RE: WINTER LLP UPDATE – Bureau of Cannabis Control Finding of Emergency and Notice of Proposed Emergency Regulations – Quick Response (QR) Code Certificate Requirements for Cannabis Licensees

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Hello all,

Some of you may have already seen this, but we wanted to circulate it again to those who aren’t on the BCC’s email list.

The below announcement from the BCC tells us what we in the industry knew all along…  The State of California Legal Cannabis Industry is the only place to purchase safe and effective cannabis.  The BCC’s findings below are much needed positive news for the legal cannabis industry with respect to lung injury cases involving vaping.

Additionally, to all Licensees out there, please contact us if you have any questions regarding the new CR Code requirements.

Thank you, and take good care out there!

 

________________________________________________

 

The Bureau of Cannabis Control (Bureau) finds that an emergency, as defined in Government Code section 11342.545 currently exists. As such, the Bureau finds that immediate action to amend the Bureau’s regulations is required to avoid serious harm to the public peace, health, safety, and general welfare. A delay in implementing the new requirements will result in continued harm to the public. Additionally, Business and Professions Code section 26013(b) deems the adoption of emergency regulations by a licensing authority to implement the Medicinal and Adult-Use Regulation and Safety Act (MAUCRSA) as an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare.

 

According to the Center for Disease Control and Prevention (CDC), as of November 13, 2019, there have been 2,172 lung injury cases and 42 deaths associated with using ecigarette, or vaping products reported across the country. From these cases, the CDC collected fluid samples from the lungs of 29 patients. Of the 29 samples, THC was identified in 82%. The CDC now recommends that those individuals using e-cigarette or vaping products should not buy the products from informal sources, or “off the streets.”

 

As of November 12, 2019, the California Department of Public Health (CDPH) has recorded 163 cases of Vaping-Associated Pulmonary Injury in the state of California. CDPH has been able to survey 86 of these individuals. Of the individuals interviewed, 71 of the 86 individuals, which equates to 83%, reported consuming vaping products containing THC. Of the 71 that consumed vaping products containing THC, only one individual reported buying THC vaping products from retailers licensed by the Bureau. The other 70 individuals surveyed reported buying THC vaping products from unlicensed sources. From these studies, it has been determined that the risk of harm to the public is greater from the use of THC vaping products obtained from unlicensed sources.

 

Specifically, retailers licensed by the Bureau are only permitted to sell cannabis goods that have passed strict laboratory testing requirements meant to protect consumer safety. Cannabis goods sold by unlicensed cannabis retailers do not have to meet the same consumer safety standards imposed during the testing process. Due to the Bureau’s strict consumer safety standards, cannabis goods, including vape products, purchased from a licensed retailer are less likely to result in injury to the consumer.

 

The Bureau’s current regulations require that licensees conspicuously display their license on the licensed premises. Despite this requirement and the existence of a statewide license search system, the Bureau has found that the data regarding death and illness due to vaping reveals that consumers continue purchasing cannabis goods from illegal businesses, which may lead to severe health consequences.

 

Often, illegal retail commercial cannabis businesses visibly resemble, or have names that sound similar to, legal cannabis businesses. If consumers are provided information that a cannabis business is legal, via the use of a posted QR Code certificate for instant verification as they are preparing to enter a business, they will be less likely to enter an illegal business. This should decrease the likelihood that the consumer will purchase cannabis goods from the illegal business and lower the potential risk of harm to their safety and health.

 

These proposed regulations will provide an additional and highly visible way for consumers to immediately identify licensed businesses that sell cannabis goods meeting the state’s rigorous safety and testing requirements. Additionally, consumers may not know that a license can be checked through the Bureau’s license search or how to do this. The proposed regulations provide for a certificate that indicates a license can be easily checked and a way to do so directly from that certificate. The QR Code certificate contains a unique digital bar code that can be scanned from a smartphone or other portable device. Once scanned, it provides information related to the license, including the license number, license status, licensee’s name, licensed premises address, business contact information, and owner.

 

The proposed amendments to the current regulation will require retailers, whose premises are open to the public, to display the QR Code certificate issued by the Bureau on the licensee’s licensed premises in a manner that makes the QR Code easily visible to members of the public as they are about to enter the licensed premises. The QR Code certificate will provide notice that a license may be checked for validity and how to do so directly from the certificate. Easy access to the QR Code will provide a valuable tool for a consumer with a smartphone or other device capable of reading QR codes to easily verify that the retailer is operating under an active state license. By making license information readily available via the QR Code certificate, the state is protecting consumers who may, erroneously, believe that a premises they enter has a valid license and is subject to all of the state testing requirements.

 

The proposed regulation amendment will also require licensee employees engaging in the transportation or delivery of cannabis goods to carry a copy of the QR Code certificate along with a copy of the distributor’s or retailer’s license. This will allow delivery customers, other licensees, and law enforcement to use the QR Code certificate to verify the business’ license and that the cannabis goods being transported are legal. Enabling members of the public to easily distinguish licensed businesses from unlicensed businesses will assist consumers in more easily identifying legal retailers and prevent consumers from purchasing untested and potentially harmful cannabis goods from an unlicensed source; this should reduce the risk of injury or death suffered by consumers consuming unregulated and illegal cannabis products. Further, by providing a way to immediately and conveniently check licensure information using the QR Code certificate, law enforcement can more readily identify vehicles carrying illegal cannabis goods and prevent these potentially harmful products from reaching illegal retailers, who will ultimately sell them to consumers.

 

Government Code section 11346.1(a)(2) requires that at least five working days prior to submission of a proposed emergency regulation to the Office of Administrative Law (OAL), the adopting agency shall provide a notice of the proposed emergency action to every person who has filed a request for notice of regulatory action with the agency. After submission of the proposed emergency regulation to the OAL, the OAL shall allow interested persons five calendar days to submit comments, on the proposed emergency regulations, as set forth in Government Code section 11349.6.

 

BACKGROUND:

 

In June 2017, the California State Legislature passed a budget trailer bill, Senate Bill 94, that integrated the Medical Cannabis Regulation and Safety Act with the Adult-Use Marijuana Act and created the MAUCRSA. (Bus. & Prof. Code, §26000, et seq.) Under MAUCRSA, a single regulatory system governs the cannabis industry (both medicinal and adult-use) in California. The Bureau is charged with the licensing, regulation, and enforcement of the following types of commercial cannabis businesses: distributors, retailers, microbusinesses, temporary cannabis events, and testing laboratories. On January 16, 2019, the Bureau’s current regulations took effect.

 

AUTHORITY AND REFERENCE:

 

Business and Professions Code section 26013 authorizes the Bureau to adopt these proposed regulations. The proposed regulations implement, interpret, and make specific the MAUCRSA at Business and Professions Code sections 26000, 26012, 26070, and 26090.

