Winter LLP Update: Self-Distribution of Cannabis Products

There has been a lot of confusion recently about Self-Distribution under state and local laws. It hasn’t helped matters that some local (city/county) ordinances, in jurisdictions such as Monterey County, for example, allow cultivation and manufacturing permit holders to “self-distribute” their material or products without the use of a third-party distributor.

As such, this update is being provided to help you understand what, exactly, “self-distribution” means at the state level.

Under current California law, there are only two types of businesses that can legally transfer or transport cannabis: (1) Licensed dispensaries that are authorized to provide delivery services can “transfer” cannabis or cannabis products directly to a customer, and (2) licensed distributors can “transport” cannabis and cannabis products between licensees. It is important to emphasize that Section 26070 of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) expressly states that “the transportation of cannabis and cannabis products shall only be conducted by persons holding a distributor license.

Section 26110 of MAUCRSA does allow a cultivation or manufacturing licensee to self-distribute its cannabis or cannabis products to other licensees. However, this is only allowed if the business also holds a valid Type 11 state distribution license. Accordingly, while a local city or county ordinance may allow a permitted manufacturer or cultivator to distribute its own cannabis or cannabis products without a separate locally issued distribution permit, a Type 11 state distribution license is still required.

Whether self-distributing or not, all must comply with the regulations and requirements placed upon regularly licensed distributors, which include the following:

  • Prior to transportation, distributors shall:
    • Complete an electronic shipping manifest.
    • Transmit the manifest to the bureau and the licensee receiving product.
  • During transportation, distributors shall:
    • Maintain a physical copy of the manifest and make it available upon request to the Department of Consumer Affairs and law enforcement officers.
  • Upon receipt, licensee receiving shipment shall:
    • Submit to the licensing authority a record verifying receipt of the shipment and the details of the shipment.

We hope this clears up some of the confusion surrounding the requirements placed on cannabis businesses that hope to Self-Distribute their material or products to other licensees.

As always, should you have any questions or want any additional information regarding Self-Distribution, or any other local permitting or state licensing requirements, please let us know.

Thank you, stay safe, and good luck out there! Todd Winter, WINTER LLP.

What is Proposition 65?

1. What is Proposition 65?

Proposition 65 (Prop 65) requires businesses to notify Californians about significant levels of chemicals in products they purchase, in their homes or workplaces, or that are released into the environment.[1] Prop 65 also prohibits California businesses from knowingly discharging significant amounts of listed chemicals into sources of drinking water. Once a chemical is listed as one of the Prop 65 chemicals, businesses have 12 months to comply with warning requirements and 20 months to comply with the discharge prohibition. The Office of Environmental Health Hazard Assessment (OEHHA) administers Prop 65, which is part of the California Environmental Protection Agency (EPA). The California EPA also evaluates all currently available scientific information on substances considered for placement on the Prop 65 list.[2]

Businesses are required to provide a “clear and reasonable” warning before knowingly and intentionally exposing anyone to a listed chemical. This warning can be given by labeling a consumer product, posting signs at the workplace, distributing notices at a rental housing complex, or publishing notices in a newspaper.

2. Which types of businesses are exempt from Prop 65 warning requirements?

  1. Businesses with less than 10 employees;
    1. In Consumer Advocacy Group, Inc. v Pilot Automotive, Inc., the court found that the defendant corporation’s staff of less than 10 employees, was a substantial factor in finding that the corporation had not violated Prop 65 when it sold steering wheel covers which contained lead. The court stated:
    2. The corporation’s staff cannot be held liable under Health & Safety Code § 25249.11 because it contains fewer than 10 employees. Health & Safety Bode § 25249.11(b) states that a “person” under the Act does not include a “person employing fewer than 10 employees in his or her business.”
  1. Government agencies; and
  2. Businesses whose exposures are so low as to create no significant risk[3] of cancer, birth defects,[4] or other reproductive harm.

3. What are the content requirements that a Noticing Party must comply with before commencing an action alleging a Prop 65 violation?

  1. General Information. Each notice shall include as an attachment a copy of “The Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65): A Summary” prepared by the lead agency. This attachment need not be included in the copies of notices sent to public enforcement agencies.
  2. Description of violation.U A notice shall provide adequate information from which to allow the recipient to assess the nature of the alleged violation, as set forth in this paragraph. The provisions of this paragraph shall not be interpreted to require more than reasonably clear information, expressed in terms of common usage and understanding, on each of the indicated topics.

4. What information must the Noticing Party identify in the Notice?

  1. The name, address, and telephone number of the noticing individual or a responsible individual within the notice entity and the name of the entity;
  2. The name of the alleged violator or violators;
  3. The approximate time period during which the violation is alleged to have occurred; and
  4. The name of each listed chemical involved in the alleged violation.

5. What information is the Notice not required to contain?

  1. The specific retail outlet or time or date at which any product allegedly violating the Act was purchased;
  2. The level of exposure to the chemical in question;
  3. The specific admissible evidence by which the person providing the notice will attempt to prove the violation;
  4. For product, the UPC number, SKU number, model or design number or stock number or other more specific identification of products;
  5. For geographic areas, the lot, block or other legal description of the property in question

6. Do the products alleged to be in violation of Prop 65 need to be included?

Yes. For notices of violation of § 25249.6 of the Act involving consumer product exposures, the name of the consumer product or service, or the specific type of consumer product or services, that cause the violation, with sufficient specificity to inform the recipients of the nature of the items allegedly sold in violation of the law and to distinguish those products or services from others sold or offered by the alleged violator for which no violation is alleged.

7. Do the means by which an individual alleges to have been exposed to the chemicals in the products need to be stated?

Yes. For all notices of violation of § 25249.6, the route by which exposure of the listed chemical is alleged to occur needs to be stated in the Notice. For example, various types of ways people are exposed to harmful chemicals include inhalation, ingestion, dermal contact, etc.

8. How must the Notice be served on the alleged violator?

Notices shall be served by first class mail or any manner that would be sufficient for service of a summons and complaint under the California Code of Civil Procedure. In lieu of service as prescribed in the California Code of Civil Procedure, a notice may be served on the Attorney General and a district attorney or city attorney by electronic mail if:

  1. The Attorney General, District Attorney or City Attorney has specifically authorized such service and the authorization appears on the Attorney General’s Web site.
  2. The Notice and related documents are sent to the electronic mail address specified, and in the format (e.g. Word, Adobe Acrobat) specified.
  3. Service by this method is not effective until the documents are actually received. Notice is actually received when it is acknowledged by the recipient.
  4. Where a document is served electronically, time shall be computed as it would for service by mail within the State of California.

9. Does the Notice require a certificate of service?

Yes, certificate of service shall be attached to each notice listing the time, place, and manner of service and each of the parties upon which the notice was served.

