California Cannabis Licensing

California Cannabis Licensing

The complexity associated with California cannabis licensing is staggering. Here we present a sample of the questions you are going to encounter.

What are Manufacturing Processes Procedures?

Manufacturing Processes Procedures

Manufacturing Processes Procedures. – §40250. Manufacturing Processes and Procedures.

(a) The licensee shall implement and maintain manufacturing processes and procedures that ensure cannabis product quality. Manufacturing processes and procedures shall be identified through a product quality plan, as described in Section 40253. (b) The licensee shall maintain written master manufacturing protocols, as described in Section 40255, for each unique formulation of cannabis product manufactured to ensure only intended components are included and that the cannabis product is packaged and labeled in accordance with product specifications and these regulations. (c) The licensee shall maintain written batch production records, as described in Section 40258, to document the production process and, if needed, to verify that the established processes and procedures, including the preventive measures and master manufacturing protocol, were implemented correctly. (d) All manufacturing records are subject to inspection by the Department, its inspectors and agents. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

§40253. Product Quality Plan (a) The licensee shall create and implement a written product quality plan for each type of product manufactured at the premises. The product quality plan shall address the hazards associated with the premises or the manufacturing process that, if not properly mitigated, could cause the product to be adulterated or misbranded, or could cause the product to fail laboratory or quality assurance testing. (b) To create the product quality plan, the licensee shall conduct a comprehensive assessment of the overall manufacturing process, identifying each step from component intake through transfer of product from the premises, to determine the potential risks associated with each step, the preventive measures to mitigate the potential risks identified, the methods to evaluate and monitor the effectiveness of the preventive measures, and action to take if a preventive measure was unsuccessful. (c) The product quality plan shall evaluate the following potential risks to cannabis product quality: (1) Biological hazards, including microbiological hazards; (2) Chemical hazards, including radiological hazards, pesticide contamination, solvent or other residue, natural toxins, decomposition, or allergens; (3) Physical hazards, such as stone, glass, metal fragments, hair, or insects. (4) Process failures that may lead to product contamination, allergen cross-contact, packaging errors, labeling errors, or other errors affecting cannabis product quality. (d) The product quality plan shall identify the preventive measure that will be implemented to mitigate each potential risk identified pursuant to subsection (c). Examples of preventive measures include, but are not limited to:

(1) Cleaning and sanitizing of equipment and utensils to mitigate against risk of microbiological hazards; (2) Conducting in-house testing of raw cannabis to mitigate against the risk of pesticide contamination; (3) Establishing an allergen control program to ensure that allergen cross-contact does not occur between product types; (4) Implementing procedures to ensure proper homogeneity of cannabinoids into a cannabis product to mitigate against the risk of a non-homogeneous product; (e) The product quality plan shall identify methods to evaluate and monitor the effectiveness of the preventive measures in mitigating the potential risks identified in subsection (c). Methods for evaluation and monitoring of preventive measures include, but are not limited to, the following: (1) Review of test results conducted to determine contamination such as pesticide residue; (2) Maintaining and reviewing cleaning, sanitizing, or maintenance logs to verify such actions have been taken; (3) Conducting environmental testing to determine if equipment or utensils are contaminated with undesirable pathogens; (4) Monitoring the temperature of raw materials that need to be held below 41 F to prevent microbial contamination; (f) The product quality plan shall identify actions to be taken if the evaluation and monitoring of the preventive measure indicates that the risk was not properly mitigated. The corrective action shall be specific to the type of product under evaluation and the specific risk to be mitigated. Examples of corrective actions that may be taken include, but are not limited to: (1) Destruction of product components or finished product; (2) Further processing of cannabis extract to remove impurities;

(3) Reworking the unfinished product to further homogenize the cannabinoids; (g) The licensee shall maintain the product quality plans and documentation of preventive measures, monitoring results, and corrective actions and make the records available to the Department upon the Department’s request, including during the Department’s onsite inspection of the premises. Nothing in this chapter requires the disclosure of product quality plans other than to the Department and its inspectors and agents. The licensee may consider the product quality plan subject to trade secret protection. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

Manufacturing Processes Procedures.

What are Cannabis Product Components?

Cannabis Product Components.

Cannabis Product Components. §40248. Cannabis Product Components.

(a) In order to prevent adulteration of cannabis products through incorporation of unsanitary components, the licensee shall establish and implement written policies and procedures to ensure and maintain the quality of product components. (b) Components are subject to the following minimum requirements: (1) Raw materials and other ingredients shall be inspected upon intake to ensure that they are clean and suitable for processing into cannabis products, and shall be stored under conditions that protect against allergen cross-contact and contamination, and in such a way as to minimize deterioration. (2) Raw materials shall be washed or cleaned as necessary to remove soil and other visible contaminants. Water used for washing, rinsing, or conveying cannabis product ingredients shall be potable. (3) Raw materials and other components shall not contain levels of microorganisms that render the cannabis product injurious to human health, or shall be pasteurized or otherwise treated during manufacturing so that they no longer contain levels of microorganisms that would cause the cannabis product to be adulterated. (4) Raw materials and other components susceptible to contamination with aflatoxin or other natural toxins, pests, or extraneous material shall not exceed generally acceptable limits set by the U.S. Food and Drug Administration in the Defect Levels Handbook (Rev. February 2005), which is hereby incorporated by reference, before these raw materials or other ingredients are incorporated into finished cannabis products. (5) Raw materials and other components shall be held in containers designed and constructed so as to protect against allergen cross-contact or contamination, and shall be held at such temperature and relative humidity and in such a manner as to prevent the cannabis products from becoming adulterated. (6) Frozen raw materials and other components shall be kept frozen. If thawing is required prior to use, it shall be done in a manner that prevents the raw materials and other ingredients from becoming adulterated. (7) Raw materials and other ingredients that are food allergens shall be identified and held in a manner that prevents cross-contact with other raw materials or ingredients. (c) Holding and storage of cannabis product components shall meet the requirements of section 114047, subdivisions (a) and (b), section 114049, and section 114051 of the Health and Safety Code. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

Cannabis Product Components.

What are Manufacturing Practices Definitions

Manufacturing Practices Definitions

Manufacturing Practices Definitions §40230. Manufacturing Practices Definitions. In addition to the definitions in section 26001 of the Act and Section 40100 of these regulations, the following definitions shall govern the construction of this subchapter: (a) “Actual yield” means the quantity that is actually produced at any appropriate step of manufacture or packaging of a particular cannabis product. (b) “Adequate” means that which is necessary to accomplish the intended purpose in keeping with good public health practice to ensure cannabis product quality. (c) “Allergen cross-contact” means the unintentional incorporation of a food allergen into a cannabis product. (db) “Component” means any substance or item intended for use in the manufacture of a cannabis product, including those substances or items that are not intended to appear in the final form of the product. “Component” includes cannabis, cannabis products used as ingredients, raw materials, other ingredients, and processing aids. (ec) “Contact surface” means any surface that normally comes into contacts with cannabis products and cannabis product components and those surfaces from which drainage, or other transfer, onto the cannabis product or cannabis product components, occurs during the normal course of operations. Examples of contact surfaces include containers, utensils, tables, and equipment. (d) “Easily cleanable” means a characteristic of a surface that allows effective removal of soil, food residue, or other organic or inorganic materials by normal cleaning methods. (fe) “Environmental pathogen” means a pathogen capable of surviving and persisting within the manufacturing environment such that cannabis products may be contaminated and may result in illness if consumed or used without treatment to significantly minimize the environmental pathogen. Examples of environmental pathogens include Listeria monocytogenes and Salmonella spp. but do not include the spores of pathogenic spore-forming bacteria. (gf) “Hazard” means any biological, chemical, radiological, or physical agent that has the potential to cause illness or injury. (hg) “Holding” means storage of cannabis or cannabis products and includes activities performed incidental to storage of a cannabis product and activities performed as a practical necessity for the distribution of that cannabis product. (i) “In-process material” means any material that is fabricated, compounded, blended, ground, extracted, sifted, sterilized, derived by chemical reaction, or processed in any other way for use in the manufacture of a cannabis product. (jh) “Microorganisms” means yeasts, molds, bacteria, viruses, protozoa, and microscopic parasites and includes species that are pathogens. The term “undesirable microorganisms” includes those microorganisms that are pathogens, that subject a cannabis product to decomposition, that indicate that a cannabis product is contaminated with filth, or that otherwise may cause a cannabis product to be adulterated. (ki) “Monitor” means to conduct a planned sequence of observations or measurements to assess whether control preventive measures are operating as intended. (lj) “Pathogen” means a microorganism that can cause illness or injury. (mk) “Pest” means an undesired insect, rodent, nematode (small worm), fungus, bird, vertebrate, invertebrate, weed, virus, bacteria, or other microorganism (except microorganisms on or in humans or animals) injurious to health or the environment. (l) “Potable” means water that meets the requirements of Health and Safety Code section 113869. (nm) “Preventive controls measures” means those risk-based, reasonably appropriate procedures, practices, and processes that a person knowledgeable about the safe manufacturing, processing, packing, or holding of food would employ to significantly minimize or prevent the hazards identified pursuant to a hazard analysis product quality plan as specified in Section 40253. (on) “Processing aid” means any substance that is added to a cannabis product during manufacture but is removed in some manner from the cannabis product before it is packaged in its finished form. This includes substances that are converted into constituents normally present in the product, and do not significantly increase the amount of the constituent naturally found in the product. This also includes substances that are added to a product for their technical or functional effect in the processing but are present in the finished product at insignificant levels and do not have any technical or functional effect in that product. (po) “Qualified individual” means a person who has the education, training, or experience (or a combination thereof) necessary to manufacture quality cannabis products as appropriate to the individual’s assigned duties. A qualified individual may be, but is not required to be, an employee of the licensee. (qp) “Quality control” means a planned and systematic operation or procedure for ensuring the quality of a cannabis product. (rq) “Quality control operation” means a planned and systematic procedure for taking all actions necessary to prevent cannabis product(s) from being adulterated or misbranded. (sr) “Quality control personnel” means any person, persons, or group, designated by the licensee to be responsible for quality control operations. (ts) “Raw material” means any unprocessed material in its raw or natural state that is intended to become part of the components of a cannabis product. (ut) “Sanitize” means to adequately treat cleaned surfaces by a process that is effective in destroying vegetative cells of pathogens, and in substantially reducing numbers of other undesirable microorganisms, but without adversely affecting the product or its safety for the consumer. (u) “Smooth” means any of the following: (1) A contact surface that is free of pits, pinholes, cracks, crevices, inclusions, rough edges, and other surface imperfections detectable by visual or tactile inspection. (2) A floor, wall, or ceiling having an even or level surface with no roughness or projections that render it difficult to clean. (v) “Utensil” means an implement, tool, or container used in the storage, preparation, manufacture, or processing of cannabis and cannabis products. In addition to kitchenware, examples of utensils include, but are not limited to, gloves, screens, sieves, implements to create pre-rolls, buckets, and scissors. (v) “Theoretical yield” means the quantity of a particular cannabis product that would be produced at any appropriate step of manufacture or packaging, based upon the quantity of components or packaging to be used, in the absence of any loss or error in actual production. (w) “Validate” means obtaining and evaluating scientific and technical evidence that a control measure, combination of control measures, or quality control procedures as a whole, when properly implemented, is capable of ensuring the quality of a cannabis product or effectively controlling an identified hazard. (x) “Verification” means the application of methods, procedures, tests, or other evaluations, in addition to monitoring, to determine whether a control measure or combination of control measures is or has been operating as intended and to establish the validity of the quality control procedures. (y) “Yield” means the quantity of a particular cannabis product expected to be produced at a given step of manufacture or packaging, as identified in the master manufacturing protocol. The expected yield is based upon the quantity of components or packaging to be used, in the absence of any loss or error in actual production. “Actual yield” means the quantity of a particular cannabis product that is actually produced at a given step of manufacture or packaging that is recorded in the batch production record.

Manufacturing Practices Definitions

What are Manufacturer video surveillance reqs?

Manufacturer Video Surveillance Reqs

Manufacturer Video Surveillance Reqs – §40205. Video Surveillance. (a) At minimum, a licensed premises shall have a digital video surveillance system with a minimum camera resolution of 1280 × 720 pixels. The video surveillance system shall be able to effectively and clearly record images of the area under surveillance. (b) To the extent reasonably possible, all video surveillance cameras shall be installed in a manner that prevents intentional obstruction, tampering with, or disabling (c) Areas that shall be comprehensively recorded on the video surveillance system include the following: (1) Areas where cannabis or cannabis products are weighed, packed, stored, quarantined, loaded and unloaded for transportation, prepared, or moved within the premises; (2) Limited-access areas; (3) Security rooms; (4) Areas containing surveillance-system storage devices, which shall contain at least one camera to record the access points to such an area; and (5) The interior and exterior of all entrances and exits to the premises. (d) The surveillance system shall record continuously 24 hours per day and at a minimum speed of 15 frames per second. (e) Monitoring equipment and any Any on-site surveillance system storage devices shall be located in secure rooms or areas of the premises in an accesscontrolled environment. (f) The licensee shall ensure that all surveillance recordings are kept for a minimum of 90 days. (g) All video surveillance recordings shall be immediately available on the licensed premises and subject to inspection by the Department and shall also be copied and sent, or otherwise provided, to the Department upon request. (h) The video recordings shall display the current date and time of recorded events. Time is to be measured in accordance with the U.S. National Institute of Standards and Technology standards. The displayed date and time shall not significantly obstruct the view of recorded images. (i) If multiple licensed premises are contained within the same building, a single video surveillance coving the entire building may be used by all of the licensees under the following conditions: (1) Each applicant or licensee shall disclose on their premises diagram where the surveillance recordings are stored; (2) Each applicant or licensee shall include in their security operating procedures an explanation of how the video surveillance system will be shared, including who is responsible for monitoring the video footage and storing any video recordings; (3) All licensees shall have immediate access to the surveillance recordings to produce them pursuant to the requirements of this section; (4) All licensees shall be held responsible and subject to discipline for any violations of the video surveillance requirements. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26070, Business and Professions Code.

 

Manufacturer Video Surveillance Reqs

What is a shared-use facility?

Shared Use Facility

Shared Use Facility §40192. Registration to Operate a Shared-Use Facility.

(a) No licensee shall operate as a shared-use facility without prior approval by the Department.

(b) To register as a shared-use facility, a Type 7, Type 6, or Type N licensee shall submit the following to the Department through MCLS:

(1) A copy of the valid license, permit, or other authorization issued by the local jurisdiction that enables the licensee to operate as a shared-use facility. The Department shall contact the applicable local jurisdiction to confirm the validity of the local authorization Upon receipt of the application for registration, the Department shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid.

(2) A registration form prescribed by the Department, which includes the following information:

(A) The proposed occupancy schedule that specifies the days and hours the common-use area will be available for use by Type S licensees and when the common use area will be used by the primary licensee. The occupancy schedule shall allow for adequate maintenance, cleaning, and sanitizing between uses by individual licensees.

(B) A diagram indicating:

(i) Each designated area for Type S licensee(s).

(ii) The common-use area, including identification of any shared equipment.

(c) The Department shall notify the Type 7, Type 6, or Type N licensee upon approval of the registration to operate as a shared-use facility. Notification shall be made through MCLS.

(d) At least one business day prior to a Type S licensee commencing manufacturing operations at a registered shared-use facility, the primary licensee shall provide written notification to the Department. The notification to the Department shall include the Type S licensee’s business name, contact person, contact phone number, and license number. The primary licensee shall also provide an updated occupancy schedule that includes the Type S licensee and an updated diagram that specifies the Type S licensee’s designated area. Notification shall be provided by email or through MCLS.

(e) A primary licensee that wishes to discontinue operation as a shared-use facility may cancel its registration by providing written notice to the Department and each Type S licensee authorized to use the shared-use facility at least 30 calendar days prior to the effective date of the cancellation.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26051.5; 26055; and 26130, Business and Professions Code.

Manufacturing

Shared Use Facility

What is branded merchandise approval?

Branded Merchandise Approval

Branded Merchandise Approval –

§ 5041.1. Branded Merchandise Approval

This section has been added to provide licensees with a process to seek approval of branded merchandise. Subsection (a) indicates that if a licensee wants to sell branded merchandise that is not specifically listed in section 5000, the licensee must obtain approval from the Bureau in writing. This is necessary because section 5000 allows for licensees to sell branded merchandise other than those listed if approved by the Bureau; therefore, this subsection clarifies that the approval must be obtained in writing to avoid any confusion about whether the Bureau has approved the branded merchandise.

Subsection (b) provides that to obtain approval, the licensee must submit a written request to the Bureau for approval to sell a specific item of branded merchandise and provide a photograph of the branded merchandise. It also informs licensees that requests may be emailed to the Bureau at [email protected] or by mail to the Bureau office. This is necessary for licensees to know how to seek approval from the Bureau and the information that the Bureau needs to evaluate the request.

Subsection (c) informs the licensee that the merchandise must not be sold prior to receiving written approval from the Bureau for the specific item of branded merchandise. This is necessary to clarify for licensees that each item of branded merchandise requires a separate approval from the Bureau before it is sold.

 

Branded Merchandise Approval

What is required legal use of business name?

Legal Use of Business Name

Legal Use of Business Name –

§ 5007.2 Use of Legal Business Name

This new section would require applicants and licensees to use their legal business name on all documents related to commercial cannabis activity. This section is necessary because the Bureau has found that applicants and licensees are using “doing business as” (DBA) names on some documents and their legal business names on others. This creates confusion for the licensing authorities and the licensees, therefore the Bureau determined it was necessary to require that licensees use their legal business name on all documents.

Legal Use of Business Name

What are infor req details – Owner Submission?

Owner Submission Requirements – Owner vs. Financial Interest

The following is a summary of the Owner Submission Requirements – Owner vs. Financial Interests for the Bureau of Cannabis Control license

Owner Submission Requirements - Owner vs. Financial Interest
Owner Submission Requirements – Owner vs. Financial Interest

applications. Where an individual is deemed to be an “Owner”, the requirements are highlighted in pinkish color. Those with a Financial Interest in orange.

