Aug 03, 2019
Doing (Cannabis) Business in Marin: The Current Landscape
Aug 03, 2019
By Habib Bentaleb
Unless you’ve been living under a rock for the last couple of years, it’s impossible to have missed that cannabis is now legal in California. In June of 2017, the California Legislature passed the Medicinal and Adult-Use Cannabis Regulations and Safety Act (“MAUCRSA”), which created one system for both medicinal and adult-use cannabis regulations. MAUCRSA effectively merged the Adult Use of Marijuana Act (aka Prop 64) that was approved in 2016 by a statewide vote and the Medical Cannabis Regulation Safety Act (MCRSA) that the Legislature enacted in 2015. Although now legal, commercial cannabis businesses in California are highly regulated.
The biggest misconception out there is that many people still believe they can open up their cannabis business anywhere in the state and that couldn’t be any further from the truth. The reason why a cannabis business can’t set up shop wherever they want is because MAUCRSA grants local jurisdictions the authority to regulate cannabis businesses as they deem appropriate – which can include an outright ban on them at the restrictive end of regulation to the authorization of every single type of cannabis business (cultivator, manufacturer, distributor, laboratory, retailer, delivery, microbusiness, and temporary cannabis special events) at the permissive end.
California is a dual-licensing state when it comes to cannabis, which means that before you can open a cannabis business, you must first obtain approval from your local jurisdiction and then obtain your state license. There are 58 counties and 482 municipalities in the Golden State and approximately two-thirds of those jurisdictions have placed outright bans on all commercial cannabis activities. And those prohibitionist jurisdictions aren’t just in some of the more conservative parts of the state—they can be found in liberal leaning areas as well. Nearly seventy percent of Marin residents voted in favor of Prop 64, yet many of the county’s municipalities prohibit all commercial cannabis activities. Here’s what the current commercial cannabis landscape looks like in Marin:
- Unincorporated Marin County: Back in December 2015, the Board of Supervisors passed an ordinance authorizing up to four medical cannabis dispensaries in the County. After a lengthy application and vetting process, the County Administrator denied all applications for a dispensary — public opposition to all the proposed locations was intense. The County has since amended its ordinance to authorize up to four medical cannabis delivery-only retailers and approved two out of four applications at a hearing July 27th. All other commercial cannabis activities (including all adult-use activities) are currently banned in the County.
- San Rafael: The city of San Rafael is by far the most cannabis-friendly jurisdiction in the County (as of the date of this publication). In January 2018, the City Council passed a medical cannabis pilot program authorizing four testing labs, eight infused manufacturing licenses, and four delivery licenses. San Rafael has since authorized medical license holders to serve the adult-use market and has re-opened the application process for additional testing labs, infused manufacturers, and distributors.
- Novato: Novato has currently placed a moratorium on all commercial cannabis activities except for the limited exceptions of two previously-licensed medical cannabis businesses: a testing lab and a non-volatile manufacturer. Novato does allow medical deliveries from operators that were licensed by their local jurisdictions prior to November 17, 2017. Novato’s moratorium is set to expire on November 19th of this year and the City Council is currently reviewing a proposal to allow up to four licenses each for cultivation (indoor only), manufacturing (which would include distribution and testing) and retail.
- Fairfax: Like Novato, Fairfax also has a moratorium on all commercial cannabis activities, with the exception of a previously-licensed medical dispensary — which has just recently been authorized to conduct adult-use deliveries upon approval from the state. Fairfax’s moratorium is set to expire on October 31st and the Town Council is currently discussing whether or not to authorize additional cannabis operators.
- Belvedere, Corte Madera, Larkspur, and Sausalito: All commercial cannabis activities are banned but medical and adult-use deliveries are allowed from properly licensed operators in other jurisdictions.
- Mill Valley, Ross, San Anselmo, and Tiburon: All commercial cannabis activities are banned but medical deliveries (but not adult-use) are allowed from properly licensed operators from outside jurisdictions.
As you can see, Marin County is not a bastion of progressiveness when it comes to licensing cannabis businesses. The “not in my backyard” (aka NIMBY) sentiment is still quite strong at public hearings in Marin regarding licensing cannabis businesses. Although one can appreciate how reasonable people can disagree as to the location of a dispensary, it has been surprising to see outright bans of all the other cannabis license types throughout so much of Marin. Cannabis manufacturers, distributors, and testing labs can operate in small facilities and do not carry the same concerns of being open to the public that come with a dispensary. To that end, San Rafael will be an important bellwether for the rest of Marin. If the cannabis operators in San Rafael are able to succeed, providing employment and tax revenue to the city, then other Marin jurisdictions may rethink their outright bans. The cannabis industry has made a strong push to educate the public on what cannabis products look like today. As the perception shifts from that of the “lazy stoner” to the individual who uses cannabis for pain relief, or that of the responsible professional/parent who has replaced a glass of wine with a cannabis-infused tea, we’re likely to see a change in attitude from the public and Marin’s local legislators.
Habib is the founder of the Law Office of Habib Bentaleb and his practice centers on advising cannabis businesses, ancillary service providers, and investors on regulatory compliance, entity structuring, acquisitions, and licensing.