BArtels Law

Warning: Marijuana is NOT LEGAL at the Federal Level.
Even in CA, only Medical Sales are legal (Jan 1 2017).

There are a lot of questions but few answers surrounding Legal Marijuana in California. The landscape continues to change based on who is in office - in CA as well as federally. The best advice I can give is to be informed and cautious. Below is a status on Prop 64 and answers to some basic questions.

Updated: Jan 1, 2017
Prop 64 Status:  

All Prop 64 did was to make possessing a small amount of pot legal. It did NOT officially change the rules on selling pot. Medical marijuana is still the only legal way to buy/sell pot.

But it did set in motion the wheels to legalize the sale of pot. The CA legislature needs to establish the regulations around selling pot. It is anticipated that the rules will be very similar to selling alcohol: requires a license, three-tier maker-distribution-retail system, restrictions on who can buy, etc. It is expected to take the legislature another year (some time in 2018) before they have the system fully defined. Until then, you can not sell pot unless you have a license to sell Medical Marijuana. You can not sell pot to anyone who does not have a Medical Marijuana card. So for now - nothing really has changed, but the wheels are in motion.

To be ready for the changes coming, you will need to establish the proper business entity and history so when licenses to sell marijuana become available, you will be first in line. We anticipate that the legislature will give priority for a few years to established, local, small businesses. In order to take full advantage of this time, recommend that you form and register a business as soon as possible. so you will already be registered when licenses are made available.Contact me so we can discuss a plan for your business.

7 Thinks You Should Know About Prop 64

1. You will have to wait to sell recreational pot legally – but you must prepare.

Although Californians can possess and grow marijuana, people cannot legally buy nonmedical marijuana until stores are licensed — and the state has until Jan. 1, 2018 to begin issuing licenses.  The intent is for the licenses process to be prioritized for existing, small, local businesses - so you should prepare your business so you are near the front of the line.

2. Any adult can grow pot for personal use.

For those who don’t want to buy pot from special marijuana stores, the initiative would allow adults to grow and use up to six marijuana plants. Medical marijuana patients may still possess the quantities necessary to meet their medical needs, even in excess of the 28.5 gram limit.

To grow more than that limit and to sell it, you will need licenses.

3. You can only sell pot to adults

Prop 64 is the ‘Adult Use of Marijuana Act’ and allows only people 21 and older to possess, transport and buy marijuana for recreational use.

4. Pot products cannot be appeal to kids.

Cannabis products could not be designed to appeal to children or to be easily confused with candy. Marijuana products also would have to be packaged in child-resistant containers, and pot shops would be prohibited from allowing anyone under 21 years old on their premises.

The law also bars the marketing of marijuana products to minors, which means ads would not be able to use anything appealing to minors.

5. If you want to sell pot, you’re going to have to tell the state – and they will check you out.

Anyone who wants to grow, process, transport or sell marijuana must get a state license and pay a fee.  The state agencies below must begin issuing licenses by Jan. 1, 2018.

 - Bureau of Marijuana Control (inside the state Department of Consumer Affairs) for the transportation, storage, distribution and sale of marijuana.

 - Department of Food and Agriculture for marijuana growers

 - Department of Public Health for businesses to manufacture and test marijuana products.

The license process will require a background check.  The license will be denied to anyone with felony convictions involving violence, fraud, drug trafficking or selling drugs to a minor.

Local governments could also require operators to obtain a license, and restrict locations through zoning rules. Contact a lawyer in your area to understand the local ordinances.

6. Selling pot without a license is illegal.

Selling marijuana without a license is a misdemeanor with penalties of up to six months in jail and $500 in fines, plus possible civil penalties of up to three times the amount of the license fee for each violation.

7. Marijuana will be taxed by everyone.

Proposition 64 is a tax generating proposition.  The state can impose a 15% tax on the retail sale of marijuana. In addition, it can add a cultivation tax on growers of $9.25 per ounce for flowers and $2.75 per ounce for leaves.

Cities and counties also can (and will) impose their own taxes.

You must pay these taxes  - so you will need to build them into your pricing structure.

 

Useful Links

- Cole Memo: Memo from Deputy Atty General in 2013
- AB-64 Cannabis: medical and nonmedical: regulation and advertising

Legal Marijuana FAQs

1. What do I do now that Prop 64 passed?

2. Can I sell pot without being a medical marijuana dispensary?

3. Do I still need to be part of a co-op?

4. What is the best business type for me?

5. How do deposit the cash from sales?

6. Do I need to start paying taxes?

7. Do I need to register with the government?

8. x?

9. x?

10. x?

11. x?

12. x?

13. x?

1. What do I do now that Prop 64 passed?

Stay informed - and get a business formed.

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2. Can I sell pot without being a medical marijuana dispensary?

No. The legislature still needs to create system for licensing pot sellers - and for collecting taxes..

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3. Do I still need to be part of a co-op?

It depends on your situation, but probably. Call me and we can discuss your individual situation..

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4. What is the best business type for me?

It will depend on your individual situation, but in the short-term it is best create a xx. Call me so we can discuss your situation.

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5. How do deposit the cash from sales?

Since marijuana sales are still illegal federally, most banks will not take your money. Technically the feds consider it 'drug money' so they can seize it.

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6. Do I need to start paying taxes?

Not until the CA legislature works out the taxing system for sales of marijuana. Until then, keep goods records and set some  money aside.

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7. Do I need to register with the government?

We anticipate that getting a license to sell marijuana will require a license - so Yes, you will need to register with the government. Each situation is unique, but generally it would be best to form and register a business as soon as possible so you will already be registered when licenses are made available.

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8. x?

Any unauthorized use of the same (or confusingly similar) trademark for similar products would be trademark infringement. The basic test is whether consumers would be likely to mistake the maker of the goods or services.

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9. x?

There is no trademark police.  It is your responsibility as the trademark owner to monitor for and identify any infringement.  In most cases a ‘Cease and Desist’ letter from an attorney is enough to stop the infringement or trigger a discussion about licensing terms.

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10. Can I license my trademark to others?

Yes. Trademarks can be licensed as long as you maintain the right to control how it is used and the quality of the product. This prevents the consumers from being misled about the product.

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11. How do I protect my trademark outside The U.S.?

U.S. registration does not protect your trademark in other countries.  International trademark protection is available on a country-by-country basis. A trademark attorney can assist with the planning and execution of international trademarks.

Note: Pursuing cases of international trademark infringement can be very complex and expensive.  Only large multi-national corporations typically pursue this action.  For small companies, the best strategy typically is to enforce the trademark on any imports into the US.

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12. Are domain names trademarks?

No.  Domain names (URLs) are internet addresses and do not typically identify the source of a product so they are not trademarks. They can become trademarks if, instead of simply being an internet address, they come to identify the product. For example, ‘Yahoo Dot Com’ is used in advertising to identify Yahoo so it can be a trademark.

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13. Can someone else use my trademark in a domain name?

Yes– but only if they are using it for legitimate business purposes. This is a little confusing, but since domains are not trademarks, if the person is using the trademark for legitimate (not confusing) business purposes, they can use the mark.  But they cannot just hold it hostage. In 1999, Congress passed the Anticybersquatting Consumer Protection Act, which makes it an infringement to hold someone's trademark hostage.

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