“The instructions which accompany the Owner’s Submission state:

  • An owner is defined as a person with an aggregate ownership interest in the commercial cannabis business of 20 percent or more unless the interest is solely a security, lien or encumbrance. 
  • A person with an aggregate ownership interest of 20 percent or more of the person applying for a license or a licensee, unless the interest is solely a security, lien or encumbrance. 
  • The chief executive officer of a nonprofit or other entity (i.e. corporation).
  •  A member of the board of directors of a nonprofit. 
  •  An individual who will be participating in the direction, control, or management of the person applying for a license. 
  •  An owner who is an individual participating in the direction, control, or management of the commercial cannabis business included any of the following: 
  •  A partner of a commercial cannabis business that is organized as a partnership. 
  • A member of a limited liability company of a commercial cannabis business that is organized as a limited liability company. 
  • An officer or director of a commercial cannabis business that is organized as a corporation.”
The Emergency Regulations at   Sec. 5003 and 5004 provide
§ 5003. Designation of Owner (a)- All applicants for a commercial cannabis license shall have at a minimum one individual who meets the definition of “owner” under Business and Professions Code section 26001(al) and who will submit the information required of owners under section 5002
 (b) “Owner” means any of the following:
(1) A person with an aggregate ownership interest of 20 percent or more of 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) An individual who will be participating in the direction, control, or management of the person applying for a license. An owner who is an individual participating in the direction, control, or management of the commercial cannabis business 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 limited liability company 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.
Authority: Section 26013, Business and Professions Code. Reference: Sections 26001, 26012 and 26013, Business and Professions Code.
The information required of an “Owner” includes
 
(A) The full name of the owner. 
 
(B) The owner’s title within the applicant entity. 
 
(C) The owner’s date of birth and place of birth. 
 
(D) The owner’s social security number or individual taxpayer identification number.
 
(E) The owner’s mailing address. 
 
(F) The owner’s telephone number. This may include a number of the owner’s home, business, or mobile telephone. 
 
(G) The owner’s email address. 
 
(H) The owner’s current employer. 
 
(I) The percentage of the ownership interest held in the applicant entity by the owner. 
 
(J) Whether the owner has an ownership or a financial interest as defined in sections 5003 and 5004, respectively, of this division in any other commercial cannabis business licensed under the Act.
 
(K) A copy of the owner’s government-issued identification. Acceptable forms o£identification are a document issued by a federal, state, county, or municipal government that includes the name, date of birth, physical description, and a picture of the person, such as a driver license. 
 
(L) A detailed description of the owner’s convictions. A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of polo contender. Convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must be disclosed. Convictions dismissed under Health and Safety Code section 11361.8 or equivalent non-California law must be disclosed. Juvenile adjudications and traffic infractions under $300 that did not involve alcohol, dangerous drugs, or controlled substances do not need to be included. For each conviction, the owner sha11 provide the following: 
 
(i) The date of conviction. 
 
(ii) Dates of incarceration, if applicable. 
 
(iii) Dates of probation, if applicable. 
 
(iv) Dates. of parole, if applicable. 
 
(v) A detailed description of the offense for which the owner was convicted. 
 
(vi) A statement of rehabilitation for each conviction. The statement of rehabilitation is to be written by the owner and may contain evidence that the owner would like the Bureau to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, a certificate of rehabilitation under Penal Code section 4852.01, and dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual providing the reference. 
 
(M) If applicable;a detailed description of any suspension of a commercial cannabis license, revocation of a commercial cannabis license, ar sanctions for unlicensed commercial cannabis activity by a licensing authority or local agency against the applicant or a business entity in which the applicant was an owner or officer within the three years immediately preceding the date of the application. 
 
(N) Attestation to the following statement: Under penalty of perjury, I hereby declare that the information contained within and submitted with the application is complete, true, and accurate. I understand that a misrepresentation of fact is cause for rejection of this application, denial of the license, or revocation of a license issued.
Proposed Regulations – Oct. 19 

Subsection (a) has been amended to clarify that reference to section 5002 is a reference to section 5002 of this division. This change was necessary for clarity and consistency throughout the regulations.

Subsection (b) has been amended to add an additional provision. Former subsection (b)(5) is now subsection (b)(6). New subsection (b)(5) includes as an owner an individual who is entitled to a share of 20 percent of the profits of the commercial cannabis business. Inclusion of this provision is necessary because commercial cannabis businesses are seeking alternative methods to acquire capital to cover business costs due to traditional business loans being unavailable. Because of these nontraditional methods, some commercial cannabis businesses have owners that are entitled to profits but may not consider themselves as falling under the aggregate ownership interest of 20 percent because they did not personally provide that much capital to the startup costs. This provision makes clear that an aggregate ownership of 20 percent could be someone who is entitled to at least 20 percent of the profits regardless of how much of an investment they made into the company.

New subsection (b)(6) contains those persons who fall under the statutory provision that an owner is an individual who will be participating in the direction, control, or management of the person applying for a license. This subsection has been amended to add additional provisions to part (D). Subsection (b)(6)(D) has been amended to expand on the provision that an owner is any individual who assumes responsibility for the license. The Bureau has expanded this subsection by adding parts (D)(i)-(D)(iv) to provide examples which individuals fall under the owner category of an “individual who assumes responsibility for a license.” The subsection includes the following: an individual who is managing or directing the commercial cannabis business in exchange for a portion of the profits; an individual who assumes responsibility for the debts of the commercial cannabis business; 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; and an individual who is determining what cannabis goods the commercial cannabis business will cultivate, manufacture, distribute, purchase, or sale. The inclusion of these persons as owners is necessary because the Bureau has determined that confusion continued to exist regarding which individuals needed to be disclosed as owners and undergo the background check. The amendment aims to protect public health and safety by ensuring that all individuals that are assuming responsibility for a license are accounted for and qualified as owners.

Subsection (c) has been amended to clarify that when an entity has a 20 percent ownership interest in the commercial cannabis business, then all individuals who are owners of that entity shall be considered owners of the commercial cannabis business. This subsection has also been amended to provide examples such as all entities in a multi-level ownership structure are included as owners as well as persons that have control of a trust, chief executive officers, members of a board of directors, partners, trustees, and managing or non-member managers of the entity. Further clarification is provided by indicating the disclosures must trace back to the actual person holding an interest until only individuals remain. This modification is necessary to provide clarity to applicants on which individuals will be considered an owner of a commercial cannabis business when an entity owns a portion of the commercial cannabis business. The Bureau has received numerous questions regarding this issue with many applicants not understanding that the intent of this section was to reach the individual owners of an entity that owns a portion of the commercial cannabis business, thus further clarification was necessary. To determine if a person has an aggregate interest of more than 20%, disclosure of actual individuals with ownership in entities is necessary.

 

§ 5004. Financial Interest in a Commercial Cannabis Business

(a) A financial interest means an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other equity interest in a commercial cannabis business except as provided in subsection (c).
(b) The license application shall include the name, birthdate, and government-issued identification type and number for all individuals who have a financial interest in a commercial cannabis business but are not owners as defined in Business and Professions Code section 26001(1).
These individuals shall not be required to submit the information required of owners under section 5002(c)(20).
(c) Notwithstanding subsection (b), the following persons are not required to be listed on an application for licensure under section 5002(c)(19):
(1) A bank or financial institution whose interest constitutes a loan;
(2) Persons whose only financial interest in the commercial cannabis business is through an interest in a diversified mutual fund, blind trust, or similar instrument;
{3) Persons whose only financial interest is a security interest; lien; or encumbrance on property that will be used by the commercial cannabis business; and
(4) Persons who hold shares of stock that is less than 5 percent of the total shares in a publicly traded company.
Authority: Section 26013, Business and Professions Code. Reference: Sections 26012 and 26051.5, Business and Professions Code.
Proposed Regulations October 19, 2018

§ 5004. Financial Interest in a Commercial Cannabis Business

Subsection (a) has been amended to remove the last sentence. This was necessary because the rule was repeated in subsection (d)(2). This subsection has also been amended to expand on what “an agreement to receive a portion of the profits” includes. The Bureau received comments and questions regarding this and determined it was necessary to expand on the provision by providing specific examples of agreements to receive a portion of the profits. The subsection now includes the following: an employee who has entered into a profit share plan with the commercial cannabis business; a landlord who has entered into a lease agreement with the commercial cannabis business for a share of the profits; a consultant who is providing services to the commercial cannabis business for a share of the profits; a person acting as an agent, such as an accountant or attorney for the commercial cannabis business for a share of the profits; a broker who is engaging in activities for the commercial cannabis business for a share of the profits, and a salesperson who earns a commission. With the expanded section, applicants will have clear guidance on which individuals need to be disclosed as financial interest holders.

A new subsection (c) has been added. The new subsection clarifies that if an entity has a financial interest in a commercial cannabis business, then all individuals who are owners of that entity shall be considered to have a financial interest in the commercial cannabis business. This subsection has also been amended to provide examples such as all entities in a multi-level ownership structure are included as having a financial interest as well as persons that have a profit-sharing plan, have a lease agreement for a share of the profits, are a consultant providing services for a share of the profits, are acting as an agent and receiving a share of the profits, are a broker receiving a share of the profits, and are a salesperson earning commission.  Further clarification is provided by indicating the disclosures must trace back to the actual person holding an interest until only individuals remain. This change was necessary to clarify which individuals need to be identified on the application as financial interest holders when an entity is a financial interest holder. The Bureau has received numerous questions regarding this issue with many applicants not understanding that the intent of this section was to reach the individual owners of an entity that has a financial interest in the commercial cannabis business, thus further clarification was necessary.

Former subsection (c) has been renumbered to subsection (d).

When can a legal cannabis user in CA own firearms?

Firearms-Cannabis-Never in California

The CA-9’s current ruling is Firearms-Cannabis-Never-California. The holding in Wilson v. Lynch,  [No. 14-15700 D.C. No. 2:11-CV-01679-GMN-PAL] states:

Firearms-Cannabis-Never-California
Firearms-Cannabis-Never-California

The panel affirmed the district court’s dismissal of a complaint challenging the federal statutes, regulations, and guidance that prevented plaintiff from buying a gun because she possesses a Nevada medical marijuana registry card.

The panel preliminarily held that plaintiff lacked standing to challenge 18 U.S.C. § 922(g)(3), which criminalizes possession or receipt of a firearm by an unlawful drug user or a person addicted to a controlled substance.

The panel held that plaintiff’s Second Amendment claims did not fall within the direct scope of United States v. Dugan, 657 F.3d 998 (9th Cir. 2011), which held that the Second Amendment does not protect the rights of unlawful drug users to bear arms.

Taking plaintiff’s allegations in her first amended complaint as true – that she chose not to use medical marijuana – the panel concluded that plaintiff was not actually an unlawful drug user.

The panel held that 18 U.S.C. § 922(d)(3), 27 C.F.R. § 478.11, and the Open Letter issued by the Bureau of Alcohol, Tobacco, Firearms, and Explosives to federal firearms licensees, which prevented plaintiff from purchasing a firearm, directly burdened plaintiff’s core Second Amendment right to possess a firearm.

Applying intermediate scrutiny, the panel nevertheless held that the fit

Firearms-Cannabis-Never-California
Firearms-Cannabis-Never-California

between the challenged provisions and the Government’s substantial interest in violence prevention was reasonable, and therefore the district court did not err in dismissing the Second Amendment claim.

The panel rejected plaintiff’s claims that the challenged laws and Open Letter violated the First Amendment.

The panel held that any burden the Government’s anti-marijuana and anti-gun-violence efforts placed on plaintiff’s expressive conduct was incidental.

The panel held that the challenged laws and Open Letter neither violated plaintiff’s procedural due process rights protected by the Due Process Clause of the Fifth Amendment nor violated the Equal Protection Clause as incorporated into the Fifth Amendment.

Plaintiff did not have a constitutionally protected liberty interest in simultaneously  WILSON V. LYNCH holding

Firearms-Cannabis-Never-California
Firearms-Cannabis-Never-California

a registry card and purchasing a firearm, nor was she a part of a suspect or quasi-suspect class.

Finally, rejecting the claim brought under the Administrative Procedure Act, the panel agreed with the district court that the Open Letter was a textbook interpretative rule and that it was exempt from the Act’s notice-and-comment procedures.

Hence, the answer, for the time being, is clear. If you are on a cannabis registry in California, not only is it illegal to own a firearm, but the authorities will come knocking to CONFISCATE BY FORCE the firearms that you currently possess. [See this article]

The Honolulu HI Police Chief has stated “Your medical marijuana use disqualifies you from ownership of firearms and ammunition,” and you  “have 30 days upon receipt of this letter to voluntarily surrender your firearms.”

Compliance

What are the definitions applicable to Cultivation?

§ 8000. Definitions.

The following definitions, in addition to those stated in section 26001 of the Business and Professions Code, apply to this chapter.

§ 8000. Definitions. The following definitions, in addition to those stated in section 26001 of the Business and Professions Code, apply to this chapter.

(a) “Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, division 10, chapter 1 (commencing with section 26000) of the Business and Professions Code.

(b) “Applicant” means an owner of the applicant entity or sole proprietor applying for a state license pursuant to this division.

(c) “Applicant entity” means the entity or sole proprietor applying for a state cannabis cultivation license.

(d) “Batch” or “harvest batch” means a specifically identified quantity of dried flower or trim, leaves, and other cannabis plant matter that is uniform in strain or cultivar, harvested in whole, or in part, at the same time, and, if applicable, cultivated using the same pesticides and other agricultural chemicals.

(e) “Bureau” means the Bureau of Cannabis Control within the Department of Consumer Affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation.

(f) “Canopy” means the designated area(s) at a licensed premises, except nurseries and processors, that will contain mature plants at any point in time, as follows:

(1) Canopy shall be calculated in square feet and measured using clearly identifiable boundaries of all area(s) that will contain mature plants at any point in time, including all of the space(s) within the boundaries;

(2) The canopy may be noncontiguous but each unique area included in the total canopy calculation shall be separated by an identifiable boundary that includes, but is not limited to, interior walls, shelves, greenhouse walls, hoop house walls, garden benches, hedgerows, fencing, garden beds, or garden plots; and

(3) If mature plants are being cultivated using a shelving system, the surface area of each level shall be included in the total canopy calculation.

(g) “Commercial cannabis activity” includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery, or sale of cannabis and cannabis products as provided for in this chapter.

(h) “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.

(i) “Cultivation site” means a location where commercial cannabis is planted, grown, harvested, dried, cured, graded, or trimmed, or a location where any combinations of those activities occur.

(j) “Department” means the California Department of Food and Agriculture.

(k) “Dried flower” means all dead cannabis that has been harvested, dried, cured, or otherwise processed, excluding leaves and stems.

(l) “Flowering” means that a cannabis plant has formed a mass of pistils measuring greater than one-half inch wide at its widest point.

(m) “Immature plant” or “immature” means a cannabis plant which has a first true leaf measuring greater than one half inch long from base to tip (if started from seed) or a mass of roots measuring greater than one half inch wide at its widest point (if vegetatively propagated), but which is not flowering.

(n) “Indoor cultivation” means the cultivation of cannabis within a permanent structure using exclusively artificial light or within any type of structure using artificial light at a rate above twenty-five watts per square foot.

(o) “Kief” means the resinous trichomes of cannabis that have been separated from the cannabis plant.

(p) “Licensee” means any person holding a license pursuant to this chapter.

(q) “Light deprivation” means the use of any technique to eliminate natural light in order to induce flowering.

(r) “Lot” means a batch or a specifically identified portion of a batch.

(s) “Mature plant” or “mature” means a cannabis plant that is flowering.

(t) “Mixed-light cultivation” means the cultivation of mature cannabis in a greenhouse, hoop-house, glasshouse, conservatory, hothouse, or other similar structure using a combination of:

(1) Natural light and light deprivation and one of the artificial lighting models listed below:

(A) “Mixed-light Tier 1” without the use of artificial light or the use of artificial light at a rate above zero, but no more than six watts per square foot;

(B) “Mixed-light Tier 2” the use of artificial light at a rate above six and below or equal to twenty-five watts per square foot; or

(2) Natural light and one of the artificial lighting models listed below:

(A) “Mixed-light Tier 1” the use of artificial light at a rate above zero, but no more than six watts per square foot;

(B) “Mixed-light Tier 2” the use of artificial light at a rate above six and below or equal to twenty-five watts per square foot.

(u) “Net weight” means the weight of harvested cannabis and cannabis products, exclusive of all materials, substances, or items not part of the commodity itself, including but not limited to containers, conveyances, bags, wrappers, packaging materials, labels, and individual piece coverings, and that meet the requirements in section 8406(b).

(v) “Nonmanufactured cannabis product” means flower, shake, leaf, pre-rolls, and kief that is obtained from accumulation in containers or sifted from loose, dry cannabis flower, or leaf with a mesh screen or sieve.

(w) “Nursery” means all activities associated with producing clones, immature plants, seeds, and other agricultural products used specifically for the propagation and cultivation of cannabis.

(x) “Outdoor cultivation” means the cultivation of mature cannabis without the use of artificial lighting or light deprivation in the canopy area at any point in time. Artificial lighting is permissible only to maintain immature plants outside the canopy area.

(y) “Pest” means any of the following that is, or is liable to become, dangerous or detrimental to the agricultural or nonagricultural environment of the state:

(1) Any insect, predatory animal, rodent, nematode, or weed; and

(2) Any form of terrestrial, aquatic, or aerial plant or animal virus, fungus, bacteria, or another microorganism (except viruses, fungi, bacteria, or other microorganisms on or in living man or other living animals).

(z) “Premises” means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee.

(aa) “Pre-roll” means any combination of the following rolled in a paper: flower, shake, leaf, or kief that is obtained from accumulation in containers or sifted from loose, dry cannabis flower, or leaf with a mesh screen or sieve.

(ab) “Process,” “Processing,” and “Processes” means all activities associated with the drying, curing, grading, trimming, rolling, storing, packaging, and labeling of nonmanufactured cannabis products.

(ac) “Track-and-trace system” means the state-approved system used to track commercial cannabis activity and movement.

(ad) “Unique identifier” or “UID” means an alphanumeric code or designation used for reference to a specific plant on licensed premises and any cannabis or cannabis product derived or manufactured from that plant.

(ae) “Watts per square foot” means the sum of the maximum wattage of all lights identified in the designated canopy area(s) in the cultivation plan divided by the sum of the dimensions in square feet of designated canopy area(s) identified in the cultivation plan.

(af) “Wet weight” means the weight of harvested, non-dried cannabis, on the licensed premises or being transported between licensees that does not meet the net weight requirements in section 8406(b).

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26001 and 26013, Business and Professions Code; and Section 12754.5, Food and Agricultural Code.“Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, division 10, chapter 1 (commencing with section 26000) of the Business and Professions Code.

 

 

What are the requirements for Cultivation licenses?

Article 2. Applications.

§ 8100. Temporary Licenses.

A temporary license is a conditional license that authorizes the licensee to engage in commercial cannabis activity as a licensee would be permitted to do under the privileges of an annual license of the same type. A temporary licensee shall follow all applicable statutes and regulations as a licensee would be required to do if the licensee held an annual license of the same type.