10. Who else shall be served with the Notice of an alleged violation?

Notices shall be served upon each alleged violator, the Attorney General, the district attorney of every county in which a violation is alleged to have occurred, and upon the city attorneys of any cities with populations according to the most recent decennial census of over 750,000 and in which the violation is alleged to have occurred.

  1. Where the alleged violator has a current registration with the California Secretary of State that identifies a Chief Executive Officer, President, or General Counsel of the corporation, the notice shall be addressed to one of those persons.

11. What other necessary documents must the Noticing Party provide to the alleged violator in its Notice?

If a private party alleges that a violation occurred based on one of the exposures described above, the private party must first provide the alleged violator a notice of special compliance procedure and a proof of compliance form. The alleged violator must complete and submit the compliance form to the Noticing Party at an address provided postmarked within 14 days of receiving the notice.

12. How does an alleged violator respond to a Notice?

A private party may not file an action against the alleged violator for these exposures, or recover in a settlement any payment in lieu of penalties or any reimbursement for costs and attorney’s fees, if the notice of violation was served on or after October 5, 2013, and the alleged violator has done all of the following within 14 days of being served notice:

  • Corrected the alleged violation;
  • Agreed to pay a civil penalty of $500 to the private party within 30 days
  • Notified the private party serving the notice in writing that the violation has been corrected

An alleged violator may satisfy these conditions only one time for a violation arising from the same exposure in the same facility or the same premises. The satisfaction of these conditions does not prevent the Attorney General, a district attorney, a city attorney of a city greater than 750,000 in population, or any full-time city prosecutor with the consent of the district attorney, from filing an enforcement action against an alleged violator. The amount of any civil penalty for a violation shall be reduced to reflect a payment made by the alleged violator for the same alleged violation to a private party.

13. What kind of action is the Plaintiff entitled to commence after the 60 days have elapsed form the date of service of Notice and what can the alleged violator do to avoid such action?

An action is deemed to have been “commenced more than 60 days after the person has given notice” where more than 60 days have elapsed from the date of service of the notice, as the date would be calculated for service of a document pursuant to the provisions of the Code of Civil Procedure § 1013.

The plaintiff is entitled to commence a private enforcement action, which refers to individually initiated litigation, either as stand-alone or follow-on action, before a court to remedy an infringement of antitrust law. If successful, the legal action leads to some sort of civil sanction imposed by a court such as damages, restitution, injunction, nullity or interim relief. Unlike public enforcement agencies, private parties do not have special (public) powers in civil law disputes.

In order to avoid private action enforcement on behalf of the Plaintiff, an alleged violator must ascertain that it has completed the following:

  • Posted warning or warnings about the alleged exposure that complies with the law, and attaching a copy of that warning and a photograph accurately showing its placement on its premises
  • Posted the warning or warnings demanded in writing by the Noticing Party, and attaching a copy of that warning and a photograph accurately showing its placement on its premises, OR
  • Eliminating the alleged exposure, and attaching a statement accurately describing how the alleged exposure has been eliminated.

14. What are the civil penalties for a business found in violation of Prop 65?

A business found to be in violation of Prop 65 is subject to civil penalties of up to $2,500 per day for each violation. In addition, the business may be ordered by a court to stop committing the violation.

[2] The list contains a wide range of naturally occurring and synthetic chemicals that are known to cause cancer or birth defects or other reproductive harm. These chemicals include additives or ingredients in pesticides, common household products, food, drugs, dyes, or solvents. Listed chemicals may also be used in manufacturing and construction, or they may be byproducts of chemical processes, such as motor vehicle exhaust.

[3] For chemicals that are listed as causing cancer, the “no significant risk level” is defined as the level of exposure that would result in not more than one excess case of cancer in 100,000 individuals exposed to the chemical over a 70 year life time. In other words, a person exposed to the chemical at the “no significant risk level” for over 70 years would not have more than a “one in 100,000” chance of developing cancer as a result of that exposure.

[4] For chemicals that are listed as causing birth defects or reproductive harm, the “no observable level” is determined by identifying the level of exposure that has been shown to not pose any harm to humans or laboratory animals. Prop 65 then requires this “no observable effect level” to be divided by 1,000 in order to provide an ample margin of safety.

Measure M in Los Angeles and Oakland

Please find a brief update on the passage of Measure M in Los Angeles, and Oakland’s ordinance.


On March 7, 2017, voters in the City of Los Angeles voted to approve Measure M, a citizen sponsored measure also referred to as the Los Angeles Marijuana Regulation and Safety Act (“LAMRS”). Measure M allows the City of Los Angeles to issue permits for a variety of commercial cannabis activities. Below are some highlights from the new law.

Permit Types Allowed:

Under LAMRS the City is authorized to issue permits for the following activities:

  • Cultivation
  • Dispensaries
  • Manufacturing
  • Testing
  • Distribution

Permit Timelines:

  • LAMRS requires the City to release an application for manufacturing permits within 90 days of March 8, 2017; and
  • Applications for distribution, cultivation, testing, and transportation must be released by January 31, 2018

Other Highlights from LAMRS:

  • Allows currently licensed dispensaries to apply for and receive dispensary and cultivation (indoor up to 22,000 sf) permits on existing premises before anyone else;
  • City has discretion to determine total number of dispensary, cultivation, manufacturing, testing, distribution, and transportation permits it would like to issue; and
  • Currently licensed dispensaries do not count against any cap set by the City.


On Tuesday, March 7, the Oakland City Council met to discuss the following cannabis-related ordinances:

  • · Ordinance Amending Oakland Municipal Code Chapter 5.80, Medical Cannabis Dispensary Permits; and
  • · Ordinance Amending Oakland Municipal Code Chapter 5.81, Medical Cannabis Cultivation, Manufacturing, and Other Facility Permits.

The City Council conducted a first reading and voted unanimously to adopt both ordinances. These ordinances, along with some last minute amendments made during the meeting, bring about some rather significant changes to the original draft ordinances we reviewed for permitting of commercial cannabis within Oakland. Below is a summary of the new ordinances, inclusive of the newly added amendments.

  1. 1. Three Year Residency Requirement

A significant amendment that was made during the March 7 meeting, and that was incorporated into the approved ordinances, is a requirement that all applicants for a commercial cannabis permit must have resided in Oakland for the previous three years. This requirement applies to all General Applicants (non-Equity Applicants), whether or not they are participating in the Incubator Program.

Although either an individual or a business entity can be an “Applicant” under the ordinances, it was clear in the discussion surrounding this amendment during the March 7 meeting that its intent was to prevent non-Oakland residents from owning cannabis businesses within Oakland. Therefore, it is likely that even if an entity, rather than an individual, is acting as an applicant, this three year residency requirement will be applied to the individual owners of the entity. “Ownership” is defined in the ordinances as holding a 50% or greater interest in a for-profit entity, or a majority of the seats on the board of directors for non-profit entities.

