Vertical Integration under MMRSA

Medical Marijuana Lawyers Serving the Los Angeles Area

The Medical Marijuana Regulation and Safety Act established the Bureau of Medical Marijuana Regulation and a comprehensive licensing system for medical marijuana businesses. Whether you are a collective that is interested in manufacturing medical marijuana, or you hope to get involved with testing medical marijuana, it is crucial to retain an experienced Los Angeles medical marijuana attorney who understands the complicated rules regarding vertical integration under MMRSA. At the Cannabis Law Group, we can educate you on the new licensing system and advise you on which licenses may be appropriate for your objectives.

Vertical Integration under MMRSA

Under MMRSA, there are 17 types of medical marijuana licenses, but there are limits on vertical integration. There are 10 types of cultivation licenses based on the scale of the operation, the type of light source used, and the production stage. There are two types of manufacturing licenses, one type of testing license, one type of distribution license, and one type of transportation license. There are two types of dispensary licenses depending on the number of retail sites.

Those that receive licenses may only hold them in up to two categories, and there are restrictions on the combinations of licenses that a particular business may have. However, there is an exception if you meet the following requirements:

  • The city or county in which you do business has an ordinance permitting vertical integration;
  • You were vertically integrated before July 1, 2015;
  • You have been in continuous operation; and
  • You are registered with the Board of Equalization.

The exception permits vertical integration for those that meet the requirements until January 1, 2026 unless the legislature extends this period. Additionally, there is a specialty dispensary license that allows vertical integration until January 1, 2026 if the entity operates three or fewer retail sites, holds only one manufacturing license, and does not own more than four acres of licensed cultivation sites in California.

The restrictions related to the combination in which you can hold any two licenses are intricate. For example, if you hold a testing or distribution license, you cannot hold any other type of license. However, if you have a Type 10 A dispensary license, you can hold a cultivation or manufacturing license. This means that a Type 10 A license-holder would need to contract with a distributor and a tester, and then have the product transported to one of its retail sites. Those that hold a large-scale cultivation license cannot also hold a manufacturing license. Moreover, both cultivators and manufacturers are required to contract with an entity that has a distribution license in order to transport products to a testing facility.

Explore Your Options with a Medical Marijuana Attorney in Los Angeles

Although a vertically integrated system may be easier to administer and navigate for the purpose of making large profits, it is more difficult for newcomers to enter industries that are vertically integrated. The system set up by MMRSA allows niches for newcomers and rewards those that have gotten their legal and financial affairs in order under prior laws. The Los Angeles medical marijuana lawyers at the Cannabis Law Group can advise you on MMRSA requirements, as well as the MMPA, the Controlled Substance Act (CSA), the Compassionate Use Act (CUA), and all other marijuana-related laws in California. We represent clients in many Southern California cities, including Moreno Valley, Indio, Corona, Laguna Niguel, Tustin, Newport Beach, Irvine, Anaheim, Long Beach, Woodland Hills, Van Nuys, Hollywood, Burbank, and Beverly Hills. Call us at (714) 937-2050 or use our online form to set up an appointment with a cannabis attorney.

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