  1. Temporary license applications shall be completed and submitted online at calcannabis.cdfa.ca.gov or mailed to the department at P.O. Box 942871, Sacramento, CA 94271.
  2. An application for a temporary cultivation license shall include the following:
    1. The license type, pursuant to section 8201 of this chapter, for which the applicant is applying and whether the

application is for an M-license or A-license;

    1. If the applicant has already submitted an application for annual licensure, the application number; (3) The legal business name of the applicant entity;
  1. The full legal name, mailing address, phone number, email address, and affiliation of the designated responsible party who shall:
    1. Be an owner with legal authority to bind the applicant entity; (B) Serve as agent for service of process; and

(C) Serve as primary contact for the application. (5) The physical address of the premises;

(6) A copy of a valid license, permit, or other authorization, issued by a local jurisdiction, that enables the applicant entity to conduct commercial cannabis activity at the location requested for the temporary license. For the purposes of this section, “other authorization” shall include, at a minimum, a written statement or reference that clearly indicates the local jurisdiction intended to grant permission to the applicant entity to conduct commercial cannabis activity at the premises.

  1. When the applicant provides a license, permit, or other authorization from the local jurisdiction where the licensed premises will be or is located, the department shall notify the contact person for the local jurisdiction pursuant to section 26055 of the Business and Professions Code. If the local jurisdiction does not respond to the department’s   notification within ten (10) calendar days, the department may issue a temporary license to the applicant.
  2. A temporary license issued pursuant to this chapter shall be valid for one-hundred twenty (120) days from the effective date. No temporary license shall be effective prior to January 1, 2018.
  3. A temporary license may be extended for additional ninety (90) day periods if a complete application for licensure has been submitted to the department pursuant to section 8102 of this chapter.
  4. A temporary license does not obligate the department to issue an annual license nor does the temporary license create a vested right in the holder to either an extension of the temporary license or to the granting of a subsequent annual license.
  5. Temporary applications and licenses are exempt from fees. (h) This section shall remain in effect until January 1, 2019.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26050.1 and 26055, Business and Professions Code.

§ 8101. Annual License Application Fees.

The following are nonrefundable application fees for the specified annual license type and shall be paid by the applicant at the time the complete application is submitted to the department:

(a) Specialty Cottage Outdoor $135 (b) Specialty Cottage Indoor $205 (c) Specialty Cottage Mixed-Light Tier 1 $340 (d) Specialty Cottage Mixed-Light Tier 2 $580 (e) Specialty Outdoor $270 (f) Specialty Indoor $2,170 (g) Specialty Mixed-Light Tier 1 $655 (h) Specialty Mixed-Light Tier 2 $1,125 (i) Small Outdoor $535 (j) Small Indoor $3,935 (k) Small Mixed-Light Tier 1 $1,310 (l) Small Mixed-Light Tier 2 $2,250 (m) Medium Outdoor $1,555 (n) Medium Indoor $8,655 (o) Medium Mixed-Light Tier 1 $2,885 (p) Medium Mixed-Light Tier 2 $4,945 (q) Nursery $520 (r) Processor $1,040

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8102. Annual License Application Requirements.

§ 8102. Annual License Application Requirements. Applications for a cultivation license shall be completed and submitted online at calcannabis.cdfa.ca.gov or by mailing a hard copy of the application to the department at P.O. Box 942872, Sacramento, CA 94271-2872. Application fees, pursuant to section 8101 of this chapter, shall accompany the applications submitted online at calcannabis.cdfa.ca.gov or by mail to the department at P.O. Box 942872, Sacramento, CA 94271-2872. Each Aapplications shall include the following, if applicable: (a) The legal business name of the applicant entity and the business entity structure, including but not limited to a corporation, general partnership, joint venture, limited liability company, limited liability partnership, limited partnership, sovereign entity, sole proprietorship, or trust;. (b) The license type, pursuant to section 8201 of this chapter, for which the applicant is applying and whether the application is for an M-license or A-license; (c) A list of all valid commercial cannabis license types the applicant entity holds and the associated license numbers, from the department and other cannabis licensing authorities; (d) The physical address of the premises; (e) The mailing address of the applicant entity; (f) The hours of operation for each day of the week the applicant entity will have staff on the licensed premises. The Aapplicant must provide a minimum of two (2) hours of operation that are between 8:00am and 5:00pm (Pacific Time) on each day, Monday through Friday; (g) A designated responsible party, who shall also be an owner, with legal authority to bind the applicant entity, and the primary contact for the application. The following information shall be provided for the designated responsible party: Page 7 of 76 full legal name, title, mailing address, primary contact phone number, email address, preferred method of contact (either standard mail or email), and a copy of the owner’s government-issued identification. Acceptable forms of identification are a document issued by a federal, state, county, or municipal government, including, but not limited to, a driver’s license, that contains the name, date of birth, physical description, and picture of the individual; (h) An individual or entity serving as agent for service of process for the applicant. The following information shall be provided for the agent for service of process: full legal name, mailing address, primary contact phone number, and email address, and preferred method of contact (either standard mail or email); (i) A complete list of every owner of the applicant entity pursuant to section 8103 of this chapter. Each individual owner named shall submit the following information: (1) Full legal name; (2) Title within the applicant entity; (3) Date of birth; (4) Social security number or individual taxpayer identification number; (5) Home address; (6) Primary phone number; (7) Email address; (8) Preferred method of contact (either standard mail or email); (98) Date ownership interest in the applicant entity was acquired; (109) Percentage of the ownership interest held in the applicant entity by the owner; (1110) A list of all the valid licenses, including license type(s) and license number(s), from the department and other cannabis licensing authorities that the owner is listed as either an owner or financial interest holder; (1211) A copy of the owner’s government-issued identification. Acceptable forms of identification are a document issued by a federal, state, county, or municipal government, including but not limited to, a driver’s license, that contains the name, date of birth, physical description, and picture of the individual; (1312) If applicable, a detailed description of any criminal conviction. A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere. Convictions dismissed under sections 1203.4, 1203.4a and 1203.41 of the Penal Code or equivalent non-California law shall be disclosed. Juvenile adjudications and traffic infractions do not need to be included. For each conviction, all of the following shall be provided: (A) The date of conviction; (B) Date(s) of incarceration, if applicable; (C) Date(s) of probation, if applicable; (D) Date(s) of parole, if applicable; Page 8 of 76 (E) A detailed description of the offense for which the owner was convicted; and (F) A statement of rehabilitation for each conviction. The statement of rehabilitation is to be written by the owner and may contain evidence that the owner would like the department to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, a certificate of rehabilitation under section 4852.01 of the Penal Code, and dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual providing the reference. (1413) A copy of the owner’s completed application for electronic fingerprint images submitted to the Department of Justice.;

(1514) If applicable, a detailed description of any administrative orders or civil judgements for violations of labor standards, any suspension of a commercial cannabis license, revocation of a commercial cannabis license, or sanctions for unlicensed commercial cannabis activity by a licensing authority, or local agency, or state agency against the applicant or a business entity in which the applicant was an owner or officer within three years immediately preceding the date of the application. (j) A complete list of financial interest holders pursuant to section 8103 of this chapter, including the following information for: (1) Individuals: full legal name, tax identification number (social security number, individual taxpayer identification number, or national identification number), and government identification number and type of government identification; and (2) Business entities: legal business name and employer identification number. (k) Copies of all formation documents, which may include, but are not limited to, articles of incorporation, operating agreement, partnership agreement, and fictitious business name statement. The applicant shall also provide all documents filed with the California Secretary of State, which may include but are not limited to, articles of incorporation, certificate of stock, articles of organization, certificate of limited partnership, and statement of partnership authority. If an applicant is a foreign corporation, a certificate of qualification issued by the California Secretary of State; (l) A valid seller’s permit number issued by the California Department of Tax and Fee Administration, or confirmation from the California Department of Tax and Fee Administration that a seller’s permit is not needed. If the applicant entity has not yet received a seller’s permit, the applicant entity shall attest that it is currently applying for a seller’s permit; (m) For applicants that are a cannabis cooperative as defined by division 10, chapter 22 (commencing with section 26220) of the Business and Professions Code, identification of all members. Identifying information shall include the member’s license number for commercial cannabis activity, the licensing authority that issued the license, and the name of the licensed business; Page 9 of 76 (n) Evidence that the applicant entity has the legal right to occupy and use the proposed location pursuant to section 8104 of this chapter; (o) Evidence of having obtained a surety bond in the amount of not less than $5,000, payable to the department in a form prescribed by the department pursuant to Title 11 of the California Code of Regulations section 26.20. The bond shall be issued by a corporate surety licensed to transact surety business in the State of California; (p) For all cultivator license types except Processor, evidence of enrollment in an order or waiver of waste discharge requirements with the State Water Resources Control Board or the appropriate Regional Water Quality Control Board. Acceptable documentation for evidence of enrollment can be a Notice of Applicability letter. Acceptable documentation for a Processor that enrollment is not necessary can be a Notice of Non-Applicability Evidence of enrollment with the applicable Regional Water Quality Control Board or State Water Resources Control Board for water quality protection programs or written verification from the appropriate board that enrollment is not necessary; (q) Evidence that the applicant has conducted a hazardous materials record search of the EnviroStor database for the proposed premises. If hazardous sites were encountered, the applicant shall provide documentation of protocols implemented to protect employee health and safety; (r) Evidence of exemption from, or compliance with, division 13 (commencing with section 21000) of the Public Resources Code, California Environmental Quality Act (CEQA). The evidence provided shall be one of the following: (1) A signed copy of a project specific Notice of Determination or Notice of Exemption and a copy of the associated CEQA document, or reference to where it may be located electronically, a project description, and/or any accompanying permitting documentation from the local jurisdiction used for review in determining site specific environmental compliance A copy of the applicant’s license, permit, or other authorization and any accompanying documentation or permitting package from the local jurisdiction used for discretionary review pursuant to CEQA, if the local jurisdiction has adopted an ordinance, rule, or regulation pursuant to section 26055(h) of the Business and Professions Code that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity; (2) A copy of a project specific Notice of Determination or Notice of Exemption and a copy of the CEQA document, or reference to where it may be located electronically and any accompanying documentation or permitting package from the local jurisdiction used for discretionary review pursuant to CEQA if the local jurisdiction has not adopted an ordinance, rule, or regulation pursuant to section 26055(h) of the Business and Professions Code; (3) If an applicant does not have the evidence specified in subsections (1) or (2), or if the local jurisdiction did not prepare a CEQA document, the applicant will be responsible for the preparation of an environmental document in compliance with CEQA that can be approved or certified by the department, unless the department specifies otherwise. (s) For indoor and mixed-light license types, identification of all power sources for cultivation activities, including but not Page 10 of 76 limited to, illumination, heating, cooling, and ventilation; (t) A property diagram pursuant to section 8105 of this chapter; (u) A proposed cultivation plan pursuant to section 8106 of this chapter; (v) Identification of all of the following applicable water sources used for cultivation activities and the applicable supplemental information for each source pursuant to section 8107 of this chapter: (1) A retail water supplier; (2) A groundwater well; (3) A rainwater catchment system; (4) A diversion from a surface waterbody or an underground stream flowing in a known and definite channel. (w) A copy of any final lake or streambed alteration agreement issued by the California Department of Fish and Wildlife, pursuant to sections 1602 or 1617 of the Fish and Game Code, or written verification from the California Department of Fish and Wildlife that a lake and streambed alteration agreement is not required; (x) An attestation that the proposed location is at least a six-hundred (600) foot radius from a school providing instruction in kindergarten or any grades one (1) through twelve (12), or a day care center or youth center as defined in section 26001 of the Business and Professions Code, that is in existence at the time the application is submitted, or that the premises complies with a local ordinance specifying a different radius. The distance shall be measured in the same manner as provided in subsection (c) of section 11362.768 of the Health and Safety Code unless otherwise provided by law; (y) An attestation that the applicant entity will enter into, or has already entered into, and will abide by the terms of a labor peace agreement if the applicant entity will have twenty (20) or more employees on payroll at any time during the licensed period. The applicant shall submit a copy of the page of the labor peace agreement that contains the signatures of the union representative and the applicant. For applicants who have not yet entered into a labor peace agreement, the applicant shall provide a copy of the page of the labor peace agreement that contains the signatures of the union representative and the licensee as soon as reasonably practicable after licensure; (z) An attestation that the applicant entity is an “agricultural employer” as defined by the Alatorre-Zenovich-DunlapBerman Agricultural Labor Relations Act of 1975; division 2, part 3.5 (commencing with section 1140) of the Labor Code;

(aa) An attestation that the local fire department has been notified of the cultivation site if the application is for an indoor license type; (bb) For an applicant entity with more than one employee, the applicant entity shall attest that the applicant employs, or will employ within one year of receiving a license, one supervisor and one employee who have successfully completed a Cal-OSHA 30-hour general industry outreach course offered by a training provider that is authorized by an OSHA Training Institute Education Center to provide the course; (ccbb) Any applicant that may fall within the scope of sovereign immunity that may be asserted by a federally recognizable Page 11 of 76 tribe or other sovereign entity shall waive any sovereign immunity defense that the applicant may have, may be asserted on its behalf, or may otherwise be asserted in any state or local administrative or judicial enforcement actions against the applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise, under the state laws and regulations governing commercial cannabis activity, and shall provide documentation as may be requested by the department that establishes that the applicant has the lawful authority to enter into the waiver described above and has effectively done so. The limited waiver of sovereign immunity shall meet the requirements of the following: (1) The written limited waiver shall include that the applicant or licensee has the lawful authority to enter into the waiver required by this section, the applicant or licensee hereby waives sovereign immunity, and the applicant or licensee agrees to do all of the following: (A) Provide documentation to the department that establishes that the applicant or licensee has the lawful authority to enter into the waiver required by this section; (B) Conduct all commercial cannabis activity in full compliance with the state laws and regulations governing commercial cannabis activity, including submission to all enforcement provisions thereof; (C) Allow access as required by statute or regulation by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any premises or property at which the applicant conducts any commercial cannabis activity, including premises or property where records of commercial cannabis activity are maintained by or for the applicant or licensee; (D) Provide any and all records, reports, and other documents as may be required under the state laws and regulations governing commercial cannabis activity; (E) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise specified by state law; (F) Meet all of the requirements for licensure under state laws and regulations governing the conduct of commercial cannabis activity, and provide truthful and accurate documentation and other information of the applicant’s qualifications and suitability for licensure as may be requested by the department; (G) Submit to the personal and subject matter jurisdiction of the California courts to address any matter related to the waiver or commercial cannabis application, license, or activity, and that all such matters and proceedings shall be governed, construed and enforced in accordance with California substantive and procedural law, including but not limited to the Act; (2) Any applicant or licensee shall immediately notify the department of any changes that may materially affect the applicant and licensee’s compliance with subsection (1). (3) Any failure by an applicant or licensee to comply with the requirements of subsections (1) and (2) shall be a basis for denial of an application or renewal or discipline of a licensee. Page 12 of 76 (ddcc) If applicable, the applicant shall provide evidence that the proposed premises is not located in whole or in part in a watershed or other geographic area that the State Water Resources Control Board or the Department of Fish and Wildlife has determined to be significantly adversely impacted by cannabis cultivation pursuant to section 8216. (eedd) The department shall not approve an application for a state license if approval of the license would violate the provisions of any local ordinance or regulation adopted in accordance with section 26200 of the Business and Professions Code by a county or, if within a city, a city, within which the licensed premises is to be located. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26051.5, 26054, 26055, 26060.1, 26066, Business and Professions Code.

§ 8103. Owners and Financial Interests Holders.

(a) “Owner” means any of the following: (1) A person with an aggregate ownership interest of twenty (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) An individual who will be participating in the direction, control, or management of the person applying for a license. (b) An owner who is an individual participating in the direction, control, or management of the commercial cannabis business includes any of the following: (1) A partner of a commercial cannabis business that is organized as a partnership; (2) A managing member of a commercial cannabis business that is organized as a limited liability company; (3) An officer or director of a commercial cannabis business that is organized as a corporation. (c) All individuals and business entities that have a financial interest in a commercial cannabis business but are not owners as defined in subsections (a) or (b) of this section shall be listed on an application for licensure under section 8102(j) of this chapter. “Financial interest” means an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other fully-vested equity interest in a commercial cannabis business. (d) Notwithstanding subsections (a), (b), or (c), the following are not considered to be owners or financial interest holders: (1) A bank or financial institution whose interest constitutes a loan; (2) Persons whose only financial interest in the commercial cannabis business is through an interest in a diversified mutual fund, blind trust, or similar instrument; (3) Persons whose only financial interest is a security, lien, or encumbrance on property that will be used by the commercial cannabis business; and (4) Persons who hold a share of stock that is less than five (5) percent of the total shares in a publicly traded company. Page 13 of 76 Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26001, 26013, and 26051.5, Business and Professions Code.

§ 8104. Legal Right to Occupy.

(a) If the applicant is the owner of the property on which the premises is located, the applicant shall provide to the department a copy of the title or deed to the property. (b) If the applicant is not the owner of the property upon which the premises is located, the applicant shall provide the following to the department: (1) A document from the property owner or property owner’s agent where the commercial cannabis activity will occur that states the applicant has the right to occupy the property and acknowledges that the applicant may use the property for commercial cannabis cultivation; (2) The property owner’s mailing address and phone number; and (3) A copy of the lease or rental agreement, or other contractual documentation. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26051.5, Business and Professions Code.