Several of the City Council Members expressed a desire to create an exception to this three year residency requirement for General Applicants who participate in the Incubator Program. It was decided, however, to bring this exception in a future action rather than including it in the ordinances as voted on at the meeting. Thus, while currently the three (3) year residency requirement applies to all applicants, there is at least a possibility that such an exception will be added in the future for those General Applicants that support an Incubator Program for an Equity Applicant.

  1. 2. Equity Permitting Program

The ordinances initiate an “Equity Permitting Program” that provides special benefits such as interest free loans, industry specific technical assistance and waivers from permitting fees to businesses owned by certain individuals. To qualify as an applicant for the Equity Permitting Program (Equity Applicant), the business must be owned by an individual earns less than 80% of Oakland’s average mean income, and either has resided in a specified high crime neighborhood for 10 of the last 20 years, or was arrested in Oakland and convicted for a cannabis related crime after November 5, 1996.

Until the Equity Permitting Program is fully up and running, an “initial permitting phase” will be implemented. During this initial phase, at least 50% of permits issued must go to Equity Applicants (the remainder to General Applicants who meet the 3 year residency requirement). The ordinances define a General Applicant as any applicant that is not an Equity Applicant.

  1. 3. Incubator Program

To encourage accessibility to the industry for Equity Applicants, the ordinances lay out criteria for an “Equity Incubator.” A General Applicant who provides, rent free, at least 1000 square feet of space to an Equity Applicant to conduct its operations for at least three (3) years will be considered an Equity Incubator and will receive the next available Permit available for a General Applicant. The Equity Incubator must also provide the required security measures. The biggest risk to the Equity Incubator is if the Equity Applicant goes out of business or otherwise ceases operations within the 3 year period. If this occurs, the Incubator/General Applicant must re-apply for a permit and seemingly go to the back of the line behind other applicants waiting for a permit.


Clearly there are a lot of issues left to resolve, understand and navigate in both ordinances. But the passage of ordinances (despite their problems) in these two major metropolitan areas in the State of California are monumental for the legal cannabis movement.

WINTER LLP is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.

The Truth About the DEA and CBD

Fundamentally, CBD derived from hemp is not specifically defined under the Federal Controlled Substances Act (the “CSA”) which can be found under 21 U.S.C. 812. Therefore it is not a Schedule I Substance under the United States Code. (U.S.C.)

When Congress passes a law, it is recorded in a set of books known as The United States Code, or U.S.C. That is where the CSA can be found.

However, the CFR, or Code of Federal Regulations (CFR) is written by government agencies responsible for the subject matter of the laws. The regulations found in the CFR do not stand on their own; they must be based on statutes passed by Congress and are only valid if they put into effect an actual statute enacted by Congress.

Yesterday, the DEA amended the CFR to define all extracts from cannabis as a Schedule 1 drug. However, the United States Code (U.S.C.) and CSA remain unchanged. The DEA has no authority to change the law (U.S.C.) and as such, unless or until Congress amends the definition of marijuana in the U.S.C. (CSA), the DEA has no authority to enforce its “regulations.” As indicated above, the CFR is simply a book of regulations written by governmental agencies, and do not stand on their own as laws unless based upon actual acts of Congress. Congress has made no acts with respect to CBD derived from hemp.

When the DEA in 2003 attempted to initiate rules and interpretations concerning cannabinoid constituents of marijuana that were not expressly set forth under the CSA or the DEA’s own regulations, the Ninth Circuit Federal Court of Appeals struck down its efforts, stating that “an agency is not allowed to change a legislative rule retroactively through the process of disingenuous interpretation of the rule to mean something other than its original meaning.”

Then, in another case in 2004, the court stated “In keeping with the definitions of drugs controlled under Schedule I of the CSA, the DEA Final Rules can regulate foodstuffs containing natural THC if it is contained within marijuana, and can regulate synthetic THC of any kind. But they cannot regulate naturally-occurring THC not contained within or derived from marijuana — i.e., non-psychoactive hemp products — because non-psychoactive hemp is not included in Schedule I. The DEA has no authority to regulate drugs that are not scheduled, and it has not followed procedures required to schedule a substance.”

In other words:

  1. The CSA, as found in the United States Code, remains unchanged. CBD derived from hemp is not a Schedule I substance as found in the CSA. This is the law.
  2. The DEA has no authority to change Congress’ interpretations or make laws, and Congress has not scheduled CBD derived from hemp as a Schedule 1 drug. The regulations found in the CFR are not enforceable unless based upon actual statutes found in the U.S.C.
  3. The DEA has not properly followed procedures required to schedule CBD derived from hemp as a Schedule 1 drug, and therefore it has no authority to regulate drugs that are not scheduled.
  4. Unless or until Congress amends the United States Code to reschedule CBD from hemp as a Schedule 1 drug, the DEA’s power to enforce its “Final Rules” is limited. And even if it does somehow attempt to enforce the “rule”, the DEA can be successfully challenged in court.

The two primary factors to keep your eyes on as our industry moves forward, in my opinion, are (i) the continuing approval of (CA – R) Dana Rohrabacher’s Spending Bill provisions limiting federal funds for enforcement efforts in legal cannabis states; and (ii) if Congress is somehow convinced to change the CSA by the DEA’s shenanigans, which I think is highly doubtful.

WINTER LLP is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.

What is a Trademark Class and How Do You Choose the Correct Trademark Class to File?

What is a Trademark Class and How Do You Choose the Correct Trademark Class to File?

When you file an application for a trademark, you are required to select the trademark class, or classes, in which your particular product or service belongs. This might lead you to wonder what a trademark class is and how it is you choose the correct trademark class for your particular product or service.

What is a Trademark Class?

The United States Patent and Trademark Office (also known as the “USPTO”) utilizes something known as the “Nice Classification of Goods and Services”, which is a system created to classify goods and services for the purpose of registering trademarks. This classification system is recognized by many countries throughout the world and helps provide a better system for consistency in trademark laws between countries. The system also makes conducting a federal trademark search much simpler because the search can be narrowed down to particular trademark classes.

The Nice Classification of Goods and Services groups different products and services into categories known as “trademark international classes”. Each trademark class is assigned a number and makes up a certain type of products of services. The Nice Classification List (or “NCL” for short) consists of 34 goods and 11 services. For example, if your products were related to household or kitchen utensils, you would file your trademark registration under Class 21. If your products were related to carpets, rugs, linoleum, mats or some other material that covers flooring, you would you’re your trademark registration under Class 27. If you provide legal services, you would file your trademark registration under Class 45.

What is a Trademark Description?

