Inside California's Historic Medical Marijuana Regulation Bill


  • State of California
  • Rob Bonta.
The historic bill to create a statewide program to regulate California’s medical cannabis industry could cost $20 million to implement and may be too unwieldy. That’s according to an official analysis of Assembly Bill 266, which is now on hold, pending budget discussions in Sacramento this week. (The Senate Appropriations Committee voted unanimously Tuesday to move AB 266 to the so-called "suspense file," a standard process for legislation with significant costs).

The bill, co-sponsored by Assemblymember Rob Bonta (D-Oakland), appears to have significant momentum, with a prior version earning the support of the League of California Cities, the influential California Medical Association, and Board of Equalization member George Runner. Still, the bill has sparked opposition from pro- and anti-pot groups, because it both cements the legalization of medical cannabis in California, and curtails some practices in the country’s most laissez-faire medical pot system.


1) AB 266 would license an entire commercial industry, and “repeal existing law authorizing collective cultivation of medical cannabis, once the state has certified that licensing authorities have begun issuing conditional licenses,” the analysis notes.

"'Commercial cannabis activity' means any cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, or sale of medical cannabis ora medical cannabis product," the bill states.

The repeal targets police's biggest issue: unregulated collectives that claim they are growing for dozens of patients, and then ship the product out of state. It would also affect collectives that don't engage in trafficking. 

Patients and caregivers would be exempt from the new rules, under Prop 215.

2) Growers and stores would need both a local and state license to operate — a win for cities and counties that want to ban all pot activity. 

3) The Senate analysis expressed skepticism about having multiple state agencies working in concert with one another on marijuana.
It is likely to be very difficult for the new Office to effectively oversee and manage entities within other state agencies…. [and] to the extent that any one of the state agencies that directly oversee a new licensing entity does not place a high priority on developing or administering medical cannabis regulation, the entire state regulatory structure could be held up. If one or more state agencies does not place a high priority on developing and implementing the required regulatory structure for medical cannabis, it is not clear how the new Office of Medical Cannabis Regulation could compel the licensing entity to do so.
4) The bill also appears to lay the groundwork for for-profit medical cannabis operations in California since the language does not require entities to be not-for-profit. And some current pot operators are counting on the change. One pot company CEO, Derek Peterson of TerraTech in Oakland, told investors on a conference call August 12 that he expects the state to go in this direction:
“we're also working from a legislative standpoint and to do our best to make certain that the state ends up to be a for-profit state, because [it] just makes more sense. And it's a better economic piece of legislation, and free markets are what this country are built on. And I don't think we're getting much push back from those in California that are the stakeholders and watching this legislative fees go through. I think that's probably a likely scenario that we end up with here in California.”
5) The bill also has fingerprints on it from the United Food and Commercial Workers Union, which just fired their pot industry organizer, Dan Rush. Rush faces federal charges for accepting cash and gifts from dispensary operator Martin Kaufman of BLUM Oakland, which is also part of TerraTech. The FBI is accusing Rush of selling “bullshit” labor neutrality agreements to dispensary operator Kaufman and Peterson, and promising “doors slamming, slamming, slamming,” for TerraTech's competitors.

AB 266 contains language about “labor peace agreements." License applicants with twenty or more employees would have to “provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.” A labor peace agreement is between a licensee and a union and prohibits members from picketing, boycotting, and conducting work stoppages — while banning pot managers from disrupting efforts to unionize. The agreement grants unions mandatory access to employees "for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment.”

The bill further states: “A licensing authority shall deny the application for licensure or renewal, or suspend or revoke a state license, if any of the following conditions apply … The applicant has had 20 employees or more in the past year and failed to enter into a labor peace agreement.".

AB 266 will be approved or held at a special hearing on August 27. If approved, it will go to the Senate floor for a vote, with a deadline of September 11.

We'll take your read on this massive bill in the comments.