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Regulation of Marijuana under AUMA

Overview: Proposition 64, also known as the Adult Use of Marijuana Act (AUMA), was passed into law by the California electorate in November 2016.  This article provides a basic overview of the regulation of marijuana under AUMA, which includes compliance with environmental laws.

What will AUMA do? AUMA allows adults 21 and over to possess, carry, share, and buy up to one ounce of marijuana and to grow up to six cannabis plants at home. It creates the regulatory framework that will govern the manufacture, transportation, marketing, and sale of marijuana in California.  Further, it will reduce the criminal penalties for minor marijuana-related offenses while still allowing for the prosecution of the most serious offenses as felonies.  AUMA Section 2G.

What agencies will be in charge of regulating marijuana industries? AUMA creates a comprehensive regulatory structure that delegates the authority to license and oversee various aspects of the marijuana industry to several state agencies.  First, “the Bureau of Marijuana Control, housed in the Department of Consumer Affairs, will oversee the whole system and ensure a smooth transition to the legal market.”  Second, “the Department of Food and Agriculture will license and oversee marijuana cultivation, ensuring that it is environmentally safe.”  Third, “the Department of Public Health will license and oversee manufacturing and testing, ensuring consumers receive a safe product.” Section 2I.  See also Section 26012(a)(2)-(4).

When will AUMA’s regulatory scheme take effect? Authorities will begin issuing licenses to marijuana businesses on January 1, 2018.  However, AUMA aims to protect small and medium sized businesses by waiting five years before issuing any licenses for large-scale cultivation.

How will the commercial marijuana industry be regulated? AUMA includes a track and trace management system that will track the movement of marijuana and marijuana products throughout the distribution chain.  Marijuana will be tracked from “seed to sale” using a “unique identifier” that will be attached to the base of each plant.  See Chapter 17.  See also Section 26067 (c)(1).

What role will local governments play in the regulation of marijuana? AUMA safeguards local control by “allowing local governments to regulate marijuana-related activities, to subject marijuana businesses to zoning and permitting requirements, and to ban marijuana businesses by a vote of the people within a locality.”  Section 2E.

How will AUMA penalize unlicensed commercial marijuana activity? AUMA imposes civil penalties up to three times the amount of a licensing fee for each day of unlicensed operation.  Further, criminal penalties will continue to apply to persons engaging in commercial activity without a license.  Section 26038(a).

What environmental safeguards does AUMA include? AUMA “will create strict environmental regulations to ensure that the marijuana is grown efficiently and legally, to regulate the use of pesticides, to prevent wasting water, and to minimize water usage.”  It will also “crack down on the illegal use of water and punish bad actors, while providing funds to restore lands that have been damaged by illegal marijuana grows.”  Also, businesses must demonstrate that they are in “full compliance with the applicable water usage and environmental laws” or they will have their licenses revoked.  Section 2F.  See also Section 26060(c), 26066, 26070(a)(3).

What to expect? AUMA creates the basic regulatory framework for California’s recreational marijuana industry by delegating licensing and oversight authority to several key state agencies.  However, AUMA does not create a comprehensive regulatory scheme, leaving it up to the agencies to fill in the gaps.

Conclusion: Businesses are already gearing up for their entrance into the commercial marijuana market in 2018.  Entrepreneurs looking to cash in on California’s recreational marijuana industry should keep a close eye on the Bureau of Marijuana Control, the Department of Food and Agriculture, and the Department of Public Health as they begin to implement their authority under AUMA.  Business plans should focus on jurisdictions that are likely to issue the necessary licenses and permits and should avoid jurisdictions that may ban commercial marijuana activity altogether.  Further, commercial growers should consider environmental laws and water availability as they plan their future operations.

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