Q&A on California Marijuana Regulations

Nearly two decades after California became the first state to legalize medical marijuana, the state finally is planning to regulate the vast, unruly industry the voter-approved move spawned.

Gov. Jerry Brown on Friday signed a package of bills that create a licensing and oversight framework for the growing and selling of medical marijuana and pot-infused products.

Here are the basics on the Medical Marijuana Regulation and Safety Act, how it might affect the existing landscape for medical marijuana and what happens next.

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HOW WILL THE REGULATIONS WORK?

Every person and company involved in the commercial medical marijuana trade will be required to obtain both a local operating permit and an annual state license beginning Jan. 1, 2018. That includes marijuana growers, retail operations such as storefront dispensaries and delivery services, and makers of processed pot products.

The framework, modeled after the system the state uses for regulating alcohol sales, also creates new industry players that will have to carry licenses as well: wholesale distribution centers that do pre-sale tracking and inspections, transporters that will be charged with getting pot from the distributors to the point of sale, and product safety testing labs.

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WHO WILL BE RESPONSIBLE FOR CARRYING OUT THE NEW SCHEME?

A new Bureau of Marijuana Regulation within the Department of Consumer Affairs will oversee the work of several existing state agencies. The bureau will be led by a director appointed by the governor and confirmed by the state Legislature. It initially will be financed by a $10 million advance from a dedicated fund where licensing fees will go.

Authority to license indoor and outdoor marijuana growers will reside with the Department of Food and Agriculture, which also will be responsible for enforcing strict acreage and square footage limits for commercial cultivation sites. The Department of Pesticide Regulation has been given responsibility for developing standards on the use of pesticides in growing pot.

Consumer affairs will issue licenses to dispensaries, distributors and transporters. The Department of Public Health will be in charge of product testing labs and manufacturers, a task that will include creating packaging and labeling rules.

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HOW MUCH REVENUE WILL THE MEASURES GENERATE?

Pot dispensaries already are supposed to pay state sales taxes, but because the state has not had a way of tracking the businesses, officials suspect that many vendors either underreport their sales or skip the step altogether.

The bills the governor signed did not include any other taxing mechanism for the state. They do, however, authorize counties to tax medical marijuana cultivation and sales with voter approval.

The state hasn't provided any projections for how much it expects to take in from license fees other than to say they will be set at a level to cover the cost of the aforementioned bureaucracy.

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WILL STATE OVERSIGHT CAUSE THE INDUSTRY TO EXPAND OR SHRINK?

Local governments and the California Association of Police Chiefs fought hard for provisions that preserve the right of counties and cities to ban or restrict dispensaries, as at least 250 do now.

Medical marijuana advocates are hoping that many cities, tempted by a new source of tax revenue, will lift their bans now that the state has stepped up to tame and set uniform standards for the industry.

The impact also remains unclear for growers. While the package seeks to protect small farms by restricting most license holders to 10,000 square feet or less of "total canopy" at one site, experts note that California likely produces way more marijuana than is needed to meet in-state demand.

In truth, since no one knows how many growers, retail outlets or even medical marijuana users California now has and with voters expected to consider legalizing recreational marijuana use next, the full impact of the regulations may always remain unclear.