§ 8105. Property Diagram. A property diagram shall be submitted with each application and shall contain the following: (a) Boundaries of the property and the proposed premises wherein the license privileges will be exercised with sufficient detail to enable ready determination of the bounds of the premises showing all perimeter dimensions, entrances, and exits to both the property and premises; (b) If the proposed premises consists of only a portion of a property, the diagram shall be labeled indicating which part of the property is the proposed premises and for what purpose the remaining property is used, including any areas shared with other licenses; (c) All roads and water crossings on the property; (d) All water sources identified and labeled for beneficial use type, including but not limited to, irrigation, domestic, fire protection, power, fish and wildlife preservation and enhancement, and/or recreation; (ed) If the applicant is proposing to use a diversion from a waterbody or an underground stream flowing in a known and definite channel, groundwater well, or rain catchment system as a water source for cultivation, include the following locations on the property diagram with locations also provided as coordinates in either latitude and longitude or the California Coordinate System: Page 14 of 76 (1) Sources of water used, including the location of waterbody diversion(s), pump location(s), and distribution system; and (2) Location, type, and capacity of each storage unit to be used for cultivation. (fe) The assessor’s parcel number(s); (gf) The diagram shall be to scale; and (hg) The diagram shall not contain any highlighting. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26013, 26051.5, and 26060.1, Business and Professions Code. § 8106. Cultivation Plan Requirements. (a) The cultivation plan for each Specialty Cottage, Specialty, Small, and Medium licenses shall include all of the following: (1) A detailed premises diagram showing all boundaries and dimensions in feet of the following proposed areas to scale: (A) Canopy area(s), including aggregate square footage if the canopy areas are noncontiguous. All unique areas separated by identifiable boundaries pursuant to section 8000(f) shall be clearly described and labeled in the premises diagram; the boundary shall be identified and labeled on the diagram and at no time during the licensed period may any portion of a cannabis plant extend over the boundary; (B) Area(s) outside of the canopy where only immature plants shall be maintained, if applicable; this area may not be shared among multiple licenses held by one licensee; (C) Designated pesticide and other agricultural chemical storage area(s); (D) Designated processing area(s) if the licensee will process on site; this area may not be shared among multiple licenses held by one licensee; (E) Designated packaging area(s) if the licensee will package products on site; this area may not be shared among multiple licenses held by one licensee; (F) Designated composting area(s) if the licensee will compost cannabis waste on site; (G) Designated secured area(s) for cannabis waste if different from subsection (F) above; (H) Designated area(s) for harvested cannabis storage; (I) Designated area(s) for physically segregating cannabis or nonmanufactured cannabis products subject to an administrative hold pursuant to section 8603 of this chapter; this area may not be shared among multiple licenses held by one licensee;. (J) Designated area(s) that are shared between licenses held by one licensee. The shared area(s) must be contiguous, be indicated on the property diagram for each application, and be one or more of the following Page 15 of 76 designated area(s) shared between licenses held by one licensee: pesticide and other agricultural chemical storage area(s), composting area(s), secured area(s) for cannabis waste, and harvested cannabis storage; (K) Common use area(s), such as hallways, bathrooms, or break rooms; this area may be shared by multiple licensees. (2) For indoor and mixed-light license type applications, a lighting diagram with the following information shall be included: (A) Location of all lights in the canopy area(s); and (B) Maximum wattage, or wattage equivalent, of each light. (3) A pest management plan which shall include, but not be limited to, the following: (A) Product name and active ingredient(s) of all pesticides to be applied to cannabis during any stage of plant growth; and (B) Integrated pest management protocols, including chemical, biological, and cultural methods the applicant anticipates using to control or prevent the introduction of pests on the cultivation site.; and (C) A signed attestation that states the applicant shall contact the appropriate County Agricultural Commissioner regarding requirements for legal use of pesticides on cannabis prior to using any of the active ingredients or products included in the pest management plan and shall comply with all pesticide laws. (4) A cannabis waste management plan meeting the requirements of section 8108 of this chapter. (b) The cultivation plan for nursery licenses shall include the following information: (1) A detailed premises diagram showing all boundaries and dimensions, in feet, of the following proposed areas to scale: (A) Area(s) which shall contain only immature plants; (B) Designated research and development area(s) which may contain mature plants; (C) Designated seed production area(s) which may contain mature plants; (AD) Designated pesticide and other agricultural chemical storage area(s); (BE) Designated composting area(s) if the licensee will compost cannabis waste on site; and (CF) Designated secured area(s) for cannabis waste if different from subsection (EB) above;. (D) At least one of the following areas: i. Area(s) which shall contain only immature plants; ii. Designated seed production area(s) which may contain mature plants. (E) Designated research and development area(s) which may contain mature plants, if the licensee will be conducting research and development activities that require a plant to flower. (2) A pest management plan that shall include, but not be limited to, the following: (A) Product name and active ingredient(s) of all pesticides to be applied to cannabis at any time; and Page 16 of 76 (B) Integrated pest management protocols, including chemical, biological, and cultural methods the applicant anticipates using to control or prevent the introduction of pests on the cultivation site.; and (C) A signed attestation that states the applicant shall contact the appropriate County Agricultural Commissioner regarding requirements for legal use of pesticides on cannabis prior to using any of the active ingredients or products included in the pest management plan and shall comply with all pesticide laws. (3) A cannabis waste management plan pursuant to section 8108 of this chapter. (c) The cultivation plan for processor licenses shall include a detailed premises diagram showing all boundaries and dimensions, in feet, of the following proposed areas: (1) Designated processing area(s); (2) Designated packaging area(s), if the licensee will package and label products on site; (3) Designated composting area(s) if the licensee will compost cannabis waste on site; (4) Designated secured area(s) for cannabis waste if different from subsection (3) above; and; (5) Designated area(s) for harvested cannabis storage. (6) A cannabis waste management plan pursuant to section 8108 of this chapter. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26013, 26051.5, 26060, and 26060.1, Business and Professions Code.

§ 8107. Supplemental Water Source Information. The following information shall be provided for each water source identified by the applicant: (a) Retail water supply sources: (1) If the water source is a retail water supplier, as defined in section 13575 of the Water Code, such as a municipal provider, provide the following: (i) Name of the retail water supplier; and (ii) A copy of the most recent water service bill. (2) If the water source is a small retail water supplier, such as a delivery service, and is subject to subsection (a)(1)(B) of section 26060.1 of the Business and Professions Code and either: (A) The retail water supplier contract is for delivery or pickup of water from a surface water body or an underground stream flowing in a known and definite channel, provide all of the following: (i) The name of the retail water supplier under the contract; (ii) The water source and geographic location coordinates in either latitude and longitude or the California Coordinate System of any point of diversion used by the retail water supplier to divert water delivered to the applicant under the contract; Page 17 of 76 (iii) The authorized place of use of any water right used by the retail water supplier to divert water delivered to the applicant under the contract; (iv) The maximum amount of water delivered to the applicant for cannabis cultivation in any year; and (v) A copy of the most recent water service bill; or (B) The retail water supplier contract is for delivery or pickup of water from a groundwater well, provide all of the following: (i) The name of the retail water supplier under the contract; (ii) The geographic location coordinates for any groundwater well used to supply water delivered to the applicant, in either latitude and longitude or the California Coordinate System; (iii) The maximum amount of water delivered to the applicant for cannabis cultivation in any year; (iv) A copy of the well completion report filed with the Department of Water Resources pursuant to section 13751 of the Water Code for each percolating groundwater well used to divert water delivered to the applicant. If no well completion report is available, the applicant shall provide evidence from the Department of Water Resources indicating that the Department does not have a record of the well completion report. When no well completion report is available, the State Water Resources Control Board may request additional information about the well; and (v) A copy of the most recent water service bill. (b) If the water source is a groundwater well: (1) The groundwater well’s geographic location coordinates in either latitude and longitude or the California Coordinate System; and (2) A copy of the well completion report filed with the Department of Water Resources pursuant to section 13751 of the Water Code. If no well completion report is available, the applicant shall provide evidence from the Department of Water Resources indicating that the Department of Water Resources does not have a record of the well completion report. If no well completion report is available, the State Water Resources Control Board may request additional information about the well. (c) If the water source is a rainwater catchment system: (1) The total square footage of the catchment footprint area(s); (2) The total storage capacity, in gallons, of the catchment system(s); and (3) A detailed description and photographs of the rainwater catchment system infrastructure, including the location, size, and type of all surface areas that collect rainwater. Examples of rainwater collection surface areas include a rooftop and greenhouse. (d) If the water source is a diversion from a waterbody (such as a river, stream, creek, pond, lake, etc.), provide any applicable water right statement, application, permit, license, or small irrigation use registration identification Page 18 of 76 number(s), and either: (1) A copy of any applicable statement, registration certificate, permits, or licenses, or proof of a pending application issued under part 2 (commencing with section 1200) of division 2 of the California Water Code as evidence of approval of a water diversion by the State Water Resources Control Board; (2) If the applicant has claimed an exception from the requirement to file a statement of diversion and use pursuant to section 5101 of the Water Code, the applicant shall provide a copy of the documentation submitted to the State Water Resources Control Board before January 1, 2019 demonstrating that the diversion is subject to subsection (a), (c), (d), or (e) of section 5101 of the Water Code. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26060.1, Business and Professions Code. § 8108. Cannabis Waste Management Plan. For the purposes of this section, “cannabis waste” is organic waste, as defined in section 42649.8(c) of the Public Resources Code. An applicant’s cannabis waste management plan shall identify one or more of the following methods for managing cannabis waste generated on its licensed premises: (a) On-premises composting of cannabis waste; (b) Collection and processing of cannabis waste by a local agency, a waste hauler franchised or contracted by a local agency, or a private waste hauler permitted by a local agency; (c) Self-haul cannabis waste to one or more of the following: (1) A manned, fully permitted solid waste landfill or transformation facility; (2) A manned, fully permitted composting facility or manned composting operation; (3) A manned, fully permitted in-vessel digestion facility or manned in-vessel digestion operation; (4) A manned, fully permitted transfer/processing facility or manned transfer/processing operation; or (5) A manned, fully permitted chip and grind operation or facility. (6) A recycling center as defined in title 14, section 17402.5(d) of the California Code of Regulations and that meets the following: (A) The cannabis waste received shall contain at least ninety (90) percent inorganic material; (B) The inorganic portion of the cannabis waste is recycled into new, reused, or reconstituted products which meet the quality standards necessary to be used in the marketplace; and (C) The organic portion of the cannabis waste shall be sent to a facility or operation identified in subsection (c). (d) Reintroduction of cannabis waste back into agricultural operation through on premises organic waste recycling

methods, including but not limited to tilling directly into agricultural land, no-till farming, and feeding to non- commercial livestock. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26066, Business and Professions Code. § 8109. Applicant Track-and-Trace Training Requirement. (a) For the purpose of this section, the applicant’s shall designated an owner responsible party shall to be the licensee’s track-and-trace system account manager pursuant to section 8402(cb) of this chapter. The designated account manager shall register for track-and-trace system training provided by the department within ten (10) calendar business days of receiving notice from the department that its application for licensure has been received and is complete. (b) Applicants approved for an annual license shall not have access to the track-and-trace system until the designated account manager has completed the track-and-trace training prescribed by the department and proof of completion has been validated by the department. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26067, Business and Professions Code. § 8110. Proof of Local License, Permit, or Other Authorization. When the applicant provides a license, permit, or other authorization from the local jurisdiction where the licensed premises will be or is located, pursuant to section 26055(e) of the Business and Professions Code, the department will notify the local jurisdiction’s contact person identified pursuant to section 26055(f) of the Business and Professions Code. If the local jurisdiction does not respond to the department’s notification within ten (10) calendar days, the department may issue a license to the applicant. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26055, Business and Professions Code. § 8111. Priority Application Review. (a) Priority review of annual license applications shall be given to applicants that can demonstrate the applicant entity was in operation under the Compassionate Use Act of 1996 before September 1, 2016. (b) Eligibility for priority application review shall be demonstrated by any of the following, dated prior to September 1, 2016:

(1) Local license, permit, or other authorization; (2) Collective or cooperative membership agreement; (3) Tax or business forms submitted to the California Department of Tax and Fee Administration or Franchise Tax Board; (4) Incorporation documents filed with the Secretary of State; (5) Any other verifiable business record adequate to demonstrate the operation of the business prior to September 1, 2016; or (6) Any applicant identified by the local jurisdiction pursuant to section 26054.2(b) of the Business and Professions Code. (c) The department may request additional documentation to verify the applicant’s date of commencement of operations. (d) This section shall cease to be operative on December 31, 2019, unless otherwise provided by law. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26054.2, Business and Professions Code. § 8112. Annual License Application Review for Completeness. The department shall notify the applicant in writing that the application is either: (a) Complete and accepted for further review; or (b) Incomplete and the reasons for the incompleteness. (1) The department shall receive the missing information or fee, payment, or penalty from the applicant no later than ninety (90) calendar days from the date of the notification from the department. Failure to provide the designated missing information or any fees, payments, or penalties that are due and payable will result in disqualification of the application from further consideration. (2) If disqualified, the applicant may reapply and pay a new application fee. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26013, Business and Professions Code. § 8113. Substantially Related Offenses Review. (a) The following convictions shall be considered substantially related to the qualifications, functions, or duties of the business for which the application is made and may be a basis for denying the license: (1) A violent felony conviction, as specified in subsection (c) of section 667.5 of the Penal Code; (2) A serious felony conviction, as specified in subsection (c) of section 1192.7 of the Penal Code; (3) A felony conviction involving fraud, deceit, or embezzlement; Page 21 of 76 (4) Any felony conviction involving the hiring, employment, or use of children in transporting, carrying, selling, giving away, preparing for sale, or peddling any controlled substance to a minor, or offering, furnishing, or selling any controlled substance to a minor; and (5) A felony conviction for drug trafficking with enhancements pursuant to sections 11370.4 or 11379.8 of the Health and Safety Code. (b) Except as provided in subsections (a)(4) and (5) and notwithstanding chapter 2 (commencing with section 480) of division 1.5 of the Business and Professions Code, a prior conviction, where the sentence, including any term or probation, incarceration, or supervised release, is completed for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance is not considered substantially related, and shall not be the sole ground of denial for a license. Conviction for any controlled substance felony subsequent to licensure shall be grounds for revocation of a license or denial of the renewal of the license. (c) To determine whether an applicant who has been convicted of a criminal offense that is substantially related to the qualifications, functions, or duties of the business for which the application is made should be issued a license, the department shall conduct a review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation. Evidence of rehabilitation includes: (1) The nature and severity of the criminal offense; (2) Whether the person has a felony conviction based on possession or use of cannabis or cannabis products that would not be a felony if the person were convicted of the offense on the date of the person’s application; (3) The applicant’s criminal record as a whole; (4) Evidence of any conviction of a criminal offense committed subsequent to the criminal offense under consideration that could be considered grounds for denial, suspension, or revocation of a commercial cannabis activity license; (5) The time that has elapsed since commission of the act or offense; (6) The extent to which the applicant has complied with any terms of parole, probation, restitution, or any other sanctions lawfully imposed against the applicant; (7) If applicable, evidence of dismissal under sections 1203.4, 1203.4a, and 1203.41 of the Penal Code or another state’s similar law; (8) If applicable, a certificate of rehabilitation obtained under section 4852.01 of the Penal Code or another state’s similar law; and (9) Other evidence of rehabilitation submitted by the applicant. (d) If an applicant has been denied a license based on a substantially related conviction, the applicant may request a hearing pursuant to section 26058 of the Business and Professions Code to determine if the applicant should be issued a license. Page 22 of 76 Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26057, and 26058, Business and Professions Code. § 8114. Withdrawal of Application. An applicant may withdraw an application at any time prior to the department’s issuance of a license or denial of a license. (a) Requests to withdraw an application shall be submitted to the department in writing, dated, and signed by the designated responsible party. (b) The department will not refund application fees for a withdrawn application. (c) An applicant may reapply and pay a new application fee at any time following the withdrawal of an application. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26013, Business and Professions Code. § 8115. Notification and Grounds for Denial of License; Petition for Reconsideration. (a) The department shall notify the applicant in writing if the application is denied with the reasons for denial. (b) In addition to the reasons for denial in section 26057 of the Business and Professions Code, a license may be denied for the following reasons: (1) The applicant’s premises does not fully comply with standards pursuant to this chapter; (2) The applicant denied the department access to the premises to verify compliance with this chapter; (3) The applicant made a material misrepresentation on the application; or (4) The licensee had a license, permit, or other authorization to engage in commercial cannabis activity denied, suspended, or revoked by a state licensing authority or local agency. (c) Within thirty (30) calendar days upon service of the denial of an application, the applicant may file a written petition for reconsideration. Upon receipt of a timely filed petition for reconsideration, the department shall set a date for a hearing to be conducted pursuant to chapter 5 (commencing with section 11500) of part 1 of division 3 of title 2 of the Government Code. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26013, 26057, and 26058, Business and Professions Code.

 

 

Article 3: Cultivation License Fees and Requirements

What are the fees and requirements for Cultivation licenses?

Article 3: Cultivation License Fees and Requirements

§ 8200. Annual License Fees.

An annual license fee shall be paid to the department prior to issuance of a license or renewal license. The fee schedule is as follows:

(a) Specialty Cottage Outdoor $1,205 (b) Specialty Cottage Indoor $1,830 (c) Specialty Cottage Mixed-Light Tier 1 $3,035 (d) Specialty Cottage Mixed-Light Tier 2 $5,200 (e) Specialty Outdoor $2,410 (f) Specialty Indoor $19,540 (g) Specialty Mixed-Light Tier 1 $5,900 (h) Specialty Mixed-Light Tier 2 $10,120 (i) Small Outdoor $4,820 (j) Small Indoor $35,410 (k) Small Mixed-Light Tier 1 $11,800 (l) Small Mixed-Light Tier 2 $20,235 (m) Medium Outdoor $13,990 (n) Medium Indoor $77,905 (o) Medium Mixed-Light Tier 1 $25,970 (p) Medium Mixed-Light Tier 2 $44,517 (q) Nursery $4,685 (r) Processor $9,370

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26180, Business and Professions Code.

§ 8201. Cultivation License Types. License types include:

  1. Specialty Cottage:
    1. “Specialty Cottage Outdoor” is an outdoor cultivation site with up to 25 mature plants.
    2. “Specialty Cottage Indoor” is an indoor cultivation site with 500 square feet or less of total canopy.
    3. “Specialty Cottage Mixed-Light Tier 1 and 2” is a mixed-light cultivation site with 2,500 square feet or less of total canopy.
  2. Specialty:
    1. “Specialty Outdoor” is an outdoor cultivation site with less than or equal to 5,000 square feet of total canopy, or up to 50 mature plants on noncontiguous plots.
    2. “Specialty Indoor” is an indoor cultivation site between 501 and 5,000 square feet of total canopy.
    1. “Specialty Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 2,501 and 5,000 square feet of total canopy.
  1. Small:
    1. “Small Outdoor” is an outdoor cultivation site between 5,001 and 10,000 square feet of total canopy. (2) “Small Indoor” is an indoor cultivation site between 5,001 and 10,000 square feet of total canopy.

(3) “Small Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 5,001 and 10,000 square feet of total canopy.

  1. Medium:
    1. “Medium Outdoor” is an outdoor cultivation site between 10,001 square feet and one acre of total canopy. (2) “Medium Indoor” is an indoor cultivation site between 10,001 and 22,000 square feet of total canopy.

(3) “Medium Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 10,001 and 22,000 square feet of total canopy.

  1. “Nursery” is a cultivation site that conducts the cultivation of cannabis solely as a nursery.
  2. “Processor” is a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis and nonmanufactured cannabis products.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26050, Business and Professions Code.