In addition to selecting the appropriate trademark class for your products and/or services, you will have to draft a complete description (identification) of the goods and services you will be providing. This description is very important because it is what the USPTO will use to compare your application to other trademark registration to determine whether there is a conflict. When describing the goods and services you want to sell or provide, it is helpful to use somewhat broad language, but not too broad. The reason for this is because you cannot broaden the identification after the application is filed. However, if the description is too narrow, you could give up valuable trademark protection. An attorney can assist you with drafting an accurate but broad description of your products and/or services.

How Do You Choose the Right Trademark Class for Your Product or Service?

On the USPTO’s website, you can go through their Acceptable Identification of Goods and Services Manual to help you decide which trademark class should be filed for your particular product and service, but while you may initially determine that your products or services fall under one particular class, you may also neglect to address other classes that may be applicable to your trademark. This can become a costly mistake down the road if you ever wish to defend yourself against trademark infringers and find you don’t have the proper trademark class registration. A qualified trademark attorney will help you determine and advise you about which trademark classes to file for.

It is also important to note that your registration fees are based on the number of trademark classes you are applying for. For example, companies like Google, Apple and Disney have dozens of trademarks because their goods and services fall under so many different trademark classes.

Understanding more about trademark classes and identifications will help you understand more about trademark laws and why trademark registration fees may vary. Make sure that you consult with a qualified trademark attorney to ensure you file trademark registrations accurately and for all of the trademark classes that are applicable to your products and/or services.

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.

Prop 64 Quick Reference – Key Points

Personal Use

  • Goes into effect immediately
  • Anyone over the age of 21
    • Can purchase, possess, or give away up to 28.5 grams of cannabis (not in the form of concentrated cannabis) or up to 8 grams of concentrated cannabis
    • Can possess up to 6 plants, as well as the cannabis produced from the plants in accordance with any reasonable local regulation or ordinance
    • Can purchase, possess, manufacture, or give away cannabis accessories to anyone over 21
    • Can smoke or ingest cannabis or cannabis products
  • Cannabis and cannabis products cannot be smoke or ingested
    • In public place
    • Anywhere where smoking tobacco is prohibited
    • Within 100 feet of a school, daycare center, or youth center (unless in a private residence)
  • Cannot ingest or possess an open container of cannabis or cannabis product while either driving or riding as a passenger in a motor vehicle

Medical Cannabis Patients

  • Beginning on January 1, 2018, a qualified patient must possess a new identification card supported by a physician’s recommendation
  • Personal information of patients and their primary caregivers are considered “medical information” and enjoys the same protection as all other forms of confidential medical information
  • The status as a qualified patient cannot be used to restrict parental rights in any proceeding before a family or juvenile court

Cannabis businesses and Licensing

  • State licensing authorities are required to begin issuing licenses to recreational cannabis business no later than January 1, 2018
  • Commercial recreational cannabis activity is lawful if the business (1) is in possession of both a state issued license and locally issued license, and (2) operate in accordance with all applicable regulations
  • There are nineteen different license classifications to be issued by the state, they are:
    • Type I = Cultivation; specialty outdoor; Small.
    • Type IA = Cultivation; Specialty indoor; small.
    • Type IB = Cultivation; Specialty mixed-light; Small.
    • Type 2 = Cultivation; Outdoor; Small
    • Type 2A = Cultivation; Indoor; Small
    • Type 2B = Cultivation; Mixed-light; Small.
    • Type 3 = Cultivation; Outdoor; Medium.
    • Type 3A = Cultivation; Indoor; Medium.
    • Type 3B = Cultivation; Mixed-light; Medium
    • Type 4 = Cultivation; Nursery.
    • Type 5 = Cultivation; Outdoor; Large.
    • Type 5A = Cultivation; Indoor; Large.
    • Type 5B = Cultivation; Mixed-light; Large.
    • Type 6 = Manufacturer 1.
    • Type 7 = Manufacturer 2.
    • Type 8 = Testing.
    • Type 10 = Retailer.
    • Type 11 = Distributor.
    • Type 12 = Microbusiness.
  • All licenses are valid for 12 months, and must be renewed annually
  • A separate license is required for each location where the applicant operates
  • A single recreational cannabis business can obtain multiple licenses of different types,
  • The exception is that an entity holding a license for testing is prohibited from holding any other license
  • The same business can hold both recreational and medicinal licenses
  • A recreational cannabis business cannot also be a licensed retailer of alcohol
  • No cannabis business can be located within 600 feet of a school or daycare center (although this can be increased or decreased by local ordinances)
  • Until December 19, 2018, an applicant must demonstrate five years of continuous California residency to be eligible for a license
  • Licensing Authorities will give priority to applicants that can demonstrate they operated in compliance with the Compassionate Use Act prior to September 1, 2016, or is currently in compliance with the Medical Cannabis Regulation and Safety Act (MSCRA)
  • Regulations governing commercial cultivation will be issued and enforced by the State Department of Food and Agriculture
  • Regulations governing commercial manufacturing will be issued and enforced by The Department of Public Health

Product and Labeling Requirements

  • Recreational cannabis and cannabis products cannot be sold to anyone under the age of 21
  • Medical cannabis can be sold to persons 18 and older who possess a valid identification card
  • All cannabis and cannabis products must be sold in child resistant packaging and display a specific government warning in bold letters
  • Cannabis products cannot contain more than 10 milligrams of THC per serving
  • Edible cannabis products must be divided into standardized serving sizes, and producers must ensure uniform distribution of THC and other cannabinoids throughout the product
  • All cannabis and cannabis products for sale must contain a label stating the manufacture and/or cultivation date, source, and net weight of the cannabis contained in the package
  • The labeling of all cannabis and cannabis products must list the pharmacologically active ingredients and the amount of such ingredients per serving and per package
  • The labeling of all cannabis and cannabis products must list any solvents, nonorganic pesticides, herbicides, and fertilizers that were used during cultivation and manufacturing
  • Labeling for cannabis products must comply with all other state and federal nutritional labeling requirements

Local Regulations

  • Local governments can enact their own zoning, land use, licensing, and other reasonable requirements
  • Local governments can ban any and all forms of commercial cannabis activities
  • Local governments can allow cannabis to be smoked and ingested on the premises of a retailer if access is restricted to those 21 years of age or older, cannabis is not visible from a public place, and no alcohol or tobacco are served


  • Retail sales of cannabis and cannabis products are subject to a state excise tax of 15% of gross receipts
  • Cannabis cultivation is subject to a state tax of $9.25 per dry-ounce weight of cannabis flowers, and $2.75 per dry-ounce weight for leaves (these amounts are subject to adjustment and categories can be added or changed by the state)
  • Cities and counties can enact and collect their own taxes on commercial cannabis activity in addition to the taxes established by the state

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.

