California Dispensary Laws

As the nation’s cannabis legalization impetus spreads from state to state, California has the distinction of being the first state that legalized medical marijuana with the passage of the 1996 Compassionate Use Law (Code Section 11362.5). As of the date of publication, medical-use marijuana is legal in 33 states, and recreational-use marijuana is legal in 11 states (including California) and Washington, D.C. California state legislation and local ordinances regulate the personal and commercial activities of recreational and medical marijuana, and dispensaries must observe these regulations or be subjected to penalties.

Amid the sometimes-confusing terms of cannabis, marijuana and hemp lies a botanical explanation to clear the muddy water. Marijuana and hemp plants are simply different varieties of Cannabis sativa, which is the collective botanical name for all cannabis plants in this species. As members of this plant species, marijuana and hemp share botanical similarities, but they also have distinguishing differences. Although they look nearly identical, it is their chemical properties instead of their physical properties that call for their regulation.

Both plants produce phytochemicals, which are naturally occurring chemical compounds. Among other chemicals, cannabis plants produce cannabidiol, known in the industry as CBD, and Delta-9-tetrahydrocannabinol, known in the industry as THC. Although both hemp and marijuana plants produce these chemicals, marijuana produces a higher concentration of THC, and hemp produces a higher concentration of CBD. Because THC is classified as a psychoactive drug (CBD is not psychoactive), the cultivation, use, possession and sale of marijuana are regulated according to this characteristic.

California cannabis dispensaries formerly sold only medical marijuana because the medical use of marijuana became legal in 1996, which preceded the legal recreational use 20 years later in 2016 with the passage of Proposition 64 (The Control, Regulate, and Tax Adult Use of Marijuana Act). Dispensaries currently may sell medical and/or recreational use marijuana, according to their licensing. But because legal mandates are also imposed by local ordinances, which may prohibit dispensaries, each dispensary business must research the laws in the area in which it’s located to determine its compliance with local law as well as state law.

When Proposition 64 passed in late 2016, legislators needed time to fine-tune the final licensing regulations for the commercial cannabis industry in California. As a stop-gap solution, the state issued temporary licenses and associated extensions, all of which were valid only through December 31, 2018. Beginning January 16, 2019, the finalized regulations mandated three types of licenses for commercial growers and manufacturers, including dispensaries.

Read More: California Marijuana Dispensary Laws: Retail & Licensing

As commercial retailers, marijuana dispensaries must be state-licensed. Division 10 of the California Business and Professions Code (BPC) establishes the provisions, definitions and regulations for these licenses in Code Sections 26000-26250. Licensing authorities include state agencies that issue, renew and reinstate licenses. These agencies also can take disciplinary action against any non-compliant licensee.

The three types of licenses for “commercial cannabis activity” in California are:

1. A-license. With this license, licensees are legally allowed to cultivate, manufacture and sell cannabis and cannabis products to adults who are age 21 or older.
2. M-license. With this license, licensees are legally allowed to cultivate, manufacture and sell medicinal cannabis and cannabis products.
3. Testing laboratory license. With this license, licensees can perform or offer tests on cannabis and cannabis products for commercial reasons. Testing laboratories also include state agencies and facilities as well as laboratories. Independent third-party agencies that are not affiliated with the commercial cannabis industry must license and accredit each testing laboratory.

California law defines “commercial cannabis activity,” which applies to retailers such as dispensaries, in Division 10 of the BPC. This broad definition includes not only the sale of cannabis but also its cultivation, possession, manufacture, distribution, processing, storage, laboratory testing, packaging, labeling, transport and delivery. “Delivery” is further defined by a retailer’s technology platform deliveries as well as its commercial transfers to customers.

California cannabis retailers may operate from a storefront or non-storefront. Storefront retailers sell cannabis products at a licensed physical location or by delivering the products. Non-storefront retailers may only sell cannabis products through delivery, although licensees must have a licensed physical location at which they store their products. Non-storefront retailers may not sell cannabis from their licensed storage facility, which cannot be open to the public.

The hours for sales and deliveries of storefront and non-storefront businesses are the same: 6:00 a.m. to 10:00 p.m., Pacific Time. Dispensaries can only sell cannabis goods, which are packaging- and labeling-compliant, cannabis accessories, and the licensee’s promotional materials or branded merchandise. Licensed retailers can only receive shipments from licensed distributors during these same hours. Both types of licensees may accept product returns, but the products cannot be resold; they must be destroyed or returned to the licensee’s distributor if defective.

All licensed retailers – whether storefront or non-storefront – must maintain these types of records for seven years and make them available to the California Bureau of Cannabis Control at its request:

• Financial records.
• Personnel records.
• Training records.
• Contracts.
• Permits.
• Security records.
• Destruction records.
• Data entered into track-and-trace.
• Accurate records of all sales for the seven-year period.

Only customers at least 21 years of age who provide a valid proof of identification may access the premises of adult-use (recreational) cannabis dispensaries. Customers who are at least 18 years of age who provide a valid ID may access the premises of medicinal cannabis dispensaries. Retail employees must confirm each customer’s age before allowing the customer to enter a dispensary.

Storefront deliveries must be made only to a California physical address that does not include schools, day care centers, youth centers or other locations on publicly owned land. Delivery employees must carry a copy of the retailer’s license, a government-issued identification and an identification badge that’s issued by the licensed retailer. Delivery vehicles must be enclosed motor vehicles with a GPS device that provides secure storage of the cannabis products.

Delivery employees cannot carry cannabis goods worth more than $5,000 at a time, which includes no more than $3,000 in cannabis goods not already part of a customer order that was processed prior to the employee’s leaving the dispensary.

Non-storefront, delivery-only retailers follow the same delivery regulations as noted for storefront retailers, including the additional shared requirement of delivery receipts. Each delivery of cannabis goods must include a delivery request receipt that includes all the items listed in the California Bureau of Cannabis Control Section 5420 regulations.

These delivery request receipt items must include:

• The name and address of the licensed retailer.
• The first name and employee number of the licensed retailer’s delivery employee who delivered the order.
• The first name and employee number of the licensed retailer’s employee who prepared the order for delivery.
• The first name of the customer and a licensed retailer-assigned customer number for the person who requested the delivery.
• The date and time the delivery request was made.
• The delivery address.
• A detailed description of all cannabis goods requested for delivery, which shall include the weight, volume or any other accurate measure of the amount of all the cannabis goods requested.
• The total amount paid for the delivery, including any taxes or fees, the cost of the cannabis goods and any other charges related to the delivery.
• Upon delivery, the date and time the delivery was made and the handwritten or electronic signature of the customer who received the delivery.