By David Hodes

A reliable source closely connected to action in California cannabis legislation has reported the introduction of a budget trailer bill that proposes changes to the state’s cannabis laws which would effectively merge medical and recreational cannabis into a single regulatory framework.

The proposed bill will use language and regulation proposals from Proposition 64, the Adult Use of Marijuana Act (AUMA), combined with the Medical Cannabis Regulation and Safety Act (MCRSA) in an effort to eliminate the ambiguity inherent in both acts and provide clear regulatory structure.

Members of the Bureau of Cannabis Control who proposed the trailer bill legislation indicated that this single regulatory structure for cannabis activities in the state will help move forward the regulation of both medical and adult use cannabis, end some of the duplication of costs and clear up the confusion among licensees, regulatory agencies and the public.

Legislators believe that this type of single regulatory structure is also needed to maximize public and consumer safety.

Here’s a look at the proposed changes in the bill:

– Zoning and planning decisions will be made locally with licensees providing state regulators with local compliance information. Under the AUMA, the state licensing authorities were required to determine whether a business was compliant. Goal: Streamline the process.

– The AUMA’s vertically integrated multiple licensing structure will now apply to both recreational and medical license holders. MCRSA restricts the number and type of licenses that a cannabis business can have. Goal: Enable new business models to develop, following the AUMA’s protections against over concentration of licenses in areas.

– The bureau proposes to keep the AUMA’s open distribution model, ending the MCRSA model of requiring all medicinal cannabis products to go through a third-party distributor for testing before it can go to market. AUMA allows for both third-party and in-house distributors, with the responsibility for testing the product going to the licensee taking the product to market. All distributors must arrange for an independent licensed testing lab to transport and test product. Goal: Shift responsibility for testing and make it easier for businesses to enter the market.

– Two separate definitions are proposed for applicant and owner, with only one designated as the applicant. The bureau wants to adopt the AUMA definition of an owner as the person having at least 20 percent ownership in a business, and only owners will need to pass a background check. The MCRSA required any license applicant with a five percent interest to pass a background check. Goal: Identifying owner as separate from applicant

– The bureau proposes limiting the number of type 3 licenses available. MCRSA included this same limit, which is about the scale of cultivation. The AUMA did not limit the number of type 3 licenses that could be issued. Goal: Prevent the illegal production of cannabis and avoid illegal diversion to other states.

– The AUMA established a new license type for micro businesses in four market segments: cultivation, manufacturing using non-volatile solvents, distribution and retail. Under the terms from the AUMA, these businesses would only be required to get licensed from the Bureau of Cannabis Control. The proposed change would adopt the terms for this license type, and include a review of the applicant and licensee by the California Department of Food and Agriculture and the Department of Public Health. Goal: To protect public health and safety, and be in compliance with environmental laws.

– The AUMA will be subject to the state’s environmental rules for cultivators as outlined in senate bill 837. For example, licensees must include a pending application, registration or other water right documentation that has been filed with the state water resources board. The AUMA was drafted before that bill was passed. The administration proposes amending the AUMA to reflect that and other requirements, which are the same environmental protection requirements in the MCRSA. Goal: To add identical environmental protections from the MCRSA to the AUMA.

– The bureau proposes a marijuana control appeals panel to review a penalty, a license issue or denial, and any other adverse actions by any of the licensing authorities. That panel was created by the AUMA, but the proposal will extend the review of the panel to all licensing decisions related to cannabis. Goal: To streamline the appeals process, with the ability to appeal a panel decision directly to the Court of Appeals, similar to how the Alcohol Beverage Control Appeals Board works.

– The appellation of origin, which is a federal determination of the geographical area in which a product is grown that is typically used for wine, will be transferred from the bureau to the California Department of Food and Agriculture, which is in line with what the MCRSA authorized. The AUMA addressed the same issue, but wanted the bureau to establish standards for the appellation of origin. Goal: To allow sufficient time to establish and set standards for appellations of origin.

– The bureau proposes to delete the requirement for state-issued medical ID cards, and provides the county with the authority to issue local cards. Goal: To give the county the authority to issue local cards.

Ruben Honig, the executive director of the Los Angeles Cannabis Task Force, wrote in an email response to CBE that they are closely reviewing the language. “We applaud the state for proposing much needed reconciliations between medical and recreational laws,” Honig wrote. “LA’s cannabis industry is one of the world’s largest, and we need a system that’s clear, streamlined, and allows businesses and patients to thrive. Streamlining the application and licensing process is the only way California will be ready to license and regulate cannabis on the timeline voters gave when they passed Prop 64.”

The effective date for both the AUMA and MCRSA is January 1, 2018.