California Just Legalized Cannabis! Now Comes the Hard Part
December 09,2016 | By BEN ADLIN
California, let it sink in. No matter your feelings on Proposition 64’s convoluted details, tonight you legalized cannabis in a state where nearly 1 in 8 Americans live. You removed criminal penalties and laid the foundation for a legal, regulated market that could set the global standard. Tomorrow’s headlines might herald the fact that almost a quarter of the US population now lives in legal, adult-use states. But recognize: Half of that was you. So what happens next?
What’s legal—and when?
According to the California Constitution, Art. II, Sec. 10(a), approved ballot measures take effect the day after the election unless otherwise specified by the measure. So Prop. 64 becomes law on Wednesday, Nov. 9. But if you think your nearest medical dispensary will start selling you cannabis without a doctor’s recommendation anytime soon, not so fast. Some changes happen immediately. According to the lawyer who wrote Prop. 64, here’s what will be legal for adults 21 and older as California wakes up on Wednesday:
*Possession of up to 28.5 grams (about an ounce) of cannabis flower and up to 8 grams of cannabis concentrate
*Consumption of cannabis in a private home
*Growing up to six cannabis plants and keeping the harvested product in a private home
*Giving away to another adult up to 28.5 grams of flower and up to 8 grams of concentrate
When will retail cannabis stores open? It’ll be at least early 2018. The long, complicated process of creating the state regulatory infrastructure—which will result in those stores—is just beginning. No commercial cannabis licenses of any type can be issued until Jan. 1, 2018, and all products have to be tested and labeled before they’re sold.
There’s also that issue of actually growing the plants, which won’t be allowed for commercial purposes until licenses are issued. And remember, it takes about eight weeks for a cannabis clone to mature into a flowering plant ready for harvest. So whenever the first commercial adult-use grow licenses are issued: Figure the first product may be ready about two months later.
All that could slow the system’s actual rollout, as it sometimes has in other states. In Washington, for instance, it took months for all licensed growers to come online, which resulted in product scarcity and high prices during the first year retail shops were open.
Keep in mind that the full text of Proposition 64 is long and unwieldy. Sixty-two pages long, in fact. You can read it beginning on page 178 of this gargantuan PDF (or skim the in-depth summary on page 90). But even if you read the whole thing—as I did, and you should—you’ll be left with a lot of questions. Please remain calm and avoid wild speculation.
Here’s what will frustrate many in the coming years: Even at 62 pages, the law doesn’t have answers to everything. Some things we know right now. Others, despite the measure’s agonizingly detailed language, we won’t know for sure until further rules are hammered out by state agencies or local governments.
Other questions won’t be answered until they’re matters decided in court. California is an expansive state, diverse politically and culturally. There will be many disagreements over the new law. If you have much at stake or plan on starting a business, you probably should talk to a lawyer.
What do I need to know as a consumer?
Possession, use at home, and cultivation are legal for adults 21 and over on Nov. 9, as long as you stay within the law’s limits. Local governments can ban outdoor cultivation, but Prop. 64 specifically allows up to six plants inside a home, everywhere in the state. You can still receive a fine for consuming in public, and your employer can still fire you for testing positive for cannabis at work.
Criminal penalties have been removed, adjusted, or—in a few cases—heightened by the law’s passage. In general, most minor criminal penalties are removed for adults 21 or older. The same goes for minors under 18, whose criminal punishments would be replaced by tax-funded drug education.
For adults 18 to 20 years old, some penalties get stiffer. While possession of less than an ounce would remain a $100 infraction, possession of any more could bring a sentence of up to six months in jail. And any adult 18 or over who shares cannabis with someone under 21 can be hit with up to a six-month sentence and a $500 fine. Critics worry this could cause problems at colleges, where joints are passed casually among underage adult friends.
What about the industry?
The first retail shops won’t open until at least 2018. There are various commercial licenses, none of which can be issued before Jan. 1, 2018, the same day the state’s new medical cannabis regulatory system goes online.
Prop. 64’s licensing scheme comprises cultivation, manufacturing, testing, retail, distribution, and entities referred to as microbusinesses, which must cultivate cannabis in an area smaller than 10,000 square feet but can also act as manufacturers, retailers, and/or distributors. For all the talk of big business in the cannabis industry, some of the most innovative newcomers to the market could be tiny.
As for bigger operations, licenses for the largest-scale grows won’t be issued until 2023, which is in many ways an experiment. The five-year head start is intended to give smaller growers a foothold in the market, while the mere existence of large-scale grows is predicted to drive down prices by increasing scale. Nobody’s quite sure how the system will fare, especially in light of the fact that the measure’s licensing scheme allows for vertical integration, in which the operator of a business can hold multiple licenses, enabling a grower to also obtain, for example, manufacturing and retail licenses.
Taxes will depend on a few factors. All commercial cultivation, medical and adult-use, will be subject to a new state tax of $9.25 per ounce of dried flower and $2.75 per ounce of dried leaves. A new state excise tax will subject both medical and non-medical customers to an additional 15 percent of a product’s retail price. Adult-use sales will also be subject to sales tax, while registered medical patients will be exempt. Local governments can impose additional taxes.
Who’s in charge of all this? Do I even want to know?
First let me explain why I think you should want to know. As we’ve seen in nearly every legal state, whether medical or adult use, most problems crop up during implementation, where a law people all thought they understood becomes real-life practice. Consider: Most people think patients should have access to medical marijuana, but they disagree on the best ways to provide access. Most people agree legal cannabis should be tested for pesticides; the question becomes how it’s done. Yes, let’s get some plants growing already—but what about the water situation?
This sounds really complicated.
It does seem complicated, and here’s a big reason why: Legalization measures in other states have been deceivingly simple. Prop. 64’s full text runs 62 pages. Nevada’s legalization measure, Question 2, is just 12.
Simplicity might seem appealing on the surface, but it can contain all sorts of ambiguities. California’s 1996 measure, Prop. 215, allowed patients with doctors’ recommendations to get out of criminal charges in court, but by itself did little more than that. State lawmakers failed to fill in the holes or establish a system for distribution, and until the past few years, nobody quite knew whether dispensaries were even legal. Local governments, industry, and patient advocates had been battling it out in court for decades.
Prop. 64 tries to avoid these problems by providing a detailed skeleton of how the system will function. It’s up to state agencies and local governments to finish the framework. This is a big part of why the text is so damn long—in many places it lists specifications for future policies, while the development of actual procedures is left to the state agencies that will have a hand in enforcing them. In theory, this limits the measure’s uncertainty. Prop. 64’s authors ostensibly have learned from other states’ experience. But the detailed prescriptions could also create a heap of bureaucracy.
Here’s one bright spot: Because there’s so much left to do, there are plenty of opportunities to get involved in helping to define what legal cannabis looks like. Get involved! The hard work starts now.