Can Marijuana be Ethical?
By Ruben Duran
Cheech and Chong jokes aside, the reality in California today is that marijuana, also referred to as cannabis, is legal under state law for both medical and recreational uses. While federal law still classifies cannabis as a Schedule 1 illegal substance, the landscape of laws and regulations at the state and local levels is evolving almost daily, and if the issue hasn’t hit your jurisdiction yet, odds are it will, and soon.
So what should a local elected official know about cannabis law in California, and what the heck does this have to do with ethics? From a broad public policy perspective, local leaders must be prepared to deal with the issues that their constituents know and care about, and the fact that marijuana is in the news regularly likely means that residents and stakeholders are interested to know what, if anything, their local leaders may do about it.
To that end, here is a brief summary of the California laws applicable to the use and regulation of marijuana.
First, understand the distinction between medicinal and recreational use of cannabis under the law. Medical marijuana has been legal in California since the adoption of Prop 215 (the Compassionate Use Act) in 1996. Under that law and the rules and regulations adopted pursuant to it, qualified patients can obtain marijuana for medicinal use with a prescription, often through purchases at dispensaries, which some jurisdictions allowed and others banned outright. Mobile medical marijuana delivery systems have also been established in various areas of the state.
In 2015, the State Legislature enacted the Medical Marijuana Regulation and Safety Act (MMRSA), consisting of three bills (AB 243, AB 266, and SB 643). The MMRSA created more robust regulations of medical marijuana while also allowing for strong local control. It also created the Bureau of Medical Cannabis Regulation within Department of Consumer Affairs, which is expected to begin issuing licenses by 2018. The MMRSA also allows local taxation and regulatory licensing fees.
In summary, the MMRSA allows local governments to regulate or to ban outright:
- Medical marijuana dispensaries
- Medical marijuana delivery services originating or terminating in jurisdiction
- Medical marijuana cultivation
- Medical marijuana manufacturing
- Medical marijuana testing
- Other medical marijuana uses
Prop 64 – Adult Recreational Use
California voters approved Prop 64 in November 2016 with 57% of the vote. Known as the Adult Use of Marijuana Act (AUMA), Prop 64 legalized recreational use of marijuana by adults in California.
- Personal use by those 21 years of age or older
- Possession of up to 28.5 grams of cannabis plant material or 8 grams of concentrate
- Indoor cultivation of up to 6 plants for personal use inside a private residence or accessory structure, and possession of any marijuana produced by those plants.
AUMA also established a state tax for both medical and recreational cannabis, including a state excise tax of 15% on medical and recreational marijuana and a state cultivation tax of $9.25 on flower/$2.75 on non-flower plant leaf for medical and recreational use. It also created a new Division 10 of the Business & Professions Code to license marijuana businesses.
Notwithstanding these taxation provisions, AUMA allows local governments to ban:
- Recreational retailers
- Medical dispensaries
- Any delivery service originating from or terminating in jurisdiction
- Outside cultivation
- Any other state-licensed marijuana business licensed under Division 10
Finally, under AUMA, commercial licenses may be issued by the State beginning January 1, 2018, and as of April 2017, the Bureau of Marijuana Control has issued a notice of rulemaking with hearing dates starting June 1 and draft regulations for retailers, distributors, and labs. The California Department of Food and Agriculture has proposed regulations for cultivation, nurseries, and processing, and the Department of Public Health has proposed rules for manufacturing, including extraction, processing and infusion. Now is the time for local government leaders to act if they want to comment on any of these forthcoming rules.
Options for Local Government
Given the legal and regulatory framework discussed above, cities (primarily, as the local land use authorities) have the following options to consider:
- A city MAY NOT ban personal use in a private residence
- A city can ban use of marijuana in all other contexts, including use in public spaces, on-site use at dispensaries or retailers, or use in any public space within 1,000 feet of a school, park, or other public gathering space.
With respect to outdoor cultivation for personal use, a city may:
- Ban outdoor cultivation outright
- Allow outdoor cultivation if plants are in enclosed spaces or screened from view
- Require property owner approval of cultivation on property
- Limit the number of plants that can be cultivated outdoors.
For indoor cultivation, a city must allow cultivation of up to six plants, and can “reasonably regulate” indoor cultivation by:
- Requiring a cultivation permit
- Allowing cultivation for personal use only
- Allowing cultivation for commercial use with a business license
- Imposing an alternative set of public welfare regulations, but requiring no permit.
With respect to the regulation of commercial uses, a city may:
- Ban all commercial marijuana activity, including commercial delivery, commercial cultivation, commercial manufacturing, commercial testing, and commercial dispensaries or recreational retailers
- Allow commercial cultivation with a local tax imposed on growth
- Allow retailers with zoning limitations on location or number, or a local tax on retail sales
- Allowing delivery services to originate or terminate in the City.
Finally, some important points to remember about taxing authority, should your local agency decide to explore options that allow marijuana but seek to also raise revenue:
- Any tax imposed must be passed by the voters, per Prop 218.
- A special tax (which is set aside for specific uses, such as law enforcement) must be passed by a 66% vote
- A general tax (which goes into the general fund for unrestricted use) must be passed by a 50% +1 vote
- The earliest opportunity to place a measure on the ballot to tax marijuana is November 2018.
Whether these issues come to your jurisdiction at the behest of advocates on behalf of the cannabis industry (and, a large and diverse industry is indeed developing, organizing and acting at the state, local and national levels) or through individual constituents who feel strongly about these issues one way or another, you would be well-suited to prepare by learning about the law and the issues. As always, don’t hesitate to reach out if I may assist in any way.
Ruben Duran serves as general and special counsel to public agencies throughout Southern California, including cities, special districts, school districts and special-purpose entities in health care, job training and development and air quality management. He is a member of the Cannabis Working Group at Best Best & Krieger, which advises the firm’s clients on all aspects of marijuana laws and regulations.