Pot in California

Head of California’s medical marijuana bureau visits Coalinga

Gov. Jerry Brown appointed Lori Ajax as the first chief of the Bureau of Medical Cannabis Regulation.
Gov. Jerry Brown appointed Lori Ajax as the first chief of the Bureau of Medical Cannabis Regulation. California Department of Alcoholic Beverage Control

The woman spearheading a statewide effort to regulate the booming but controversial medical marijuana industry is traveling across California to learn more about pot – and teach industry insiders about the state’s lawmaking process.

Lori Ajax, five months into her position as the chief of the newly formed California Bureau of Medical Cannabis Regulation, visited Coalinga last month. Coalinga is the first city in the central San Joaquin Valley to embrace medical cannabis. The city legalized its manufacture and sold a vacant prison to a cannabis oil manufacturer in July.

In a phone interview the following week, Ajax took The Bee inside the visit – one of many she will make across the state – and the daunting task of writing regulations for an underground industry thrust into legitimacy.

“We hadn’t had a chance to get to the Valley yet, and it was important that we got here. But it was really hot,” she said with a laugh. “The meeting was well attended, and people had thoughtful questions and voiced their concerns. Both the local government and law enforcement just aren’t sure how we will shape our regulations.”

$4.1 millionThe amount Coalinga made from selling its empty prison to a medical cannabis oil manufacturer

Ajax isn’t sure how her bureau will shape the rules, either. Medical marijuana was legalized in California 20 years ago, but the state has only recently decided to get directly involved.

The Medical Cannabis Regulation and Safety Act (AB 243) passed in October. It added codes to existing sections of government regulations, but it also called for new regulations to be written as part of a state licensing process. California will soon require all medical cannabis growers, manufacturers and distributors to earn both a state and local license in order to do business. Basically, a grower will have to do A, B and C to get a local license as well as X, Y and Z for the state in order to operate within the law.

Ajax is familiar with the state licensure process. She spent 21 years in the Department of Alcoholic Beverage Control, working her way from agent to chief deputy director. However, she has no experience with marijuana. No one does.

In February, Gov. Jerry Brown appointed Ajax, a Republican, to lead the new medical marijuana bureau.

“I knew a lot about alcohol but not cannabis,” she said. “It’s been a little over five months, but I’ve still got a lot to learn.”

The bureau is expected to start granting permits by Jan. 1, 2018. Right now, Ajax said the focus is solely on medical marijuana. Her bureau will regulate medical cannabis dispensaries, distributors, transporters and testing labs. The California Department of Public Health will cover its manufacture, and the California Department of Food and Agriculture will license cultivators.

However, her course could get altered in November in the form of Proposition 64, which would legalize recreational marijuana use in California. Should the new law pass as expected, recreational users would fall under the new bureau’s umbrella.

For now, Ajax is working to get local governments and medical cannabis insiders on board with her new agency. These groups will have a say in the new regulations, but they need to use the traditional state channels to voice their feedback. And she’s trying to explain that process to as many people as possible during her trips, which will likely continue into 2017.

Ajax can tell you how many alcohol licenses were active in California last year (nearly 89,000), but predicting a future number for medical marijuana licenses is much trickier.

“A lot depends on local governments and their views,” Ajax said. “We don’t know what’s going to happen. It is still federally illegal – it’s not like most products.”

She continued: “A lot of cities and counties are waiting to see what our regulations will be. And it depends on what happens in November.”

Fresno County and nearly all of the cities within it have remained steadfast opponents to medical marijuana. The county enforces a $1,000-per-plant ban on all marijuana plants and has spent hundreds of thousands of dollars battling these fines out in court – with mixed results.

We don’t know what’s going to happen. It’s still federally illegal – it’s not like most products.

Lori Ajax, chief of the California Bureau of Medical Cannabis Regulation

It remains to be seen whether these walls will crumble in the wake of Coalinga’s decision, which made $4.1 million when Ocean Grown Extracts purchased the empty Claremont Custody Center. The city will also make at least $600,000 per year in property taxes from the deal, and Ocean Grown has pledged to hire 100 local residents to staff the new manufacturing operation.

The federal government could prove to be a wild card. Marijuana possession is still federally illegal, meaning the millions changing hands among medical cannabis producers in California could be seized if placed in federally insured banks. The U.S. Department of Justice could, in theory, raid the new Coalinga operation – or any of the much larger ones currently operating in Southern California or the Bay Area.

Coalinga received a letter from federal officials threatening to shut off the city’s water should any be diverted to the Ocean Grown operation. Ocean Grown agreed to assume all the risk – both federal involvement and finding its own water source if need be.

At the state level, Ajax said her bureau is working to comply with the Cole Memo, a 2014 notice sent to all U.S. attorneys by Deputy Attorney General James M. Cole on which marijuana cases to prioritize. It lists preventing marijuana distribution to minors or stopping the funneling of pot money to gangs as some of the high-priority examples.

“We’re not the first state to do this,” Ajax said. “We’re keeping an eye out as we put together comprehensive, transparent regulations.”

She said the state has not received anything from the federal government on its current medical marijuana regulation process or its possible recreational legalization.

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