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Proposition 64: What Every Lawyer Needs to Know About the Adult Use of Marijuana Act

Proposition 64: What Every Lawyer Needs to Know About the Adult Use of Marijuana Act

The passage of California's Proposition 64, also known as the Adult Use of Marijuana Act or "AUMA," legalizing the adult recreational use of marijuana under California law makes this state the most populous state in the nation to do so. It comes six years after California voters narrowly rejected a similar measure, and it expands on Proposition 215, the law that twenty years ago made California the first state to legalize cannabis for medical use.

Proposition 64 sets up a broad range of marijuana regulations that address such issues as personal use, possession, and cultivation; commercial cultivation, processing, and retail sale; transportation; taxation; and environmental protections. Prop. 64 also establishes packaging, labeling, advertising and marketing standards and restrictions for marijuana products.

It also significantly changes current criminal laws related to marijuana—which are rewritten with a new penalty structure—and it provides that people previously convicted of offenses that would not be a crime or would now be a lesser offense may petition the court for a recall or dismissal of their sentence.

This article will outline each of these aspects of the Adult Use of Marijuana Act and seeks to provide a ready resource for answering questions about the nature of the changes these new enactments make to existing law. The article concludes with an examination of the context of legalized medical and recreational marijuana in light of the recent change of focus in the federal government's enforcement efforts and the possibility of a change in the enforcement policy that may come under the administration of President-elect Donald Trump.

Personal Use, Possession, Cultivation

Proposition 64 legalizes the recreational use of marijuana for adults aged 21 years or older. It is now legal under California law to possess up to 28.5 grams (one ounce) of marijuana and up to eight grams of concentrated marijuana, such as hashish or dabs. An individual is permitted to grow up to six plants within a private home, so long as the area is locked and not visible from a public place.

However, possession or use on the grounds of a school, day care center, or youth center while children are present remains illegal. Also forbidden is consumption within 1,000 feet of a school or youth center while children are present, except on residential property or on licensed premises and provided the smoking is not detectable by the students.

Smoking is permitted under California law in a private home or at a business licensed for on-site marijuana consumption. Smoking marijuana remains illegal while driving a vehicle, anywhere smoking tobacco is illegal, and in all public places. Laws against driving while impaired are unchanged.Consumption or possession of an "open container" of marijuana or marijuana products is prohibited while driving or riding as a passenger in a motor vehicle, aircraft, vessel, or other transportation vehicle. Violations are an infraction punishable by a $100 fine. What constitutes an "open container" of marijuana is unclear, for example, in the case of edibles or e-cigs. (Note: at present, there is no state law prohibiting legal Prop. 215 patients from possessing medical marijuana in open containers.)

Proposition 64 makes it is lawful under state law for adults to transport one ounce of marijuana in a closed container for personal use. This provision is intended to override an existing law (Vehicle Code § 23222(b)) which makes it an infraction to drive in possession of marijuana.Citations issued under Section 23222(b) after the passage of Prop. 64 are likely to be dismissed in court.

While Californians can use marijuana legally under state law as of November 9, 2016, people who do not have a medical marijuana card may not be able to legally purchase marijuana from dispensaries until the recreational use dispensary licensing provisions go into effect on January 1, 2018. However, it is now legal under California law to give an ounce or less of marijuana away as a gift to someone 21 years or older.

Significantly, although Californians have the legal right to use marijuana, Prop. 64 does not interfere with the right of employers to discriminate against marijuana users, medical or otherwise, both on and off the job.

"It is now legal under California law to possess up to one ounce of marijuana and up to eight grams of concentrated marijuana. An individual is permitted to grow up to six plants within a private home, so long as the area is locked and not visible from a public place."

Commercial Sale

The state has until January 1, 2018 to set up a system for dispensaries to apply for licenses, which will allow them to sell marijuana for recreational use legally under California law. To sell marijuana for recreational use, businesses must obtain a state license. Local governments can also require dispensaries to obtain local licenses. Businesses are not to be authorized to sell marijuana within 600 feet of a school, day care center, or youth center. No alcohol or tobacco licenses may be held by marijuana licensees.