U.S. v. McIntosh: Ninth Circuit says that the Department of Justice May Not Prosecute Legal Cannabis Dispensaries

On August 16, 2016, the Ninth Circuit ruled in U.S. v. McIntosh that the Department of Justice may not expend federal money to prosecute state-law compliant medical marijuana providers and entities.

Since 2014, through appropriations riders, Congress has ruled that the Department of Justice may not use appropriated funds to pursue federal enforcement actions in ways that would thwart state medical marijuana laws. The relevant language in the budget bills passed in 2014 and renewed in 2015 reads:

“ None of the funds made available in this Act to the Department of Justice may be used, with respect to the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington, and Wisconsin, to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”

However, the DOJ contended that the ban did not undermine its right to prosecute state-law compliant growers and distributors. The Ninth Circuit’s ruling interprets the legislation to mean that it does indeed “prohibit DOJ from spending funds from relevant appropriations acts for the prosecution of individuals who engaged in conduct permitted by state medical marijuana laws and who fully complied with such laws.” U.S. v. McIntosh.

Although a favorable ruling for the cannabis industry, the court also articulated the following two important points limiting its benefits:

  1. The ruling only applies to medical marijuana. No federal appellate-level court has directly endorsed, tacitly or otherwise, state-legal recreational cannabis businesses. This implicates much of the cannabis community, especially as medical programs are set to yield to or merge into recreational programs in a number of states that have adopted medical cannabis reform.

  1. Instead of ordering lower courts to dismiss the criminal charges, the Ninth Circuit ordered that the cases be remanded to the lower courts to investigate whether the appellants were, in fact, fully compliant with their states’ laws regarding medical cannabis. Compliance with state law is turning out to be the cornerstone for protection from federal criminal prosecution.

That said, the DOJ’s enforcement of the federal Controlled Substances Act cannot occur without the necessary funds to do so and, in making its ruling, the Ninth Circuit Court of Appeals affirmed Congress’s intent to prohibit executive agencies from using appropriated funds for exactly that purpose. Hence, this ruling reduces the risk of federal raids for state-law abiding cannabis businesses in those states within the Ninth Circuit’s purview; namely, Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.

Missing the “Mark”: Top 7 Trademark Mistakes People Make

If you’ve never been involved in the process of registering a trademark and protecting the valuable ideas and brand names of your business, it is very easy to make mistakes. Trademark registrations are actually quite complicated and counterintuitive at times. There are several steps, procedures and maintenance requirements that must be followed or your brands may be in jeopardy of infringement or cancellation proceedings. If you aren’t very careful, you can severely jeopardize all of your hard work, creativity and potentially thousands or millions of dollars in value to your company.

Here is a list of the top seven trademark mistakes people make.

Trademark Mistake #1: Choosing a Generic Mark.

The primary purpose of trademarks is to prevent consumer confusion. Trademark law was created to protect marks from competitors that may create similar or infringing names. Marks should be unique and not descriptive of the particular product. For example, a soda company would not be allowed to register a trademark for a soda with the mark “Soda Pop”. This is far too descriptive and generic of the actual product.

Trademark Mistake #2:Not Being Able to Show Use of Your Mark.

Part of the application process for a trademark is proving use of the mark in commerce, i.e. available for purchase or use by consumers. By showing the USPTO that the mark is in use on a website, product label, product image or brochure, and by several other means is required before the USPTO will issue you full registration of that mark.

Trademark Mistake #3:Failing to Do Your Research.

Before you decide to use or register your mark, it is imperative that you have an attorney conduct a clearance search for you to ensure nobody else is using or has registered the same or similar mark in your class of goods. This is a good way to get slapped with a cease and desist letter and face potential damages for infringement. Not to mention the waste of time, effort and marketing dollars getting your company or brand off the ground.

Trademark Mistake #4: Not Displaying Your Registered Trademark Symbol Properly.

Prior to getting approval for your trademark registration, you may use the symbols “TM” (or “SM”) to put the world on notice of your common law trademark rights in that mark for the goods or services provided. Once your mark has received full registration from the USPTO, and not before, are you authorized to use the federal trademark registration symbol, the circle “R” (®). It is important that once you have your mark approved that you properly display the ® everywhere your mark appears.

Trademark Mistake #5: Failing to Monitor (and Protect) Your Trademark from Infringement.

Just because you have your mark registered, it doesn’t mean that others will abide and respect the laws protecting your mark. Often times, there is unintentional (and intentional) infringement against your mark. Whether the infringement is deliberate or not, it is important that you, as the trademark owner, protect your mark from any infringement. If you don’t, your mark may be in jeopardy of a cancellation proceeding by a competitor, subjecting your business to an incredible and unnecessary loss.

Trademark Mistake #6: Forgetting to Renew Your Trademark.

Trademark registrations are not a “one and done” process. Trademark registrations must be regularly affirmed and renewed.. For example, a new trademark owner must file an Affidavit of Use between the fifth and sixth year following the registration and another renewal filing within the year before the end of the ten-year period after the date of registration. A renewal application must also be filed within the year before the end of each successive ten-year period following the date of registration. If you forget any of the requirements as set by the USPTO for managing your trademarks, you may lose your trademark registration.

Trademark Mistake #7: Not Hiring a Qualified Trademark Attorney.

Last, but certainly not least, another mistake that people commonly make is not hiring a qualified trademark attorney to assist in the trademark application process, and to help protect, monitor and renew the mark. If your business is not in the business of applying for and monitoring trademarks, then you are subjecting yourself to potentially catastrophic losses. Why not leave it to licensed legal professionals that have experience and expertise in this area? Hire a trademark attorney to take care of your trademark needs so you can spend your time focusing on your core competencies within your business.

Knowing these some of the most common mistakes will, hopefully, help you avoid making them in the future. One final bonus trademark mistake that people make is simply not registering their marks in the first place. This can really cost you (and your business) a great deal of money. So, be sure to take the necessary steps to properly file, protect, maintain and renew your trademark registration. Contact WINTER LLP to service your trademark, copyright and corporate needs.

This post is brought to you the good folks at WINTER LLP, servicing the trademark, copyright and corporate needs of clients throughout Orange County, Los Angeles, San Francisco and Phoenix. Contact us at 1-855-FILE-TMS or through our website to file your trademark, copyright, corporation or LLC today.

FDA Deeming Regulations – How it Impacts the Cannabis Industry


On May 10, 2016, the FDA published the final “deeming rule,”[1] which extends the FDA’s tobacco product authority under the federal Food, Drug, and Cosmetic Act (FDCA) to all products meeting the statutory definition of “tobacco product.” Up until now, the existing FDA statutes and rules have only addressed cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. The new rules expand the term “tobacco products,” to include, among others, vaporizers, vape pens, hookah pens, electronic cigarettes, e-pipes, and all other ENDS (Electronic Nicotine Delivery Systems). Notably, manufacturers of components and parts of ENDS which are sold or distributed separately for consumer use – i.e. e-liquids, cartridges, atomizers, certain batteries, cartomizers and clearomizers, tank systems, drip tips, flavorings for ENDS, and programmable software – are subject FDA’s product authorities.

