations of licenses.

When issuing licenses, certain medical marijuana businesses may be prioritized by the state if they can demonstrate that it was operating in good standing by January 1, 2016. Businesses that are operating in compliance with local zoning ordinances and other state and local requirements before 2018 may also continue their operations until its application for licensure is approved or denied.

These rules suggest that businesses that get their company up and running before the end of the year with local approval will likely have priority licensing when it comes to MMRSA.

Looking Ahead

California’s new medical marijuana regulations represent a complete overhaul of the state’s program and are a big deal in a number of different ways.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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