Adult Use of Marijuana Act

While the League of California Cities has no position on Proposition 64, the Adult Use of Marijuana Act, in response to multiple inquiries from member cities, League Staff have prepared a Memorandum and a Frequently Asked Questions document, explaining how the regulatory landscape for local governments, particularly cities, will change if Prop. 64 passes in November.  The presence of this information on our website should in no way be construed as an endorsement of the initiative, but rather a pro-active effort by the League to keep our members prepared for and forewarned about various local regulatory contingencies, with a view toward maintaining local control.

NOTE:  Currently the only ordinances the League has received on recreational marijuana are bans. However, we do have resources providing guidance on local ordinances that regulate rather than ban recreational marijuana. Medical ordinances can provide helpful guidance on what recreational ordinances should look like, and can be a useful tool until local jurisdictions begin enacting recreational ordinances.  Our medical marijuana ordinances webpage is therefore a helpful resource in this interim period which may last through January 2018.
 
A key fact to remember is that there is little appreciable difference between an ordinance that regulates medical marijuana, and an ordinance that regulates recreational marijuana.  Both are agricultural products and are chemically identical for purposes of local regulation.  For this reason, the ordinances on the League’s medical marijuana webpage provide a useful guide for those cities seeking to craft recreational marijuana ordinances. 
 
There are just two key differences to bear in mind in crafting a recreational marijuana ordinance, post-Proposition 64:
 
  1. Since the passage of Proposition 64, local governments can no longer ban indoor cultivation for personal use.  Such ordinances are now invalid, even if enacted before Prop. 64 took effect.  However, locals can “reasonably regulate” indoor cultivation for personal use.  For example, local cultivation permits with an appropriate fee may be required if that is the will of the jurisdiction.
  2. Proposition 64 prohibits state and local governments from levying sales tax of any kind on medical marijuana.  Excise taxes such as business license taxes, cultivation taxes, or manufacturing taxes on medical marijuana remain valid.  And, sales taxes on recreational marijuana can still be levied by locals.  
With these governing principles, all that remains is to decide what you want the rules to be for both recreational and medical marijuana in your city.  Cities are cautioned that their marijuana ordinances should be reviewed to be certain their scope specifically includes both recreational and medical marijuanaAt least one city is now in litigation because it relied on a purely medical marijuana ordinance to regulate recreational marijuana businesses.
 

Sample Ordinances Regulating Adult Use Marijuana

Please see the League’s Medical Marijuana webpage to view our examples of medical marijuana ordinances.
 
  • On Nov. 8, 2016, the Control, Regulate, and Tax Adult Use of Marijuana Act (“AUMA” or “Act”) passed, legalizing nonmedical use of marijuana by persons 21 years of age and over, and the personal cultivation of up to six marijuana plants. In addition, the AUMA will create a state regulatory and licensing system governing the commercial cultivation, testing, and distribution of nonmedical marijuana, and the manufacturing of nonmedical marijuana products.
  • Rescission of Federal Marijuana Enforcement Policy Sends Shock Waves throughout California

     January 8, 2018
     
    The U.S. Department of Justice’s Jan. 4 announcement and memo on marijuana enforcement delivered a shock to the industry in California, causing stock prices in the few publicly traded marijuana-related companies to plummet by as much as 50 percent. 
     
    However, it is not certain that the new policy will lead to a significant increase in federal enforcement activity. 
     
    The memo represents a reversal of federal policy that conflicts with California state law, which expressly provides for local control and home rule in the context of marijuana regulation. This change is especially important for cities that are proceeding with implementation of legalized commercial marijuana sales.
     
    In the Jan. 4 memo to U.S. attorneys, U.S. Attorney General Jeff Sessions specifically rescinded several guidance documents issued by the U.S. Department of Justice pertaining to marijuana enforcement going back to 2009, but most notably the August 2013 Cole Memo and the February 2014 Guidance regarding Marijuana Related Financial Crimes.
     
    The Cole Memo provided guidance to states that legalized cannabis for either medical or adult use. Specifically, it listed eight criteria states should observe if they wished to avoid becoming a target for federal enforcement. They are:
    • Preventing the distribution of marijuana to minors;
    • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
    • Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
    • Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
    • Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
    • Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
    • Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
    • Preventing marijuana possession or use on federal property.

    The Justice Department’s Jan. 4 announcement had two immediate effects:
    1. Any safe harbor for the marijuana industry that may have existed as a result of recent federal guidance issued under the Obama Administration has come to an end; and
    2. Prosecutorial discretion on the part of individual U.S. attorneys in the area of marijuana enforcement has been reaffirmed.
    3. While a total of five guidance documents issued by the U.S. Department of Justice since 2009 were rescinded by Mr. Sessions’ announcement, the two most relevant appear to be the Cole Memo, and the Guidance regarding Marijuana Related Financial Crimes. Of these, the latter may be the most important, as it helped identify criteria under which financial institutions could at their discretion accept deposits from the cannabis industry. The rescission of this document may make access to the banking and financial services industry even more problematic for cannabis industry operators than it has been to date, if only because it increases uncertainty for banking institutions.
     
    Cities that have authorized cannabis businesses of any kind to operate within their borders should be aware that the repeal of the Guidance Regarding Marijuana Related Financial Crimes could have significant implications for municipalities seeking to establish a banking relationship for purposes of depositing cannabis tax revenue.  
     
