Update on medical cannabis regulations in the City of Fresno.

1. Fresno Cannabis – First Steps to ReformFresno Cannabis – First Steps to Reform

2. Fresno Cannabis – Ban Early, Ban OftenFresno Cannabis – Ban Early, Ban Often
March 2014 – Fresno City Council bans medical cannabis cultivation.

3. Setting the Stage: MMRSA (2015)Setting the Stage: MMRSA (2015)
The Medical Marijuana Regulation and Safety Act
(MMRSA) was enacted by the California Legislature.
Assembly Bill 243 (Wood)
Assembly Bill 266 (Bonta, Cooley, etc.)
Senate Bill 643 (McGuire)
The MMRSA bills took effect Jan. 1, 2016.
Target date for state licenses: Jan. 1, 2018.

4. MMRSA: Key ConceptsMMRSA: Key Concepts
Commercial cannabis activity must be licensed.
Dual licensing by state/local “licensing authorities.”
Criminal and civil penalties for unlicensed activity.
“Local control” provisions allow cities and counties
to regulate (or ban) commercial cannabis activities.
New Bureau of Medical Marijuana Regulation
(BMMR) created within Dept. of Consumer Affairs.
Several other agencies (DOJ, CDFA, water boards)
have regulatory and enforcement roles.

5. MMRSA: Key ConceptsMMRSA: Key Concepts
Commercial cannabis activity can be banned,
virtually ensuring it would be banned in Fresno.
Fighting a losing battle against the “local control” provisions of the MMRSA.

7. Lori Ajax, BCC Chief

8. MMRSA: Key ConceptsMMRSA: Key Concepts
Created mandatory “track-and-trace” program to
identify cannabis products from seed to sale.
Applicants must obtain local “permit, license or other
authorization” before applying for state license.
“Robust” regulations designed to address major
concerns of federal law enforcement (Cole memo).
Cannabis declared to be an agricultural product.
Did not address all issues, e.g., banking services,
state and local taxation, on-site consumption.

9. State Permits and LicensingState Permits and Licensing
Dept. of Consumer Affairs (new Bureau)
Dept. of Fish and Wildlife
Dept. of Food and Agriculture
Dept. of Pesticide Regulation
Dept. of Public Health
Dept. of Justice
State Board of Forestry & Fire Protection
State Water Boards

10. Which State Laws Were Amended?Which State Laws Were Amended?
Business and Professions Code
Fish and Game Code
Food and Agricultural Code
Health and Safety Code
Labor Code
Revenue & Taxation Code
Water Code

11. Refresher: Compassionate Use ActRefresher: Compassionate Use Act
What is Proposition 215?
Ballot initiative passed by California voters in 1996.
Created limited immunity for “qualified patients” who
use or cultivate marijuana for medical purposes
when such use has been recommended by a
California doctor for a serious medical condition.
Limited immunity also covers “primary caregivers.”
Did not address local zoning laws or retail sales.
Codified at Health and Safety Code §11362.5.

12. Refresher: Senate Bill 420Refresher: Senate Bill 420
What is the Medical Marijuana Program Act?
The Legislature's first attempt to regulate medical
marijuana took effect in 2004.
Created a voluntary state ID card program, run by
county health departments, to help identify qualified
patients and primary caregivers for law enforcement.
Extended limited immunity to include transportation
and “collective or cooperative” cultivation projects.
Established 6-plant personal cultivation threshold.
Codified at Health and Safety Code §11362.7 et
seq.

13. Unlicensed cannabis activity is illegalUnlicensed cannabis activity is illegal
Unlicensed commercial cannabis activity can…
... result in hefty fines.
… lead to seizure and destruction of cannabis.
… be prosecuted by local authorities.
AND/OR
“Criminal penalties shall continue to apply to
an unlicensed person engaging in commercial
cannabis activity in violation of this division.”
Business & Professions Code §26038

14. Commercial Cultivation: OutdoorCommercial Cultivation: Outdoor
Outdoor cultivation license types:
Type 1, “Specialty Outdoor,” up to 5,000 sq.ft.
Type 2, “Small Outdoor,” 5,001 - 10,000 sq.ft.
Type 3, “Outdoor,” 10,001+ sq.ft., up to one acre.

15. Commercial Cultivation: IndoorCommercial Cultivation: Indoor
Indoor cultivation license types:
Type 1A, “Specialty Indoor,” up to 5,000 sq.ft.
Type 2A, “Small Indoor,” 5,001 - 10,000 sq.ft.
Type 3A, “Indoor,” 10,001 – 22,000 sq.ft.

16. Commercial Cultivation: Mixed LightCommercial Cultivation: Mixed Light
Mixed-light cultivation license types:
Type 1B, “Specialty Mixed-Light,” up to 5,000 sq.ft.
Type 2B, “Small Mixed-Light,” 5,001 to 10,000 sq.ft.
Type 3B, “Mixed-Light,” 10,001 to 22,000 sq.ft.