§ 8202. General License Requirements.

  1. Cultivation licenses shall be valid for twelve (12) months from the date of issuance.
  2. Every business entity shall obtain a separate license for each premises where it engages in commercial cannabis cultivation.
  3. Cultivation licenses are not transferrable or assignable to any other person, entity, or property.
  4. Licensees are prohibited from transferring any commercially cultivated cannabis or nonmanufactured cannabis products from their licensed premises. All transfer of cannabis and nonmanufactured cannabis product from a licensed cultivation site must be conducted by a distributor licensed by the bureau.
  5. The license shall be prominently displayed on the licensed premises where it can be viewed by state or local agencies. (f) Except as provided in section 8209, a licensee may hold both an A and an M license on the same premises, provided the

inventory for each license type is kept separate and distinct. (g) A licensee shall not sublet any portion of the licensed premises.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26010, 26012, 26050, and 26053,

Business and Professions Code.

§ 8203. Renewal of License.

  1. An application for renewal of a cultivation license shall be submitted to the department at least thirty (30) calendar days prior to the expiration date of the current license. No renewal application shall be accepted by the department more than sixty (60) calendar days prior to the expiration date of the current license.
  2. If a complete renewal application is submitted in compliance with subsection (a) above, the licensee may continue to operate until the department approves or denies the renewal application.
  3. If the department receives the renewal application less than thirty (30) calendar days prior to the expiration, or within thirty (30) calendar days after the expiration, of the current license, a licensee shall submit a late fee of fifty (50) percent of the application fee to be paid in addition to the required annual renewal fee.
  4. A licensed cultivator that does not submit a complete license renewal application to the department within thirty (30) calendar days after the expiration of the current license shall forfeit their eligibility to apply for a license renewal and, instead, shall be required to submit a new license application.
  5. The license renewal application shall be submitted to the department and contain the following: (1) The legal name of the licensed entity;
  1. The license number and expiration date;
  2. The licensee’s mailing address and premises address;
  3. The annual license fee pursuant to section 8200 of this chapter;
  4. If applicable, documentation regarding any changes that have occurred from the information originally submitted to the department pursuant to section 8102 of this chapter; and
  5. An attestation that all information provided to the department is accurate and current.
  1. Beginning January 1, 2022, an application for renewal of a license shall include the following records, for each power source indicated on the application for licensure, for the previous annual licensed period:
    1. Total electricity supplied by local utility provider, name of local utility provider, and greenhouse gas emission intensity per kilowatt hour reported by the utility under section 398.4(c) of the Public Utilities Code for the most recent calendar year available at time of submission.
    2. Total electricity supplied by a zero net energy renewable source, as set forth in section 398.4(h)(5) of the Public Utilities Code, that is not part of a net metering or other utility benefit.
    3. Total electricity supplied from other unspecified sources, as defined in 398.2(e) of the Public Utilities Code, and other on-site sources of generation not reported to the local utility provider (e.g., generators, fuel cells) and the   greenhouse gas emission intensity from these sources.
    4. Average weighted greenhouse gas emission intensity considering all electricity use in subsections (1), (2), and (3).

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26050, 26051.5, and 26055, Business and Professions Code.

§ 8204. Notification of License Information Change.

  1. Licensees shall notify the department in writing within ten (10) calendar days of any change to any item listed in the application, and any of the following events:
    1. Disciplinary proceeding initiated by any state or local government agency; (2) Bankruptcy filing by any owner listed on the application for licensure;
  1. Temporary closure longer than thirty (30) calendar days. Include in the notification the reason for temporary closure and expected duration of closure;
  2. Modifications to the cultivation plan pursuant to section 8106 of this chapter that do not require preapproval pursuant to section 8205 of this chapter; and
  3. Any change in ownership that does not affect the business entity type. New owners shall submit all information pursuant to section 8102(h) of this chapter.
  1. Any change to the business entity type requires a new application and application fee.
  2. Licensee shall notify the department in writing of the following within forty-eight (48) hours of: (1) Receiving a criminal conviction or civil judgment rendered against the licensee; and

(2) Receiving notification of the revocation of a local license, permit or other authorization.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8205. Physical Modification of Premises.

A licensee shall not make a physical modification of the licensed premises that materially or substantially alters the licensed premises or the use of the licensed premises from the premises diagram originally filed with the license application without the prior written approval of the department.

  1. The following premises modifications require approval in writing from the department prior to modification:
    1. Modification to any area described in the licensee’s cultivation plan including, but not limited to, the removal, creation, or relocation of canopy, processing, packaging, composting, harvest storage, and chemical storage areas;
    2. Change in water or power source(s); and
    3. Modifications or upgrades to electrical systems at a licensed premises shall be performed by a licensed electrician. A copy of the electrician’s license shall be submitted with any premises modification requests for electrical systems.
  1. A licensee shall request approval of a physical change, alteration, or modification in writing to the department, and the request shall include a new premises diagram and/or cultivation plan pursuant to section 8106 of this chapter.
  2. A licensee shall provide additional documentation requested by the department to evaluate the licensee’s request.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26055, Business and Professions Code.

    1. The licensee notifies the department in writing that the cannabis and nonmanufactured cannabis products have been moved and that the licensee is requesting relief from complying with specific licensing requirements pursuant to subsection (a) of this section within twenty-four (24) hours of moving the cannabis;
    2. The licensee provides the department access to the location where the cannabis and nonmanufactured cannabis products have been moved to for inspection; and
    3. The licensee submits in writing to the department within ten (10) calendar days of moving the cannabis and nonmanufactured cannabis products a request for temporary relief that clearly indicates what the statutory and regulatory sections relief is requested from, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8206. Death or Incapacity of a Licensee. (a) In the event of the death, incapacity, receivership, assignment for the benefit of creditors of an owner, or other event rendering an owner incapable of performing the duties associated with the license, the owner’s successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the department within ten (10) calendar business days. (b) To continue operations or surrender the existing license, the successor in interest shall submit to the department the following: (1) The name of the successor in interest; (2) The name of the owner for which the successor in interest is succeeding and the license number; (3) The phone number, mailing address, and email address of the successor in interest; and (4) Documentation demonstrating that the owner is incapable of performing the duties associated with the license, such as a death certificate or a court order finding the owner lacks capacity, and documentation demonstrating that the individual making the request is the owner’s successor in interest, such as a court order appointing guardianship, or a will or trust agreement. (c) The department may give the successor in interest written approval to continue operations on the licensed business premises for a period of time specified by the department if: (1) The successor in interest or another person has applied for a license from the department for the license location and that application is under review; or (2) The successor in interest needs additional time to destroy or sell cannabis or nonmanufactured cannabis products; or (3) At the discretion of the department. (d) The owner’s successor in interest is held subject to all terms and conditions under which a state cannabis license is held pursuant to the Act and the regulations of this chapter. (e) The approval creates no vested right to the issuance of a state cannabis license.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26013, Business and Professions Code. § 8207. Disaster Relief. (a) If a licensee is unable to comply with any licensing requirement(s) due to a disaster, the licensee may notify the department of this inability to comply and request relief from the specific licensing requirement(s). (b) The department may exercise its discretion to provide temporary relief from specific licensing requirements for licensees whose operations have been impacted by a disaster. (c) Temporary relief from specific licensing requirements shall be issued for a reasonable amount of time as determined by the department in order to allow the licensee to recover from the disaster. (d) The department may require that certain conditions be followed in order for a licensee to receive temporary relief from specific licensing requirements. (e) A licensee shall not be subject to enforcement action for a violation of a licensing requirement from which the licensee has received temporary relief. (f) For the purposes of this section, “disaster” means condition of extreme peril to the safety of persons and property within the state or a county, city and county, or city caused by such conditions such as air pollution, fire, flood, storm, tidal wave, epidemic, riot, drought, terrorism, sudden and severe energy shortage, plant or animal infestation or disease, Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or similar public calamity, other than conditions resulting from a labor controversy, for which the Governor has proclaimed a state of emergency in accordance with Government Code sections 8558 and 8625, or for which a local governing body has proclaimed a local emergency in accordance with Government Code sections 8558 and 8630. (g) A licensed premises that has been vacated by a licensee due to a disaster shall not be deemed to have been surrendered, abandoned, or quit pursuant to section 8208 of this chapter. (h) Notwithstanding subsection (a) of this section, if a licensee needs to move cannabis and nonmanufactured cannabis products stored on the premises to another location immediately to prevent loss, theft, or degradation of the cannabis and nonmanufactured cannabis products from the disaster, the licensee may move the cannabis without obtaining prior approval from the department if the following conditions are met: (1) The cannabis and nonmanufactured cannabis products are moved to a secure location where access to the cannabis is restricted to the licensee, its employees, and contractors; (2) The licensee notifies the department in writing that the cannabis and nonmanufactured cannabis products have been moved and that the licensee is requesting relief from complying with specific licensing requirements pursuant to subsection (a) of this section within twenty-four (24) hours of moving the cannabis; (3) The licensee provides the department access to the location where the cannabis and nonmanufactured cannabis Page 30 of 76 products have been moved to for inspection; and (4) The licensee submits in writing to the department within ten (10) calendar days of moving the cannabis and nonmanufactured cannabis products a request for temporary relief that clearly indicates the statutory and regulatory sections from which relief is requested, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26013, Business and Professions Code.

§ 8208. Surrender, Rrevocation, or Ssuspension of Llicense. (a) Any licensee may apply to surrender any license by delivering to the department written notice that the licensee surrenders that license. (b) The surrender of a license becomes effective thirty (30) days after receipt of an application to surrender the license or within a shorter period of time that the department may determine, unless a revocation or suspension proceeding, including but not limited to, investigation or examination, is pending when the application is filed, or a proceeding to revoke or suspend or to impose conditions upon the surrender is instituted within thirty (30) days after the application is filed. If a proceeding is pending or instituted, the surrender of a license becomes effective at the time and upon the conditions that the department determines. (c) A licensee that abandons or quits the licensed premises, or that closes the licensed premises for a period exceeding thirty (30) consecutive calendar days without the notifying the department pursuant to section 8204 of this chapter, shall be deemed to have surrendered its license at the time and upon the conditions that the department determines. (d) The surrender of a license does not affect the licensee’s civil or criminal liability for acts committed prior to the surrender of the license. (e) The power of investigation and examination by the department is not terminated by the surrender, suspension, or revocation of any license issued by the department and the department shall have continuous authority to exercise the powers set forth in the Act and the rules and regulations promulgated thereunder. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26013, Business and Professions Code. § 8209. Medium Cultivation License Limits. A person shall be limited to one (1) Medium Outdoor, or one (1) Medium Indoor, or one (1) Medium Mixed-Light A-License or M-License. This section shall remain in effect until January 1, 2023.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26013, 26050, and 26061, Business and Professions Code. § 8210. Sample Collection by the Bureau. When a licensee transfers possession, but not title, of cannabis to a licensed distributor, the licensee shall allow the bureau to collect samples for the bureau’s own laboratory analysis. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26110, Business and Professions Code. § 8211. Prohibition of Product Returns. Licensees are prohibited from accepting returns of cannabis plants or nonmanufactured cannabis products after transferring possession of cannabis plants or nonmanufactured cannabis to another licensee after testing is performed pursuant to section 26110 of the Business and Professions Code. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26110, Business and Professions Code. § 8212. Packaging and Labeling of Cannabis and Nonmanufactured Cannabis Products. (a) All cannabis and nonmanufactured cannabis product packaged and/or labeled by a licensed cultivator shall meet all of the following: (1) All applicable requirements including implementing regulations pursuant to sections 26070, 26120, and 26121 of the Business and Professions Code; (2) Any other requirements for cannabis and nonmanufactured cannabis product specified by the bureau and the California Department of Public Health; (3) Packaging and labeling requirements pursuant to chapter 6 (commencing with section 12601), division 5 of the Business and Professions Code. (4) Beginning January 1, 2020, a package for retail sale, excluding those containing immature plants and seeds, shall be child-resistant. (b) A label may specify the county of origin only if one hundred (100) percent of the cannabis or nonmanufactured cannabis product contained in the package was produced within the designated county, as defined by finite political boundaries.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26063, Business and Professions Code. § 8213. Requirements for Weighing Devices and Weighmasters. (a) Weighing devices used by a licensee shall be approved, registered, tested, and sealed pursuant to chapter 5 (commencing with section 12500) of division 5 of the Business and Professions Code, and registered with the county sealer consistent with chapter 2 (commencing with section 12240) of division 5 of the Business and Professions Code. Approved, registered, tested, and, and sealed devices shall be used whenever any one or more of the following apply: (1) Cannabis and nonmanufactured cannabis products are bought or sold by weight or count; (2) Cannabis and nonmanufactured cannabis products are packaged for sale by weight or count; (3) Cannabis and nonmanufactured cannabis products are weighed or counted for entry into the track-and-trace system; or (4) The weighing device is used for commercial purposes as defined in section 12500 of the Business and Professions Code. (b) In any county in which a sealer is unable or not required to approve, register, test, and seal weighing devices used by a licensee, the department may perform the duties of the county sealer in the same manner, to the same extent, and with the same authority as if it had been the duly appointed sealer in such county. In those instances, the department shall charge a licensee for its services using the schedule of fees established in Business and Professions Code section 12240. (c) For the purposes of this chapter a licensee must use wet weight or net weight. Wet weight and net weight shall be measured, recorded, and reported in U.S. customary units (e.g., ounce or pound); or International System of Units (e.g., kilograms, grams, or milligrams). (d) For the purposes of this chapter, count means the numerical count of the individual cannabis plants, seeds, or nonmanufactured cannabis product units. (e) Any licensee weighing or measuring cannabis or nonmanufactured cannabis product in accordance with subsection (a) shall be licensed as a weighmaster. A certificate issued by a licensed weighmaster shall issue a weighmaster certificate whenever payment for the commodity or any charge for service or processing of the commodity is dependent upon the quantity determined by the weighmaster in accordance with section 12711 of the Business and Professions Code and shall be consistent with the requirements in chapter 7 (commencing with section 12700) of division 5 of the Business and Professions Code. Authority: Sections 12027, 26012 and 26013, Business and Professions Code. Reference: Sections 12210, 12212, 26013 and 26060, Business and Professions Code.

§ 8214. Commercial Cannabis Activity Between Licensees. Cultivation licensees may conduct commercial cannabis activities with any other licensee, regardless of the licensee’s A or M designation of its license. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26001, 26013, and 26053, Business and Professions Code. § 8215. Personnel Prohibited from Holding Licenses. (a) A license authorized by the Act and issued by the department may not be held by, or issued to, any person holding office in, or employed by, any agency of the State of California or any of its political subdivisions when the duties of such person have to do with the enforcement of the Act or any other penal provisions of law of this State prohibiting or regulating the sale, use, possession, transportation, distribution, testing, manufacturing, or cultivation of cannabis. (b) This section applies to, but is not limited to, any persons employed in the State of California Department of Justice as a peace officer, in any district attorney’s office, in any city attorney’s office, in any sheriff’s office, or in any local police department. (c) All persons listed in subsections (a) and (b) may not have any ownership interest, directly or indirectly, in any business to be operated or conducted under a cannabis license. (d) This section does not apply to any person who holds a license in the capacity of executor, administrator, or guardian. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26013, Business and Professions Code. § 8216. License Issuance in an Impacted Watershed. If the State Water Resources Control Board or the Department of Fish and Wildlife notifies the department in writing that cannabis cultivation is causing significant adverse impacts on the environment in a watershed or other geographic area pursuant to section 26069, subdivision (c)(1), of the Business and Professions Code, the department shall not issue new licenses or increase the total number of plant identifiers within that watershed or area while the moratorium is in effect.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26069 of Business and Professions Code.

What are Cultivation site requirements?

Article 4. Cultivation Site Requirements

§ 8300. Cultivation Requirements for Specialty Cottage, Specialty, Small, and Medium Licenses. (a) Cannabis plants maintained outside of the designated canopy area(s) for specialty cottage, specialty, small, and medium licenses are prohibited from flowering. Should plants outside of the canopy area(s) begin to flower, a UID shall be applied, the plant(s) shall be moved to the designated canopy area without delay, and reported in the track-and-trace system. (b) All plants or portions of a plant used for seed production shall be tagged with a UID pursuant to section 8403 of this chapter. (c) Licensees propagating immature plants for distribution or seed for distribution to another licensee shall obtain a nursery license. (d) Licensees shall process their harvested cannabis only in area(s) designated for processing in their cultivation plan provided they are compliant with packaging and labeling requirements pursuant to section 8212 of this chapter, or transfer their harvested cannabis to a licensed processor, manufacturer, or distributor via a licensed distributor. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26120, Business and Professions Code. § 8301. Seed Production Requirements for Nursery Licensees. Nursery licensees producing seed for distribution shall tag all mature plants pursuant to section 8403 of this chapter. All products, except seed, derived from these plants are prohibited from entering the commercial distribution chain. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26067, Business and Professions Code. § 8302. Research and Development Requirements for Nursery Licensees. Nursery licensees may maintain a research and development area, as identified in their cultivation plan, for the cultivation of mature plants. All mature plants shall be tagged with a UID pursuant to section 8403 of this chapter. All products derived from these plants are prohibited from entering the commercial distribution chain. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26067, Business and Professions Code

§ 8302. Research and Development Requirements for Nursery Licensees. Nursery licensees may maintain a research and development area, as identified in their cultivation plan, for the cultivation of mature plants. All mature plants shall be tagged with a UID pursuant to section 8403 of this chapter. All products derived from these plants are prohibited from entering the commercial distribution chain. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26067, Business and Professions Code. Page 35 of 76 § 8303. Cultivation Requirements for Processor Licensees. Processor licensees shall comply with all of the following requirements: (a) All aggregation of product shall adhere to track-and-trace requirements pursuant to sections 8405 and 8406 of this chapter; (b) Licensees may produce nonmanufactured cannabis products without a manufacturing license, provided packaging and labeling requirements are met pursuant to section 8212 of this chapter; and (c) Cultivation of cannabis plants is prohibited at a licensed processor premises. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, 26067, 26069, and 26120, Business and Professions Code. § 8304. General Environmental Protection Measures. All licensees shall comply with all of the following environmental protection measures: (a) Compliance with section 13149 of the Water Code as implemented by the State Water Resources Control Board, Regional Water Quality Control Boards, or California Department of Fish and Wildlife; (b) Compliance with any conditions requested by the California Department of Fish and Wildlife or the State Water Resources Control Board under section 26060.1(b)(1) of the Business and Professions Code; (c) All outdoor lighting used for security purposes shall be shielded and downward facing; (d) Immediately halt cultivation activities and implement section 7050.5 of the Health and Safety Code if human remains are discovered; (e) Requirements for generators pursuant to section 8306 of this chapter; (f) Compliance with pesticide laws and regulations pursuant to section 8307 of this chapter; (g) Mixed-light license types of all tiers and sizes shall ensure that lights used for cultivation are shielded from sunset to sunrise to avoid nighttime glare. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, 26066, and 26201, Business and Professions Code. § 8305. Renewable Energy Requirements. Beginning January 1, 2023, all indoor, tier 2 mixed-light license types of all sizes, and nurseries using indoor or tier 2 mixedlight techniques, shall ensure that electrical power used for commercial cannabis activity meets the average electricity greenhouse gas emissions intensity required by their local utility provider pursuant to the California Renewables Portfolio Standard Program, division 1, part 1, chapter 2.3, article 16 (commencing with section 399.11) of the Public Utilities Code.