 

INFORMATIVE DIGEST/ POLICY STATEMENT OVERVIEW:

 

This rulemaking action amends the Bureau’s regulations to add a requirement for licensees open to the public to display a QR Code certificate provided by the Bureau with their license and requiring those transporting or delivering cannabis goods to carry the QR Code certificate with them. The regulations will provide the size and placement requirement for the QR Code certificates to ensure visibility and customer access to the QR Codes.

 

The proposed regulations are necessary to address a recent outbreak of lung disease believed to be primarily caused by the use of vaping products containing THC, as discussed above. By requiring all storefront retailers clearly display a QR Code certificate, consumers will be able to easily distinguish licensed cannabis retailers from unlicensed retailers because the QR Code certificate is posted. Once the QR Code is scanned, it will display information about the license, including if it is an active state license. This will assist in decreasing the risk of illness that may result from the purchase and consumption of untested cannabis goods. Additionally, requiring delivery and transportation employees to carry a copy of the QR Code certificate will allow delivery customers, law enforcement, and other members of the public to use the QR Code certificate to verify the licenses of the cannabis businesses for whom the employees work.

 

Proposed subsection (a) contains the language in the current regulation. It has been identified as subsection (a) as the proposed amendments add several subsections to section 5039.

 

Proposed subsection (b) of section 5039 adds the requirement that storefront retail licensees must display the QR Code certificate issued by the Bureau so that it can be easily viewed and scanned from outside the business, allowing licensure to be verified before entering the business. This proposed addition to the regulation ensures that all licensees will display a QR Code certificate so that members of the public and government agencies, who are visiting the licensed premises, are able to easily use the QR Code to verify that the business is properly licensed by the Bureau.

 

Proposed subsection (c) of section 5039 requires that storefront retail licensees post the QR Code certificate in the front window, or in a locked display within 3 feet of any public entrance, in a manner that is clearly visible to the general public and to anyone entering the licensed premises. This requirement is necessary to ensure that all persons entering the licensed premises will be able to easily identify and access the QR Code certificate to verify the state license prior to entering the cannabis business. The locked display case requirement is necessary because if the licensed premises does not have a front window, the QR Code certificate must be posted outside the business, so as to be visible from outside of the premises. If it is not secured, the QR Code certificate is vulnerable to theft or damage; hence the locked display case.

 

Proposed subsections (d)(1)-(3) of section 5039 provide additional requirements to the QR Code certificate posting. Proposed subsection (d)(1) of section 5039 requires that the QR Code certificate be printed on paper no less than 8 ½ inches by 11 inches. Proposed subsection (d)(2) requires that the QR Code printed on the certificate be no less than 3.75 inches by 3.75 inches. The dimensions proposed are those of the QR Code if the certificate from the Bureau is printed without alteration. This size is also highly visible, while maintaining the ability to be effectively scanned.

 

Both proposed subsections (d)(1) and (d)(2) are necessary to ensure that the size of the certificate and QR Code printed on the certificate are of a large enough size that the QR Code is reasonably visible and accessible to individuals who may use the QR code to verify the business’ license. Subsection (d)(3) of section 5039 requires that the QR Code printed on the certificate be of a sufficient clarity that the code can be read from at least 3 feet away. This requirement is necessary to ensure that the QR Codes displayed by licensees are clear enough to be scanned and reasonably used, by the public to verify the business’ license. If the quality of the QR Code is too low, the QR Code could not be scanned and read. This would prevent the QR Code from being useful, defeating the purpose of the proposed regulation. The requirements found in proposed subsection (d) of section 5039 apply to all licensees to ensure that all QR Code certificates displayed by licensees are of a certain size and clarity so that they may be used to verify a license.

 

Proposed subsection (c) of section 5311 has been amended to add the new requirement that employees of a licensed distributor who are engaging in the transportation of cannabis goods, carry a copy of the licensee’s license and the QR Code certificate issued by the Bureau. This amendment is necessary to ensure that law enforcement and Bureau of Cannabis Control other licensees will be able to easily access the QR Code certificate to easily verify the validity of the distributor’s license. Additionally, as subsection (c) contains new language, prior subsections (c) through (o) have been renumbered to subsections (d) through (p), respectively, so as not to have two subsections entitled (c) and allow sequential numbering of all subsequent subsections. Additionally, cross references within section 5311 have been changed to correspond to the new subsection letters for accuracy.

 

Proposed subsection (e) of section 5415 has been amended to add a requirement that a delivery employee of a licensed retailer carry a copy of the QR Code certificate while conducting deliveries. In addition, the subsection has been amended to require delivery employees to provide the copy of the retail license, the QR Code certificate, and their employee identification badge to any delivery customer, for viewing and inspection, upon request. These additional requirements are required to ensure that delivery employees will be able to easily provide identifying documentation that can be used to verify that the delivery employee is conducting deliveries of cannabis goods on behalf of a retailer that has been properly licensed by the Bureau. This will reduce the risk of customers inadvertently purchasing cannabis goods from an unlicensed source.

 

Anticipated Benefit of the Proposed Regulations:

 

The broad objective of these proposed regulations is to provide a mechanism for purchasers of cannabis goods to be able to easily identify whether the retailer they are purchasing cannabis goods from is properly licensed by the Bureau. The proposed amendments to the regulations will allow consumers to expediently and conveniently determine if a cannabis business is licensed at the specific business location before entering the business to make a purchase. Additionally, consumers purchasing cannabis goods by delivery will also be able to confirm licensure through the QR Code certificate. Also, those transporting and delivering cannabis will have the license and QR Code certificate in their vehicle, allowing for easier verification of their employer’s license.

 

It is expected that the requirements created by the proposed amendments to the regulations will allow customers to more easily make a determination of the legality of a specific cannabis business and avoid entering unlicensed premises, decreasing purchases from unlicensed businesses. This should aid in preventing illegal cannabis goods from reaching consumers, thereby reducing the potential of harm to the consumer.

 

The present proposal will allow easier access to information on legal cannabis businesses and provide consumers with a better means of finding and purchasing safer, legal cannabis products from licensed businesses in the future. This should better protect the public health and safety, as outlined above.

 

Evaluation of Inconsistency/Incompatibility with Existing State Regulations:

 

Under the federal Controlled Substances Act (21 U.S.C. §801, et seq.), cannabis is federally illegal. However, California, through the MAUCRSA, has decriminalized the cultivation, sale, and possession of cannabis goods for persons aged 21 or older, and medicinal patients. After conducting a search and review of any similar regulations on this topic, the Bureau has determined that these proposed regulations are not inconsistent or incompatible with existing regulations and are the only regulations regarding cannabis retailers and distributors related to the use of QR Codes and a QR Code certificate.

 

DISCLOSURES REGARDING THE PROPOSED ACTION

 

The Bureau has made the following initial determinations:

 

Mandate on local agencies and school district: None.

 

Cost or savings to any state agency: None.