17. Commercial Cultivation: Other LicensesCommercial Cultivation: Other Licenses
Other cultivation license types:
Type 4 “Nursery” license is for cultivation of
immature plants and seeds as nursery stock only.
A nursery licensee may transport live plants.
“Specialty cottage” license type for small growers
adopted by Legislature in 2016 (AB 2516 – Wood).

18. Post-cultivation License Types*Post-cultivation License Types*
Type 6: Manufacturer 1 (non-volatile solvents).
Type 7: Manufacturer 2 (volatile solvents).
Type 8: Testing.
Type 10: Retailer (aka dispensary). “Storefront,”
“non-storefront” subtypes proposed for delivery-only
retail businesses.
Type 11: Distributor
Type 12: Microbusiness
*(License types shown as they currently exist in state law, not as enacted.)

19. Who's eligible for state licensing?Who's eligible for state licensing?
You do not have to be a qualified patient. However...
You should have some money saved up. License
application and renewal fees will be expensive.
DOJ fingerprint checks required (LiveScan).
Convictions for violent felonies, fraud/embezzlement
and other specified offenses are disqualifying.
License may be denied on other “suitability” factors.
The level of security and background checks applied
to owners, employees and licensed sites are
comparable to alcohol and cardroom regulations.

20. Criminal and Civil PenaltiesCriminal and Civil Penalties

21. Criminal and Civil PenaltiesCriminal and Civil Penalties
Limited immunity for collectives is going away.
H&S Code §11362.775 is repealed one year after
the state commences commercial licensing.
The official sunset date is Jan. 9, 2019.
Operators of unlicensed “collective or cooperative”
businesses and cultivation sites will no longer have
an affirmative MMJ defense if charged criminally.
http://bcc.ca.gov/about_us/documents/18-
005_repeal_hscode.pdf

22. Who's in Charge of Enforcement?Who's in Charge of Enforcement?
State and local agencies share enforcement duties.
City: Police | code enforcement | city attorney | DA.
County: Sheriff | county counsel | district attorney.
Dept. of Food & Agriculture | ag commissioners.
Dept. of Consumer Affairs (Bureau).
Dept. of Public Health | county health officers.
State/local water and environmental agencies.
CDTFA (state/local taxes).

23. Where does medical cannabis come from?Where does medical cannabis come from?

24. Dispensaries: Lawful Access is LimitedDispensaries: Lawful Access is Limited
Dispensary bans are in place in Fresno County and
most other cities and counties in the Central Valley.
Among the closest lawful dispensaries to Fresno:
Tulare: 46 miles
Coalinga: 62 miles (pending city approval)
Goshen: 37 miles
Bakersfield: 109 miles (unregulated, recent sweep)
Sacramento: 171 miles
Los Angeles: 219 miles

25. Whack-A-Mole: Unlicensed StorefrontsWhack-A-Mole: Unlicensed Storefronts
Fresno-area storefronts open, close, open again.

26. Deliveries: Supply and DemandDeliveries: Supply and Demand
The number of delivery services (50+) grew rapidly
after local bans on dispensaries were enacted.

27. Personal CultivationPersonal Cultivation
Cultivation is vital in “dry” cities and counties.
Personal cultivation does not require a state license.
Nuisance/crime potential is limited by small size of
license-exempt gardens.
Trend: Ordinances that limit greenhouse/indoor
growing to “fully enclosed and secure structures.”
Natural sunlight is safest, cheapest growing method.
Reduces carbon footprint and potential fire risks.
Did I mention greenhouses? They’re important.

28. What About Federal Law?What About Federal Law?
Although federal law prohibits all cannabis activities,
state/local MMJ laws are not pre-empted by default.
The Compassionate Use Act does not obstruct the
enforcement of federal law. Police agencies may not
enforce federal law where federal authorities do not
enforce it themselves. (City of Garden Grove v.
Superior Court; 2007)
State ID card program does not violate federal law.
(County of San Diego v. San Diego NORML; 2008)
U.S. Controlled Substances Act (CSA) explicitly
grants states right to regulate drugs and medicine.

29. Legalization 2016: Enter Prop. 64Legalization 2016: Enter Prop. 64
Adult-use legalization in other states was the main
reason that the state Legislature passed the MMRSA.
Voters were expected to approve a ballot initiative in
November to legalize non-medical use – and they did.
The Adult Use of Marijuana Act (AUMA) was drafted
with the MMRSA framework as a model. Adults 21
and up can grow, possess and use small amounts.
Commercial and retail activities are state-licensed.
Adult-use cannabis is now legal in Alaska, California,
Colorado, Maine, Massachusetts, Nevada, Oregon,
Washington state, District of Columbia.

30. AUMA: Key ConceptsAUMA: Key Concepts
The Adult Use of Marijuana Act (AUMA) builds upon
MMRSA framework with added layers of regulation.
Bureau of Marijuana Control tasked with overseeing
both medical and nonmedical marijuana.
Revision of state criminal statutes reduces some
cannabis penalties but is not full “legalization.”
Establishment and funding of new drug-diversion
programs aimed at youth, with local grant options.
MMRSA-style commercial licensing and oversight.
Adult-use sales can be regulated or banned locally.

