Seven months after Californians voted to legalize and tax recreational marijuana, state leaders are moving full speed ahead with a system to oversee the cultivation, distribution and sales of cannabis -- rules that have to be in place, under law, by January.
Many key details of how California will make that happen were included in a bill that was part of last week's state budget deal and is now on Governor Jerry Brown's desk. They range from the mundane, such as changing all references in state law from "marijuana" to "cannabis"; to serious issues, such as giving the California Highway Patrol $3 million to train drug recognition experts; to the more light hearted, such as setting up a legal appellation -- or origin -- labeling process for weed, like wine currently has.
In total, the bill establishes a single set of laws overseeing cannabis in California, reconciling previous laws governing medical marijuana with Proposition 64, the 2016 ballot measure that legalized recreational marijuana use and sales for people over the age of 21.
"We are preparing to take one of the largest agricultural crops, a $7 billion industry, out of the dark and into the light," said state Sen. Mike McGuire, D-Healdsburg. He represents the epicenter of cannabis production, the Emerald Triangle -- including Humboldt, Mendocino and Trinity counties -- and has been one of the key players in hashing out details of cannabis laws in recent years.
"We are building this airplane while we are flying it, coming out of the era of prohibition," McGuire said. "It's no easy feat, and the state of California and every agency involved is in full-court-press mode to get the rules and regulations implemented."
The bill includes details on how businesses can operate once commercial cultivation and sales are legal next year. (Under Prop. 64, marijuana was legal for adults to grow and use immediately, but commercial enterprises were not allowed to start until next year.)
It sets out agricultural rules, tax collection and remittance procedure and testing and packaging requirements for commercial marijuana. It also sets rules and guidance for state agencies involved in regulating marijuana. It would prohibit open containers of cannabis in cars, let medical and recreational marijuana be sold at the same shop, and allow for delivery sales.
It could also result in some cannabis businesses being unionized.
McGuire said the bill additionally offers protections that are important to his district: It sets out environmental rules aimed at protecting California watersheds and forests from negative impacts of pot farming, and it gives small growers a path forward.
"I was very concerned that small family farmers, particularly in Northern California, were going to be pushed out of the market by what many call the Walmarts of weed," he said. "I believe that this budget bill went a long way to ensure that small cannabis farmers will thrive in the Golden State for years to come."
The bill would allow small farmers to team up and join cooperatives, which could make their businesses more viable. It would also make it easier for those niche growers to set themselves apart by requiring truth-in-labeling so growers cannot lie about where their weed was grown and by creating a process for an organic designation and cannabis appellations -- like the wine industry has -- that will be overseen by the California Department of Food and Agriculture.
McGuire says California benefitted from lessons learned in other states that adopted legalization first, including not spending money the state has yet to collect. In a decade, he said, the state expects to net about $1 billion a year in cannabis-related taxes. But next year, legislators are not counting on a single penny.
In part, said McGuire, that's because it's still unclear when the state will be ready to physically collect taxes from cannabis businesses.
"The state has yet to purchase tax collection software," he said. "I anticipate the tax collection system will not be fully functional until mid 2018 or fall 2018. ... We need patience and I think California has to be clear about what deadlines we are going to hit and what deadlines we are going to miss."
But under Prop. 64, the state has to start issuing permits to grow and sell cannabis on Jan. 2 -- even if it can't tax those sales yet.