 

Cost to any local agency or school district which must be reimbursed in accordance with Government Code sections 17500, et. seq.: None.

 

Other non-discretionary cost or savings imposed on local agencies: None.

 

Cost or savings in federal funding to the state: None.

 

TECHNICAL, THEORETICAL, AND/OR EMPIRICAL STUDY, REPORTS, OR DOCUMENTS

 

  1. Centers for Disease Control and Prevention. Outbreak of Lung Injury Associated with the Use of E-Cigarette, or Vaping, Products https://www.cdc.gov/tobacco/basic_information/e-cigarettes/severe-lung-disease.html. Accessed November 14, 2019.

 

  1. California Department of Public Health, Center for Healthy Communities, VAPI Weekly Update Report 11/12/2019 (November 2019) <https://www.cdph.ca.gov/Programs/CCDPHP/Pages/EVALI-Weekly-Public-Report.aspx> (as of Nov. 14, 2019).

 

The Bureau of Cannabis Control is the lead agency in regulating commercial cannabis licenses for medical and adult-use cannabis in California. The Bureau is responsible for licensing retailers, distributors, testing laboratories, microbusinesses, and temporary cannabis events. For more information about our agency, please visit the Bureau’s website. To learn more about California’s three cannabis licensing authorities and the other state agencies contributing to cannabis regulatory efforts, please visit California’s Cannabis Portal.

Those looking to get in touch with the Bureau of Cannabis Control may contact us directly through email at bcc@dca.ca.gov.

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RE: WINTER LLP Update (COMMENTS SUBMITTED RE DRAFT REGULATIONS)

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Hello all,

We wanted to share with you the formal comments we submitted to the BCC re the recent draft regulations. These comments were submitted prior to the deadline Monday.

In our opinion and experience in this industry, the draconian approach the state has taken on each of these two issues (addressed below) will be catastrophic if approved. Not only to many of our clients, but the entire industry. We are hopeful the state receives many similar comments and backlash from other cannabis professionals, and responds favorably to our comments below.

We will keep you posted as we learn more. And regardless of the outcome, we will figure out a path forward for each of you. We’ve had to retool our legal/business approaches many times over the last 11 years, so that’s nothing new. We will always get you to the finish line in the end.

Here are our comments on these two particular draft regulations:

Letter to BCC re IP Licenses / While Labelling:

Dear BCC,

Please see comments regarding Section 5032(b), Commercial Cannabis Activity.

We do not believe that licensees should be prohibited from (1) manufacturing cannabis goods according to the specifications of a non-licensee (IP licensing); (2) packaging and labeling cannabis goods under a non-licensee’s brand (white-labeling), or (3) distributing cannabis goods for a non-licensee.

The authority upon which Section 5032 is based, BPC Section 26013(c) states: “Regulations issued under this division shall be necessary to achieve the purposes of this division, based on best available evidence, and shall mandate only commercially feasible procedures, technology, or other requirements, and shall not unreasonably restrain or inhibit the development of alternative procedures or technology to achieve the same substantive requirements, nor shall such regulations make compliance so onerous that the operation under a cannabis license is not worthy of being carried out in practice by a reasonably prudent businessperson.” (emphasis added.)

Section 5032(b) unreasonably restrains or inhibits the development of alternative procedures to achieve the same substantive requirements. There are already hundreds of pages of regulations in place to ensure that cannabis products are grown, manufactured, tested, transported, and sold in a manner that will promote public peace, health, safety, and general welfare. Section 5032, which restricts a licensee’s ability to accept IP licensing contracts or white-labeling contracts does not increase the health, safety or welfare of the public. All products that are manufactured or packaged for a non-licensee must still comply with all testing, packaging and labeling regulations. Labels are already required to contain the name and contact information of the manufacturer. Products are not more dangerous to society merely because there is different IP/branding.

Moreover, IP licensing and white-labeling are well-established business practices in almost every goods and services industry in the U.S. and abroad, and have been successfully utilized by the cannabis industry for years. If a manufacturer has sufficient equipment, materials, and employees in place to produce goods for others and achieve economies of scale, the BCC should not limit that manufacturer’s ability to produce goods with different IP. Requiring each brand/company to manufacture goods under their own license dramatically drives up costs (license fees, equipment, employees), slows time to market, while wasting natural and environmental resources to build out these additional facilities. It also creates a monopoly for the limited manufacturers that have obtained licensing to date. This draft regulation will significantly damage the California cannabis industry and put long-standing companies out of business through an immediate devaluation.

If the issue is disclosure of participants in the legal market, the BCC should implement something similar to the Beer Brand Registration model, in which the ABC requires beer brands to register and disclose whether beer is “contract brewed.” Licensees that contract with IP companies or white label companies may be required to fill out a simple disclosure form each year. This would resolve the disclosure issue, while allowing manufacturing licensees, IP companies, and brands opportunities to continue to manufacture safe cannabis products in an efficient and cost-effective manner. Whatever the solution, it cannot be this draft regulation, which if passed will have immediate and catastrophic consequences, including loss of thousands of jobs, bankrupt businesses, and loss of industry leaders, to name a few.

Letter to BCC re Designation of Owner:

Dear BCC,

Please see comments regarding Section 5003(b)(6)(D), Designation of Owner, which states:

Owner means any of the following:

An individual who will be participating in the direction, control, or management of the person applying for a license. Such an individual includes any of the following:

Any individual who assumes responsibility for the license. Such an individual includes but is not limited to, the following:

(i) An individual who is managing or directing the commercial cannabis business in exchange for a portion of the profits.

(ii) An individual who assumes responsibility for the debts of the commercial cannabis business.

(iii) An individual who is determining how a portion of the cannabis business is run, including non-plant-touching portions of the commercial cannabis business such as branding or marketing.

(iv) An individual who is determining what cannabis goods the commercial cannabis business will cultivate, manufacture, distribute, purchase, or sale.

As we disagree with the addition of Section 5032(b), we cannot agree that individuals who determine how non-plant touching portions of the commercial cannabis business is run, such as branding or marketing, should be considered owners.

The authority upon which Section 5032 is based, BPC Section 26013(c) states: “Regulations issued under this division shall be necessary to achieve the purposes of this division, based on best available evidence, and shall mandate only commercially feasible procedures, technology, or other requirements, and shall not unreasonably restrain or inhibit the development of alternative procedures or technology to achieve the same substantive requirements, nor shall such regulations make compliance so onerous that the operation under a cannabis license is not worthy of being carried out in practice by a reasonably prudent businessperson.” (emphasis added.)

