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dispensary Requirements in California have changed somewhat since the Prop. 64 Initiative passed. Although the Initiative did not change state law, it did create a regulated system for licensed marijuana plants to be grown and harvested. The drafters of the Initiative did not consider the effect of this on dispensary Requirements and have included those provisions. However, as California is adopting different approaches to regulate marijuana growers and processors they may find that some parts of the Prop. 64 Rule have been preempted by subsequent legislation.

Some of the changes from the Prop. 64 have to do with dispensary Requirements and how they are implemented. Some new stipulations include a waiting period for the certified patient to complete their application and obtain their doctor's recommendation before the plant can be harvested or processed for sale. This could be a substantial inconvenience to medical marijuana patients who are already experiencing a difficult time finding local providers and have already completed the three-step process of obtaining a certified patient license.

There are also several other dispensary requirements in the new law including that all licensed marijuana growers and processors must retain records for each marijuana plant harvested and processed. This information will allow state auditor's access to plant records to ensure that only quality seedlings are being grown and processed for sale. This requirement could be a significant inconvenience to medical marijuana patients who need to have their crops restored or to their patients who rely on having consistent, reliable sources for top quality marijuana.

The drafters of the initiative required that a for-profit entity may be designated as the governing authority for regulating sales. Regulating the sale and distribution of medical marijuana may prove to be difficult given the highly localized nature of the industry. The Prop. 65 law specifically provides that the Department shall not license a for-profit entity unless the department has signed an agreement with the applicant authorizing the conducting of the business for profit and stating that the applicant is not conducting direct sales of marijuana.

For-profit entities are not required to be licensed by the state when applying for a certificate of occupancy. Applicants may conduct business as a non-profit organization even without obtaining a certificate of occupancy. However, the title 13, c. 895, of California does require that the business obtain a certification from the department before it can operate legally. The department shall issue a certificate if the business meets all of the requirements and complies with all tax and regulatory provisions of the California Civil Code. In addition, the certificate must indicate that the business is operated for profit.

Marijuana distributors and manufacturers are required to register with the California Department of Health Services. Distributors must provide a proof of ID and the same applies to manufacturers. All transactions must be recorded by the seller or manufacturer and must be held on the public record. In addition, the seller or manufacturer must provide a complete list of items sold and the tax id number of each item sold. When processing an application for a registration, the seller or manufacturer must provide a copy of their tax ID. On a date specified by the Department, the seller or manufacturer will provide a certificate of occupancy to the department.

To qualify for a certificate of occupancy, a business corporation or any non-profit entity may be required to meet additional regulations. Specifically, the applicant must: be a publicly held non-profit entity; have a net asset value of one thousand dollars or greater; comply with all local and state tax laws; and submit an application for operations certification. Operations certification is issued by the Department after the department determines that the business corporation or non-profit entity has met all other applicable requirements. Operations certification will not be necessary if the business is licensed under the provisions of the California Franchise Tax Act or if the applicant has filed a fictitious corporation.

Applicants wishing to open new medical marijuana dispensary can obtain pre-filing documents from the county Recorder of Deeds or their equivalent. After filing, the applicant must appear before the board for a hearing. At the hearing the applicant must be given notice of the application by mail. The applicant then has twenty-one days from the date of service to apply for a temporary license if the application was filed directly with the Recorder of Deeds. If the application was filed through the State Board of Equalization, then the applicant must appear at the State Board of Insurance in Sacramento and sign a document stating that he or she is not the applicant on file with the State Board of Equalization.


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