April 20th (or 4-20), is the “Black Friday” for the cannabis industry, ripe with promotions and sales offered by cannabis retailers and other establishments. Since last 4-20, a lot has changed in the way of cannabis laws and regulations, especially in California, so we wanted to share some highlights to help our friends in the cannabis industry to stay on the right side of the law as they roll out 4-20 campaigns this month.
One surefire way to attract attention from customers is to offer something free (just ask Southwest). But, if you are a cannabis business in California, you should know that recently-passed state law and new regulations issued by the Bureau of Cannabis Control (“BCC”) prohibit gifting cannabis, with two exceptions, which we call the “friendly adult” and “qualified patient” exceptions. This article will discuss the two exceptions briefly, but if you are planning to incorporate either into your 4-20 business plans, we recommend speaking with an attorney to discuss all the nuances that apply.
“Friendly Adult” Exception
The “friendly adult” exception allows an individual at least 21 years old to give away up to an ounce of cannabis or 8 grams of concentrated cannabis to another individual at least 21 years old. It also prohibits the exchange of “any compensation whatsoever.” Perhaps the most interesting part of this exception is its restriction on “any compensation whatsoever,” which suggests that the law intends to prohibit more than the direct exchange of cash for weed, like giving someone “free weed” in exchange for admission to a party or event, or receiving anything of value in exchange for “free weed.”
Another interesting component of California’s law is that there are few restrictions on where “friendly adult” gifting can occur. Of course, you can’t gift cannabis in any place where possession is prohibited, such as a school or courthouse. But, you can give away cannabis almost anywhere else, including places where it is illegal to consume the product, like a car or boat in operation. In other words, it’s perfectly legal in California to give away up to an ounce of cannabis (or 8 grams of concentrated cannabis) to a friend, family member, or stranger if: (1) you’re doing it in your individual capacity and not on behalf of a company or organization in connection with a promotional campaign; (2) you and the other party are at least 21 years old; (3) you’re not in a place where possession is illegal; and (4) absolutely no compensation is exchanged. So, while we can neither confirm nor deny the truth to the old saying that it’s better to give than receive, it’s safe to do both in California if you follow the above rules.
“Qualified Patient” Exception
The “friendly adult” exception applies to individuals, and California law prohibits licensed businesses from giving away “any amount of cannabis or cannabis products, or any cannabis accessories, as part of a business promotion or other commercial activity.” So, it’s just as illegal for a dispensary to give a customer a glass pipe as it is to thank a customer with a free pre-rolled joint… unless the “qualified patient” exception applies.
California has recognized the medicinal benefits of cannabis and has allowed its use for medicinal purposes since the Compassionate Use Act was passed in 1996. The recent legalization of recreational use in California built upon the existing law rather than replacing it, so different rules apply to cannabis intended for medicinal use than cannabis intended for recreational use. Gifting is a great example of this double standard. Although businesses cannot give away cannabis, a business with an M-license (i.e., a dispensary licensed by the State to sell cannabis to patients who have a doctor’s recommendation for marijuana) can give a “qualified patient” who is in possession of a valid medical recommendation, fee cannabis. Another impact of the double standard relates to the amount that can be given under the “qualified patient” exception compared to what can be given under the “friendly adult” exception. One ounce is the maximum that can be given under the “friendly adult” exception, but a “qualified patient” can be given up to eight ounces or more per the medical recommendation per day.
So, as 4-20-19 quickly approaches, there are likely to be more promotions directed at “qualified patients” or that use individuals (i.e., street teams or bud ambassadors) who do not openly associate with a particular business or brand. But, as a final note, we want to caution against marketing campaigns that advertise “friendly adult” or “qualified patient” giveaways, because the new BCC regulations prohibit advertising and marketing that offers free cannabis goods or giveaways of any type of product, including non-cannabis products (including BOGO, raffles, and sweepstakes). So, cannabis businesses in California have to get creative with their marketing efforts this year, because “Come Get Some Free Weed” won’t shake it.
Want more info on California’s cannabis laws and regulations? Here are some handy resources (and stay tuned for an exciting announcement later this month):
CA Medicinal and Adult-Use Cannabis Regulation and Safety Act [aka MAUCRSA]