Requiring independent consultants and advisors to register as “owners” is onerous and impractical for a reasonable businessperson. The BCC is overreaching by defining an owner as individuals who determine how “non-plant touching portions of the commercial business” are run, because this could potentially include almost all advisors (attorneys, CPAs) and ancillary business consultants (equipment manufacturers, marketing companies, IP companies, etc.) who provide guidance to permitted licensees. Seeking the professional guidance of independent consultants and advisors is a well-established business practice that does not rise to the level of involvement as an “owner” in any other industry. It does not make sense that they are required to register as “owners” when these ancillary individuals are not required by State law to be on any corporate formation documents, such as Statements of Information, Bylaws, or Operating Agreements. Requiring the registration of these ancillary individuals not only complicates corporate documents and structures, it could potentially lead to unnecessary and frivolous litigation between and against all of the “owners” of a license, especially those with “deep pockets.”

Instead of defining these individuals as “owners,” it should be sufficient that IP companies and brands are disclosed as having financial interests in the business. This would still allow the BCC to track the involvement of these companies, while not further complicating business structures and “ownership” obligations.

WINTER LLP Update: Committee Blog: Protecting Stash-Assets

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Committee Blog: Protecting Stash-Assets

By NCIA’s Infused Products Committee
Contributors include Radojka Barycki, Noval Compliance; Karin Clarke, KC Business Solutions; Lee Hilpert, Organnx; Danielle Maybach, Eva Gardens; Trevor Morones, Control Point; and Todd Winter, Winter LLP

You have spent months fighting sleep deprivation to build a strong pitch deck as the next most desired infused cannabis company. Educating staff, family, and friends, through role-plays and recent published journal entries. Blog after blog, inspirational book after book, and you start to believe that the deck is complete. Dress to impress then review the multi-colored sticky notes that list the risks of your operation. Some are likely, others are less, but what about the ones that are high? Is ALL of your due-diligence completed to pitch to the venture capital groups in the cannabis world?

The Issue

While legalization has quickly brought cannabis and cannabis-related products into international markets, relevant food safety regulations need to be implemented and adopted to protect patients and consumers. The infused product manufacturing sector, in particular, requires more uniform safety requirements to guide operating professionals, many of whom lack knowledge, resources, and incentive to standardize safety.

As target consumers range from large groups of adult consumers to medical users, safety is a paramount concern for all. This is especially true for medical users, as they are predominately high-risk consumers regardless of their specific medical condition.

The cannabis industry, especially the infused edible products sector, has a prime opportunity to incorporate and implement existing food safety regulations into their manufacturing processes. This will demonstrate alliance with the general food manufacturing industry and help to ensure that cannabis-infused product manufacturers are regulated no more stringently than any other food manufacturer.

The Risk

In addition to the already controversial nature of our industry, safety issues will undoubtedly garner public and press attention when as few one people become ill as a result of an unsafe product. Contamination inevitably comes from a variety sources, such as chemical, physical, or biological hazards in the growing and extraction process (and lack of testing), employee contamination (failure to use gloves, wash hands, dirty garments and tools, etc.), failure to adhere to basic food safety processing standards and practices (clean food contact surfaces, improper chemical concentrations, introducing biological contaminants).

Without clear and industry applicable guidelines and processes, product safety issues will emerge and take over headlines. Issues of product safety damage consumer and industry trust, resulting in lost revenue, loss of market share, decreased share value and loss of talent. One most recent example of the exorbitant cost related to product safety was made ominously clear in the multi-state Chipotle case. This incident caused a tragic decline in customer confidence and many days of double-digit stock value plunges.

The Solution

Site-specific training for all team members is the preventative action to reduce risks and generate positive audit results. Rigorous training programs expand food/product safety knowledge, generate a stronger culture, reduce risk, and prevent contamination. By focusing on how each employee can positively impact safety through their daily actions and contribute to the market value and customer satisfaction, employees take on a stronger safety and excellence culture, resulting in higher Net Promoter Scores (NPS).

Measurement is critical to quality control and ongoing excellence. Food Safety Management Systems (FSMS) provide operating structure and validate the process to prove the system is operating as intended. These proven systems operate on a foundation of integrity that mitigates risk throughout the process of a product. No doubt the learnings there transfer to the cannabis products, especially infused products.

What’s Next?

The IPC’s goals are to raise awareness, effectuate positive change, and help establish protocols and standards for food safety, dosing, and testing within the cannabis industry. This will establish baselines from which cannabis business operators can rely upon, prevent inapplicable regulatory requirements that are not relevant to our industry, and most of all provide for the safety of consumers.

Now, when did food safety leave a bitter taste in your mouth? Precisely! Never would we need an Upton Sinclair to transform the industry from a negative outlook on the truths. Collectively we will unite and hold our operations to a standard of excellence that will be called upon during the end of cannabis probation on a national level.

URL: https://thecannabisindustry.org/committee-blog-protecting-stash-assets/

WINTER LLP UPDATE: 2018 Cannabis Legislation

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2018 CANNABIS LEGISLATION

The California State Legislature has passed numerous cannabis-related bills this legislative session. Several of these bills were signed into law by Governor Brown in the final moments of the session. Many take effect immediately, while others take effect January 1, 2019. We will be closely tracking additional cannabis-related bills as they wind their way through both houses of State Congress next year.

The new laws that affect the cannabis industry in California include the following:

ALL CANNABIS LICENSE TYPES

SB 1459 – Provisional Cannabis License:

Effective immediately, all licensing authorities (BCC, MCSB, CalCannabis) may issue “provisional cannabis licenses,” as a bridge between temporary and annual licenses. A provisional license will act in the same manner as an annual license, except that it is not renewable.

To qualify for a provisional commercial cannabis cultivation license, an annual applicant must:

  • Hold, or have held, a temporary cannabis cultivation license for the same premises and the same commercial cannabis activity for which the provisional license will be issued; and
  • Submit a completed state annual cultivation license application (all applicable requirements pursuant to California Code of Regulations section 8102 still apply), including evidence that compliance with the California Environmental Quality Act (CEQA) is underway; and
  • Pay the application fee for the associated license type.

AB 1741 – Payment of State Taxes by Means Other than Electronic Funds Transfer:

Effective immediately, state taxing authorities must temporarily accept money for cultivation, sales and excise taxes by means other than electronic funds transfer. This law temporarily waives the current 10% penalty for paying taxes in cash.

AB 2799, CalOSHA Requirements:

Effective January 1, 2019, licensed cannabis business that have at least one employee and manager must complete a 30-hour course from the California Occupational Safety and Health Administration (CalOSHA) to ensure compliance with job-related safety and health hazards.

AB 2899, No Advertising During License Suspension:

Effective January 1, 2019, the new law prohibits a cannabis licensee from publishing or disseminating advertising or marketing (including web sites) while the licensee’s license is suspended.

CULTIVATION LICENSES

AB 873, CalCannabis Peace Officer Duties:

Effective January 1, 2009, investigators with the California Department of Food and Agriculture to have arrest and search warrant powers with regard to enforcement of cannabis laws.

DISTRIBUTION LICENSES

SB 311, Distribution to Other Licensed Distributors:

Effective immediately, all licensed distributors are able to transport to other licensed distributors after the required cannabis testing.