As evidence of meeting the standard, licensees shall comply with the following: (a) If a licensee’s average weighted greenhouse gas emission intensity as provided in section 8203(g)(4) is greater than the local utility provider’s greenhouse gas emission intensity, the licensee shall provide evidence of carbon offsets from any of the following sources to cover the excess in carbon emissions from the previous annual licensed period: (1) Voluntary greenhouse gas offset credits purchased from any of the following recognized and reputable voluntary carbon registries: (A) American Carbon Registry; (B) Climate Action Reserve; (C) Verified Carbon Standard. (2) Offsets purchased from any other source are subject to verification and approval by the Department. (b) New licensees, without a record of weighted greenhouse gas emissions intensity from the previous calendar year, shall report the average weighted greenhouse gas emissions intensity, as provided in section 8203(g)(4), used during their licensed period at the time of license renewal. If a licensee’s average weighted greenhouse gas emissions intensity is greater than the local utility provider’s greenhouse gas emissions intensity for the most recent calendar year, the licensee shall provide evidence of carbon offsets or allowances to cover the excess in carbon emissions from any of the sources provided in subsection (a). Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, 26066, and 26201, Business and Professions Code. § 8306. Generator Requirements. (a) For the purposes of this section, “generator” is defined as a stationary or portable compression ignition engine pursuant to title 17, division 3, chapter 1, subchapter 7.5, section 93115.4 of the California Code of Regulations. (b) Licensees using generators rated at fifty (50) horsepower and greater shall demonstrate compliance with either, as applicable, the Airborne Toxic Control Measures for stationary engines pursuant to title 17, division 3, chapter 1, subchapter 7.5, sections 93115 through 93115.15 of the California Code of Regulations, or the Airborne Toxic Control Measure for portable engines pursuant to title 17, division 3, chapter 1, subchapter 7.5, sections 93116 through 93116.5 of the California Code of Regulations. Compliance shall be demonstrated by providing a copy of one of the following to the department upon request: (1) For portable engines, a A Portable Equipment Registration Certificate provided by the California Air Resources Board; or (2) For portable or stationary engines, a A Permit to Operate, or other proof of engine registration, obtained from the Local Air District with jurisdiction over the licensed premises

(c) Licensees using generators rated below fifty (50) horsepower shall comply with the following by 2023: (1) Designate the generator as emergency or low-use as defined in title 17, division 3, chapter 1, subchapter 7.5, sections 93116.2(a)(12) and 93116.2(a)(22) of the California Code of Regulations; (1) Either (A) or (B): (A) Meet the “emergency” definition for portable engines in title 17, division 3, chapter 1, subchapter 7.5, sections 93116.2(a)(12) of the California Code of Regulations, or the “emergency use” definition for stationary engines in title 17, division 3, chapter 1, subchapter 7.5, section 93115.4(a)(30); or (B) Operate eighty (80) hours or less in a calendar year; and (2) Either (A) or (B): (A) Meet Tier 3 with lLevel 3 diesel particulate filter requirements pursuant to title 13, division 3, chapter 914, article 4, sections 2423 2700 through 2711 of the California Code of Regulations; (B) Meet Tier 4, or current engine requirements if more stringent, pursuant to title 1340, division 3, chapter 14I, subchapter U, part 1039, subpart B, section 2702 1039.101 of the Code of Federal Regulations California Code of Regulations. (d) All generators shall be equipped with non-resettable hour-meters. If a generator does not come equipped with a non- resettable hour-meter an after-market non-resettable hour-meter shall be installed. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, 26066, and 26201, Business and Professions Code. § 8307. Pesticide Use Requirements. (a) Licensees shall comply with all pesticide laws and regulations enforced by the Department of Pesticide Regulation. (b) For all pesticides that are exempt from registration requirements, licensees shall comply with all pesticide laws and regulations enforced by the Department of Pesticide regulation and with the following pesticide application and storage protocols: (1) Comply with all pesticide label directions; (2) Store chemicals in a secure building or shed to prevent access by wildlife; (3) Contain any chemical leaks and immediately clean up any spills; (4) Apply the minimum amount of product necessary to control the target pest; (5) Prevent offsite drift; (6) Do not apply pesticides when pollinators are present; (7) Do not allow drift to flowering plants attractive to pollinators; (8) Do not spray directly to surface water or allow pesticide product to drift to surface water. Spray only when wind is

blowing away from surface water bodies; (9) Do not apply pesticides when they may reach surface water or groundwater; and (10) Only use properly labeled pesticides. If no label is available consult the Department of Pesticide Regulation. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, 26066, and 26201, Business and Professions Code. § 8308. Cannabis Waste Management. (a) For the purposes of this section, “cannabis waste” is organic waste, as defined in section 42649.8(c) of the Public Resources Code. (b) A licensee shall manage all hazardous waste, as defined in section 40141 of the Public Resources Code, in compliance with all applicable hazardous waste statutes and regulations. (c) A licensee shall manage all cannabis waste in compliance with division 30, part 3, chapters 12.8, 12.9, and 13.1 of the Public Resources Code. In addition, licensees are obligated to obtain all required permits, licenses, or other clearances and comply with all orders, laws, regulations, or other requirements of other regulatory agencies, including, but not limited to, local health agencies, regional water quality control boards, air quality management districts, or air pollution control districts, local land use authorities, and fire authorities. (d) A licensee shall dispose of cannabis waste in a secured waste receptacle or in a secured area on the licensed premises designated on the licensee’s premises diagram and as identified in the licensee’s cultivation plan. For the purposes of this section, “secure waste receptacle” or “secured area” means physical access to the receptacle or area is restricted to only the licensee, employees of the licensee, the local agency, or a waste hauler franchised or contracted by a local agency, or a private waste hauler permitted by the local agency. Public access to the designated receptacle or area shall be strictly prohibited. (e) A licensee shall comply with the method(s) for managing cannabis waste identified on its cannabis waste management plan in accordance with section 8108. (f) If composting cannabis waste on the licensed premises, a licensee shall do so in compliance with title 14 of the California Code of Regulations, division 7, chapter 3.1 (commencing with section 17850). (g) If a local agency, a waste hauler franchised or contracted by a local agency, or a private waste local agency is being used to collect and process cannabis waste, a licensee shall do all the following: (1) Obtain and retain the following information from the local agency, waste hauler franchised or contracted by the local agency, or private waste hauler permitted by the local agency that will collect and process the licensee’s cannabis waste: (A) Name of local agency providing waste hauling services, if applicable; Page 39 of 76 (B) Company name of the waste hauler franchised or contracted by a local agency or private waste hauler permitted by the local agency, if applicable; (C) Local agency or company business address; and (D) Name of the primary contact person at the local agency or company and contact person’s phone number. (2) Obtain and retain a copy of a receipt from the local agency, waste hauler franchised or contracted by the local agency, or private waste hauler permitted by the local agency evidencing subscription to a waste collection service documentation from the local agency, the waste hauler franchised or contracted by a local agency, or private waste hauler permitted by the local agency that indicates the date and time of each collection of cannabis waste at the licensed premises; (3) Obtain and retain a copy of the certified weight ticket, or other documentation prepared by the local agency, the waste hauler franchised or contracted by a local agency, or private waste hauler permitted by the local agency evidencing receipt of the cannabis waste at one or more of the solid waste facilities in section 8108(c); and (34) Cannabis waste may be collected from a licensee in conjunction with a regular organic waste collection route used by the local agency, the waste hauler franchised or contracted by a local agency, or private waste hauler permitted by the local agency. (h) If self-hauling cannabis waste to one or more of the solid waste facilities in section 8108(c) of this chapter above, a licensee shall obtain and retain, for each delivery of cannabis waste by the licensee, a copy of a certified weight ticket, or receipt documenting delivery, prepared by a representative(s) of the solid waste facility receiving the self-hauled cannabis waste. Transportation of self-hauled cannabis waste shall only be performed by the licensee or employees of the licensee. (i) If cannabis waste is hauled to a recycling center that meets the requirements of section 8108(c)(6), in addition to the tracking requirement set forth in section 8405 and 8406 of this chapter, a licensee shall use the track-and-trace system and documentation required pursuant to this section to ensure the cannabis waste is identified, weighed, and tracked while on the licensed premises and until the cannabis waste becomes a new, reused, or reconstituted product. (ji) In addition to all other tracking requirements set forth in sections 8405 and 8406 of this chapter, a licensee shall use the track-and-trace system and documentation required pursuant to this section to ensure the cannabis waste is identified, weighed, and tracked while on the licensed premises and when disposed of in accordance with subsections (f), (g), and (h) above. (kj) A licensee shall maintain accurate and comprehensive records regarding cannabis waste that account for, reconcile, and evidence all activity related to the generation or disposition of cannabis waste. All records required by this section are records subject to inspection by the department and shall be kept pursuant to section 8400 of this chapter.

 

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26060, Business and Professions Code; and Sections 40141 and 42649.8, Public Resources Code.

What are the record-keeping and reporting requirements for Cultivation?

Article 5. Records and Reporting

§ 8400. Record Retention. For the purposes of this chapter, “record” includes all records, applications, reports, or other supporting documents required by the department. (a) Each licensee shall keep and maintain the records listed in subsection 8400(d) of this chapter for at least seven (7) years from the date the document was created. (b) Licensees shall keep records, either electronically or otherwise, identified in section 8400(d) of this chapter on the premises of the location licensed. All required rRecords shall be kept in a manner that allows the records to be examined provided at the licensed premises or delivered to the department, upon request. (c) All records are subject to review by the department during standard business hours or at any other reasonable time as mutually agreed to by the department and the licensee. For the purposes of this section, standard business hours are deemed to be 8:00am – 5:00pm (Pacific Time). Prior notice by the department to review records is not required. (d) Each licensee shall maintain all the following records on the licensed premises, including but not limited to: (1) Department issued cultivation license(s); (2) Cultivation plan; (3) All records evidencing compliance with the environmental protection measures pursuant to sections 8304, 8305, 8306, and 8307 of this chapter; (4) All supporting documentation for data or information entered into the track-and-trace system; (5) All UIDs assigned to product in inventory and all unassigned UIDs. UIDs associated with product that has been retired from the track-and-trace system must be retained for six (6) months after the date the tags were retired; (6) Financial records related to the licensed commercial cannabis activity, including but not limited to, bank statements, tax records, contracts, purchase orders, sales invoices, and sales receipts; (7) Personnel records, including each employee’s full name, social security number or individual tax payer identification number, date of employment, and, if applicable, date of termination of employment; (8) Records related to employee training for the track-and-trace system or other requirements of this chapter. Records shall include, but are not limited to, the date(s) training occurred, description of the training provided, and the names of the employees that received the training; (9) Contracts with other state licensed cannabis businesses; (10) All Ppermits, licenses, and other authorizations to conduct the licensee’s commercial cannabis activity; (11) Records associated with composting or disposal of cannabis waste; (12) Documentation associated with loss of access to the track-and-trace system prepared pursuant to section 8402(d)

of this chapter. (e) All required records shall be prepared and retained in accordance with the following conditions: (1) Records shall be legible; and (2) Records shall be stored in a secured area where the records are protected from debris, moisture, contamination, hazardous waste, fire, and theft. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26055, 26060, 26060.1, 26067, 26069, 26160, and 26161, Business and Professions Code. § 8401. Sales Invoice or Receipt Requirements. The licensee shall prepare a sales invoice or receipt for every sale, or transfer of cannabis or nonmanufactured cannabis product to another licensee. Sales invoices and receipts may be retained electronically but must be readily accessible for examination by the department, other state licensing authorities, any state or local law enforcement authority, and the California Department of Tax and Fee Administration. Each sales invoice or receipt shall include all of the following: (a) Name, business address, and department or other licensing authority issued license number of the seller; (b) Name, business address, and department or other licensing authority issued license number of the purchaser; (c) Date of sale or transfer (month, day, and year). The date of any sale or transfer of cannabis and nonmanufactured cannabis products shall be the date of transfer to the licensee receiving it; (d) Invoice or receipt number; (e) Weight or quantity of cannabis and nonmanufactured cannabis products sold or transferred; (1) Weight. For the purposes of this section a licensee must use wet weight or net weight. Wet weight and net weight shall be determined following weighing device requirements pursuant to section 8213 of this chapter and measured, recorded, and reported in U.S. customary units (e.g., ounce or pound); or International System of Units (e.g., kilograms, grams, or milligrams). (2) Weighing Devices. A licensee shall follow weighing device requirements pursuant to section 8213 of this chapter. (23) Count. For the purposes of this section, “count” means the numerical count of the individual plants or units. (f) Cost to the purchaser, including any discount applied to the total price, shall be recorded on the invoice; (g) Description for each item, including strain or cultivar, and all of the applicable information below: (1) Plant; (2) Flower; (3) Leaf; (4) Shake; (5) Kief; and Page 42 of 76 (6) Pre-rolls. (h) Signature of the seller, or designated representative of the seller, acknowledging accuracy of the cannabis and nonmanufactured cannabis products being shipped; (i) Signature of the purchaser, or designated representative of the purchaser, acknowledging receipt or rejection of the cannabis or nonmanufactured cannabis products. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26161, Business and Professions Code. § 8402. Track-and-Trace System. Except as provided in section 8405(e) of this chapter, each licensee shall report in the department’s track-and-trace system the disposition of immature and mature plants, nonmanufactured cannabis products on the licensed premises, any transfers associated with commercial cannabis activity between licensees, and any cannabis waste pursuant to this chapter. (a) The licensee is responsible for the accuracy and completeness of all data and information entered into the track-andtrace system. Data entered into the track-and-trace system is assumed to be accurate and can be used to take enforcement action against the licensee if not corrected. (b) Each licensee shall use the track-and-trace system for recording all applicable commercial cannabis activities. (c) Pursuant to section 8109 of this chapter, each licensee shall identify an owner, a designated responsible party, or a designated agent in the licensee’s organization to be the licensee’s track-and-trace system account manager. The licensee’s designated track-and-trace system account manager shall be responsible for all the following: (1) Complete track-and-trace system training provided by the department. If the designated account manager did not complete the track-and-trace system training prior to the licensee receiving his or her annual license, the designated account manager will be required to register for the track-and-trace system training provided by the department within five (5) calendar business days of license issuance; (2) Designate track-and-trace system users, as needed, and require the users to be trained in the proper and lawful use of the track-and-trace system before the users are permitted to access the track-and-trace system; (3) Maintain an accurate and complete list of all track-and-trace system users and update the list immediately when changes occur; (4) Within three (3) calendar days, Immediately cancel the access rights of any track-and-trace user from the licensee’s track-and-trace system account if that individual is no longer authorized to use the licensee’s track-and-trace system account; and (5) Correct any data that is entered into the track-and-trace system in error within three (3) calendar business days of discovery of the error.; and