31. AUMA: More Key ConceptsAUMA: More Key Concepts
15% state excise tax on cannabis cultivation.
Express authority for counties to tax cannabis sales;
authority for city cannabis taxes is implied.
Game-changer for Fresno: Cities and counties
may not completely prohibit indoor cultivation of six
living plants by adults 21 and up at their private
residence, nor the possession and use of
designated amounts of cannabis.
Qualified patients and primary caregivers with valid
state-issued ID card exempt from paying sales tax.

32. Local Options: Regulate, Tax or BanLocal Options: Regulate, Tax or Ban
Prop. 64 requires local implementation to work.
Personal cultivation: Consider Prop. 215 update;
“indoor” options can include secure greenhouses.
Medical/non-medical needs/laws are not identical.
Commercial cultivation: Outdoor unlikely in urban
landscapes; may be some indoor/mixed-light options
in industrial zones. Most outdoor cultivation will
occur in rural/ag lands outside incorporated cities.
Dispensaries/retail sales: Storefronts, deliveries.
Other license types: Heavy commercial/industrial.

33. Land-Use Options: Zoning is KeyLand-Use Options: Zoning is Key
Existing zoning can
frame land uses for
cannabis activities.
● Personal
cultivation.
● Commercial
cultivation.
● Dispensary or
delivery-only.
● Other licenses.

34. More Local Options: Cannabis TaxesMore Local Options: Cannabis Taxes
Prop. 64 authorizes cities to tax commercial cannabis
activities, subject to local voter approval.
Oakland: Voters approved a 5% tax on medical,
10% tax on nonmedical commercial activities.
Desert Hot Springs: Voters approved 10% tax on
dispensary sales and area-based cultivation tax.
Sacramento: Business operations tax, up to 10%.
Lake County: Cultivation tax ($1/2/3 sq.ft.)
Palm Springs: Voters approved 15% dispensary tax.

35. Senate Bill 94 = Medical + Adult UseSenate Bill 94 = Medical + Adult Use
The MMRSA, approved by the Legislature, and
voter-approved Prop. 64 did not line up word for word.
The two laws were merged and renamed in 2017.
The law was renamed the Medicinal and Adult-Use
Cannabis Regulation and Safety Act (MAUCRSA).
Most MAUCRSA statutes appear at Business and
Professions Code Sec. 26000 et seq.
Emergency regulations issued in November 2017 by
Bureau of Cannabis Control (DCA), CalCannabis
Cultivation Licensing (CDFA) and Manufactured
Cannabis Safety Branch (CDPH).

36. The City of Fresno respondsThe City of Fresno responds
Adult use or “recreational” cannabis banned.
The Fresno City Council voted June 22, 2017, to
ban all recreational cannabis activities.
Personal cultivation in limbo. Proposition 64
effectively ended the ban on personal cultivation in
Fresno for qualified patients and adults 21 and older.
A new ordinance will be introduced in 2018.
Historic council vote. In December 2017, the City
Council voted 7-0 to initiate MMJ-only regulations.
City hires “dope consultant.” The city has hired
HdL to help develop cannabis fees and regulations.

37. Keeping It LocalKeeping It Local
The cannabis industry is expanding rapidly.
Many large companies are setting up shop in the
Emerald Triangle, Southern California, the Bay Area
and the Central Coast. Fresno is losing ground.
Big boxes in small cities. Coalinga was the first
city to regulate cannabis in 2016. Parlier, Hanford,
Merced, Firebaugh and other cities have followed.
Social equity is lacking. Oakland, Los Angeles,
Sacramento and other large cities are exploring
ways to help minorities enter the marketplace.
Barriers to entry hit people of color hardest.

38. Keeping It LocalKeeping It Local
“If the overall goal of the [cannabis
regulation] program was to favor a
corporate, big dollar, new money
industry then we have succeeded.
If the goal was to create a workable
pathway for existing operators, then
I think we have failed.”
– Sonoma County ag commissioner

39. Cities Need Role Models TooCities Need Role Models Too
Sacramento. Registered existing dispensaries and
allowed some to relocate away from sensitive uses.
Registered existing industrial cultivation sites.
Cracked down on hundreds of illegal “grow houses.”
Oakland. Created social equity program to set aside
permits for minority applicants impacted by drug
war.
Coalinga. Despite intense opposition, the Coalinga
City Council passed a regulatory ordinance and
crafted two successful ballot measures in 2016.
Lake County. Passed “self-certification” program for
existing medical cannabis collective growers.

40. Moving ForwardMoving Forward
Serve patients. Medical cannabis is a health-care
delivery challenge. Safe access = retail sales +
more flexible personal cultivation regulations.
Do not criminalize patients. (Kirby v. Fresno Co.)
Address contentious issues in phases, by topic.
Consider ballot placement of a cannabis tax
measure, covering medical and nonmedical options.
Develop regulatory ordinances on separate tracks.
Don't forget CEQA and planning laws. Good
zoning ordinances take time to draft and review.
Conduct initial study to identify potential impacts.

41. Fresno Cannabis – First Steps to ReformFresno Cannabis – First Steps to Reform
Prepared for the
Central Valley NORML
Cannabis Town Hall
March 5, 2018