On September 12^th, Assembly Bill (AB) 2679, which seeks to amend regulations relating to medical cannabis research and production currently existing in state law, was sent to Governor Brown’s desk to be signed into law. This letter provides an overview of the changes that the implementation of AB 2679 will have on state law.

Overview

When signed into law by Governor Brown, AB 2679 will amend three sections of California state law pertaining to medical cannabis regulation, research, and production. Two of these amendments are relatively minor, and are not likely to have a significant impact on most of our clients. The third, however, may positively affect a majority of our clients, as well as the California medical cannabis industry in general.

First, AB 2679 makes a change to the annual reporting requirements of the licensing authorities established by the Medical Cannabis Regulation and Safety Act (MCRSA). Under existing law, each licensing authority is required to prepare an annual report detailing the authority’s activities. The authority is required to submit this report to the State Legislature and to post the report on its website. AB 2679 compels the licensing authorities to include the following information in each report: (1) The number of appeals from the denial of state licenses or other disciplinary actions taken by the licensing authority; (2) the average time spent on these appeals; and (3) the number of complaints submitted by citizens or representatives of cities or counties regarding licenses.

The second amendment AB 2679 makes to state law pertains to the University of California Marijuana Research Program authorized by current law. The purpose of this program is to study the general medical safety and efficacy of cannabis. If it finds the medicinal use of cannabis to be safe and effective, the program is to develop medical guidelines for the appropriate administration of tis use. AB 2679 makes a small modification to state law specifying that studies conducted by the Research Program may also include those meant to ascertain the effect cannabis has on motor skills.

The third and final change made to state law by the passing of AB 2679 is also the most likely to have an effect on many of you. As currently codified in state law, until one year after the Bureau of Medical Cannabis Regulation posts a notice on its website that licensing authorities have begun to issue state licenses, the MCRSA exempts cooperatives and collectives who cultivate medical cannabis for qualified patients from criminal prosecution for activities relating to the growing, sale, or distribution of cannabis. AB 2679 will also now exempt manufacturers of medical cannabis without a state issued license from criminal sanctions, for the same time period mentioned above, if specified conditions are met, including the possession of a valid license issued by the local city or county.

Questions and Answers

The following information is provided within the context of California state law only and does not address the applicability of any federal laws, which still hold cannabis for any purpose to be illegal.

What activities are considered “manufacturing” under AB 2679?

According to the language imposed by AB 2679, “Manufacturing” of medical cannabis products means compounding, converting, producing, deriving, processing, or preparing, either directly or indirectly by chemical extraction or independently by means of chemical synthesis, medical cannabis products.

In addition to possessing a valid local license, what other conditions must I meet to be in compliance with AB 2679?

AB 2679 amends existing state law to state that a collective or cooperative that manufactures medical cannabis products shall not, solely on that basis, be subject to criminal sanctions, if all of the following conditions are met:

1. The collective or cooperative utilizes either (1) a solvent-less manufacturing process, or one that employs nonflammable nontoxic solvents that are generally recognized as safe by the FDA; or (2) a manufacturing process that uses solvents exclusively within a closed-loop system that meets specified requirements.
2. The manufacturer has received and maintains approval from the local fire official regarding the facility as well as all equipment and operations utilized.
3. All relevant fire, safety, and building code requirements must be met.
4. The collective or cooperative possesses a valid Sellers Permit from the Board of Equalization.
5. The collective or cooperative posses a valid local permit, license, or other form of authorization specific to the manufacturing of medical cannabis, and is in compliance with all conditions imposed by the issuing city or county.

Closing

In addition to some relatively minor changes pertaining to licensing authorities and academic studies into medical cannabis, AB 2670 may help relieve some of our clients from the threat of criminal prosecution for the manufacturing of medical cannabis products without a state license, until such licenses are made available. However, specific conditions must be met including the possession of a valid locally issued license, which is why we are working so diligently with many of you to secure local permits. Today, only a few cities and counties issue such permits, but the landscape is changing weekly.

We hope this has been helpful. And we look forward to hearing from each of you, and helping you navigate these new laws and regulations today and into the future.

This post is provided for educational purposes only. No specific legal advice is intended to be given, or attorney/client relationship established, by providing of this information. Please consult with an Attorney of your choice with respect to questions regarding any matter contained herein.

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.