(6) Notify the department immediately for any loss of access that exceeds three (3) calendar days. (d) The licensee is responsible for all access and use of the licensee’s track-and-trace system account. (e) If a licensee loses access to the track-and-trace system for any reason, the licensee shall prepare and maintain comprehensive records detailing all required inventory tracking activities conducted during the loss of access. (1) Once access to the track-and-trace system is restored, all inventory tracking activities that occurred during the loss of access shall be entered into the track-and-trace system within three (3) calendar business days. (2) A licensee shall document the date and time when access to the track-and-trace system was lost, when it was restored, and the cause for each loss of access. (3) A licensee shall not transfer cannabis or nonmanufactured cannabis products to a distributor until such time as access to the system is restored and all information is recorded into the track-and-trace system. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26067, 26069, and 26160, Business and Professions Code. § 8403. Track-and-Trace System Unique Identifiers (UID). (a) Within five (5) calendar business days of the date the licensee’s designated account manager(s) was credentialed by the department to use the track-and-trace system, the designated account manager shall request UIDs using the track-andtrace system as prescribed by the department. (1) The licensee shall only use UIDs provisioned and distributed by the department, or the department’s designee. (2) The licensee shall maintain a sufficient supply of UIDs in inventory to support tagging in accordance with this section. (3) The licensee shall use the track-and-trace system to document receipt of provisioned and distributed UIDs within three (3) calendar business days of physical receipt of the UIDs by the licensee. (4) Except as provided in section 8407 of this chapter, all cannabis shall be entered into the track-and-trace system by the licensee starting with seed, cannabis which has been propagated onsite or purchased from a licensed nursery, or seedling purchased from a licensed nursery pursuant to this chapter. (b) The UID shall accompany the cannabis products through all phases of the growing cycle, as follows: (1) Licensees with immature plants shall assign a UID to each established lot respectively. The lot UID shall be placed in a position so it is visible and within clear view of an individual standing next to the immature lot to which the UID was assigned, and all UIDs shall be kept free from dirt and debris. For the purposes of this subsection, each lot of immature plants shall be uniform in strain or cultivar and shall not have more than one hundred (100) immature plants at any one time. All immature plants in a lot shall be labeled with the corresponding UID number assigned to the lot and shall be contiguous to one another to facilitate identification by the department. Page 44 of 76 (2) Immature plants transferred from a licensed nursery, via a distributor, to a licensed cultivator shall meet requirements of subsection (b)(1) above. Each immature plant intended for retail sale shall have a UID affixed, or be labeled with the corresponding UID number of the lot, and be recorded in the track-and-trace system prior to transfer from the licensed nursery. (3) The licensee shall apply a UID to all individual plants at the time any plant is moved to the designated canopy area or when an individual plant begins flowering, as defined in section 8000(l) of this chapter. The licensee may tag individual immature plants prior to movement to the designated canopy area or prior to flowering. (4) UIDs are required for each mature plant. UIDs shall be attached to the main stem, at the base of each plant. The UID shall be attached to the plant using a tamper evident strap or zip tie and placed in a position so it is visible and within clear view of an individual standing next to the mature plant to which the UID was assigned and UIDs shall be kept free from dirt and debris. Licensees are prohibited from removing the UID from the mature plant to which it was attached and assigned until the plant is harvested, destroyed, or disposed. (c) Each harvest batch shall be assigned a unique harvest batch name which will be associated with all UIDs for each individual plant, or portion thereof, contained in the harvest batch. (d) UIDs are required for all cannabis and nonmanufactured cannabis products and shall be associated with the corresponding harvest batch name from which the cannabis and nonmanufactured cannabis products were derived. (e) Upon destruction or disposal of any cannabis or nonmanufactured cannabis products, the applicable UIDs shall be retired in the track-and-trace system by the licensee within three (3) calendar business days of the destruction or disposal and be performed in accordance with the licensee’s approved cannabis waste management plan. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26067, 26069, and 26160 Business and Professions Code. § 8404. Track-and-Trace System User Requirements. (a) All track-and-trace account managers or users, as identified by the licensee pursuant to section 8402 of this chapter, shall enter all commercial cannabis activities in the track-and-trace system. (b) Each track-and-trace account manager and user shall have a unique log-on, consisting of a username and password, which shall not be used by or shared with any other person. (c) No track-and-trace account manager, user, or other licensee, employee, or agent shall intentionally misrepresent or falsify information entered into the track-and-trace system. (d) The account manager shall monitor all notifications from the track-and-trace system and resolve all issues included in the notification in the timeframe specified in the notification. An account manager shall not dismiss a notification from the track-and-trace system until the issue(s) included in the notification has been resolved. Page 45 of 76 Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26013, 26067, and 26069, Business and Professions Code. § 8405. Track-and-Trace System Reporting Requirements. (a) Except as provided in subsection (e) below, the track-and-trace account manager or users shall report in the track-andtrace system any and all transfers of cannabis or nonmanufactured cannabis products to another licensee prior to the movement of the cannabis or nonmanufactured cannabis products off the licensed premises. (b) The track-and-trace account manager or users shall report in the track-and-trace system any and all cannabis or nonmanufactured cannabis products physically received or rejected from another licensee within twenty-four (24) hours of receipt or rejection of the products. (c) The track-and-trace account manager or users shall report in the track-and-trace system information related to the disposition of cannabis and nonmanufactured cannabis products, as applicable, on the licensed premises. All applicable information for each event listed below shall be reported in the track-and-trace system within three (3) calendar business days of the applicable event: (1) Creating a planting of an immature plant lot; (2) Moving immature plants to a designated canopy area, or when an individual plant begins flowering, or when applying a UID to an immature plant, in accordance with section 8403(b)(3) of this chapter; (3) Destruction or disposal of an immature or mature plant; (4) Harvest of a mature plant, or portion thereof. The following information must be reported into the track-and-trace system for each harvested plant, or portion thereof, or harvest batch: (A) The wet weight of each harvested plant, or portion thereof, which must be obtained by the licensee immediately after harvest of the plant, or portion thereof; (B) The net weight of each harvest batch, obtained pursuant to section 8406(b) of this chapter;. (C) The weight of cannabis waste associated with each harvest batch.; (D) The unique name of the harvest batch and the initiating date of the harvest. For the purposes of this section, the initiating date of the harvest is the month, day, and year the first mature cannabis plant(s) in the harvest batch were cut, picked, or removed from the soil or other growing media. The initiating date of the harvest shall be recorded using the MM/DD/YYYY. For example, January 1, 2018 would be recorded as 01/01/2018. (5) Packaging.

(d) The account manager or user shall be required to report information in the track-and-trace system for each transfer of cannabis or nonmanufactured cannabis products to, or cannabis or nonmanufactured cannabis products received from, another licensee. Required information to be entered includes, but is not limited to: Page 46 of 76 (1) Name, business address, and department or other licensing authority issued license number of the seller; (2) Name, business address, and department or other licensing authority issued license number of the purchaser; (3) Name and department issued license number of the distributor; (4) Date of sale, transfer, or receipt (month, day, and year) of cannabis or nonmanufactured cannabis products; (5) Weight or count of individual units of cannabis or nonmanufactured cannabis products sold, transferred, or received; (A) Weight. For the purposes of this section a licensee must use wet weight or net weight. Wet weight and net weight shall be determined following weighing device requirements pursuant to section 8213 of this chapter and measured, recorded, and reported in U.S. customary units (e.g., ounce or pound); or International System of Units (e.g., kilograms, grams, or milligrams). (B) Weighing Devices. A licensee shall follow weighing device requirements pursuant to section 8213 of this chapter. (BC) Count. For the purposes of this section count means the numerical count of the individual plants or units. (6) Estimated departure and arrival time; (7) Actual departure time; (8) Description for each item, including strain or cultivar, and all of the applicable information below: (A) Plant; (B) Flower; (C) Leaf; (D) Shake; (E) Kief; and (F) Pre-rolls. (9) UID(s). (e) Temporary Licensees. A licensee operating under a temporary license, issued by the department pursuant to section 8100 of this chapter, is not required to record commercial cannabis activity in the track-and-trace system as otherwise required by this chapter. Temporary licensees shall record all commercial cannabis activity in accordance with section 8401 of this chapter. (f) Any commercial cannabis activity conducted between a temporary licensee and an annual licensee shall be reported in the track-and-trace system by the annual licensee based upon the documentation prepared pursuant to section 8401 of this chapter. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26067, and 26160, Business and Professions Code. Page 47 of 76 § 8406. Track-and-Trace System Inventory Requirements. Licensees shall use the track-and-trace system for all inventory tracking activities at a licensed premises, including, but not limited to, all of the following: (a) Reconciling all on-premises and in-transit cannabis or nonmanufactured cannabis products inventories at least once every thirty (30) calendar fourteen (14) business days; and (b) Recording the net weight of all harvested cannabis once the majority of drying, trimming, and curing activities have been completed, or within sixty (60) calendar days from the initial harvest date, whichever is sooner; (c) Licensees shall close out their physical inventory of all cannabis and nonmanufactured cannabis products and UIDs, if applicable, prior to the effective date of any of the following changes to their license: (1) Voluntary surrender of a temporary license or annual license; (2) Expiration of an annual license; (3) Revocation of a license. (d) Close-out of physical inventory includes, but is not limited to, all of the following items: (1) Immature plants and their corresponding lot UID(s); (2) Mature plants and their corresponding plant UID(s); (3) Harvest batches and their corresponding UID(s); (4) Nonmanufactured cannabis products and their corresponding UID(s); and (5) UIDs in the licensee’s possession which have not been assigned in the track-and-trace system. (e) All transfers and sales shall be documented pursuant to sections 8401 and 8405 of this chapter. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26067, Business and Professions Code. § 8407. Track-and-Trace System Requirements for Cannabis and Nonmanufactured Cannabis Products in Temporary Licensee Possession at the Time of Annual License Issuance. (a) Within thirty (30) calendar business days of receipt of the UIDs ordered pursuant to section 8403 of this chapter, the licensee shall enter into the track-and-trace system and assign and apply a UID to each existing immature plant lot, each individual mature plant, and all nonmanufactured cannabis products physically located on the licensed premises. (b) After the thirty (30) day time frame referenced in subsection (a) above expires, all cannabis at the licensed premises shall be entered into the track-and-trace system starting with seed, clone propagated onsite or purchased from a licensed nursery, or seedling purchased from a licensed nursery pursuant to this chapter. This section shall remain in effect until July 1, 2019. Page 48 of 76 Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26067, Business and Professions Code. § 8408. Inventory Audits. The department may perform an audit of the physical inventory and inventory as reported in the track-and-trace system of any licensee at the department’s discretion. Inventory audits of the licensee shall be conducted during standard business hours or at other reasonable times as mutually agreed to by the department and the licensee. For the purposes of this section, standard business hours are 8:00am – 5:00pm (Pacific Time). Prior notice of an inventory audit is not required. Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26015 and 26067, Business and Professions Code. § 8409. Notification of Diversion, Theft, Loss, or Criminal Activity. Licensees shall notify the department and law enforcement authorities within three (3) calendar business days of discovery of any diversion, theft, loss of, or criminal activity related to licensee’s cannabis or nonmanufactured cannabis products.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26015, Business and Professions Code.

What are inspect, investigate, audit reqs for Cultivation ?

Article 6. Inspections, Investigations and Audits

§ 8500. Inspections, Investigations and Audits Applicability.

All licensees and applicants shall be subject to inspection, investigation or audit of their licensed premises and records by the department to determine compliance with applicable laws and regulations.

Professions Code.

§ 8501. Inspections, Investigations and Audits.

The department shall conduct inspections, investigations and audits of licensees including, but not limited to, a review of any books, records, accounts, inventory, or onsite operations specific to the license.

  1. The department may conduct an inspection, investigation or audit for any of the following purposes: (1) To determine accuracy and completeness of the application prior to issuing a license;

(2) To determine compliance with license requirements including, but not limited to, the cultivation plan; (3) To audit or inspect any records outlined in section 8400 of this chapter;

  1. To respond to a complaint(s) received by the department regarding the licensee;
  2. To inspect incoming or outgoing shipments of cannabis and nonmanufactured cannabis products; and (6) As deemed necessary by the department.
  1. All inspections, investigations and audits of the licensed premises shall be conducted during standard business hours or at other reasonable times as mutually agreed to by the department and the licensee. For the purposes of this section, standard business hours are 8:00am 5:00pm (Pacific Standard Time). Prior notice of inspection, investigation or audit  is not required.
  2. No applicant, licensee, its agent or employees shall interfere with, obstruct or impede the department’s inspection, investigation or audit. This includes, but is not limited to, the following actions:
    1. Denying the department access to the licensed premises; (2) Providing false or misleading statements;

(3) Providing false, falsified, fraudulent or misleading documents and records; and (4) Failing to provide records, reports, and other supporting documents.

  1. Upon completion of an inspection, investigation or audit, the department shall notify the applicant or licensee of any violation(s) and/or action(s) the department is taking.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26015, and 26160, Business and Professions Code.

Article 7. Enforcement

§ 8600. Enforcement Applicability.

Notwithstanding any other provision of law, the department may take a licensing or administrative action at any time within five (5) years after the department discovers, or with reasonable diligence should have discovered, any violation of state law

or local ordinances.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8601. Administrative Actions.

The department shall use the violation classes and applicable fine amounts as follows:

  1. For the purpose of this section, violation classes are designated as “Minor,” “Moderate,” and “Serious”.
    1. “Serious”. Violations which preclude or significantly interfere with enforcement, or those that cause significant false, misleading or deceptive business practices, potential for significant level of public or environmental harm, or for any violation that is a repeat of a Moderate violation that occurred within a two-year period and that resulted in an administrative civil penalty. All serious violations are subject to revocation
    2. “Moderate”. Violations that undermine enforcement, are likely to cause public or environmental harm, or are a repeat of a Minor violation that occurred within a two-year period and resulted in an administrative civil penalty.
    3. “Minor”. Violations that are not likely to have an adverse effect on public safety or environmental health. 

(c) Pursuant to section 26160(f) of the Business and Professions Code, if a licensee, or an agent or employee of the licensee, fails to maintain or provide required records, the licensee shall be subject to a citation and a fine of up to thirty thousand dollars ($30,000) per individual violation. (cd) Table A below shall be used to establish the initial level of severity of the referenced particular violations of Division 10 of the Business and Professions Code and referenced related regulations and the corresponding penalty range for “Serious,” “Moderate,” and “Minor” violation classes.

For violations of other state law, including state labor laws and related regulations, the department shall utilize the definitions of violation classes in subsection (a)

  1. Pursuant to section 26038(a) of the Business and Professions Code, a person(s) engaging in commercial cannabis activity without a license shall be subject civil penalties of up to three (3) times the amount of the license fee for each violation.
  2. Pursuant to section 26160(f) of the Business and Professions Code, if a licensee, or an agent or employee of the licensee, fails to maintain or provide required records, the licensee shall be subject to a citation and a fine of up to thirty thousand dollars ($30,000) per individual violation.
  3. Table A below shall be used to establish the initial level of severity of a particular violation and the corresponding penalty range for “Serious,” “Moderate,” and “Minor” violation classes.

LARGE TABLE

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8602. Notice of Violation.

  1. The department shall issue a Notice of Violation to a licensee that is in violation of applicable statutes and regulations. A Notice of Violation shall be served upon the licensee and legal owner of the property. The Notice of Violation shall contain all of the following:
    1. A brief statement of the violation(s) alleged; (2) The proposed penalty;

(3) A statement of whether the violation is correctable, and a timeframe in which the violation shall be corrected; and (4) Notice of an administrative hold of property, if applicable.

  1. The right to a hearing will be deemed waived if respondent fails to respond in writing within thirty (30) calendar days from the date the Notice of Violation was received by the licensee.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8603. Administrative Hold Procedure.

To prevent destruction of evidence, illegal diversion of cannabis or nonmanufactured cannabis products, or to address potential threats to the environment or public safety, while allowing a licensee to retain its inventory pending further inspection, or enforcement action, the department may order an administrative hold of cannabis or nonmanufactured cannabis products pursuant to the following procedure:

  1. The notice of administrative hold shall provide a documented description of the cannabis or nonmanufactured cannabis products to be subject to the administrative hold and a concise statement regarding the basis for issuing the

administrative hold.

  1. Following the issuance of a notice of administrative hold to the licensee, the department shall identify the cannabis or nonmanufactured cannabis products subject to the administrative hold in the track-and-trace system.
  2. Within twenty-four (24) hours of receipt of the notice of administrative hold, the licensee shall physically segregate all designated cannabis or nonmanufactured cannabis products subject to the hold and shall safeguard and preserve the subject property as noticed.
  3. While the administrative hold is in effect, the licensee is restricted from selling, donating, transferring, transporting, gifting, giving away or destroying the subject property noticed.
  4. Nothing herein shall prevent a licensee from the continued possession, cultivation, or harvesting of the cannabis subject to the administrative hold. During the hold period, all cannabis or nonmanufactured cannabis products subject to an administrative hold shall be put into separate batches.
  5. Nothing herein shall prevent a licensee from voluntarily surrendering cannabis or nonmanufactured cannabis products that are subject to an administrative hold. The licensee shall identify the cannabis or nonmanufactured cannabis products being voluntarily surrendered in the track-and-trace system. Voluntary surrender does not waive the right to a hearing and any associated rights.
  6. The licensee shall have the right to appeal an administrative hold ordered by the department pursuant to section 8604 of this chapter. The department shall schedule an informal hearing within ten (10) calendar days from receipt of the request for an informal hearing and issue the written decision within five (5) calendar days after the conclusion of the hearing.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8604. Informal Administrative Hearings.

  1. The respondent may appeal a Notice of Violation or an administrative hold and request an informal hearing by written correspondence to the California Department of Food and Agriculture, Legal Office of Hearings and Appeals, 1220 “N” Street, Suite 400, Sacramento, California 95814 or via email to [email protected] The request shall be received within thirty (30) calendar days from the date the Notice of Violation was received by the respondent. The request shall include the following:
    1. The respondent’s name, mailing address, and daytime phone number; (2) If applicable, the license number issued by the department;
  1. Copy of the Notice of Violation; and
  2. A clear and concise statement for the basis of the appeal or counts within the Notice of Violation.
  1. Failure to submit a timely written request constitutes a waiver of the respondent’s right to contest the Notice of Violation. Untimely requests for an informal hearing will not be considered.
  2. If the Notice of Violation places an administrative hold on cannabis or nonmanufactured cannabis products, the hold shall remain in effect pending the outcome of the informal hearing.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8605. Informal Hearing Schedule and Notification.

  1. The department shall schedule an informal hearing within forty-five (45) calendar days from receipt of the request for an informal hearing.
  2. The department shall provide a notice of the informal hearing to the respondent containing the following information: (1) Date, location, and time of the informal hearing;
  1. Summary of the violations;
  2. Any other information or documentation necessary for the hearing; and (4) Standard of Proof.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8606. Conduct of Informal Hearings.

Informal hearings shall be conducted as follows:

(a) The standard of proof to be applied by the hearing officer shall be a preponderance of the evidence; (b) Hearings may be conducted by phone at the request of the respondent;

  1. The decision of the hearing officer shall be in writing and shall include a statement of the factual legal basis of the decision;
  2. The written decision shall be issued within thirty (30) calendar days after the conclusion of the hearing and may be issued orally at the conclusion of the hearing subject to written confirmation;
  3. The decision shall be served on the respondent either by personal service, mail, email or via facsimile per respondent’s request/direction; and
  4. The respondent may appeal the hearing officer’s decision by filing a petition for a writ of administrative mandamus in accordance with the provisions of the section 1094.5 of the Code of Civil Procedure.

Professions Code.

§ 8607. Licensing Actions.

  1. The department may take a licensing action for any violation of this chapter.
  2. If the licensee holds multiple cultivation licenses, the department may take any one of, or combination of, the following actions on all the licensee’s cultivation licenses:
    1. Revocation of the license;
    2. Suspension of the license for a specified period of time;
    3. Issuance of a probationary license with terms and conditions determined by the department; and (4) Order an administrative hold of cannabis or nonmanufactured cannabis products.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8608. Formal Administrative Hearings.

  1. Notice shall be given to the applicant or licensee of the department’s intent to hold adjudication proceedings to consider the following actions:
    1. Denial of an application for a license; (2) Denial of a license renewal;
  1. Revocation of a license; and
  2. Suspension of a license for a specified period of time.
  1. Hearings concerning proceedings in subsection (a) above shall be held pursuant to chapter 5 (commencing with section 11500) of part 1 of division 3 of title 2 of the Government Code.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

CDFA

What are definitions for Cannabis Manufacturing?