Commercial Growing & Environmental

The regulations regarding commercial growing operations are like those established for medical cannabis growers under the Prop. 215 medical cannabis enabling legislation, called the Medical Cannabis Regulation and Safety Act ("MCRSA"). Commercial cultivators must be licensed by the state and by local authorities, and must comply with conditions set by Department of Fish and Wildlife and State Water Resources Control Board, along with all other state and local environmental laws. The Department of Pesticide Regulation is to issue standards for use of pesticides for cannabis. The state is also directed to establish an organic certification program and standards for recognizing regional appellations of origin. Additionally, marijuana is to be regulated as an agricultural product by the Department of Food and Agriculture, which is to establish an identification program with unique identifiers for every marijuana plant.

Commercial Transport & Delivery

Under MCRSA, the transportation of medical cannabis is strictly regulated, and permits are required. However, AUMA does not have a separate license category for transportation between recreational licensees. Prop. 64 merely says that the Bureau of Marijuana Control shall establish standards for types of vehicles and qualifications for drivers eligible to transport commercial marijuana between licensees, and that local government may not prevent delivery of marijuana on public roads by licensees in compliance with the initiative and local law.Like MCRSA, AUMA does require a special license for retail deliveries to customers. Under MCRSA, local governments are entitled to ban deliveries of medical marijuana to residents in their jurisdiction. Nothing in AUMA requires local governments to allow deliveries for recreational use.

Regulatory Structure

Under Prop. 64, the Bureau of Medical Cannabis Regulation is renamed the Bureau of Marijuana Control. It is responsible for regulating and licensing marijuana businesses. But Prop. 64 also involves the Department of Food and Agriculture, which will license and regulate growers; the Department of Public Health, to license and regulate producers of edible marijuana products; the State Water Resources Control Board; and the Department of Pesticide Regulations.

Although Proposition 215—the Compassionate Use Act—was passed in 1996, the state legislature only recently enacted legislation to implement the state-wide regulation of medical cannabis. MCRSA, the enabling legislation, went into effect on January 1, 2016; however, the state has said that it will need until January 2018 to set up the necessary agencies, information systems, and regulations to actually begin issuing licenses. In the interim, local governments may choose to adopt new ordinances to permit or license local businesses in preparation for state licensing. This is important because much of the regulatory structure for regulation of adult use of marijuana in Prop. 64 was taken from the medical use regulations of MCRSA, which, in turn, was based upon the state's regulation of the production, distribution, and sale of alcohol.

Labeling & Advertising

Parallels to alcohol regulation can be seen where Prop. 64 prescribes specific label warnings on every package of marijuana and marijuana products:


(The Schedule I warning is to be deleted if the federal government reschedules marijuana.)

Also taken from alcohol regulations is the provision that minors may be employed as peace officers to try to entrap marijuana dealers into illegal sales, as are restrictions on advertising such as misleading claims and marketing to minors. Billboards along interstate highways and the use of cartoon characters, language, or music known to appeal to children are also banned.

Licensing of Commercial Operations

It should be noted that licenses for adult use facilities are distinct from those for medical facilities issued under MCRSA. Medical dispensaries are not allowed to dispense marijuana for recreational users. That sort of separation—as well as the whole licensee-based regulation of marijuana that separates licenses based on the vertical supply chain—is also a parallel to alcohol regulation. There are separate license types for cultivators (based on size of growing space and whether it is indoor, outdoors, mixed-light, or a nursery); manufacturers (with separate licenses for those using volatile chemicals in their processing and those that do not); dispensaries (based on the number of retail sites); distributors; transporters; and testing facilities. These license types come from Prop. 215 regulations, but there are some notable differences between the licensing structure for medical and recreational businesses.

