California releases long-awaited cannabis regulations, will allow huge farms

An employee sorts marijuana at the Green Cross cannabis dispensary in San Francisco’s Excelsior neighborhood. An employee sorts marijuana at the Green Cross cannabis dispensary in San Francisco’s Excelsior neighborhood. Photo: Gabrielle Lurie / Gabrielle Lurie / The Chronicle 2016 Photo: Gabrielle Lurie / Gabrielle Lurie / The Chronicle 2016 Image 1 of / 20 Caption Close California releases long-awaited cannabis regulations, will allow huge farms 1 / 20 Back to Gallery

There will be no cannabis cappuccinos or drone deliveries in California under the new pot rules state officials released Thursday that regulate everything from who can legally sell and deliver marijuana to how it must be packaged and transported.

The rules released by three licensing agencies — the Department of Health, Department of Food and Agriculture and the Bureau of Cannabis Control — offer the first glimpse of the future in which pot is legal throughout California.

Big farms will continue to thrive in Mendocino and Monterey. Small delivery services will finally operate legally. Pot won’t be transported in self-driving cars or on bicycles, and it isn’t allowed in strip clubs.

Those guidelines come amid mass confusion among cities that haven’t put together their own regulations for the sale of recreational marijuana, which will be legal Jan. 1.

California’s regulations dealt a win to cannabis-delivery businesses, which for years have operated in the shadows. They will now be allowed to apply for licenses once the new rules take effect next month.

“With delivery, it’s been a huge fight,” said Nina Parks, co-founder of the San Francisco-based cooperative Mirage Medicinal, which allows patients to order cannabis through a website, and have it brought to their doorsteps.

“When you think of bedridden patients or elderly people, they don’t want to travel far to get their medicine,” Parks said.

Yet the state will allow cannabis to be delivered only in cars and trucks — transport by “aircraft, watercraft, drone, rail, human-powered vehicle, and unmanned vehicle is prohibited,” according to the rules.

Edible cannabis products can contain only 100 milligrams of euphoria-inducing tetrahydrocannabinol — commonly known as THC — in each 10-serving package under the new rules. Other products, such as lotions and tinctures, are limited to 2,000 milligrams of THC in the medicinal market, or 1,000 milligrams for regular adult use.

That means some popular but extremely potent items, like the Black Bar brownie by Korova Edibles — which has 1,000 mg of THC — will be illegal.

Cannabis labels can’t be decorated with cartoons or other marketing that appeals to children. Manufacturers also can’t use the term “candy” in any of their branding language. The new regulations also prohibit businesses from mixing cannabis with alcohol, nicotine, caffeine or seafood.

That provision won’t affect brews like SuperCritical Ale, a new cannabis beer by Lagunitas Brewing Co. in Petaluma. It’s made with terpenes — plant-oil compounds — which have a strong flavor but contain no THC.

The state also clamped down on the aesthetics of cannabis products, which “cannot be (made) in the shape of a human being, animal, insect or fruit,” Miren Klein of the Department of Public Health said at a Cannabis Advisory Committee meeting in Sacramento on Thursday.

The rules didn’t include size restrictions for marijuana farms and nurseries — a notable shift from the one-acre cap that the state’s Department of Food and Agriculture had proposed in an environmental impact report published Monday.

The idea of limiting cannabis agriculture to one-acre plots had become a major point of debate in the industry. It would have benefited small businesses and blocked corporations from setting up huge farms or greenhouses in the Salinas Valley.

But now that the cap has been tossed, California has set the stage for marijuana to be the next major industrial crop.

Hezekiah Allen, executive director of the California Growers Association, called the decision “a catastrophe.”

“Simply put, there will be too much supply,” he said, noting that federal law still prohibits interstate shipment of controlled substances — and reports from the Department of Food and Agriculture show that the state already produces far more marijuana than it consumes.

Even so, the state has set up a sliding-scale fee system so that large companies pay much more for licenses than their mom-and-pop counterparts. The biggest distributors — companies that expect to earn more than $80 million in gross revenue — will pay $125,000 annually.

Though California’s rural areas may soon be exploding with marijuana, San Francisco and other Bay Area cities appear to be lagging behind. Dispensaries in those cities won’t immediately enter the adult-use market, since the state will only issue licenses to businesses that have local permits.

However, regulators offered some flexibility for the first four months, allowing any licensed farm or nursery to sell cannabis products to any licensed dispensary, regardless of whether the licenses are classified as medicinal or recreational.

That added grace period will help jump-start the market, even though few recreational permits have been issued throughout the state.

The extension is “very necessary,” said industry consultant Sean Donahoe, who was watching a livestream of the meeting from the top floor of the Cosmopolitan Hotel in Las Vegas, where thousands of industry bigwigs gathered this week.

“Regrettably, most localities have not moved forward with adult-use licensing,” Donahoe said. “They’re apprehensive. They fear a rush of new business.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan