California
To set yourself up for long-term success in this growing but competitive industry, you’ll need to know exactly what’s required in order to stay compliant with state law. Being found in violation of any regulations – even for a seemingly small infraction – can result in losing the license you worked so hard to get.
California’s cannabis industry is now regulated by a single entity: the Department of Cannabis Control (DCC). This department oversees all aspects of the legal marijuana market in California, including licensing for retailers, manufacturers, distributors, testing laboratories, and cultivators. The DCC has consolidated the functions previously managed by separate agencies, streamlining the regulatory process.
To operate legally, dispensaries in California must obtain a retailer’s license from the DCC, which offers both Type 9 and Type 10 licenses. Type 9 licenses are required for non-storefront (delivery) operations, while Type 10 licenses are necessary for traditional storefront dispensaries.
As part of the application process, various requirements must be met, including local approval and compliance with zoning regulations. Operating hours are typically limited (6:00 a.m. to 10:00 p.m. PST), and each city may have additional regulations and fees. The total cost of obtaining and maintaining a license can be substantial, potentially exceeding $100,000 depending on various factors.
Regarding taxes, as of January 1, 2023, the state levies a 15% excise tax on all recreational cannabis sales, which retailers are now responsible for collecting and remitting. For 2023 only, this tax is calculated as 15% of the retailer’s gross receipts from retail sales. It’s worth noting that the cultivation tax was discontinued as of July 1, 2022.
Additionally, dispensaries must adhere to strict purchase limits. Adults can buy up to 28.5 grams of non-concentrated cannabis, 8 grams of concentrated cannabis, and 6 immature cannabis plants per day. Medical marijuana patients have a higher limit of 8 ounces of medical cannabis per day. Delivery services face their own set of regulations, including a $10,000 limit on the value of goods that can be carried by a delivery employee.
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CANNABIS LEGALIZATION HISTORY IN CALIFORNIA
California has a long and complex history with cannabis legalization. In 1996, California became the first state in the U.S. to legalize medical cannabis with the passage of Proposition 215. This groundbreaking law allowed patients with certain medical conditions to obtain and use cannabis with a doctor’s recommendation.
The California State Legislature further solidified the state’s medical cannabis program by passing the Medical Marijuana Program Act in 2003. The MMPA enabled the Department of Health to issue patient identification cards and allowed for the creation of patient “collectives.” These collectives were authorized to grow and distribute marijuana to approved patients who were members of the collective.
A major shift occurred in 2016 when California voters approved Proposition 64, which legalized the possession, use, and cultivation of cannabis for adults 21 and over. This law also established a regulatory framework for the commercial cultivation, production, and sale of cannabis products. However, since the passage of Proposition 64, California has faced significant challenges in implementing the law and regulating the cannabis industry effectively.
Initially, the state struggled to issue licenses to cannabis businesses in a timely manner, which contributed to the persistence of a thriving illicit market. High taxes and stringent regulations have made it difficult for licensed businesses to compete with unlicensed operators. In response, California has made efforts to streamline the licensing process and combat the illegal market. For instance, in 2019, the state launched a public awareness campaign called “Get #weedwise” to educate consumers about the importance of purchasing cannabis from licensed retailers.
Recent years have seen California taking proactive steps to address the harms caused by the war on drugs and the disproportionate impact of cannabis prohibition on communities of color. This includes the implementation of social equity programs aimed at promoting diversity and inclusion in the legal cannabis industry. For example, in 2018, the California Cannabis Equity Act was passed to support local equity programs and provide technical assistance to equity applicants and licensees.
Moreover, California has made significant progress in expunging past cannabis convictions. In 2018, the state passed AB 1793, which required the automatic review and potential expungement of cannabis convictions that are no longer considered crimes under Proposition 64. This process has been further accelerated through partnerships with organizations like Code for America, which has helped to clear thousands of convictions.
Despite ongoing challenges, California continues to evolve its cannabis policies. The state has consolidated its regulatory structure under the Department of Cannabis Control (DCC) in 2021, aiming to improve oversight and streamline processes. As the cannabis landscape continues to change, California remains at the forefront of cannabis policy reform, balancing the need for regulation with efforts to create a more equitable and sustainable industry.
LAST UPDATED 8/09/2024 – It’s important to remember that laws can be revised and updated frequently, so please keep this in mind.