Permissive Medical Marijuana Vertical Integration

Medical marijuana - own source requirement - 50% own source requirement fiscal year 2018-19 - elimination of own source rule in fiscal year 2019-20 - production management system - sales above 2 ounces for extended ounce count. Under current law, a medical marijuana center must source 70% of the medical marijuana it sells from its associated optional premises cultivation facility. Similarly, an optional premises cultivation facility must have 70% of the medical marijuana it cultivates sold through its associated medical marijuana center. The act eliminates that requirement and allows medical marijuana centers to source medical marijuana from any optional premises cultivation facility.

The act creates a transition period between the current limited sourcing model that begins July 1, 2018. For one year from that date, medical marijuana centers and optional premises cultivation facilities can purchase and sell 50% of their inventory as a wholesale transaction, and medical marijuana trim is not included in the calculation of the percentage. Then, on or after July 1, 2019, an optional premises cultivation facility may sell any amount of the medical marijuana it cultivates to any medical marijuana center. Similarly, a medical marijuana center may source its medical marijuana from any optional premises cultivation facility without restriction. Additionally, the state licensing authority shall adopt a production management system similar to the system in the retail marijuana code.

The act allows a medical marijuana center to sell medical marijuana acquired from an optional premises cultivation facility licensee or medical marijuana-infused products manufacturer licensee. A medical marijuana center can sell more than 2 ounces to a patient if that patient has a recommended extended ounce count from his or her physician and registers with the medical marijuana center as his or her primary center. The patient also has to sign an affidavit that he or she does not have a primary caregiver cultivating medical marijuana on his or her behalf.

(Note: This summary applies to this bill as enacted.)