RETAIL LICENSES / SPECIAL EVENTS

AB 2020, Temporary Event Licenses:

Effective January 1, 2019, provides that a state temporary event license can be issued in places other than county fairgrounds or district agricultural association events by the local authority, including the retail sale and consumption of cannabis, with the appropriate licenses by its participants. Starting January 1, 2019, cannabis special events can be held at any other venue approved by a city or county.

WINTER LLP: COMMITTEE BLOG: NCIA’S INFUSED PRODUCTS COMMITTEE STIRS THE TESTING BATCH (INTERVIEW)

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JULY 23, 2018

COMMITTEE BLOG: NCIA’S INFUSED PRODUCTS COMMITTEE STIRS THE TESTING BATCH (INTERVIEW)

A year ago, NCIA’s Infused Products Committee (IPC) made the decision to tackle the issue of cannabis testing. It is an issue we feel is at the heart of cannabis legalization and is negatively impacting cannabis businesses across the nation. Although it has been a struggle to get comparable lab results across different labs, IPC believes there is a future where cannabis testing will reach consistency.

We began our process by asking several questions and with the assistance of the NCIA, we crafted a survey that was sent to experts in the field. During our preliminary research, we discovered that most cannabis testing labs view their protocols and procedures as proprietary information.

To gain better insight about the testing sector, we asked Alena Rodriguez, a member of NCIA’s Scientific Advisory Committee (SAC) to participate in an interview. Alena represents Rm3 Labs, a cannabis testing laboratory in Colorado.

IPC: Are you concerned about the inconsistent and varying test results and the impact it has on consumer safety?

Alena: Yes, I’m concerned. I do not take my job lightly; I know that contaminated cannabis can be harmful and sometimes life threatening. That is why I am involved with state regulators and groups like NCIA’s SAC and Testing Policy Working Group. We aim to educate regulators and stakeholders on the importance of practices such as independent audits, proficiency testing and ISO/IEC 17025 accreditation for cannabis testing labs.

IPC: Do you think we are close to having consistent cannabis test results from different laboratories?

Alena: We are well on our way. In Colorado, licensed labs must undergo Proficiency Testing (PT) twice per year. PT is done through an inter-laboratory comparison where participating labs receive the same sample and analyze it using their methodology. Even though our procedures are not standardized to one method, most of the labs arrive at the same result. Unfortunately, not all states require PT yet, but I feel more and more states will adopt these programs.

Along with PT, consistent testing across labs requires the use of high-quality reference materials that are used to validate analytical methods and calibrate instruments. Cannabis testing labs in the United States have limited access to reference standards. Like cannabis, most industries started with limited resources, but over time the science will progress as federal barriers are lifted to make more research and better standards possible. It took decades to develop standardized, consistent methods in other industries, such as in pharmaceuticals and food testing. I don’t see the cannabis industry being any different.

IPC: Should there by penalties if a testing lab consistently provides drastically different results from prior tests of the same product?

Alena: It depends on the situation. If the lab is knowingly breaking the rules or trying to cheat the system, then absolutely. But, most of the time inconsistent results have causes other than fraud or negligence. This industry produces new products every day and some manufacturers and laboratories don’t “get it right” on the first try. There is a lot of research and development that is involved. Three of the biggest hurdles for consistent testing of cannabis products are 1) the variety of sample types 2) the lack of certified reference materials for uncommon cannabinoids and terpenoids and difficulties in obtaining concentrated standards and 3) inhomogeneity in some infused products or concentrates. Product uniformity is critical and should be confirmed by analytical testing for consumer safety. Variable results across multiple labs may suggest a product lacks uniformity.

IPC: Do you believe testing procedures and protocols are proprietary?

Alena: Yes, third-party cannabis laboratory protocols are just as proprietary as the protocols developed by cultivators, concentrate extractors and infused product makers. Testing labs having proprietary methods is not novel to this industry. If a lab in any other industry (e.g. food, medical, agriculture, environment) develops an alternative method to the standard method, they can use it if they can validate against the reference method.

IPC: Should labs be required to prove their analytical methods are accurate by submitting their practices confidentially to a regulatory body?

Alena: Absolutely! Colorado labs are currently required to send all new Standard Operating Procedures (SOPs) and method validations to the CDPHE prior to implementation. I hope more states adopt this practice, if they aren’t doing so already. As of January 1, 2019, all cannabis testing labs in Colorado will be required to be ISO/IEC 17025 accredited. ISO/IEC 17025 accreditation is the international gold standard for assessing the competence and quality management systems of testing labs across all industries to ensure consistent, accurate test results. More than a dozen cannabis labs have achieved this accreditation across the country.

IPC: Are you aware that the ASTM Committee D37 reportedly drafted testing procedures? If published, will cannabis testing labs follow published procedures that are not their own?

Alena: Yes, I’m excited! This is a great step for our industry. I imagine the committee will develop similar protocols to those being used by third-party labs. But as I mentioned before, labs will have the choice to use the published standard methods or their own alternative method, granted it is validated against the reference method. I expect some labs will attempt to validate their methods against the standard methods and some will adopt ASTM’s methods.

IPC: Are you aware of testing labs that allow for “tipping” on their order forms? Does this concern you, and why?

Alena: It concerns me that there are bad actors in the testing sector of the cannabis industry but I’m afraid there are bad actors in every segment of every industry. At Rm3 Labs, we do not participate in or condone unethical behavior such as paying for the results you want. We would never risk falsifying test results because we are aware immunocompromised individuals and children are possibly taking the products we are testing. I would not risk my entire scientific career to give you 5% higher THC potency results or lie about your contaminant testing results. I advise all cannabis testing labs to always act ethically because you are in the business of public safety and your lab is subject to investigation by regulatory agencies at any time.

IPC conducted the above enlightened interview with SAC. While we were inspired by some of the answers, much like our survey attempt this past year, many of our questions remain unanswered. For example, we don’t agree that cannabis cultivators or manufacturers are to blame for receiving inaccurate “clean/approved” test results from labs due to products being inhomogeneous.

That said, it is clear by a couple of the responses that some states, like Colorado, are making substantial progress in oversite and legal requirements for testing laboratories, while other states, like California, are still leaving significant and dangerous gaps.

In our opinion, the industry’s need for consistent and accurate testing results remains at the forefront of the issues facing commercial cannabis today. The ability to send the same sample, from the same batch, under the same conditions, and have it tested by multiple labs, achieving the same results, is paramount to our industry’s future and success. State laws should require it. The industry should demand it. And the consumers most certainly deserve it.

As such, the IPC will continue its mission to drive this conversation forward with both testing labs and operators alike. Only together, can we really solve this crucial issue facing our amazing industry.

WINTER LLP UPDATE: U.S. Senate Votes To Legalize Hemp After Decades-Long Ban Under Marijuana Prohibition

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The non-psychoactive cannabis cousin of marijuana would finally become legal to grow in the United States under a bill overwhelmingly approved by the Senate.

