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Cannabis business owners talk about job creation during the Desert Hot Springs Small Business Summit. (October 26, 2016)
Richard Lui/The Desert Sun

The passage of California’s Adult Use of Marijuana Act in November left a 14-month gap before businesses could begin selling marijuana to recreational users.

For residents eager to purchase and use cannabis, that may have seemed like a long time. But that period is almost half over — and for the state, which has been tasked with regulating the sprawling cannabis industry, there’s a lot more to do.

“In order to start issuing licenses on Jan. 1 or Jan. 2, we need people in place and we need them to be up to speed,” said Alex Traverso, chief of communications at California’s Bureau of Medical Cannabis Regulation, or BMCR. “From everything we’ve seen and heard, there’s an amazing amount of interest. We expect to be busy on that Jan. 2 date.”

Jan. 2, Traverso said, because state offices will be closed in observance of a holiday Jan. 1.

The BMCR is one of several offices and state agencies tasked with marijuana regulation. According to the state:

  • The Bureau of Medical Cannabis Regulation is housed within California’s Department of Consumer Affairs. It regulates the testing, transportation and sale of marijuana, which includes “testing labs, transporters, distributors, dispensaries and microbusinesses.”
  • CalCannabis is housed within the California Department of Food and Agriculture. It will license marijuana cultivators, create a system to track cannabis from farm to dispensary, and evaluate marijuana’s environmental impacts. 
  • The Office of Medical Cannabis Regulation is housed within the Department of Public Health. It licenses companies that manufacture cannabis products like edibles. 

READ MORE: With California legalization, marijuana industry approaches ‘end of the beginning’

The BMCR — initially named the Bureau of Medical Marijuana Regulation, which produced the oft-teased acronym BMMR (“bummer”) — was created by the Medical Cannabis Regulation and Safety Act, which Gov. Jerry Brown signed in 2015. Although medical marijuana has been legal in California since 1996, there was no state body licensing and regulating dispensaries until the 2015 law created the BMCR.

The newly created agency was tasked with establishing “a licensing and regulatory framework for the commercial cultivation, manufacturing, transportation, distribution and sale of medical cannabis in California,” according to the state. If dispensaries received state licenses in addition to their local licenses, they could operate as for-profit businesses and not just non-profit collectives, according to NORML, a pro-legalization advocacy group. Lori Ajax, a longtime staffer at the state Department of Alcoholic Beverage Control, was tapped to lead the office.

The Bureau was still working on drawing up those regulations when voters approved Proposition 64, legalizing adult recreational use of marijuana.

“It’s a massive undertaking,” said Hillary Bricken, an attorney who specializes in cannabis law. “With the number of licenses available, the number of agencies that have to be involved, they’re going to spend a ton of time on this. (BMCR chief Lori) Ajax said it herself, and she’s correct — these rules are going to change time and time and time again. They’re fluid.”

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Marijuana plants grow under LED lights at the MedMen cultivation facility in Sun Valley near Los Angeles, on Tuesday, November 15, 2016. Plants grow to size for 3 to 4 weeks before being moved to the flower room.  (Photo: Richard Lui/The Desert Sun)

BMCR staff plan to have a draft of proposed medical marijuana regulations ready for a 45-day public comment period in April.

Next, the agency will begin drawing up regulations for recreational marijuana. Though Traverso said they’ll likely look very similar to those for medical marijuana — for example, the licensing process will be almost identical, including rules about background checks for sellers and testers — the laws make some key distinctions. For example, Bricken said, the legislation that regulated medical marijuana says that different companies must grow, manufacture and distribute medical cannabis, while Proposition 64 allows companies to participate in several parts of the production process.

There probably won’t be time for another 45-day public comment period on recreational marijuana regulations, Traverso said. So the state may use emergency authority to enact regulations before Jan. 1, then get public feedback and adjust the rules.

READ MORE: Marijuana businesses can’t get bank accounts, so many pay taxes in cash

License applications will almost certainly be available online, Traverso said, at least for those parts of the industry his agency regulates — dispensaries, distributors and testing labs.

California’s Department of Food and Agriculture will handle licenses for cultivators, and its Department of Public Health will regulate manufacturers of edible marijuana.

BMCR, now a 15-person agency, plans to hire 50 to 75 people after its new fiscal year starts July 1. Traverso said funding for the expansion will come from the governor’s budget.

The Department of Food and Agriculture has created CalCannabis Cultivation Licensing, an agency within the department, to license cultivators. And the Department of Public Health’s Office of Manufactured Cannabis Safety is responsible for issuing licenses to manufacture marijuana products like edibles.

The state’s medical marijuana legislation,enacted in 2015, created CalCannabis, now a 22-person office, to create a licensing program for medical marijuana cultivation, implement a system that tracks cannabis from farm to dispensary, and measure marijuana’s environmental impacts, according to Steve Lyle. director of public affairs at the Department of Food and Agriculture.

The agency plans to release draft regulations in “spring 2017,” Lyle wrote in an email. As for whether CalCannabis will be ready to issue licenses on Jan. 1, 2018, Lyle simply wrote, “Yes.”

READ MORE: Gateway to drugs? A California border town considers future of marijuana tourism

The Office of Manufactured Cannabis Safety, housed within the Department of Public Health, has not yet responded to questions about the size of their office, what aspects of marijuana manufacturing they are required to regulate or whether they expect to issue licenses beginning on Jan. 1.

Cathedral City advances multiple pot zoning changes Wednesday. (Photo: Desert Sun file photo)

The BMCR plans to have applications available before January, so they can review them in advance of issuing the first licenses Jan. 2, Traverso said. In the meantime, he recommended that people who want to start marijuana-related businesses obtain licenses from their city or county, which they’ll need to apply for state licenses.

READ MORE: Marijuana companies want California to issue trademarks for pot

“They’re super ambitious. I like what Ajax is saying, hustling to put together a draft, they’re saying all the right, reasonable things and exercising, I think, genuine rhetoric about wanting to get this done correctly,” Bricken said. “However, I do not think licenses will issue in January 2018, for a multitude of reasons.”

Bricken pointed to the amount of harmonization required between Prop 64 and existing medical marijuana laws, as well as the near-inevitability that California will be sued by organizations objecting to its proposed regulations or processes. A more attainable deadline, in her mind, is summer or fall of 2018.

Trevaso described the timeline as a “challenge,” but said the office was committed to meeting it — and, in fact, was legally obligated to do so by Prop 64.

As for the Trump administration’s anti-marijuana rhetoric — a departure from the Obama administration’s views on the drug — Traverso said they’ve hardly had time to think about it. While U.S. Attorney General Jeff Sessions has voiced opposition to both recreational and medical use of cannabis, he has not implemented policy changes yet.

“Maybe that’s the beauty of having the timeline that we have — we haven’t really put too much stock in the words, it’s been more, ‘hey, let’s wait and see if there’s a plan and see what happens at that point,'” Traverso said. “For now, we’re continuing to do our work and work hard to get regulations in place, and if something comes down from the federal government, we’ll respond accordingly.”

Rosalie Murphy covers real estate and business at The Desert Sun. Reach her at rosalie.murphy@desertsun.com or on Twitter @rozmurph.

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