Equity Project State Briefing
Is Cannabis Legal in California?
Cannabis in California is legal for both medical and adult use.
Date of Legalization
California legalized cannabis for medical use in 1996 through the passage of Proposition 215, the state’s Compassionate Use Act. California went on to legalize cannabis for adults in 2016 through proposition 64.
Regulations for California’s adult use and medical cannabis industry can be found at: https://cannabis.ca.gov/resources/rulemaking/
Within California’s adult use framework, adults 21+ may possess up to 28.5 grams of cannabis not in concentrate form and up to 8 grams of concentrate and may grow up to six residential plants. Within the medical framework patients may possess up to eight ounces of flower, up to six mature plants and 12 immature plants.
Other Licensing Provisions
- License Caps:
California does not impose any state licensing caps, however, localities are authorized to implement licensing caps. For example Los Angeles has a cap on several license types such as retail licenses. Additionally, localities may opt out of participation in the adult use market. There are no notable carve outs for medical establishments operating prior to adult use legalization.
Application Selection Process
- Selection System:
California distributes its adult-use cannabis licenses through a compliance-based application review system.A compliance-based application review requires that applicants meet a set of requirements for licensure. Generally, the requirements are designed to ensure applicants are qualified and would be able to safely and responsibly operate.
Felony Disqualification on Ownership
- Ownership Exclusion for Felony Convictions:
- Exemption for Cannabis Offenses:
California’s adult use framework disqualifies applicants for cannabis licensure on the basis of certain conviction. The department may deny an application for licensure if the applicant, owner, or licensee has been convicted of an offense,within the proceeding 7 years, that is substantially related to the qualifications, functions, or duties of the business or profession for which the application is made. Substantially related offenses shall include, but not be limited to: a violent felony, serious felony, a felony conviction in fraud deceit or embezzlement, or felony conviction for drug trafficking. California state law specifically states that convictions for the possession, sale, manufacture, transportation or cultivation of drugs are not considered substantially related to the qualifications and functions of holding a license and thus cannot be the sole reason you are denied a license (unless your conviction involved a minor).
Employee Criminal Records
- Conviction Restrictions for Employees:
- Exemption for Cannabis Offenses:
While there are no required state level background checks for California adult use cannabis employees, employers reserve the right to conduct background checks in compliance with Ban the Box/ Fair Chance Act legislation. California’s Fair Chance Act prohibits commercial background check companies from reporting convictions which have been expunged. California offers automatic expungements for certain qualifying cannabis convictions.
Availability of Expungements
California offers automatic expungement for cannabis related convictions which are now immune to prosecution under state adult use laws. Many cannabis convictions, for activity that still holds a penalty under state law, can be expunged after a certain amount of time by petitioning the court.
Social Equity Definition / Criteria
Within California’s adult use sector, social equity programs are administered at the local level. The 2018 “California Cannabis Equity Act” authorized the state Department of Cannabis Control to provide funding and technical assistance to local equity programs that help local equity applicants or local equity licensees.
California does not create a statewide definition of social equity eligibility. However, local equity program means a program adopted or operated by a local jurisdiction that focuses on inclusion and support of individuals and communities in California’s cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization as evidenced by the local jurisdiction’s equity assessment.
Within California, social equity programs are administered at the local level, therefore each jurisdiction creates its own social equity eligibility criteria, however, a person is usually eligible for these programs based on having a qualifying income, having a cannabis conviction prior to 2016 and or living in an area that was disproportionately criminalized by cannabis as indicated by specific census tracts, police beats and zip codes. State residency is not a requirement under any of California’s social equity programs.
Social Equity Provisions
In California, social equity benefits are disbursed at the local level and vary based on jurisdiction. The only direct state level benefit available is the state’s fee waiver and deferral program, which allocates at least 60% of waivers to social equity applicants/license holders.
Local equity programs may include, but are not limited to, the following types of services:
(1) Small business support services offering technical assistance or professional and mentorship services to those persons from economically disadvantaged communities that experience high rates of poverty or communities most harmed by cannabis prohibition, determined by historically high rates of arrests or convictions for cannabis law violations.
(2) Tiered fees or fee waivers for cannabis-related permits and licenses.
(3) Assistance in paying state regulatory and licensing fees. (including grants and low interest loans)
(4) Assistance securing business locations prior to or during the application process.
(5) Assistance securing capital investments or direct access to capital.
(6) Assistance with regulatory compliance.
(7) Assistance in recruitment, training, and retention of a qualified and diverse workforce, including transitional workers.
(8) Other services deemed by the Governor’s Office of Business and Economic Development to be consistent with the intent of this chapter.
License Priorities and Set Asides
California does not have any specific licensure set aside for social equity operators, nor is there any state level licensing priority given for social equity applicants. However some jurisdictions such as Los Angeles, offer licensing priority to social equity applicants and exclusive access to certain licenses. For example in Los Angeles, retail, cultivation and delivery licenses are currently limited to Social Equity Applicants until January 1, 2025.
Fee Waivers and Reductions
Since California social equity programs are administered at the local level, most fee waivers or reductions would be determined by the locality. However, California does have one state level program which provides fee waivers and deferrals for application fees, licensing fees, and renewal fees required by the state. At least 60 percent of the total dollar amount of waivers and deferrals of fees must be allocated equity applicants and licensees.
Other Financial Support for Social Equity Applicants and Licensees
California Equity Grant Program funds are derived from cannabis taxes and are administered through the Governor’s Office of Business and Economic Development to local jurisdictions to provide assistance for social equity programs. Jurisdictions are not required to give direct funding to applicants, but rather can use state funding to offer specific services and assistance. Gobiz disbursed $30 Million in Grant Funding for Local Jurisdictions for FY2019-2020 and 15 million for FY 2020-2021. No funds were available before the start of adult use commercial sales in 2018.