SLO County Cannabis Business Association > Blog > Delivery > Medical vs. Adult use Cannabis Products

Medical vs. Adult use Cannabis Products

This is for the benefit of those attempting to understand (including myself) the differences of cannabis deemed for medicinal use as opposed to adult use aka recreational use of cannabis and how best to make it available to consumers.

  • What's the difference between medicinal and adult use cannabis?
  • How will it be licensed for retail?
  • How will it be tax exempt for State ID issued card carriers?

In essence, there is physiologically no difference between a Type M-licensed medicinal cannabis plant and a type A-licensed cannabis plant destined for adult use. In addition, the standards of quality will be the same for both license types as per California Dept of Public Health. The only difference between an “A-license” and an “M-license” is how the consumer could be exempt from paying sales tax if used as a prescribed medicine for treatment of a specific ailment and holds a State issued ID card.

Definitions:
“A-license” means a state license issued under this division for cannabis or cannabis products that are intended for adults who are 21 years of age and older and who do not possess a physician’s recommendation.

“M-license” means a state license issued under this division for commercial cannabis activity involving medicinal cannabis.

“Retailer,” for the retail sale and delivery of cannabis or cannabis products to customers. A retailer shall have a licensed premises which is a physical location from which commercial cannabis activities are conducted. A retailer’s premises may be closed to the public. A retailer may conduct sales exclusively by delivery.

“Microbusiness,” for the cultivation of cannabis on an area less than 10,000 square feet and to act as a licensed distributor, Level 1 manufacturer, and retailer under this division, provided such licensee can demonstrate compliance with all requirements imposed by this division on licensed cultivators, distributors, Level 1 manufacturers, and retailers to the extent the licensee engages in such activities. Microbusiness licenses that authorize cultivation of cannabis shall include the license conditions described in subdivision (b) of Section 26060.1.

Tax exemptions:
“The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides his or her card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.”

  • Is it feasible for a dispensary to operate as medicinal only and not offer adult use licensed products?

The short answer is no.

Tax exempt people. Let’s consider a few more complicated issues concerning “M Licensed” cannabis. The consumer is only exempt from paying taxes if they are a STATE card issued patient. This is very different from a physician's recommendation that is widely used to gain membership in today’s collective. Please see HEALTH AND SAFETY CODE - HSC for the requirements for patient & caregiver tax exempt status.

So in comparison to what collectives accept now as a “medical recommendation”, this state issued identification card isn’t something I see a majority of dispensary visiting consumers applying for, in my opinion. The question I’d ask now is, of those that have a current “medical recommendation”, how many will actually go to the state and apply for the tax exemption status vs. how many will just opt to pay taxes for either type A or M licensed products? From what I can understand a consumer can purchase both A or M licensed products. Only the State ID card carriers would be exempt from paying tax on M licensed products only. So it’s not a matter of the Medicinal or Adult Use of the products, it’s just whether or not sales tax is collected.

I would estimate that a larger percentage of those who currently have current “medical recommendations” to gain access to a collective currently would opt to not renew those recommendations and purchase type A or M licensed product and happily pay the taxes, (motivation to keep them low). Because they are essentially the same products.

Considering that From 2004 through January of this year, 85,370 medical marijuana identification cards have been issued by California counties, an average of 7,100 cards per year, wouldn’t that would severely limit the opportunity for profitable business if a dispensary were limited to selling only type “M-Licensed” products to only State ID holders? And would it cause consumers to unnecessarily obtain a medical ID card to be able to purchase a product such as a pain relieving topical.

I often hear elected officials contemplate medicinal only dispensaries because “we’re just not comfortable with adult use yet”. I ask you to consider this truth; A large part of the SLO County population is comfortable with it. They are experienced, educated, ready and eager to purchase the products they voted for access to. Aside from prohibition of adult use complicating product sales for such things as topicals it would seem that by allowing for a combined A & M licensed dispensary or retail store-front would result in:

Providing the consumers what they asked for.
Lessen the propensity for black market sales.
Keep revenue in your locality instead of giving it all to Grover Beach or outside delivery services.
Save time in the future from having to go back and change ordinances.
Greater chance of profitability for the dispensary by being able to offer a wider range of products for consumers.

These matters are extremely complicated especially if one is unfamiliar with the how’s, who’s and why’s of cannabis activities. So without seeming to minimize the complexity and implications of cannabis business in our communities, I’d argue that by allowing a dispensary that sells both type A & M licensed products the process would be less complicated in the long run, better suited for local consumers and profitable for the store owner.

San Luis Obispo County Cannabis Business Association is a local non-profit agency offering assistance in understanding state law and how it applies to SLO County and it’s residents. We strive to bridge the gaps of understanding by working with stakeholders and community leaders to compile timely and accurate information needed to implement conscientious regulations that will serve our communities without compromising their integrity.

Please feel free to use us as a resource by reaching out to any of our SLOCCBA Board Members, or myself.

Kindly,
Marie Roth
SLOCCBA President
(805) 712-5963

P.S.

AB133 is now positioned to replace SB94. Other notable language in the trailer bill AB133:

By using the “Ctrl F” key please search “requirements” to learn more about licensing requirements.

MAUCRSA requires that a licensed medicinal cannabis manufacturer only manufacture cannabis products for sale by a medicinal cannabis retailer. AB133 would repeal those provisions making it possible for one manufacturer to produce for both medicinal as well as adult use products. These products can also be sold in the same store right next to each other on the same shelf.

“The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities.”

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