Photo by Chris Wallis // Side Pocket Images

The wide-ranging agriculture and food policy legislation known as the Farm Bill, passed by a vote of 86 – 11 on Thursday, contains provisions to legalize the cultivation, processing and sale of industrial hemp.

The move, championed by Senate Majority Leader Mitch McConnell (R-KY), would also make hemp plants eligible for crop insurance.

“Consumers across America buy hundreds of millions in retail products every year that contain hemp,” McConnell said in a floor speech on Thursday. “But due to outdated federal regulations that do not sufficiently distinguish this industrial crop from its illicit cousin, American farmers have been mostly unable to meet that demand themselves. It’s left consumers with little choice but to buy imported hemp products from foreign-produced hemp.”

McConnell also took to the Senate floor on Tuesday and Wednesday to tout the bill’s hemp legalization provisions in separate speeches.

In April, the GOP leader introduced standalone legislation to legalize hemp, the Hemp Farming Act, the provisions of which were included in the larger Farm Bill when it was unveiled earlier this month.

The Senate Committee on Agriculture, Nutrition and Forestry approved the bill by a vote of 20-1 two weeks ago.

During that committee markup, Sen. Charles Grassley (R-IA), one of Congress’s most ardent opponents of marijuana law reform, threatened to pursue serious changes to the bill’s hemp provisions on the floor. Namely, he wanted to remove the legalization of derivatives of the cannabis plant, such as cannabidiol (CBD), which is used by many people for medical purposes. But Grassley never ended up filing a floor amendment, allowing hemp supporters to avoid a contentious debate and potentially devastating changes to the bill.

Hemp legalization enjoys broad bipartisan support.

“Legalizing hemp nationwide ends decades of bad policymaking and opens up untold economic opportunity for farmers in Oregon and across the country,” Sen. Ron Wyden (D-OR) said upon passage of the Farm Bill on Thursday. “Our bipartisan legislation will spur economic growth in rural communities by creating much-needed red, white and blue jobs that pay well. I’m proud to have worked with my colleagues to get the bipartisan Hemp Farming Act through the Senate. Today marks a long-overdue, huge step forward for American-grown hemp.”

BIG news for industrial hemp farming! Today, the Senate passed my bipartisan #HempFarmingAct, legislation that would lift a decades-old ban on growing industrial hemp on American soil. #RonReport

— Ron Wyden (@RonWyden) 3:09 PM – Jun 28, 2018

Earlier this month, the Senate approved a nonbinding resolution recognizing hemp’s “growing economic potential.”

“For the first time in 80 years, this bill legalizes hemp. We forget, but hemp was widely grown in the United States throughout the mid-1800s,” Sen. Michael Bennet (D-CO) said in a floor speech on Wednesday. “Americans used hemp in fabrics, wine, and paper. Our government treated industrial hemp like any other farm commodity until the early 20th century, when a 1937 law defined it as a narcotic drug, dramatically limiting its growth. This became even worse in 1970 when hemp became a schedule I controlled substance. In Colorado, as is true across the country–I have talked to a lot of colleagues about this–we see hemp as a great opportunity to diversify our farms and manufacture high-margin products for the American people.”

McConnell’s standalone hemp bill currently has 29 cosponsors signed on—17 Democrats, nine Republicans and two independents.

A Congressional Research Service report released last week says that the “global market for hemp consists of more than 25,000 products.”

House Republican leaders blocked a vote to make hemp legalization part of that chamber’s version of the Farm Bill. But now that the language is included in the version approved by the Senate, it will be part of discussions by the bicameral conference committee that will merge both chambers’ bills into a single piece of legislation to be send to President Trump’s desk. All indications are that McConnell, as the most powerful senator, will fight hard for the survival of his hemp proposal.

A White House statement of administration policy released this week outlining concerns with the Farm Bill does not mention its hemp legalization provisions.

In 2014, McConnell included provisions to allow limited state-authorized hemp research programs in that year’s version of the Farm Bill.

Kentucky’s agriculture commissioner cheered the passage of the new hemp provisions on Thursday..

For farmers across KY, there is no piece of legislation more important than the #FarmBill. I am excited that @SenateMajLdr’s #HempFarmingAct made it into this measure, which will allow states to unleash the full economic potential of our industrial hemp pilot programs. #KyAg365

— Commissioner Quarles (@KYAgCommish) 3:17 PM – Jun 28, 2018

Tom Angell publishes Marijuana Moment news and founded the nonprofit Marijuana Majority. Follow Tom on Twitter for breaking news and subscribe to his daily newsletter.

WINTER LLP UPDATE: FDA approves first drug derived from marijuana

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The Food and Drug Administration (FDA) on Monday gave a green light to the country’s first drug derived from marijuana.

Epidiolex, manufactured by GW Pharmaceuticals, is intended to treat seizures associated with two rare and severe forms of epilepsy that begin in childhood. The drug is made of cannabidiol (CBD), a component of marijuana that doesn’t give users a high.

The approval could spur more research into marijuana products, though marijuana itself remains illegal.

“This approval serves as a reminder that advancing sound development programs that properly evaluate active ingredients contained in marijuana can lead to important medical therapies,” FDA Commissioner Scott Gottlieb said in a statement.

In a separate statement, Gottlieb stressed the importance of using proper research on the medical uses of marijuana and noted the approval doesn’t mean the agency will be lowering its approval standards for marijuana.

“This is an important medical advance. But it’s also important to note that this is not an approval of marijuana or all of its components,” he said. “This is the approval of one specific CBD medication for a specific use.”

Medical marijuana is available in about half of states. But federal regulations classify CBD as a Schedule 1 drug, which means it has no medical value and a high potential for abuse, because it is a chemical component of the cannabis plant.

This means the Drug Enforcement Administration (DEA) will have to reclassify it before GW can begin marketing Epidiolex.

The FDA said it is providing medical and scientific information and recommendations to the DEA about CBD.

WINTER LLP UPDATE: CWCB Expo

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Join me on September 25th in sunny Los Angeles, the largest single urban cannabis consumer market in the world, to learn about the latest in #cannabis law in #California and beyond, when I present at “Cannabis Law: Present and Future,” an exclusive workshop at #CWCBExpo in #LA on September 25! This is a can’t miss event for both experienced and canna-curious counsel in the LA area. Earn 5.25 CLE credits and learn from some of the cannabis industry’s best and brightest legal minds!

