If you live in California, you know Proposition 64, the Adult Use of Marijuana Act, recently passed late in 2016. Among other things, the law has legalized the possession and use of up to 1 ounce of marijuana and personal use cultivation of up to 6 plants per residence by an adult aged 21 or older. It also established a license regulation system for commercial production and sale of recreational cannabis beginning on January 1, 2018. Before you think about opening a business in this industry, here are a few things you need to know.
You Will Need a License and a Permit
To cultivate, sell, distribute, manufacture, or transport recreational cannabis on a commercial basis, you will first need “a license, permit, or other authorization" from your local government. Typically, this “authorization” means obtaining a Conditional Use Permit at the local level. Furthermore, most cannabis businesses require a Seller’s Permit or Resale Certificate from the California Board of Equalization (BOE). Additionally, you will need a license for commercial marijuana sales. These are not yet available, but California will begin issuing them next year, in 2018. Currently, California anticipates issuing nineteen (19) different types of licenses regulating the cultivation, manufacturing, testing, retail, and distribution of recreational cannabis.
Commercial Marijuana Sales Are Still Illegal
For at least another 9 months, the commercial sale of cannabis and cannabis products remains illegal under California and Federal law. However, medical marijuana sales are allowed, subject to various exceptions and contingent requirements. To obtain assistance in navigating through the myriad of state or local laws that apply to the Adult Use of Marijuana Act, consult an excellent attorney who is familiar with California and local regulations.
Marijuana Is Illegal Under Federal Law
The U.S. government still lists marijuana, like heroin, as a Schedule 1 Controlled Substance. This means the government could legally enforce the law by arresting people who have possessed, cultivated, or distributed cannabis. However, the Department of Justice (DOJ) issued a guidance memo to prosecutors stating that medical marijuana cases are not a priority. The current presidential administration has made noises about cracking down on recreational marijuana use. So, at least for the next 4 years, you might be at risk as a seller of a “controlled substance,” despite its general legality under California law.
Banking Is Difficult
Very few banks will provide services to any kind of marijuana-based business, legal or not. This may change if and when the federal Drug Enforcement Agency reschedules cannabis from its current Schedule 1 classification. Although progress is being made on a daily basis, until that day, banks and credit card companies will likely remain skittish about loaning you money. Your best bet is smaller, community banks and state-chartered credit unions.
Starting a business is hard work, but adding marijuana laws into the mix can be downright scary. Talk to one of our experienced San Diego cannabis business lawyers today. We have more than 50 years of collective experience in business law, and we are intimately familiar with both California and local regulations regarding marijuana cultivation and sales. Let us help your business thrive. Contact us at (858) 360-7080 or fill out our online form for a courtesy evaluation.