Newly deemed “tobacco products” are now subject to the same premarket review provisions of Section 905(j) and 910 of the FDCA that govern currently regulated tobacco products, meaning that manufacturers of newly deemed products will be required to obtain premarket authorization through one of three premarket pathways: SE Exemption Requests; SE Reports; or Premarket Tobacco Product Applications (PMTAs). Because the “grandfather date” of February 15, 2007 still stands, and most e-cigarette and vapor products were commercially marketed after the grandfather date, the deeming rule effectively mandates that these products will be subject to the PTMA review process.

Manufacturers will have a 24-month initial compliance period from August 8, 2016, to prepare PTMAs for authorization, as well as a 12-month continued compliance period after those dates in which to obtain FDA authorization. Importantly, the aforementioned compliance policy applies only to products that are commercially marketed as of the effective date of the deeming rule (August 8, 2016): any new product not on the market as of August 8, 2016, is not covered by the compliance policy and is subject to enforcement if marketed without premarket authorization. [2]

Submission of a PMTA will cost between $117,000 to $466,000, as indicated by the FDA.[3] However, industry experts suggest the FDA is underestimating costs and have placed the figure at well over $1 million.


1. How will the new FDA regulations affect the cannabis industry?

Although the FDA has thus far limited its contact with the cannabis industry, the new rules may indirectly apply to cannabis products because of the dual-use nature of many “tobacco products” – such as vape pens that can be used for either tobacco/nicotine-derivatives or cannabis-derivatives.

A key phrase the FDA uses in defining a “tobacco product” in its Deeming Rule is whether the product is “intended or reasonably expected to be” used for human consumption of a tobacco product or alter or affect a tobacco product. This “intended or reasonably expected to” language will likely have further reaching effects to the cannabis industry for a couple of reasons: (1) cannabis is still currently federally classified as a Schedule I drug; and as such, (2) most cannabis-related products have been marketed as for use with tobacco/nicotine.

Therefore, the FDA will be able to regulate cannabis products that are marketed as “intended or reasonably expected to be used for human consumption of a tobacco product or alter or affect a tobacco product” – which includes most cannabis vaporizer components (empty vape cartridges, batteries, cartomizers, tank systems, etc.)

Please note that these new regulations are targeted at tobacco/nicotine products; therefore, they do not specifically address the FDA’s role in regulation of cannabis oil. For more information specifically about cannabis oil, please see Question 7.

2. Will the FDA regulations affect the importation (from other countries) of vaporizer components, parts, and accessories, i.e. vape cartridges, batteries, cartomizers, etc.?

In the “Draft Guidelines for Industry – Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems (ENDS)”, the FDA states that:

“At this time, FDA intends to limit enforcement of the requirements of ENDS products sold or distributed separately for consumer use. FDA does not, at this time, intend to enforce these requirements for components and parts of newly deemed products that are sold or distributed solely for further manufacturing into finished tobacco products and not sold separately to the consumer. For example, an e-liquid that is sold or distributed for further manufacturing into a finished ENDS products is not itself a finished tobacco product, and at this time, FDA does not intend to enforce such e-liquids that are sold or distributed without a marketing order. In contrast, an e-liquid sealed in final packaging that is to be sold or distributed to a consumer for use is a finished tobacco product. FDA intends to enforce against such finished e-liquids that are sold or distributed without a marketing order.”[4]

Therefore, with respect to our clients that import vape cartridges, batteries, cartomizers, etc. for use with cannabis, the FDA should not have the authority to regulate the importation of such components so long as the components are not sold separately to the customer and will be “sold or distributed solely for further manufacturing.” In other words, the FDA will only be regulating the importation of vape pens, cartridges, batteries, etc. that are sealed in final packaging and are ready for sale to a consumer.

As explained in further detail below in (4), although FDA intends to work with the U.S. Customs and Border Protection (CBP) to ensure tobacco products that enter U.S. borders comply with applicable regulations, the FDA is ultimately responsible for determining whether an FDA-regulated article offered for importation into the United States is in compliance with the laws enforced by FDA.

3. There are new products (cartridges, batteries, vape pens) available on the market. Can I upgrade my current models to reflect those changes?

In short, we advise against introducing any “new products” (particularly products that can also be used with tobacco/nicotine products) that were not on the market as of August 8, 2016. This includes refraining from incorporating new technology, methods, packaging, labeling, etc. relating to vape pens and its components. Although the new Deeming Rule is targeted at manufacturers and retailers of tobacco/nicotine products, it is foreseeable that by introducing new vape technology, packaging, or products, manufacturers of cannabis-related products will “awaken” the FDA regulatory authorities to their products. Also, as discussed above, the FDA will be able to regulate cannabis products that are marketed as “intended or reasonably expected to be used for human consumption of a tobacco product or alter or affect a tobacco product” – which includes most cannabis vaporizer components (empty vape cartridges, batteries, cartomizers, tank systems, etc.)

Moving forward, the packaging, labeling and advertising of cannabis-related products with a conceivable dual purpose could be an important factor in determining whether the FDA will deem the product a “tobacco product” subject to the new rules. However, the industry faces a tricky dilemma as labeling a product “for use with cannabis only” is federally illegal, while labeling a product as “for use with tobacco” will cause it to be regulated as a tobacco product. It is also conceivable that sometime in the near future, particularly if the federal government legalizes cannabis, the FDA will embark on similar rulemaking related to cannabis products.