Click here to learn more about my panel discussion, as well as all the other presenters and guest speakers: https://bit.ly/2m6Pgob
Register here now and save $50 on the CLE Workshop by using the promo code: “LAW50”: https://bit.ly/2HVnJOV

WINTER LLP UPDATE: National Cannabis Industry Association Calls On Congress To Regulate Cannabis In Response To Reports Of Vaping-Related Illnesses

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Advocates cite prohibition as main driver of illicit market products linked to most cases, urge federal action, caution from producers of state-legal cannabis vape products
** Statement below from National Cannabis Industry Association Executive Director Aaron Smith **
WASHINGTON, D.C. – In recent weeks, a growing number of respiratory illness cases associated with nicotine or cannabis vaporizer (vape) cartridges have been reported, leading to increasing concern among cannabis vape cartridge consumers, regulators, and medical experts. As of early this week, more than 450 cases have been reported nationwide, including six fatal cases.
The vast majority of these reports have been linked to vape cartridges that were produced and obtained in the illicit and unregulated market, or that were adulterated by consumers. The minute number of cases that have so far been associated with legal cannabis products have not shown definitive links to those specific products. Cases have been reported in states with and without regulated cannabis markets.
Preliminary research has suggested some additive thickening agents, particularly Vitamin E acetate, as a likely cause for many of these cases. This is so far inconclusive, however, and other possible causes including pre-existing medical conditions, faulty delivery devices, or problematic consumption behavior are being explored.
In light of the indeterminate cause(s) of these illnesses and variance in state regulations regarding vape cartridges, the National Cannabis Industry Association (NCIA) makes the following recommendations:
Congress is urged to immediately remove cannabis from the Controlled Substances Act and begin to sensibly regulate this substance in a manner similar to alcohol and other consumables, and to make funds immediately available to state medical authorities to investigate these cases.
Licensed vape cartridge producers are encouraged to halt the use, if any, of additive thickening agents until more data is available.
Given the preliminary reported association of some illness cases with Vitamin E acetate, any licensed producer that has included this additive in recent vape product batches is strongly encouraged to issue a voluntary recall of those products.
Licensed cannabis retailers are encouraged to take steps to ensure none of their available vape cartridge inventories have been sourced from a producer that uses Vitamin E acetate.
Cannabis vape cartridge consumers are urged to immediately cease the use of any product obtained from the illicit market and to limit any future purchases of vape cartridges and other cannabis products to state-licensed, regulated businesses.
Statement from Aaron Smith, executive director of the National Cannabis Industry Association:
“These unfortunate illnesses and deaths are yet another terrible, and largely avoidable, consequence of failed prohibition policies. Current federal laws interfere with research, prevent federal regulatory agencies from establishing safety guidelines, discourage states from regulating cannabis, and make it more difficult for state-legal cannabis businesses to displace the illicit market. These policies are directly bolstering the markets for untested and potentially dangerous illicit products.
The fact that so few of these cases have so far reported any link whatsoever to the legal cannabis market is a testament to the effectiveness of state regulators and licensed businesses at ensuring product reliability. As an industry, however, we view it as our duty to make sure whatever is causing these illnesses is not replicated in legal products and to work toward enacting regulations that can prevent similar public health issues from occurring in the future. The legal cannabis industry is paying very close attention to any new information provided by medical authorities regarding these cases.
It is now the responsibility of Congress to end prohibition and regulate cannabis without delay. By removing cannabis from the schedule of controlled substances and instituting a clear regulatory framework through existing agencies, the federal government can provide helpful guidance to states that have or wish to establish regulated cannabis control systems while helping put irresponsible illicit market producers out of business for good.
We are deeply saddened by this situation and sincerely hope the specific causes are determined as soon as possible to help avoid further suffering. We stand ready to work with Congress and federal regulators on the long-term solution to this problem, which is replacing prohibition with sound regulations.”
Cannabis is legal for adults in 11 states, Guam, and the District of Columbia, and 33 states as well as several territories have comprehensive medical cannabis laws. The substance is legal in some form in 47 states.

Link: https://thecannabisindustry.org/press-releases/national-cannabis-industry-association-calls-on-congress-to-regulate-cannabis-in-response-to-reports-of-vaping-related-illnesses/?utm_campaign=NCIA%20Content&utm_medium=email&_hsenc=p2ANqtz-_QSGQOOUPW2CVU63lHKv4RXl7YRUvTsGpKRHsO9swsh_5rrOkTfeHKGehMwDrtuuNl83i7iXHoyIsEIsoORc2qErwSiiiBfwYPnz1hykydjFQ13F8&_hsmi=76719797&utm_content=76719797&utm_source=hs_email&hsCtaTracking=f4f9fce2-1e48-448c-aa85-3ab7c5e30145%7C1f416949-6f18-4b31-8b46-2e20b9209df7

WINTER LLP Update: Final Cannabis Regulations Approved

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Dear All,

On January 16, 2019, California’s three state cannabis licensing authorities announced that the Office of Administrative Law (OAL) officially approved state regulations for cannabis businesses across the supply chain. Please note, these new cannabis regulations take effect immediately, meaning the previous emergency regulations are no longer in effect.

First, we would like to address the sections that we previously commented on during the 15-day comment period back in October.

Section 5032(b), Commercial Cannabis Activity.

(b) Licensees shall not conduct commercial cannabis activities on behalf of, at the request of, or pursuant to a contract with any person that is not licensed under the Act.

Such prohibited commercial cannabis activities include, but are not limited to, the following:

(1) Procuring or purchasing cannabis goods from a licensed cultivator or licensed manufacturer.

(2) Manufacturing cannabis goods according to the specifications of a non-licensee.

(3) Packaging and labeling cannabis goods under a non-licensee’s brand or according to the specifications of a non-licensee.

(4) Distributing cannabis goods for a non-licensee.

The Bureau has removed the specific examples of “prohibited commercial cannabis activity,” such as “packaging and labeling cannabis goods under a non-licensee’s brand or according to the specifications of a non-licensee. However, this does not mean that the State is authorizing white labeling/branding for unlicensed brand owners; in fact the opposite holds true. Practically, this means that (1) the operating company (licensed/permitted entity) needs to hold the IP (trademarks, copyrights, brands) instead of the management company; and (2) companies that do not hold a permit/license cannot get their products made by permitted manufacturers (white-labeling) unless they are included as an owner of the license.

The Bureau provided a few examples of an authorized brand owner/licensee relationship:

  • “if a licensee includes as one of their owners a brand owner, the licensee can produce the branded products because in this case the licensee is not engaged in commercial cannabis activity on behalf of an unlicensed person. Because the owner of the brand is an owner of the licensee, there is no unlicensed person involved.”
  • “Generally, where a brand-owner may be dictating the standards and specifications of a product (i.e. providing direction or control), they would likely be considered an owner that would need to be disclosed under section 5003. Where ownership is properly disclosed, such persons would not be considered non-licensees, and would be able to conduct business under their license.”

We understand there is a lot of confusion/debate surrounding this issue. We are reviewing angles and alternatives to work through these vague/troubling rules. Additionally, we are seeking further clarification from the State regarding how IP licensors/licensees may be classified (as owners, financial interest holders, etc.). Please stay tuned.