Extra-large and extra-small cultivators

A new category of Type 5 "large" cultivation licenses is created for farms over the MCRSA limit of one-half acre indoors or one acre outdoors. No limit is set on the size of Type 5 gardens. However, no Type 5 licenses are to be issued before Jan 1, 2023. The drafters and promoters of Prop. 64 indicated this was included to delay the takeover of California's marijuana industry by large corporate concerns. Also, a new category of Type 12 microbusiness licenses is established for small retailers with farms not exceeding 10,000 square feet.

"It should be noted that licenses for adult use facilities are distinct from those for medical facilities. Medical dispensaries are not allowed to dispense marijuana for recreational users."

Vertical integration

Unlike MCRSA, AUMA does not prohibit vertical integration of licenses. In general, a licensee may hold any combination of licenses: cultivator, manufacturer, retailer, distributor, and tester. The one exception is for Type 5 large cultivators, who may not hold distribution or testing licenses. In contrast, MCRSA allows applicants to have, at most, two different license types, effectively prohibiting direct farm-to-consumer sales (A.B. 266; Business & Professions Code § 19328). The limits on vertical integration are a vestige of still-enforced alcohol regulations to prevent organized crime from controlling the liquor industry.

Taxation & Use of Proceeds

Proposition 64 created two new excise taxes on marijuana.One is a cultivation tax of $9.25 per ounce for flowers and $2.75 per ounce for leaves, with exceptions for certain medical marijuana sales and cultivation. The second is a fifteen-percent tax on the retail price of marijuana. Taxes will be adjusted for inflation starting in 2020.

Revenue from the two taxes will be deposited in a new California Marijuana Tax Fund. First, the revenue will be used to cover costs of administrating and enforcing the measure. Next, it will be distributed via specific annual allocations contained in the proposition to specified programs for drug research, treatment, and enforcement. Thereafter, the remaining revenue will be distributed as follows: sixty percent to youth programs, including drug education, prevention, and treatment; twenty percent to prevent and alleviate environmental damage from illegal marijuana producers; and twenty percent to programs designed to reduce driving under the influence of marijuana and to a grant program designed to reduce negative impacts on health or safety resulting from the proposition.

Local governments have been authorized to levy taxes on marijuana as well. In fact, in November 2016, voters in the City of Stockton passed Measure Q, the Medical Cannabis Business License Tax Ordinance, which authorizes a business license tax for non-medical/recreational marijuana of $50 per $1,000 in gross receipts.

"Persons previously convicted of offenses that would not be a crime or would be a lesser offense under Prop. 64 may petition the court for recall or dismissal of their sentences."

Criminal Offenses

Not only does Proposition 64 allow adult use of recreational marijuana and set up a regulatory structure for licensing and taxation of businesses involved in the trade, it also significantly changes current criminal laws related to marijuana (Health and Safety Code §§ 11357-11360), which are rewritten with a new penalty structure. Notably, in all cases, offenders under 18 are not subject to criminal punishment, but to drug education and community service. Prop. 64 enacts the following other changes:

  • Possession (H. & S. § 11357): Illegal possession of an ounce of marijuana by persons 18-21 continues to be a $100 infraction. Illegal possession of more than an ounce by adults continues to be a misdemeanor, punishable by $500 and/or six months in jail. Possession of less than an ounce upon a school ground during school hours by a person over 18 is a misdemeanor punishable by a fine of $250, or $500 plus 10 days in jail for repeat offenses. In the case of concentrated cannabis, Section 11357 makes possession of more than four grams an infraction.
  • Cultivation (H. & S. § 11358): Illegal cultivation of six plants or less by individuals aged 18-21 is a $100 infraction. Illegal cultivation by adults of more than six plants is a misdemeanor punishable by a $500 fine and/or six months in jail. The current mandatory felony penalty for cultivation is eliminated, but felonies may be charged in the case of repeat offenders, persons with violent or serious priors, and various environmental offenses.
  • Possession for Sale (H. & S. § 11359): Mandatory felonies under prior law drop to misdemeanors ($500 fine and/or six months in jail). Felony enhancements are allowed for repeat offenders, serious or violent priors, and sale to individuals under the age of 18.
  • Transportation, Importation, Sale or Gift (H. & S. § 11360): Mandatory felonies under prior law drop to misdemeanors ($500 fine and/or six months in jail). Felony enhancements are allowed for importing, exporting, or transporting for sale more than one ounce of marijuana or four grams of concentrate.
  • Relief for Prior Offenders (H. & S. § 11361.8): Persons previously convicted of offenses that would not be a crime or would be a lesser offense under AUMA may petition the court for recall or dismissal of their sentences. The court shall presume that the petitioner is eligible unless the state provides clear and convincing evidence to the contrary.

