The State of California has established a set of dispensary requirements to help ensure that only licensed cultivators and retailers can operate on the state's adult-use market. As outlined in Prop. 39, a person can cultivate marijuana plants for personal consumption up to a year after the plant has been harvested, but no more than three years later. A retail establishment may sell or distribute marijuana to anyone who has valid identification and a California sales permit. The final rule establishes that no more than two percent of the plants in a distribution system are harvested and no more than seven percent of those sold are consumed within the store.
To qualify for a license as a dispensary, a nonprofit entity may also qualify under the following rules adopted by the Department of California: the dispensary must file an application with the department; it must have a board of license; it must be organized and maintain a public notice of its operations; and it must not engage in the business of selling intoxicating beverages. No tax payments will be required by the dispensary under the provisions of Title 13, California Code, including registration and taxation. In addition, the dispensary is not required to obtain a certificate of occupancy or a permit from the Office of the Secretary of State if it does not qualify as a home-based business under the preceding conditions.
Under the second condition, the dispensary shall register its name in the Register of Classes of Practical and Necessary Marijuana Licensed Nurses. The department shall issue a registration certificate to the registered applicant upon completion of the application, payment of an application fee, and subjecting the completed forms to credit approval. However, if the Clinic loses its registration certificate, the applicant can reinstate the application. If the Clinic loses its certificate of occupancy, the department shall reinstate the application. However, if the Clinic becomes bankrupt or ceases operation, the department shall reinstate the application and shall provide written notice to the applicant.
The third condition is that a minimum number of marijuana plants shall be contained in the cultivation area. This number was established by the California Department of Food & Services based on the percentage of licensed growers who indicated that they were producing more than fifteen five marijuana plants. However, the dispensary may choose to increase this number at any time, but not after it becomes mandated by law. For example, if it is mandated by the state to obtain an additional twenty marijuana plants, it may choose to do so, but if it is mandated to produce fifty-five plants, it cannot increase its number. Pursuant to the statutory language that authorizes the Board of Equalization to increase the number of qualifying establishments, the dispensary may choose to increase the number of marijuana plants, but only once, after it has been notified by the Department of Food & Services that it has met all the required number requirements.
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The fourth requirement requires that the Clinic meet the regulations governing a for-profit entity. Specifically, the regulations require that the Clinic: (a) adopt and implement policies and procedures manual; (b) submit to the Department of Food & Services an application for operating a commercial food processing facility; and (c) participate in a licensing program. These requirements must be met in order to become a valid medical marijuana dispensary in California. The application for operating a commercial food processing facility must include a complete set of business documents which must be submitted with the applicable forms for the Department of Food & Services, including: a certificate of registration with the State Department of Food and California Department of Consumer Affairs, a state license to operate the business, a complete set of business references with names and addresses of each individual to whom the business will be granted access to the public, and a signed declaration that the business will not engage in the unauthorized sale or distribution of marijuana.
The fifth requirement is that the business Corporation must: (a) have a majority of shareholders which are local residents who own the dispensary. (b) elect board members who represent the majority of the shareholders. (c) submit to the state Board of Equalization an annual report that discloses all of the Clinic's financial and business information. The sixth requirement is that the dispensary must not engage in the business of buying or selling marijuana which originated outside of California. (d) refrain from using marijuana smoking paraphernalia in the workplace or at school, except cigarettes which are properly declared to be cigarettes by a customer to be smoked in private. The seventh requirement is that the Clinic must not allow employees to buy marijuana from the offices of the Clinic.
The eighth requirement to open a dispensary involves the submission of an application to the California Department of Insurance, providing assurances that the proposed business would not violate applicable insurance clauses. The ninth requirement relates to the payment of a fee to the State Attorney General, which the Clinic must reimburse, or cause to be remitted, if a complaint is filed against it. The final requirement is that the Clinic must not participate in the distribution of marijuana to anyone who has a valid medical need thereunder, nor allow anyone to drive a motor vehicle while under the influence of marijuana. Additionally, any person found to be violating these nine requirements is immediately imprisoned and thereafter held in jail for their marijuana offenses.
Proponents of the Initiative believe that the nine-step process will ensure that only licensed persons may open new dispensaries in California and will prevent law-abiding people from becoming criminals. However, opponents argue that the nine-step process is so confusing that no one really understands what it means and are therefore more prone to committing crimes to earn money or other illicit benefits. Although the initiative passed, the state government is still free to prohibit individuals from opening unlicensed shops. In short, California's dispensary Law does not appear designed to protect consumers or enhance public safety.