Section 5003(b)(6)(D), Designation of Owner.

(b)Owner means any of the following:

(6) An individual who will be participating in the direction, control, or management of the person applying for a license. Such an individual includes any of the following:

(1) A person with an aggregate ownership interest of 20 percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.

(2) The chief executive officer of a nonprofit or other entity.

(3) A member of the board of directors of a nonprofit.

(4) The trustee(s) and all persons who have control of the trust and/or the commercial cannabis business that is held in trust.

(5) An individual entitled to a share of at least 20 percent of the profits of the commercial cannabis business.

(6) An individual who will be participating in the direction, control, or management of the person applying for a license. Such an individual includes any of the following:

(A) A general partner of a commercial cannabis business that is organized as a partnership.

(B) A non-member manager or managing member of a commercial cannabis business that is organized as a limited liability company.

(C) An officer or director of a commercial cannabis business that is organized as a corporation.

(D)Any individual who assumes responsibility for the license. Such an individual includes but is not limited to, the following:

(i) An individual who is managing or directing the commercial cannabis business in exchange for a portion of the profits.

(ii) An individual who assumes responsibility for the debts of the commercial cannabis business.

(iii) An individual who is determining how a portion of the cannabis business is run, including non-plant-touching portions of the commercial cannabis business such as branding or marketing.

(iv) An individual who is determining what cannabis goods the commercial cannabis business will cultivate, manufacture, distribute, purchase, or sale.

The Bureau has removed section D, “any individual who assumes responsibility for the license” completely. The Bureau addressed comments as follows: “A salesperson earning a fractional share in profits would not be considered an owner under this section but would be a financial interest holder. Commenter’s comment demonstrates that rather than providing clarification, subsection (b)(6)(D) created more confusion. Therefore, the Bureau has determined that it is necessary to withdraw the subsection.”

Therefore, consultants, Marketing Managers, etc. will not have to be disclosed as “owners” unless they fulfill one of the other definitions of an owner (20% or more profits, 20% or more ownership interest, board of directors, etc.)

Second, please find a brief summation of some important regulatory changes for each license type. Please note that this is not a comprehensive summary and we advise you to contact us with any questions regarding your specific operation.

BCC Regulations (Retail, Delivery, Microbusiness, Distribution, Testing)

  1. Annual License Application Forms. All BCC applicants will be required to use the applicable forms supplied by the Bureau to submit Transportation Procedures, Inventory Procedures, Non-Laboratory Quality Control Procedures, Security Procedures, and Delivery Procedures.
  2. Cal-OSHA training. Businesses with more than 1 employee must complete a Cal-OSHA 30-hour general industry outreach course within one year of receiving a license.
  3. Business/Owner Modifications. If one or more of the owners of a license change, the new owners shall submit their required information within 14 calendar days of the effective date of the ownership change, but may not need to submit a new license application if at least one existing owner is not transferring his ownership interest.

Distributors

  1. Pre-rolls. Distributors may package and label pre-rolls that consist exclusively of any combination of flower, shake, leaf, or kief for retail sale.
  2. Exit Packaging. Until January 1, 2020, the child-resistant packaging requirement may be met through the use of a child-resistant exit package at retail.
  3. Distributor to distributor transfer. After a batch passes testing, the goods packaged as they will be sold at retail, may be transported to one or more licensed retailers, distributors, or microbusinesses (previously was only retailers). However, cannabis goods that have not been transported to retail within 12 months of the date on the Certificate of Analysis must be destroyed or re-tested.
  4. Ownership of Vehicles. All vehicles used to transport cannabis goods must be owned or leased by the licensee.

Delivery

  1. Delivery to prohibited cities. A delivery employee may deliver to any jurisdiction within the State of California.
  2. Value of Goods. A delivery vehicle may not carry cannabis goods in excess of $5,000 at any time.

Testing

  1. Sampling. Once a representative sample has been obtained for compliance testing, the testing laboratory that obtained the sample must complete the regulatory compliance testing.
  2. Final Form. All testing of the samples shall be performed on the final form in which the cannabis or cannabis products will be consumed or used.

Temporary Cannabis Event

  1. Other venues allowed. Temporary cannabis event may be held at county fair event, district agricultural association event, or at another venue expressly approved by a local jurisdiction for the purpose of holding a temporary cannabis event.

MCSB Regulations (Manufacturing)

  1. Cal-OSHA training. Businesses with more than 1 employee must complete a Cal-OSHA 30-hour general industry outreach course within one year of receiving a license.
  2. Cannot use CBD from hemp. Manufacturers may only use cannabinoid concentrates and extracts that are manufactured or processed from cannabis obtained from a licensed cannabis cultivator (and not from hemp cultivators).
  3. Retail Food/ABC Premises. A manufacturer shall not manufacture, prepare, package, or label cannabis products in a location that is operating as a retail food establishment, or that is licensed by the Department of Alcoholic and Beverage Control.
  4. Requirements of Operating Procedures and Policies have changed (new written protocols required).
  5. Final Form. Cannabinoid content may be included on the product label or added to the product at the distribution premises after issuance of the regulatory compliance testing Certificate of Analysis.
  6. Child-Resistant Packaging. Until January 1, 2020, the child-resistant packaging requirement may be met through the use of a child-resistant exit package at retail.
  7. Edible cannabis product label may not contain a picture of the edible product.
  8. New Labeling and Packaging Requirements. We strongly encourage you to contact us with any questions regarding the new comprehensive packaging and labeling checklist and/or to have us review your packaging and labeling for compliance with the new regulations.

CalCannabis Regulations (Cultivation)

  1. Cal-OSHA training. Businesses with more than 1 employee must complete a Cal-OSHA 30-hour general industry outreach course within one year of receiving a license.
  2. Separate processing areas for each license type. Processing areas, packaging areas, and storage of cannabis subject to administrative hold areas may not be shared among multiple licenses held by one licensee (need to identify separate areas for each license)
  3. Common areas. Pesticide and chemical storage areas, composting areas, and secured waste areas may be shared between licenses held by one licensee.
  4. Light deprivation. Outdoor licensees may not use light deprivation.
  5. Processing. Cultivators may process cannabis, which includes all activities associated with the drying, curing, grading, trimming, rolling, storing, packaging, and labeling of flower, shake, leaf, pre-rolls, and kief that is obtained from accumulation in containers or sifted from loose flower with a mesh screen.
  6. New Labeling and Packaging Requirements. We strongly encourage you to contact us with any questions regarding the new comprehensive packaging and labeling checklist and/or to have us review your packaging and labeling for compliance with the new regulations.

As always, we hope that you find the above useful in navigating this rapidly-evolving landscape. This is by no means a comprehensive summary of all of the changes that were implemented; it is simply a quick overview of relevant rules that may be applicable to our Clients.

Please do not hesitate to contact us if you have further questions or need clarification regarding any of the new regulations.