How the New CA Marijuana Law Impacts Property Management and Land Use

The legalization of small amounts of recreational pot raises important questions for landlords and property professionals, and local governments. How much marijuana plant growing should be tolerated in an apartment complex, or strip centers, if any? Does the private use of recreational marijuana in an apartment violate a NO SMOKING policy of an apartment complex?    Does the private use of smoking marijuana disturb horizontal and vertical neighbors- causing a lease violation by the tenant?    Should medical marijuana users have special privileges to smoke as an exception to a no smoking ban in an apartment complex?

As we sort out the answers to these questions,  it is important to have an overview of the new state pot law in California, so you don’t go up in smoke! This an overview of California state laws, which may conflict with federal laws, and is not by any means an endorsement of any cannabis-based lifestyle.  

Please be aware that a person or business may be compliance with state law or local ordinances, but may be in potential violation of federal laws governing controlled substances, given the U.S. Department of Justice anti-pot policy.  CNN and the LA Times Reported that Federal Attorney General Jeff Sessions announced last Thursday he was rewriting the federal government’s stance on marijuana prosecution, shifting policy away from the Obama’s administration’s hands-off approach to one that brings more risk to the players in states where the drug is decriminalized

This classical vertical conflict in state and federal laws will have to be sorted out in the Congress and the federal courts. In the United States, national polls indicate that 64 % of Americans favor recreational pot use.

As promised, here, is the California law overview:   

Adult use of cannabis is legal in California under Prop. 64, the Adult Use of Marijuana Act (AUMA), approved by the voters on Nov 8, 2016. In general, AUMA allows adults 21 and over to possess, privately use, and give away up to one ounce of cannabis, and to cultivate no more than six plants for personal use at their residence. It also legalizes the commercial sale, distribution and production of cannabis for adult use at state-licensed facilities beginning January 1, 2018, under terms spelled out in the Medical and Adult Use of Cannabis Regulation and Safety Act (MAUCRSA) approved by the legislature in 2017. Local city and county governments can restrict or ban cannabis businesses in their jurisdiction.

Cannabis remains legal for medical use by patients of all ages who have a physician’s recommendation under California’s 1996 medical marijuana law, Prop. 215. Prop 215 affords somewhat broader rights to possess and cultivate for personal use than AUMA. Prior to AUMA, the sale, production and distribution of medical cannabis by so-called patients’ collectives were authorized in loose terms under a law known as SB 420 (2004). However, SB 420 collectives will be phased out and subsumed in the state regulation and licensing system beginning in 2018.

The Bureau of Cannabis Control in the Dept. of Consumer Affairs is in charge of licensing and regulating retail sales, distribution, and testing; the Dept. of Food and Agriculture is in charge of cultivation, and the Dept. of Public Health is in charge of manufacturing. Prior approval by local city or county governments is required for all state-licensed facilities. Further info on state regulations may be found at the California Cannabis Portal.

Legal Adult-Use Activities

Under AUMA it is LEGAL for any adult 21 or over to:
(1) Possess, process, transport, purchase, obtain, or give away to persons 21 or older, not more than one ounce of cannabis or 8 grams of concentrated cannabis[HSC 11362.1(a)(1) and (2)].

(2) Cultivate, possess, plant, harvest, dry or process not more than six live plantsand possess the produce of the plants [HSC 11362.1(a)(3)


(a) Any cannabis in excess of one ounce is stored in the person’s private residential property, in a locked space, and not visible from a public place.

(b) No more than six plants are planted at any one residence at one time.

(c) Local governments may impose reasonable restrictions on cultivation, but may not forbid cultivation indoors in a residence or accessory structure that is fullly enclosed and secure. Locals are free to prohibit outdoor cultivation altogether until such time as adult use is made legal under federal law. (HSC 11362.2(b)).

Violation of restrictions on personal use cultivation is a $250 infraction for six plants or less [HSC 11362.4(e)].

