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California Marijuana Business Guide

by / Tuesday, 17 September 2013 / Published in Business, California

Operating a Marijuana Business in California. With Washington and Colorado expecting a “gold rush” style response to the legalization of recreational marijuana shops in 2014, it seems inevitable that the next state to open the floodgates for hundreds of potential “ganjapreneurs” is California. Although medical marijuana is legal in the Golden State, voters have yet to pass laws that would toss out decriminalized regulations in favor of legalizing recreational pot use for anyone over 21 years old. The impetus to legalize marijuana, however, is alive and kicking in the form of California Cannabis, Hemp and Health Initiative of 2014.

Backers of the bill need to collect over 500,000 signatures to get this initiative on the ballot next year. Similar to bills that led to the legalization of pot in Washington and Colorado, the California CHH initiative would permit residents to grow and possess certain amounts of marijuana and establish legislation delineating rules for the retail sale of pot by licensed individuals. In addition, the bill also prohibits state law enforcement from applying federal drug laws to those who use or sell marijuana.

Also embedded in the proposed bill is a revision of the definition of pot to exclude hemp that contains 3/10 of a percent of THC. “Industrial” hemp would be subject to testing by the U.S. DEA to guarantee that this grade of marijuana did not contain normal or above normal levels of THC so that it could be used to produce biofuels, clothing, rope and a variety of other widely implemented items. Proponents of the California CHH initiative are also quick to point out that their state harbors a high demand for industrial hemp products and legalizing it would greatly increase business and employment opportunities for a severely, revenue-strapped state like California.

Operating a Retail Marijuana Shop in California

Information Specific to Operating a Retail Marijuana Shop in California That is Contingent on Passage of California Cannabis Hemp and Health Initiative 2014: AN ACT TO AMEND THE HEALTH AND SAFETY CODE OF CALIFORNIA (see full text here: http://www.cchi2014.org/fulltext.html):

Within six months of being voted on and passed by the residents of California, the California CHH Initiative 2014 requires legislation to be established that allows licensed “concessionary” retail shops to sell recreational marijuana under guidelines regulating the sale of wine and beer in California.

Permit and/or license fees

Permit and/or license fees to operate an establishment involved in the sale, production or distribution “shall not exceed $1000”. In addition, an excise tax will be placed on marijuana sales that should not exceed 10 percent of a product’s price. Fifty percent of all taxes collected on the sale of recreational marijuana should be made available to the development and research of medicinal, industrial and nutritional pot industries operating solely in California.

Business owners and their employees will not be subject to testing for “residual and/or inactive cannabis metabolites” in order to obtain insurance or employment. However, the initiative states that testing for “active” cannabis should be allowed and deemed pertinent in regards to determining an individual’s level of impairment as well as employment status.

California law enforcement will be prohibited from assisting the U.S. Drug Enforcement Agency in prosecuting acts involving the use, possession and sale of marijuana that is not illegal in the state, upon passage of the initiative.

Current Laws Affecting Recreational Marijuana Users in California

At this point in time, marijuana that is not being used in a medical capacity remains illegal in California. However, possession of pot is significantly decriminalized. Having up to 28.5 grams of marijuana for personal use is considered an “infraction” and results in a $100 fine. Alternately, cultivation of any amount of pot, unless the person caught growing pot is certified to use medical marijuana, is a felony and could result in prison time.

A recent poll of registered voters in California indicates that the majority of voters are currently in favor of legalizing the sale of recreational marijuana (http://www.sfgate.com/politics/article/Legal-pot-favored-in-new-California-poll-4312545.php). Fifty-four percent said they would vote “yes” on the California Cannabis Hemp and Health Initiative 2014 while 43 percent claimed they would vote “no”. The San Francisco area had the highest percentage of positive responses, with nearly 70 percent of Bay Area voters asserting they would like to see recreational pot legalized and sold as a commodity in California.

Pot Shop or Vending Machines?

After California Cannabis Hemp and Health Initiative 2014 passes—which it is entirely expected to–and lawmakers permanently establish regulations permitting the legal sale of recreational marijuana, some entrepreneurs are considering the use of vending machines as an easy and affordable way to sell pot products. Already instituted in some states that have legalized medical marijuana use, these vending machines will require purchasers to submit to a fingerprint scan integrated somewhere on the machine before making a transaction to ensure they are at least 21 years old.

To continue receiving the latest news regarding the progression of California’s push to legalize recreational marijuana, check back often for updates and additional resources that can help you establish your own marijuana retail store in California.

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