California voters made history on November 8, 2016 by approving the Adult Use of Marijuana Act (AUMA). AUMA’s passage means that Californians 21 years and older may use recreational marijuana. However, California will continue to heavily regulate marijuana, as the 62-page Act contains numerous restrictions and timelines which affect both businesses and consumers.
For starters, AUMA’s passage does not mean that recreational marijuana is immediately accessible by all adults 21 years and older. In fact, recreational marijuana stores will not open in California until January 1, 2018. Once allowed, recreational sales will be subject to a 15% excise tax. In the meantime, California’s medical marijuana dispensaries may not sell marijuana to individuals without a doctor’s recommendation. However, AUMA does immediately allow adults 21 years and older to possess and transport, within California, up to one ounce of marijuana and, subject to local ordinances, grow up to 6 plants in their own residences.
AUMA’s passage does not mean that Californians can use recreational marijuana publicly. Under AUMA, no one may smoke marijuana in places where state law prohibits tobacco use or within 1,000 feet of a school, day-care center or youth center while children are present. Those who fail to abide by this restriction could face a fine of up to $250. Californians also may not smoke marijuana in public places unless specifically allowed by a local ordinance. Doing so can result in a $100 fine.
Finally, much like the Medical Cannabis Regulation and Safety Act (MCRSA), California’s medical marijuana framework set to take effect in 2018, AUMA has a detailed licensing scheme for marijuana businesses. AUMA has 19 types of licenses, which include 13 different types of cultivation licenses, two types of manufacturing license, a testing license, a distributor license, a retail license and a microbusiness license. All licensees must use a seed-to-sale traceability system to record their transactions. The MCRSA tasks The Bureau of Marijuana Control with licensure. Under AUMA, selling marijuana without a license can result in a misdemeanor charge, with penalties of up to $500 in fines and six months in jail. Additionally, any unlicensed sale of marijuana will result in civil penalties of up to three times the cost of licensure.
Marijuana businesses must strictly comply with AUMA to take advantage of the Act’s profitability potential. To do so, these businesses can benefit from of compliance, merchant service and cash management platforms like PayQwick, whose comprehensive compliance assessment programs incorporate all applicable federal and state laws, regulations and guidelines to ensure that marijuana businesses operate legally. While the full effects of AUMA will not be known until 2018, it is clear that its success depends upon compliance.