Prohibited Activities

Under AUMA, Cannabis users may NOT [HSC 11362.3 – 11362.4]:

  • Smoke, vaporize or ingest cannabis or cannabis products in any public place($100 infraction).
    Exception: local governments may permit on-site consumption at state-licensed premises in their jurisdiction [BPC 26200(g)].
  • Smoke or vaporize cannabis in any non-smoking area, or within 1,000 feet of a school, day care or youth center while children are present, except privately at a residence. ($250 infraction)
  • Consume cannabis or possess an “open container” of cannabis while driving or riding as a passenger in any motor vehicle, boat, or airplane ($250 fine).
    Exception: consumption by passengers may be permitted in commercial vehicles specifically licensed for such purposes without children present. (Open containers are defined to mean any receptacle containing cannabis or cannabis products that has been opened or has a seal broken, or loose cannabis flower not in a container, except when in the trunk of the vehicle. Exception: Qualified Prop 215 patients carrying an ID card or recommendation may possess cannabis in a container that is closed or resealed [VC 23222].) It is also unlawful to use cannabis while in a car under Vehicle Code 23220 & 23221 even if you are a passenger. This is also true for cannabis edibles.
  • Possess or use cannabis on the grounds of a school, daycare or youth centerwhile children are present. ($100 fine).
  • Manufacture concentrated cannabis with a volatile solvent (except for state-licensed manufacturers). Volatile solvents include explosive chemicals like butane but not ethyl alcohol.

Other Restrictions [HSC 11362.45]

AUMA does not repeal, affect or preempt:

  • The rights of employers to maintain a drug and alcohol-free workplace, or to have policies forbidding use of cannabis by employees
  • The ability of landlords and other private parties from prohibiting or restricting use of cannabis on their privately owned property
  • The ability of government agencies to prohibit or restrict use of cannabis within a building they own or occupy

Rights of Prop 215 Medical Users

California’s medical cannabis laws under Proposition 215 remain in effect under AUMA. Prop 215 gives patients and their designated primary caregivers the right to possess and cultivate cannabis for their personal medical needs given the recommendation or approval of a California-licensed physician. Because there is no set limit on the amount patients may possess or cultivate, the argument can be made that patients may legally possess more than the one ounce and six plants allowed under AUMA if their medical needs require. Patients who do so should exercise discretion by keeping their stash at home and not carrying more than one ounce in public.

There is no age limit on medical use. Minors under age 18 need permission from their parents or guardians to use medical cannabis. Young adults age 18-20 are allowed to visit state-licensed medical dispensaries, but not adult-use ones.

Patients who have state medical cannabis ID cards are exempt from the sales tax on medical cannabis and cannabis products [BPC 34011(g)].

The parental rights of qualified Prop 215 patients are protected by AUMA in family and juvenile court proceedings (HSC 11362.84)

Prop. 64 added Section 26033 to the Business and Professions Code, protecting patients and primary caregivers who cultivate an unspecified amount for themselves or no more than five patients, if they receive compensation only under Subdivision (c) of Section 11362.765 of the Health and Safety Code. Under Prop 215, patients are still entitled to grow and possess whatever amount of marijuana is consistent with their medical need, though this is subject to local limits and land-use restrictions, including bans. Locals may not ban 6-plant-per-parcel gardens under Prop. 64, though they may “reasonably regulate” them, including banning outdoor cultivation.

How Can One Obtain Cannabis Legally ?

Adults 21 and over can buy cannabis at retail dispensaries with an “A” adult use license as of Jan 1, 2018.

Medical users 18 and over with a California physician’s recommendation can buy at stores with an “M” medical use license. Some medical cannabis collectives may continue to operate temporarily during the transition to state licensing, but they must obtain a state license within a year.

Dispensaries can apply for both “A” and “M” licenses. Some localities are allowing medical sales only, while others are banning both medical and adult-use. Only a limited number of California cities and counties are allowing “A” dispensaries in 2018.

Consumers can also have cannabis delivered from licensed type “A” and “M” delivery services.

Delivery services can operate in regions that don’t allow dispensaries, except for a handful of localities that have banned deliveries altogether (the legality of delivery bans is uncertain and may be challenged).

It is legal for any adult to buy or receive an ounce of cannabis from another, and to give away up to one ounce without compensation to other adults. Adults can also grow up to six plants at their residence.

Taxes Impact State Revenue and Price

Retail sales of cannabis are subject to the standard state sales and use tax of 7.5% – 9.25%.

