We have spent the past three years as a very active and aggressive participant in the creation and evolution of the commercial cannabis industry in California. The market went from a lightly regulated experiment with medical cannabis beginning in 1996 to a highly regulated market which continues in transition and involves twenty-three state level agencies, three with primary regulatory responsibility, and second tier, land-use regulation by 539 counties and cities.
We have witnessed the
• Creation of a structure for legal medical cannabis beginning with Prop. 215 back in 1996, and the evolution of law regarding legislative limits on the modification of a Proposition passed by the vote of the citizens of California .
• Creation of a legal adult use cannabis framework with the passage of Prop. 64 , and the
• Creation and development of the triumvirate of cannabis industry regulatory agencies which include the Bureau of Cannabis Control [“BCC”], the California Dept. of Public Health [“CDPH”] Medical Cannabis Safety Board [“MCSB”], and the California Dept. of Food and Agriculture [“CDFA”] CalCannabis Cultivation Unit, [collectively the “Regulators”]. We have written about the regulatory framework in greater detail here, and detail the classification of cannabis cultivation as agricultural activity under local law here.
The complexity of the system has created the “absolute necessity of” and “engagement by” myriad attorneys, certified public accountants, consultants and professional managers to guide cannabis businesses It is quite ironic that the very system of regulation has created a serious “hoisted by one’s own petard” trap for the wary among that exact group of advisors.
With the “re-adoption” of the Emergency Regulations, all three California agencies tasked with regulating cannabis are now finally on the same page about the disclosure and vetting of “Owners” versus FI’s. The melding of the traditional advisor roles of lawyer, accountant, financial advisor and, consultant with the evolving “fintech” roles of lender, mezzanine lender, landlord and other types of financial recompense in the cannabis industry have created an entirely new set of issues [“cannabis regulatory disclosures” or “CRD’s” for short] Continues here