    State of California officials responded late last week in a manner that signals that the business of implementing legal marijuana sales in California will continue as planned.
     
    “We’ll continue to move forward with the state’s regulatory processes covering both medicinal and adult-use cannabis consistent with the will of California’s voters, while defending our state’s laws to the fullest extent,” said Bureau of Cannabis Control Chief Executive Lori Ajax.
     
    “In California, we decided it was best to regulate, not criminalize, cannabis,” California Attorney General Xavier Becerra said in a statement. “We intend to vigorously enforce our state’s laws and protect our state’s interests.”
     
    While the state may be gearing up to defend California’s marijuana laws, federal law remains unchanged.  Marijuana is a Schedule 1 substance prohibited under federal law. This means state officials have no ability to block federal enforcement action by any of the four U.S. attorneys in California. Last week’s memo did not include an explicit order to U.S. attorneys around the country to open an assault on marijuana businesses. Instead, the Attorney General said he would leave that decision up to each of the country’s 93 U.S. attorneys, which may lead to responses that vary across the country and even within the state. It is important to note that three of California’s four U.S. attorneys occupy their positions on an interim basis — a factor that may have a bearing on how they respond. It is also not yet clear to what degree California’s U.S. attorneys have the interest or resources to pursue enforcement action against legalized cannabis operations in the state. 
     
    In general, increasing uncertainty seems to be the overall effect of the U.S. Department of Justice’s announcement — for investors, the cannabis industry, the banking industry, and the states and respective political subdivisions that have legalized cannabis for either medical or recreational use. The memo issued last week did not make a distinction between medical and adult use, or recreational cannabis, raising the question of whether Congress will renew, as it has every year since 2013, the provision in federal law prohibiting the use of federal funds for enforcement action interfering with the implementation of states’ medical marijuana laws. That is the sole action Congress has taken to date that might expressly limit future enforcement action on the part of U.S. attorneys, but it remains to be seen whether Congress will renew what has come to be known as the Rohrbacher-Farr amendment in the wake of last week’s action, or whether Congress will go further.   
     
    Of particular note is the fact that Attorney General Sessions has voiced specific concerns about marijuana policies in California. The Los Angeles Times reported that in a remark after a news conference last month, for example, he said he was disturbed about California's role as a pot-exporting state, noting that much of the state's crop ends up on the black market.
     
    Next Steps

     The League in partnership with other organizations will be in engaged in dialogue with state authorities and the State Attorney General’s office on what steps cities may need to take in the near future.
     
  • Disclaimer

    The League does not prepare or post model ordinances, recognizing that individual cities may approach issues differently and one approach for a city may not be ideal for another. Accordingly, here are our disclaimers about the ordinances posted:
     
    1. The ordinances have been adopted by individual member cities and provided to the League for informational purposes. They are posted as a resource for the same informational purposes. They have not been reviewed by the League’s attorneys and do not constitute legal advice.
    2. The League does not endorse any ordinance as the only valid approach, recognizing that municipal codes vary and must be approached individually.
    3. City staff and elected officials should consult with their city attorney to prepare an ordinance that is appropriate for that city.
     

    Sample Ordinances Regulating Marijuana

    • City of Portola: Regulates personal cultivation and deliveries; prohibits commercial cultivation, manufacturing and distribution.
    • City of Oakland: Allows and regulates retail sale, cultivation, testing, distribution and manufacturing of adult-use cannabis; allows on-site consumption with appropriate permitting; includes an Equity Permitting program for those residents convicted of a cannabis offense after November 5, 1996.
    • City of Berkeley: Imposes 1.8 percent gross receipts tax on medicinal cannabis.

    Sample Ordinances Prohibiting Regulated Activities

    Ordinances Prohibiting Cultivation, Processing, Delivery, Dispensaries or Some Combination Thereof:
    • City of Ceres: Prohibits cultivation and deliveries.
    • City of Eastvale: Prohibits commercial cannabis activities, deliveries, and cultivation.
    • City of Jackson: Prohibits cultivation, delivery and dispensaries.
    • City of Lathrop: Prohibits cultivation, processing and storage.
    • City of Live Oak: Prohibits cultivation and dispensaries.
    • City of Lodi: Prohibits delivery and processing.
    • City of Los Banos: Prohibits dispensaries, delivery, cultivation, and processing.
    • City of Manteca: Prohibits cultivation, deliveries, transportation and storage.
    • City of Merced: Prohibits commercial cannabis activities, deliveries, and cultivation.
    • City of Newman: Prohibits business licenses for dispensaries, commercial cannabis activity, distribution, cultivation, delivery, testing, or processing; prohibits commercial cannabis activity, delivery, activity for which a state license is required under the MMRSA, cultivation; will apply to recreational marijuana if legalized in the future.
    • City of Newport Beach: Prohibits cultivation, processing, delivery and dispensaries.
    • City of Petaluma: Prohibits dispensaries, cultivation, deliveries, and commercial cannabis activity generally.
    • City of Riverbank: Prohibits dispensaries and outdoor cultivation.
    • City of San Marcos : Prohibits cultivation, processing, delivery and dispensaries.
    • City of Waterford: Prohibits commercial cannabis activities, deliveries, and cultivation.
    • City of Oceanside: Prohibits commerial culitivation and deleivery 
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