Exception: Medical users with a state medical cannabis ID card are exempt from the sales tax for type “M” medical cannabis.

Many local governments assess additional taxes on cannabis businesses, ranging as high as 10-20% of total revenues.

As of Jan 1, 2018:

• All retail sales of cannabis are subject to an additional 15% excise tax.

• Licensed commercial growers must pay a cultivation tax of $9.25 per ounce on cannabis flowers (or $2.75 on leaf)

Criminal Penalties for Cannabis Offenses (HSC 11357-11362.9)

Juvenile offenders: In general, AUMA exempts juveniles under 18 from criminal fines and imprisonment for cannabis offenses.Instead, they are sentenced to community service, drug education or counseling.

Adult offenders: Most offenses for adults 18 and over are punished either as non-arrestable infractions subject to a fine, or as criminal misdemeanors. For misdemeanors, the maximum sentence is normally a $500 fine and/or six months in jail. Felony enhancements may be charged in aggravated circumstances such as repeat or violent prior offenses, environmental offenses, involvement of minors, etc. Also, prosecutors can charge violators with felony conspiracy to commit a misdemeanor if more than one person is involved in the crime.

Illegal Possession (HSC 11357)

  • Underage possession of one ounce or less by persons 18-21 is a $100 infraction. (For juveniles <18, no fine but community service and/or drug counseling)
  • Illegal possession of more than one ounce (or 8 grams of concentrates) is a misdemeanor.
  • Possession on the grounds of a grade school of one ounce or less during school hours is a $250 infraction for first offense; subsequent offenses are misdemeanors punishable by maximum 10 days in jail and $500 fine.

Illegal Cultivation (HSC 11358)

  • Underage cultivation of six plants or less by persons 18-21 is a $100 infraction.
  • Illegal cultivation, harvesting, drying, or processing of more than six plants is a misdemeanor.
    Felony enhancements allowed for:

    • persons with two or more prior convictions for illegal cultivation,
    • offenders with two prior violent felony “strikes”
      and registered sex offenders
    • violation of specified environmental statutes regarding illegal diversion or discharge of water, hazardous waste, endangered species, etc.
  • Possession With Intent to Sell (HSC 11359)
  • Possession of cannabis for illegal sale is a misdemeanor.
    • Felony enhancements allowed for:
      • 3rd-time offenders
      • offenders with two prior violent felony “strikes” and registered sex offenders
      • knowing sale to minors <18; or
      • employing persons <21 to help sell, cultivate, transport, etc.
  • Illegal sale, import, transport, or distribution (HSC 11360)
  • Illegal selling, furnishing, administering, giving away, transporting for sale or importing into the state is a misdemeanor.
    • Felony enhancements allowed for:
      • importing into state or transporting for sale out of state more than one ounce of cannabis or 4 grams of concentrate
      • 3rd-time offenders
      • offenders with two prior violent felony “strikes”
        and registered sex offenders
      • knowingly providing to minors <18
  • Employing or providing to minors (HSC 11361This statute was not de-felonized by Prop 64. Employing a minor in cannabis sales or distribution, and selling or furnishing cannabis to a minor are felonies punishable by prison sentences of three years or more.

Driving under the influence laws are not radically modified

It is unlawful to drive while under the influence of marijuana or alcohol or any other drug by Vehicle Code 23152. “Under the influence” is not explicitly defined in the statute, but is interpreted to imply some degree of impairment. Therefore the mere fact of having taken a toke of marijuana does not necessarily mean one is DUI. For evidence of impairment, officers may administer a field sobriety test. Arrestees may also be required to submit to a blood or urine test under Vehicle Code 23612 or else forfeit their licenses. Since marijuana is detectable for much longer periods in urine than in blood (several days vs. several hours), a positive urine test constitutes much weaker proof of recent use and impairment than a positive blood test. In some jurisdictions, police are testing motorists with oral swab tests. Under current law, police cannot compel you to take a swab test like they can a blood or urine test. Oral swab tests can detect marijuana for a couple of hours to as long as a day or more after use.

Asset Forfeiture

Unlike federal law, California law requires a conviction for forfeiture of property involved in a drug crime. Also unlike federal law, state law does not permit forfeiture of personal real estate for marijuana cultivation. Vehicles may be forfeited only if 10 pounds or more of marijuana is involved. Health and Safety Code 11470. However, state authorities can choose to turn major violators over to federal prosecutors, in which case they may share in federal forfeiture proceeds.

