Dispensaries are restricted from doing on-site or off-site cultivation. Dispensaries would be required to obtain medical cannabis from licensed cultivators. There is a grandfathering provision which would allow for such vertical integration if the local ordinance or regulation which the Dispensary operates under provides for a vertically integrated seed to distribution model.
The Medical Marijuana Regulation and Safety Act has a “Grandfather” provision which will allow vertical integration from seed to distribution as to commercial cannabis operations in those local jurisdictions that have adopted a local ordinance, prior to July 1, 2015, which allows or requires qualified businesses to cultivate, manufacture, and dispense medical cannabis or medical cannabis products, with all commercial cannabis activity being conducted by a single qualified business.
In order to qualify for the Grandfather provision the following three conditions must be met:
(1) The business was cultivating, manufacturing, and dispensing medical cannabis or medical cannabis products on July 1, 2015, and has continuously done so since that date.
(2) The business has been in full compliance with all applicable local ordinances at all times prior to licensure.
(3) The business is registered with the State Board of Equalization.
A business licensed pursuant this grandfather provision is not required to conduct all cultivation or manufacturing within the bounds of the local jurisdiction where the Dispensary is located , but all cultivation and manufacturing shall have commenced prior to July 1, 2015, and have been in full compliance with applicable local ordinances for all locations. This grandfather provision remains in effect only until January 1, 2026, and as of that date is repealed.