Medical Marijuana Laws:

California's Compassionate Use Act
California's medical marijuana patients and care providers have the right to use and distribute medical marijuana under California Health and Safety Code 11362.5 and Health and Safety Code 11362.7-11362.83

California's Medical Marijuana I.D. Card Program
Sections of Health and Safety Code 11362.7-11362.83 set forth guidelines for a medical marijuana I.D. card program, which should have been implemented on January 1, 2004. To date, only some counties have enacted an I.D. card program, while others have failed to comply with state law.

Medical Marijuana Dispensaries and Distribution in California
Distribution of medical marijuana via dispensaries, cooperatives, collectives, and caregiers is legal under Health and Safety Code 11362.5 and Health and Safety Code 11362.7-11362.83

For more information on medical marijuana distribution, permits, taxes, laws and regulations, see the California Attorney General Guidelines - http://ag.ca.gov/cms_attachments/press/pdfs/n1601_medicalmarijuanaguidelines.pdf

Some of the processes and procedures for opening a dispensary are unclear at the moment, mostly due to the on-going federal resistance to medical marijuana. Additionally, most cities and counties have various regulations that may or may not apply, and which may or may not be enforced correctly. Still, there are some key points to understand:

Medical Marijuana Distribution is Legal
The Compassionate Use Act(CUA), formerly known as Proposition 215, grants legitimate medical marijuana patients the rights to "obtain and use marijuana for medical purposes". (Health and Safety Code 11362.5 ). The CUA is not clear on how the distribution of medical marijuana is to happen, which has led some to conclude that no distribution of medical marijuana is legal. However, it would be foolish to assume that the CUA grants one the right to "obtain and use" medical marijuana, but prohibits distributing the medicine. Therefore, it is more likely that the CUA is intended to permit distribution of medical marijuana through normal means.

The CUA also says that it is intented "To encourage the federal and state governments to implement a plan to provide for the safe and affordable distribution of marijuana to all patients in medical need of marijuana." So, it is clear that the CUA intends for patients to have ways to obtain their medicine. Additionally, the California State Senate passed SB 420 in 2003 (Health and Safety Code 11362.7-11362.83), which gives some guidelines for dealing with distribution of medical marijuana. SB 420, aka Health and Safety Code 11362.7-11362.83, offers various means for distribution of medical marijuana.

First, section 11362.765 says that patients, caregivers, and anyone else who "provides assistance" in obtaining medical marijuana are exempt from the criminal marijuana laws of California. Additionally, section 11362.765 provides criminal exemption for caregivers who recieve "reasonable compensation" for "sevices" and/or "out-of-pocket expenses" for providing medical marijuana to legitimate patients. Therefore, the law permits a caregiver to accept payment for production and/or distribution of medical marijuana. Furthermore, section 11362.775 provides criminal exemption for patients and caregivers "collectively or cooperatively to cultivate marijuana for medical purposes". Therefore, medical marijuana "cooperatives" and "collectives" are legal under state law.

So, as you can see, distribution of medical marijuana is clearly legal via caregivers, cooperatives, and collectives, even when there is payment involved.

Permitting of Medical Marijuana Dispensaries
There is currently no state-wide system for documenting, registering, or permitting medical marijuana dispensaries. Such a system is inevitable, but cannot begin until the federal government stops prosecuting medical marijuana patients and care providers.

All businesses must comply with local, state, and federal laws, so long as those regulations do not violate patients' rights under Health and Safety Code 11362.5 and Health and Safety Code 11362.7-11362.83. Each city and county has different regulations, but here are some that often apply to medical marijuana dispensaries:

1) Business License: Most collectives and/or cooperatives would need to file for a general business license, depending on the local laws.

2) Medical Marijuana Ordinances: Some cities have specific ordinances relating to medical marijuana "dispensaries", which regulate where and how medical marijuana distribution can happen. These ordinances usually include zoning regulations, operational restrictions, and additional permitting.

3) Sales Tax: "Sales" of medical marijuana are subject to sales tax, while "services" are not. If sales tax applies, a distributor would have to file a Sales Tax Permit with the Board of Equalization, and pay taxes monthly. For more information on the correct application of sales tax see: http://www.boe.ca.gov/pdf/pub61.pdf and http://www.boe.ca.gov/pdf/reg1501.pdf

4) The IRS: Businesses are required to file the proper paperwork and pay the proper taxes with the IRS, and this would probably apply to some dispensaries. However, the current federal prosecution of medical marijuana care providers makes it difficult for dispensaries to file the proper paperwork. A smart dispensary owner will seek advice on this subject from lawyers and accountants who know how to deal with this conflict.

For more information about laws relating to medical marijuana, see the following sites:

• Drug Policy Alliance - MMJ Legal Information