4. How will the FDA enforce these regulations?

To date, the most recent “Enforcement Action Plan” was published in 2010 by the FDA Office of Compliance & Enforcement, Center for Tobacco Products. Until the FDA publishes a new “Enforcement Action Plan,” we can assume that the 2010 regulations are still valid. In its plan, the FDA outlined the following procedures for enforcement of its tobacco regulations:[5]

  • Tobacco Marketing Surveillance: This surveillance would include monitoring and evaluating various sources of information, including: regulatory submissions made to the FDA, point-of-sale advertising and other promotional materials for tobacco products, internet promotional materials, and complaints.
  • State Tobacco Retailer Compliance Check Inspection Program: The FDA will award contracts to State agencies to assist the FDA in inspecting retail establishments that sell cigarettes and/or smokeless tobacco products. These retail inspections will cover the age and identification (youth access) requirements, as well as requirements relating to tobacco product promotion and advertising. FDA may direct an inspection of a particular retailer if a complaint or report is received, including unlicensed establishments and non-traditional vendors.
  • FDA Inspections of manufacturers and distributors: FDA plans to conduct inspections of manufacturers and distributors. If appropriate, inspections of manufacturers and distributors may be conducted by FDA in response to a complaint.
  • Imports Program: FDA intends to work with the U.S. Customs and Border Protection (CBP) to ensure tobacco products that enter U.S. borders comply with the requirements established by the Tobacco Control Act and applicable regulations. CBP, an agency within the Department of Homeland Security, is responsible for administering the nation’s laws relating to imports, exports and the collection of duties. However, FDA is responsible for determining whether an FDA-regulated article offered for importation into the United States is in compliance with the laws enforced by FDA. As previously mentioned, the FDA will not have the authority to regulate the importation of components so long as the products will be sold or distributed for “further manufacturing.” Therefore, please ensure that the FDA product code[6] on your Customs documentation indicates that your vape component is “for further manufacturing.”
  • Enforcement Tools: FDA has the authority to take enforcement action against violative tobacco products and against persons who violate the requirements established by the Tobacco Control Act and applicable regulations. FDA may utilize several enforcement tools, including but not limited to, the following: warning Letters, civil money penalties, no-tobacco-sale orders, seizures, injunctions, and/or criminal prosecutions.

5. Do I need to apply for a PMTA to continue manufacturing vape components, such as oil, cartridges, batteries, cartomizers, etc.?

As discussed above, manufacturers of “tobacco products” will have a 2-3 year compliance period to apply for and receive a “tobacco marketing order,” and any new product not on the market as of August 8, 2016, is not covered by the compliance policy and is subject to enforcement if marketed without premarket authorization. Moreover, the FDA will likely view cannabis vaporizers and its components as a “tobacco products” because they can “reasonably expected to be” used for human consumption of a tobacco product.

However, the FDA will only enforce against “finished tobacco components, including components and parts of ENDS products sold or distributed separately for consumer use.” [7] “In the case of ENDS hardware/apparatus components, FDA expects that it may be difficult for manufacturers to make the showing necessary to meet the statutory standard, given the great extent of possible variations in combinations of hardware components, if all are 70 considered and sold separately. Thus, with respect to apparatus, FDA expects that manufacturers will be most successful where authorization is sought for entire delivery systems, rather than individual components.” [8]

In other words, with respect to cannabis oil, our clients will not be able to apply for a PMTA because the FDA is only regulating e-liquids with nicotine content. Cannabis oil is not therefore a “tobacco product.”

With respect to cannabis vape components (batteries, empty cartridges, cartomizers, etc.), our clients will likely not be able to apply for a PMTA for the individual components because the FDA has suggested that they will only be approving “entire delivery systems, rather than individual components.”

However, with respect to the entire cannabis vape delivery system (without the oil), our clients may be interested in applying for an “Open Aerosolizing Apparatus” PMTA (without e-liquid and including components and parts). If the PTMA is approved by the FDA, our clients would be able to continue producing their cannabis vaporizers (without cannabis oil) and sell/distribute them to licensees, retailers, and customers even after the 2-3 year compliance period.

6. I am interested in applying for an “Open Aerosolizing Apparatus” PMTA for my entire cannabis delivery system (without the cannabis oil). What are my next steps?

Manufacturers must comply with the following requirements:

  1. Register your establishment and submit a list of all tobacco products that are being manufactured for commercial distribution by December 31, 2016.
  2. Submit tobacco health documents[9]
  3. Submit ingredient listing[10]
  4. Include Required Warning Statements on Packages and Advertisements[11]
  5. Submit quantities of Harmful and Potentially Harmful Constituents[12]
  6. Submit Premarket Tobacco Application (PMTA)

For Steps 1-5, although mailing the Center for Tobacco Products (CTP) is permitted, the FDA recommends electronic submission via the FDA’s eSubmitter software[13] to package documents and the CTP Portal[14] to upload eSubmitter package.

In its “Draft Guidelines for Industry – Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems (ENDS)”, the FDA recommends that your PMTA application for “Open Aerosolizing Apparatus” include detailed descriptions of the following:

  • Aerosolizing apparatus features;
  • Material and/or ingredient functions;
  • Capabilities to monitor product performance (e.g. temperature sensing, voltage sensing, battery life detection);
  • Instructions, and method of operation;
  • Materials of all aerosolizing apparatus components;
  • Operating ranges (e.g. lower and upper wattage, voltage limits that users can adjust);
  • Power supply, such as batteries (including whether it is rechargeable or replaceable);
  • Charging source and the safety of using different charging sources; and
  • Heating source (e.g. heating coil, chemical reaction).

FDA also recommends that your PMTA contain detailed aerosolizing apparatus schematics (e.g. CAD drawings) with dimensions, pictures, and labeling, accompanied by engineering design parameters.

Finally, electrical safety should be discussed, and applicable standards to which conformance have been demonstrated should be identified. This discussion should include appropriate data (e.g. test protocol, data, results). Additionally, you should provide a description of all built-in electrical safety features. If the product contains a controller, you should list and discuss power management techniques used, such as pulse width modulation or direct current.

It is important to note that since many of the regulations in the Deeming Rule are brand new and the FDA has never seen or approved a PMTA for an “Open Aerosolizing Apparatus,” it could be a few months before clearer guidelines and instructions are available. Again, although the FDA has estimated costs to be in the range of $117,000 to $466,000, there are no precedents available to be able to gauge the actual amount of work and costs involved. We will continuously monitor the FDA website for any news and updates regarding PMTAs for “Open Aerosolizing Apparatus.”

Finally, with respect to applying for an “Open Aerosolizing Apparatus,” PMTA, our clients may wish to consider setting up a separate corporate entity that only manufactures the finished vaporizer (without the cannabis oil). The separate, parallel entity could then license the vaporizer back to the parent cannabis entity, as well to other companies/retailers/distributors.

7. I am unsure about applying for a PMTA. Can the FDA regulate the manufacturing of cannabis oil?

It does not appear that the deeming rule has any direct effect on the current status quo of the regulatory environment surrounding the manufacturing of cannabis oils. According to the FDCA, an e-liquid is considered a “covered tobacco product” if it contains nicotine, tobacco, or any derivative of nicotine or tobacco.[15] The FDA has intimated that in many instances it is reasonably expected that e-liquids, such as flavored liquids, will be combined with liquid nicotine, or other similar substances, prior to consumption and will therefore be regulated as components of tobacco products.[16] However, it would be difficult to craft a credible argument that cannabis oil is reasonably expected to be consumed with a tobacco product. Accordingly, the deeming rule does not give the FDA any new or modified ability to regulate the manufacturing of cannabis oil.

