Medical Cannabis

California pioneered the modern cannabis policy reform movement in 1996 when voters passed Proposition 215, the Compassionate Care Act. State voters approved Proposition 215, the law that made it legal for doctors to recommend cannabis to patients.

In 2015 Gov. Jerry Brown signed three bills that toughened regulations for medical cannabis businesses and sought standards for documentation and testing. The bills are known as the Medical Marijuana Regulation and Safety Act (MMRSA). Collectively, the legislation also paved the way for medical cannabis businesses to turn a profit. The legislation is impacting marijuana business models in other ways. The laws have eliminated the idea of home-based dispensaries.

The Act requires licenses for the cultivation, manufacture, distribution, transportation, laboratory testing, and sale of medical cannabis.

Three of the California agencies implementing the Medical Cannabis Regulation and Safety Act (“MCRSA”) released their initial draft rules on April 28, 2017. These long-awaited rules make up the bulk of the regulatory standards for: transportation, distribution, and retailers (as developed by the Bureau of Medical Cannabis Regulation/Bureau of Marijuana Control); cultivation (as developed by the Department of Food and Agriculture through its CalCannabis Cultivation Licensing arm); and manufacturing (as developed by the Department of Public Health through its Office of Manufactured Cannabis Safety).

Medical Cannabis Patients

San Francisco County has the highest number of registered patients at 17812, roughly 30% of the state’s total. Marin County is the next highest, at 4841 patients, followed by Alameda (3918), Riverside (3775) and Los Angeles (3609).

Cannabis Sales (million $)

  • 2016
  • 2020

 California’s cannabis industry reported $2,692 million in retail sales via nearly 2,800 dispensaries in 2016, that is 10% more than all other MMJ states combined as of 2016 according to Arcview Market Research. While recreational cannabis market is expected to grow, medical cannabis sales are expected to decline down to $600 million as people migrate toward the adult-use market to avoid medical cannabis ID fees.

Recreational Cannabis Market

Though voters failed to approve adult use in 2010, they voted overwhelmingly in 2016 to make adult use legal in a state that represents the world’s sixth-largest economy. The vote means that cannabis will become legal for use from December 15 2017, and cannabis shops can open in 2018.

Market Projections

  • According to a study by the University of California Agricultural Issues Center (UCAIC), California’s recreational cannabis market could be worth more than $5 billion; however, the benchmark will only be achieved once cannabis consumers fully embrace the state’s legal market.
  • The $2.7 billion legal marijuana sales are expected to grow more than 18 percent annually to hit $5.6 billion by 2020. (Arcview Group)
  • According to the UCAIC, about 29 percent of cannabis consumers may, at first, stay in the illicit market to avoid the costs of new regulations, which will add 15 percent to retail values.
  • After the state adopts regulations, legal recreational use will make up 61.5 percent of the overall market, illegally purchased marijuana will make up about 29.5 percent of the market and legal medical marijuana use will be about 9 percent of the overall market, the analysis estimated.

Taxes

On November 8, 2016, California voters approved Proposition 64, Control, Regulate and Tax Adult Use of Marijuana Act, which provides:

  • Effective November 9, 2016, certain sales of medical marijuana are exempt from sales and use tax.
  • Effective January 1, 2018, a 15 percent excise tax is imposed upon purchasers of all marijuana and marijuana products. Additionally, a tax on cultivators of marijuana is imposed as follows:
  • $9.25 per dry-weight ounce of marijuana flowers
  • $2.75 per dry-weight ounce of marijuana leaves

Cannabis Regulation and Safety Act emphasizes the need for cannabis business entities to operate in absolute compliance with all local jurisdiction laws, regulations and standards:

“If your business is “in compliance with local zoning ordinances and other state and local requirements on or before January 1, 2018,” it may continue to operate until licenses are established.”

Cannabusinessplans will lay the groundwork for your business plan. This crucial document explains your vision and your niche, and establishes consistent values and language that shapes your enterprise. It also prepares you to seek investment.

We also offer “70% ready to go” Cannabis Financial Models and Cannabis Business Plan Templates for a growing, processing, dispensary, testing and vertical integrated cannabis business. Please make a note that you need Californian version and you will get the template tailored cannabis business in California.

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