Federal Law in Parks

AUMA does not apply on federal property. Possession in national parklands including Golden Gate Recreation Area is illegal. Marijuana, including both THC and CBD, remains an illegal Schedule One substance under the U.S. Controlled Substances Act. Federal charges are typically brought only in large cases where commercial distribution is suspected (e.g., cultivation of several hundred plants), or where the government stands to gain substantial assets through forfeiture.Text of the Controlled Substances Act.

Industrial Hemp (CA Food & Agriculture Code (Division 24, FC 81000 – 81010)

AUMA authorizes the production of industrial hemp under regulations to be promulgated by the California Department of Food and Agriculture. Hemp is not taxed, regulated or licensed by the Bureau of Cannabis Control like cannabis intended for human consumption. Hemp growers are required to register with their local county agricultural commission, but no procedures for doing so have been established as of Dec 2017.

State Licensing Overview (Effective Jan 1, 2018) Affects Local Land Use

Licensing is required for all phases of the cannabis industry including cultivation, testing, manufacture, distribution, transport and retail sales. All cannabis products must be tested by a state-licensed lab and pass through the hands of state-licensed distributors, who also collect taxes on cultivation and retail sales. The following license types are established under state law (BPC 26050):

  • Type I “Specialty outdoor”- no artificial lighting, cultivated area less than 5,000 sq ft canopy or 50 plants on noncontiguous plots
  • Type 1A “Specialty indoor” –
    indoor cultivation using exclusively artificial lighting between 501 and 5,000 sq ft.
  • Type 1 B “Specialty mixed-light” – combination of natural and artificial lighting between 2,501 and 5,000 sq ft.
  • Type 1 C “Specialty cottage” – 2,500 sq ft or less mixed light or up to 25 mature plants outdoors or 500 sq ft indoor cultivation
  • Type 2 “Small Outdoor” – no artificial lighting, 5,001 -10,000 sq ft
  • Type 2A “Small indoor – exclusively artificial lighting, 5,001-10,000 sq ft
  • Type 2B “Small mixed-light” 5,001-10,000 sq
  • Type 3 “Medium Outdoor” 10,001 sq ft – one acre (=43,560 sq ft)*
  • Type 3A “Medium Indoor” 10,001 – 22,000 sq ft.*
  • Type 3B “Medium Mixed-Light” 10,001 – 22,000 sq ft.*
    *The Dept of Food and Agriculture shall limit the number of type 3 licenses
  • Type 4 “Nursery” for cultivation
  • Type 5 “Large Outoor” cultivation over one acre**
  • Type 5A “Large Indoor” over 22,000 sq ft.**
  • Type 5B “Large Mixed-light” over 22,000 sq ft.**
    ** No type 5, 5A, 5 B licenses may be issued before Jan 1, 2023.
  • Type 6 – “Manufacturer 1” not using volatile solvents
  • Type 7 – “Manufacturer 2” using volatile solvents
  • Type 8 – Testing laboratory. May not hold any other kind of licenses.
  • Type 10 – Retailer
  • Type 11 – Distributor – responsible for collecting taxes, testing, and transporting to retailers. Retailers must purchase cannabis through a distributor.
  • Type 11 – Distributor Transport Only (CA Code of Regulations Section 5014)
  • Type 12 – Microbusiness –
    Combination license to cultivate < 10,000 sq ft, manufacture (Type 6 only), distribute, and retail.
  • Event Organizer License (CA Code of Regulations Section 5600).
  • Persons may hold any combination of licenses, except for testing labs and Type 5 large cultivators, which can hold no other license types.

Copyright 2017 Nate Bernstein, Attorney at Law. LA Real Estate Law Group. All Rights Reserved.

The author of this article, Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estbio pic nate bernsteinate litigation, commercial litigation, employment law, and bankruptcy matters. The contact number is (818) 383-5759, and email is  Nate Bernstein is a 22-year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options. He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company. Nate Bernstein created, a leading educational resource on quiet title real estate litigation. Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, and bankruptcy law. Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases. 

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