However, in recent years, the FDA has demonstrated that it maintains at least some ability to regulate cannabis oils, and most specifically cannabidiol (CBD). The FDA has concluded that selling products containing CBD as dietary supplements as well as the introduction of food containing CBD into interstate commerce constitute violations of the FDCA.[17] In both 2015 and 2016 the FDA has sent “warning letters” to manufacturers for their improper marketing of products containing CBD.[18] In short, the FDA has limited its “regulation” to companies that make inaccurate claims in labels or presenting human health risks.

It is important to note, though, that to date the FDA has not shown a particularly large appetite for enforcement actions against cannabis oil manufacturers. When determining whether to initiate an enforcement action for a perceived violation of the FDCA, the FDA considers factors such as agency resources and the threat posed to public safety.[19] In 2015, only 6 warning letters were sent by the FDA to CBD manufacturers, and 8 in 2016, and it is not apparent whether any further action was taken against any of the recipients. Further, the letters themselves only required that the recipient notify the FDA of the steps it intended to take to correct the alleged violations.[20]


The FDA’s use of the phrase “tobacco product” and its rationale for regulation based on the public health risk due to “highly addictive nicotine” establish that the rules do not directly affect cannabis-related products. However, the “intended or reasonably expected to” language could be the proverbial back door for the FDA to regulate cannabis-related products if there is a possibility of dual use with tobacco – such as with vape pens that can be used for either tobacco/nicotine-derivatives or cannabis-derivatives.

In summation, we recommend that cannabis companies that manufacture vape pens, components, and parts to consumers refrain from introducing any new parts/models at this time. Furthermore, companies may wish to consider applying for an Open Aerosolizing Apparatus PTMA to continue the manufacture and sale of its vape pens (sans oil/cartridges) to consumers.

With respect to cannabis oil only, the Deeming Rule does not give the FDA any new or modified ability to regulate its manufacturing. Nevertheless, it is also conceivable that sometime in the near future, particularly if the federal government legalizes cannabis, the FDA will embark on similar rulemaking related to cannabis products.

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.

[1]“Deeming Tobacco Products to be Subject to the Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Regulations Restricting the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Product Packages and Advertisements,” available at

[2] FDA, Small Entity Compliance Guide: FDA Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirement’s for Packages and Advertisements (May 2016), at 17, available at



[8] Deeming Rule at pg 69-70,







AB 2679 – Summary of New Medical Cannabis Legislation

On September 12th, Assembly Bill (AB) 2679, which seeks to amend regulations relating to medical cannabis research and production currently existing in state law, was sent to Governor Brown’s desk to be signed into law. This letter provides an overview of the changes that the implementation of AB 2679 will have on state law.


When signed into law by Governor Brown, AB 2679 will amend three sections of California state law pertaining to medical cannabis regulation, research, and production. Two of these amendments are relatively minor, and are not likely to have a significant impact on most of our clients. The third, however, may positively affect a majority of our clients, as well as the California medical cannabis industry in general.

First, AB 2679 makes a change to the annual reporting requirements of the licensing authorities established by the Medical Cannabis Regulation and Safety Act (MCRSA). Under existing law, each licensing authority is required to prepare an annual report detailing the authority’s activities. The authority is required to submit this report to the State Legislature and to post the report on its website. AB 2679 compels the licensing authorities to include the following information in each report: (1) The number of appeals from the denial of state licenses or other disciplinary actions taken by the licensing authority; (2) the average time spent on these appeals; and (3) the number of complaints submitted by citizens or representatives of cities or counties regarding licenses.

The second amendment AB 2679 makes to state law pertains to the University of California Marijuana Research Program authorized by current law. The purpose of this program is to study the general medical safety and efficacy of cannabis. If it finds the medicinal use of cannabis to be safe and effective, the program is to develop medical guidelines for the appropriate administration of tis use. AB 2679 makes a small modification to state law specifying that studies conducted by the Research Program may also include those meant to ascertain the effect cannabis has on motor skills.

The third and final change made to state law by the passing of AB 2679 is also the most likely to have an effect on many of you. As currently codified in state law, until one year after the Bureau of Medical Cannabis Regulation posts a notice on its website that licensing authorities have begun to issue state licenses, the MCRSA exempts cooperatives and collectives who cultivate medical cannabis for qualified patients from criminal prosecution for activities relating to the growing, sale, or distribution of cannabis. AB 2679 will also now exempt manufacturers of medical cannabis without a state issued license from criminal sanctions, for the same time period mentioned above, if specified conditions are met, including the possession of a valid license issued by the local city or county.

Questions and Answers

The following information is provided within the context of California state law only and does not address the applicability of any federal laws, which still hold cannabis for any purpose to be illegal.

What activities are considered “manufacturing” under AB 2679?

According to the language imposed by AB 2679, “Manufacturing” of medical cannabis products means compounding, converting, producing, deriving, processing, or preparing, either directly or indirectly by chemical extraction or independently by means of chemical synthesis, medical cannabis products.

In addition to possessing a valid local license, what other conditions must I meet to be in compliance with AB 2679?

AB 2679 amends existing state law to state that a collective or cooperative that manufactures medical cannabis products shall not, solely on that basis, be subject to criminal sanctions, if all of the following conditions are met:

  1. The collective or cooperative utilizes either (1) a solvent-less manufacturing process, or one that employs nonflammable nontoxic solvents that are generally recognized as safe by the FDA; or (2) a manufacturing process that uses solvents exclusively within a closed-loop system that meets specified requirements.
  2. The manufacturer has received and maintains approval from the local fire official regarding the facility as well as all equipment and operations utilized.
  3. All relevant fire, safety, and building code requirements must be met.
  4. The collective or cooperative possesses a valid Sellers Permit from the Board of Equalization.
  5. The collective or cooperative posses a valid local permit, license, or other form of authorization specific to the manufacturing of medical cannabis, and is in compliance with all conditions imposed by the issuing city or county.


In addition to some relatively minor changes pertaining to licensing authorities and academic studies into medical cannabis, AB 2670 may help relieve some of our clients from the threat of criminal prosecution for the manufacturing of medical cannabis products without a state license, until such licenses are made available. However, specific conditions must be met including the possession of a valid locally issued license, which is why we are working so diligently with many of you to secure local permits. Today, only a few cities and counties issue such permits, but the landscape is changing weekly.

We hope this has been helpful. And we look forward to hearing from each of you, and helping you navigate these new laws and regulations today and into the future.

This post is provided for educational purposes only. No specific legal advice is intended to be given, or attorney/client relationship established, by providing of this information. Please consult with an Attorney of your choice with respect to questions regarding any matter contained herein.

WINTER LLP® is a corporate, transactional, regulatory and intellectual property law firm focused on traditional and emerging markets, with offices in Orange County, San Francisco, and Arizona, servicing clients around the world.