California recently passed three bills regarding medical cannabis (AB 266, SB 643, AB 243) that redefine acceptable business practices and establish a variety of regulations. Let’s look at where the current, regulated medical cannabis community came from to see where it might be headed.
Current state law in California, passed in 2003, allows members of medical cannabis collectives and cooperatives to cultivate (and, indirectly, distribute) medical cannabis as long as it's not for profit. This law, which BASA has been operating under for years, allows patients to obtain cannabis without fear of being arrested.
In the early years of this law, patients would obtain the raw cannabis and make their own edibles or tinctures and even give any extra back to the collective. Over time, some members developed novel techniques for cultivating, processing, and manufacturing medical cannabis, and grew or made specialty products that became popular within the patient community. Many of these individual efforts grew into businesses that manufactured products and distributed them to other cooperatives for redistribution.
This newer model began to stray from the “closed loop” system envisioned and sanctioned by the original state law, as it operated more like the typical wholesaler/retailer model common to most businesses in the U.S. Many of the large dispensaries and retail delivery systems became stores and left it to the suppliers (wholesalers) to provide the products, whether in raw or enhanced form.
As the state’s medical cannabis industry matured, the wholesale/retail model became the dominant system due to, among other things, the high quality of products being generated, even though it fell into a gray zone of legality. Producer/wholesaler businesses currently advertise their products as “available at your local dispensary” just like any other retail product manufacturer might do.
Enter the new state law, effective January 1, 2016. The new law accepts this new definition of a medical cannabis “business” and sets up a system of legal, for-profit medical cannabis commerce between producers and retailers, while balancing public safety and public health concerns at the same time. We'll have to wait and see if the California medical cannabis community as a whole embraces this new regulatory system or, like before, finds it too restrictive or unworkable and pushes beyond its boundaries into yet another gray zone.