Local Control

Local governments may permit on-site consumption at licensed retailers and microbusinesses provided access is prohibited for persons under 21, consumption is not visible from any "public place" or non-age-restricted area, and sale or consumption of alcohol or tobacco are not allowed. Local governments may restrict or completely prohibit any type of business licensed under the act, as is also true under MCRSA. However, Prop. 64 authorizes state grants to local governments to assist with law enforcement, fire protections, or other public health and safety programs associated with implementing AUMA, and local governments stand to lose this grant funding if they prohibit retail sales or cultivation, including outdoor personal use cultivation.

Moving Forward?

Even though Californians passed Prop. 64—and despite the likely proliferation of new business ventures seeking to capitalize upon the new legal status of marijuana under state law—under federal law it is still illegal to possess or use marijuana, including for medical use. Marijuana is listed on Schedule I of the Controlled Substances Act, the most tightly restricted category reserved for drugs that have "no currently accepted medical use."Heroin, LSD and Ecstasy are on Schedule I. Accordingly, the federal government does not recognize state laws related to use of marijuana. That is true even as to state laws related to medical use of marijuana, which are preempted by the federal law that cannabis has "no currently accepted medical use."

In August 2016, the federal Drug Enforcement Administration rejected calls to reschedule marijuana, but relaxed the rules for marijuana research to make it easier for institutions to grow marijuana for scientific study. The DEA currently authorizes just one grow facility in Mississippi.

Because of marijuana's Schedule I listing, the U.S. Supreme Court ruled in 2005 that federal agencies could continue under federal law to prosecute individuals who possess or use marijuana for medical purposes even if legal under a state's law. Currently, however, the U.S. Department of Justice (DOJ) chooses not to prosecute most marijuana users and businesses that follow state and local marijuana laws if those laws are consistent with federal priorities. These priorities include preventing minors from using marijuana and preventing marijuana from being taken to other states.

The current priorities for enforcement were set by President Barack Obama and the executive branch in 2013, and then codified into law by Congress with bipartisan support in 2014, but the administration of President Trump and/or the Republican-led Congress could change these priorities and resume prosecuting marijuana production, use, and sale otherwise legal under state laws. While Mr. Trump has made statements in the past seemingly supportive of marijuana legalization, his administration appears likely to include politicians who have maintained traditionally conservative drug policy views. In fact, at the time of writing this article, Mr. Trump has announced plans to nominate Sen. Jeff Sessions (R-Ala.), a vocal opponent of marijuana legalization, to be attorney general of the United States. At a Senate hearing in April 2016, Senator Sessions said that "we need grown-ups in charge in Washington to say marijuana is not the kind of thing that ought to be legalized, it ought not to be minimized, that it's in fact a very real danger."

"Even though Californians passed Prop. 64, it is still illegal under federal law to possess or use marijuana, including for medical use."

As it stands right now, recreational marijuana is legal under the laws of the states of California, Oregon, Washington, Alaska, Colorado, and the District of Columbia, comprising about twenty-five percent of the population of the United States. Use of marijuana for medical purposes is legal in 28 states and the District of Columbia, comprising about sixty percent of the United States population, but the future of legal marijuana remains uncertain. Will the federal government follow the emerging trend toward legalization and remove marijuana from Schedule I of the Controlled Substances Act? Or will the Trump administration reprioritize enforcement of laws against the use of marijuana? Stay tuned.



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