Cannabis Manufacturing Definitions

Cannabis Manufacturing Definitions – In addition to the definitions in Business and Professions Code section 26001, the following definitions shall govern the construction of this chapter: (a) “A-license” means a license issued for commercial cannabis activities involving cannabis and cannabis products that are intended for individuals 21 years of age and older and who do not possess a physician’s recommendation. (b) “Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, codified at Business and Professions Code section 26000, et seq. (c) “Adult-use Market” means the products intended for sale at a retailer or microbusiness to individuals 21 years of age and older and who do not possess a physician’s recommendation. (d) “Adulterated” or “adulteration” has the meaning stated in section 26131 of the Act. (e) “Allergen” means a major food allergen including any of the following: (1) Milk, eggs, fish (e.g., bass, flounder, or cod), crustacean shellfish (e.g., crab, lobster, or shrimp), tree nuts (e.g., almonds, pecans, or walnuts), wheat, peanuts, and soybeans. (2) A food ingredient that contains protein derived from a food specified in (1), except the following: Any highly refined oil derived from a food specified in (1) and any ingredient derived from such highly refined oil. (f) “Applicant” means the owner that is applying on behalf of the commercial cannabis business for a license to manufacture cannabis products. (g) “Batch” or “production batch” means either:

(1) An amount of cannabis concentrate or extract produced in one production cycle using the same extraction methods and standard operating procedures; or (2) An amount of a type of cannabis product produced in one production cycle using the same formulation and standard operating procedures. (h) “Bureau” means the Bureau of Cannabis Control in the Department of Consumer Affairs. (i) “Cannabis concentrate” means cannabis that has undergone a process to concentrate one or more active cannabinoids, thereby increasing the product’s potency. For purposes of this chapter, “cannabis concentrate” includes, but is not limited to, the separated resinous trichomes of cannabis, tinctures, capsules, suppositories, extracts, and vape cartridges, inhaled products (such as dab, shatter, and wax), and tablets as defined in subsection (rr). (j) “Cannabis product” as used in this chapter means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, including, but not limited to, concentrated cannabis, or an edible or topical cannabis product containing cannabis or concentrated cannabis and other ingredients. (k) “Cannabis product quality,” “quality cannabis product,” or “quality” means that the cannabis product consistently meets the established specifications for identity, cannabinoid concentration (as specified in Section 5724 of Title 16 of the California Code of Regulations), homogeneity, composition, and limits on contaminants (as specified in Sections 5718 to 5723, inclusive, of Title 16 of the California Code of Regulations), and has been manufactured, packaged, labeled, and held under conditions to prevent adulteration and misbranding. (l) “Cannabis waste” means waste that contains cannabis or cannabis products but is not otherwise a hazardous waste as defined in Public Resources Code section 40141. (m) “CBD” means the compound cannabidiol.

(n) “Commercial-grade, non-residential door lock” means a lock manufactured for commercial use. (o) “Department” means the State Department of Public Health. (p) “Distribution” means the procurement, sale, and transport of cannabis and cannabis products between licensees. (q) “Edible cannabis product” means a cannabis product intended to be used orally, in whole or in part, for human consumption. For purposes of this chapter, “edible cannabis product” includes cannabis products that resemble conventional food or beverages and cannabis products that dissolve or disintegrate in the mouth, but does not include any product otherwise defined as “cannabis concentrate.” (r) “Extraction” means a process by which cannabinoids are separated from cannabis plant material through chemical or physical means. (s) “Finished product” means a cannabis product in its final form to be sold at a retail premises. (t) “Harvest batch” means a specifically identified quantity of dried flower or trim, leaves, and other cannabis plant matter that is uniform in strain, harvested at the same time, and, if applicable, cultivated using the same pesticides and other agricultural chemicals. (u) “Informational panel” means any part of the cannabis product label that is not the primary panel and that contains required labeling information. (v) “Infusion” means a process by which cannabis, cannabinoids, or cannabis concentrates are directly incorporated into a product formulation to produce a cannabis product. (w) “Infused pre-roll” means a pre-roll into which cannabis concentrate (other than kief) or other ingredients have been incorporated. (x) “Ingredient” means any substance that is used in the manufacture of a cannabis product and that is intended to be present in the product’s final form.

(y) “Kief” means the resinous trichomes of cannabis that have been separated from the cannabis plant. (z) “Labeling” means any label or other written, printed, or graphic matter upon a cannabis product, upon its container or wrapper, or that accompanies any cannabis product. (aa) “Limited-access area” means an area in which cannabis or cannabis products are stored or held and is only accessible to a licensee and authorized personnel. (bb) “M-license” means a license issued for commercial cannabis activity involving medicinal cannabis. (cc) “Manufacturer licensee” or “licensee” means the holder of a manufacturer license issued pursuant to the Act. (dd) “Manufacture” means to compound, blend, extract, infuse, or otherwise make or prepare a cannabis product. (1) The term “manufacture” includes the following processes: (A) Extraction; (B) Infusion; (C) Packaging or repackaging of cannabis products; and (D) Labeling or relabeling the packages of cannabis products. (2) The term “manufacture” does not include the following: (A) The repacking of cannabis products from a bulk shipping container by a distributor or retailer where the product’s original packaging and labeling is not otherwise altered; (B) The placing of cannabis products into opaque packaging at a retail premises for the purpose of complying with section 26070.1 of the Act; The preparation of pre-rolls by a licensed distributor in accordance with the requirements of the Bureau specified in Section 5303 of Division 42 of Title 16 of the California Code of Regulations;

(C) The collection of the resinous trichomes that are dislodged or sifted from the cannabis plant incident to cultivation activities by a licensed cultivator in accordance with the requirements of the California Department of Food and Agriculture specified in Article 4 of Chapter 1 of Division 8 of Title 3 of the California Code of Regulations; or (D) The processing of non-manufactured cannabis products, as defined in Section 8000 of Title 3 of the California Code of Regulations, by a licensed cultivator in accordance with the requirements of the California Department of Food and Agriculture specified in Article 4 of Chapter 1 of Division 8 of Title 3 of the California Code of Regulations;. or (E) The addition of cannabinoid content on the label of a package of cannabis or cannabis product by a distributor in accordance with Section 40409. (ee) “Manufacturing” or “manufacturing operation” means all aspects of the extraction process, infusion process, and packaging and labeling processes, including processing, preparing, holding, and storing of cannabis products. Manufacturing also includes any processing, preparing, holding, or storing of components and ingredients. (ff) “MCLS” means the Manufactured Cannabis Licensing System, which is the online license application system available on the Department’s website (www.cdph.ca.gov). (gg) “Nonvolatile solvent” means any solvent used in the extraction process that is not a volatile solvent. For purposes of this chapter, “nonvolatile solvents” include carbon dioxide and ethanol. (hh) “Orally-consumed concentrate” means a cannabis concentrate that is intended to be consumed by mouth and is not otherwise an edible product. “Orally-consumed concentrate” includes tinctures, capsules, and tablets that meet the definition of subsection (rr). (ii) “Package” or “packaging” means any container or wrapper that may be used for enclosing or containing any cannabis product. The term “package” does not include any shipping container or outer wrapping used solely for the transportation of cannabis products in bulk quantity to another licensee or licensed premises. (jj) “Personnel” means any worker engaged in the performance or supervision of operations at a manufacturing premises and includes full-time employees, part-time employees, temporary employees, contractors, and volunteers. For purposes of training requirements, “personnel” also includes owner-operators. (kk) “Person” includes any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular. (ll) “Pre-roll” means any combination of the following rolled in paper: flower, shake, leaf, or kief. (mm) “Premises” means the designated structure(s) and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity (as defined in section 26001(k) of the Act) will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee. (nn) “Primary panel” means the part of a cannabis product label that is most likely to be displayed, presented, shown, or examined under customary conditions of display for retail sale. (oo) “Product identity” or “identity of the product” means the generic, common, or usual name of the product by which it is most commonly known. (pp) “Quarantine” means the storage or identification of a product to prevent distribution or transfer of the product. (qq) “Serving” means the designated amount of cannabis product established by the manufacturer to constitute a single unit. (rr) “Tablet” means a solid preparation containing a single serving of THC or other cannabinoid that is intended to be swallowed whole, and that is not formulated to be chewable, dispersible, effervescent, orally disintegrating, used as a suspension, or consumed in a manner other than swallowed whole, and that does not contain any added natural or artificial flavor or sweetener. (ss) “THC” means the compound tetrahydrocannabinol. For purposes of this chapter, “THC” refers specifically to delta 9-tetrahydrocannabinol. (tt) “Topical cannabis product” means a cannabis product intended to be applied to the skin rather than ingested or inhaled. (uu) “Track-and-trace system” means the program for reporting the movement of cannabis and cannabis products through the distribution chain established by the Department of Food and Agriculture in accordance with section 26067 of the Act. (vv) “UID” means the unique identifier for use in the track-and-trace system established by the Department of Food and Agriculture in accordance with section 26069 of the Act. (ww) “Universal symbol” means the symbol developed by the Department pursuant to section 26130(c)(7) of the Act to indicate a product contains cannabinoids. (xx) “Volatile solvent” means any solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures. Examples of volatile solvents include, but are not limited to, butane, hexane, and propane.

 

Cannabis Manufacturing Definitions

 

Who do the Manufacturer definitions apply to?

§40101. Applicability. (a) Unless otherwise specified, the requirements of this chapter apply to licensed manufacturers and to the manufacture of cannabis products for either the medicinal-use market or the adult-use market. (b) The requirements of subchapters 3, 4, and 5 shall apply to licensed microbusinesses conducting manufacturing operations.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26050; and 26106, Business and Professions Code.

Manufacturing

What are the Manufacturer licenses and types?

§40128. Annual License Application Requirements. (a) To apply for a manufacturer license from the Department, the applicant shall submit the following on behalf of the commercial cannabis business: (1) A completed application form as prescribed by the Department, or through MCLS, which includes all of the following information: (A) Business information specified in Section 40129;

(B) Owner information as specified in Section 40130; and (C) Manufacturing premises and operations information as specified in Section 40131; (2) For new applications, the nonrefundable application fee as specified in Section 40150(a); for renewal applications, the nonrefundable annual license fee as specified in Section 40150(b); (3) Evidence of compliance with or exemption from the California Environmental Quality Act (CEQA) as specified in Section 40132; and (4) The limited waiver of sovereign immunity as specified in Section 40133, if applicable. (b) The application shall be signed by the applicant under penalty of perjury that the information provided in and submitted with the application is complete, true, and accurate, and shall include the following attestations: (1) The applicant is authorized to act on behalf of the commercial cannabis business; (2) The applicant entity, when it has 20 or more employees, has entered, or will enter as soon as reasonably practicable, into a labor peace agreement and will abide by the terms of the agreement as required by section 26051.5 (a)(5)(A) of the Act. The applicant shall provide the Department a copy of the page of the labor peace agreement that contains the signatures of the union representative and the applicant. (3) The commercial cannabis business is operating in compliance with all local ordinances; and (4) The proposed premises is not within a 600-foot radius of the perimeter of a school providing instruction in kindergarten or any grades 1 through 12, or a day care center, or youth center, or that the premises complies with the local ordinance specifying a different radius, as specified in section 26054(b) of the Act.; and

(5) For an applicant entity with more than one employee, the applicant employs, or will employ within one year of receiving a license, one supervisor and one employee who have successfully completed a Cal/OSHA 30-hour general industry outreach course offered by a training provider that is authorized by an OSHA Training Institute Education Center to provide the course. (c) The Department may request additional information and documents from the applicant as necessary to determine whether the applicant or the commercial cannabis business meets the requirements and qualifications for licensure. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26050; 26051.5; and 26054, Business and Professions Code. §40129. Annual License Application Requirements – Business Information. (a) The applicant shall submit the following information for the commercial cannabis business: (1) The legal business name; (2) The federal tax identification number. If the commercial cannabis business is a sole proprietorship, the applicant shall submit the social security number or individual taxpayer identification number of the sole proprietor; (3) The registered name(s) under which the business will operate (Fictitious Business Name, Trade Name, “Doing Business As”), if applicable; (4) The business’s mailing address which will serve as the address of record; (5) The name, title, phone number and email address of the primary contact person for the commercial cannabis business; (6) The seller’s permit number issued by the California Department of Tax and Fee Administration or notification issued by the California Department of Tax and Fee Administration that the business is not required to have a seller’s permit. If the applicant

has not yet received a seller’s permit, the applicant shall attest that the applicant is currently applying for a seller’s permit; (7) The business structure of the commercial cannabis business as filed with the California Secretary of State (e.g., limited liability company, partnership, corporation) or operation as a sole proprietor. A commercial cannabis business that is a foreign corporation or foreign limited liability company under the California Corporations Code shall include with its application the certificate of qualification status issued by the California Secretary of State; (8) A list of the all owners, as defined in Section 40102; (9) A list of all financial interest holders, as defined in Section 40102, which shall include: (A) For financial interest holders that are individuals, the first and last name of the individual, and the type and number of the individual’s government-issued identification (e.g., driver’s license); or (B) For financial interest holders that are entities, the legal business name and federal taxpayer identification number of the entity; (10) Proof of having obtained a surety bond in the amount of $5,000, payable to the State of California as obligee, to ensure payment of the cost incurred for the destruction of cannabis or cannabis products necessitated by a violation of the Act or the regulations adopted thereunder. The bond shall be issued by a corporate surety licensed to transact surety business in the State of California; (11) The license type applied for and whether the application is for medicinal cannabis product manufacturing, adult-use cannabis product manufacturing, or both; (12) The business formation documents, which may include, but are not limited to, articles of incorporation, bylaws, operating agreements, partnership agreements, and fictitious business name statements. If the commercial cannabis business is held in

trust, the applicant shall provide a copy of the certificate of trust establishing trustee authority; (13) All documents filed with the California Secretary of State, which may include, but are not limited to, articles of incorporation, articles of organization, certificates of limited partnership, and statements of partnership authority. (b) Pursuant to section 26055(e) of the Act, an applicant may voluntarily submit a copy of a license, permit, or other authorization to conduct commercial cannabis manufacturing activities issued by the local jurisdiction. When an applicant submits a local authorization, upon receipt of the application, the Department shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26050; and 26051.5, Business and Professions Code. §40130. Annual License Application Requirements – Owners. (a) Each owner shall submit all of the following information: (1) Name; (2) Title or position held; (3) Social security number or individual taxpayer identification number; (4) Date of birth; (5) Mailing address; (6) Contact phone number and email address; (7) A copy of Department of Justice form BCIA 8016, provided to the applicant by the Department of Public Health and signed by the live scan operator; and

(8) Disclosure of all of the following, including any actions against the owner as an individual and against a business entity in which the owner was an officer or an owner. The information provided shall include dates and a description of the circumstances, if applicable: (A) Any criminal conviction from any jurisdiction. Adjudications by a juvenile court and infractions do not need to be disclosed. Convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must be disclosed; (B) Any civil proceeding or administrative penalty or license sanction that is substantially related to the qualifications of a manufacturer as identified in Section 40162, including proceedings, penalties or sanctions against you or against a business entity in which you were an owner or officer; (C) Any fines or penalties for cultivation or production of a controlled substance on public or private land pursuant to Fish and Game Code section 12025 or 12025.1; (D) Any sanctions by a licensing authority, city, or county for unlicensed commercial cannabis activity within 3 years preceding the date of the application; (E) Any suspension or revocation of a cannabis license by a licensing authority or local jurisdiction within 3 years preceding the date of the application; (F) Any administrative orders or civil judgements for violations of labor standards against you or against a business entity in which you were an officer or owner within the 3 years immediately preceding the date of the application. (9) Disclosure of any ownership interest or financial interest in any other cannabis business licensed under the Act. (b) The owner shall sign under penalty of perjury that the information provided in and submitted with the application is complete, true, and accurate. (c) An owner disclosing a criminal conviction or other penalty or sanction pursuant to subsection (a), paragraphs (8)(A) and (B), shall submit any evidence of rehabilitation with the application for consideration by the Department. A statement of rehabilitation

shall be written by the owner and contain all the evidence that the owner would like the Department to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, evidence specified in Section 40165, and dated letters of reference from employers, instructors, or counselors that contain valid contact information for the individual providing the reference. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26012; 26013; 26050; 26055; and 26130, Business and Professions Code. * * * * * §40137. Application Withdrawal. (a) An applicant may withdraw an application for annual licensure at any time prior to the issuance or denial of the license. Requests to withdraw an application shall be submitted in writing to the Department or through MCLS. (b) An applicant may reapply for annual licensure at any time subsequent to the withdrawal of an application; however, a new application and application fee are required. (c) Withdrawal of an application shall not deprive the Department of its authority to institute or continue a proceeding against the applicant for the denial of the license upon any ground provided by law or to enter an order denying the license upon any such ground. (d) The application fee paid for a new application and the annual license fee paid for a renewal application shall not be refunded when if an application is withdrawn. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26012; and 26050, Business and Professions Code.

§40152. Gross Annual Revenue Calculation. (a) The applicant shall calculate the gross annual revenue for the licensed premises based on the annual gross sales of cannabis products and, if applicable, the annual revenue received from manufacturing, packaging, labeling or otherwise handling cannabis or cannabis products for other licensees, in the twelve months preceding the date of application. (b) For a new license applicant, the gross annual revenue shall be based on the gross sales and revenue expected during the first 12 months following licensure. (c) For a manufacturer licensee that is also licensed as a distributor or retailer, and that sells or transfers cannabis products manufactured on the licensed premises in a non-arm’s length transaction, the annual gross sales or revenue for such transactions shall be based on the product’s fair market value of the product if it was were to be sold in an arm’s length transaction at wholesale. (d) For purposes of this section, an “arm’s length transaction” means a sale entered into in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26012; and 26180, Business and Professions Code. * * * * * §40179. Death, Incapacity, or Insolvency of a Licensee. (a) In the event of the death, incapacity, receivership, assignment for the benefit of creditors or other event rendering one or more owners’ incapable of performing the duties associated with the license, the owner or owners’ successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the Department in writing, within 10 business days. (b) To continue operations or cancel the existing license, the successor in interest shall submit to the Department the following: (1) The name of the successor in interest; (2) The name of the owner(s) for which the successor in interest is succeeding and the license number; (3) The phone number, mailing address, and email address of the successor in interest; and (4) Documentation demonstrating that the owner(s) is incapable of performing the duties associated with the license such as a death certificate, or a court order, and documentation demonstrating that the person making the request is the owner or owners’ successor in interest such as a court order appointing guardianship, receivership, or a will or trust agreement. (c) The Department may give the successor in interest written approval to continue operations on the licensed business premises for a period of time specified by the Department: (1) If the successor in interest or another person has applied for a license from the Department for the licensed premises and that application is under review; (2) If the successor in interest needs additional time to destroy or sell cannabis or cannabis products; or (3) At the discretion of the Department. (d) The successor in interest is held subject to all terms and conditions under which a state cannabis license is held pursuant to the Act. (e) The approval pursuant to subsection (c) creates no vested right to the issuance of a state cannabis license.

Authority: Sections 26012; 26013 and 26130, Business and Professions Code. Reference: Sections 26012; 26050; and 26130, Business and Professions Code.

Manufacturing

What are the requirements for Manufacturers premises?

The applicant shall submit all of the following information regarding the manufacturing premises and operation: (a) The physical address of the manufacturing premises; (b) Whether the premises manufactures medicinal-use and/or adult-use cannabis products; (c) The type of activity conducted at the premises (extraction, infusion, packaging, and/or labeling); (d) The types of products that will be manufactured, packaged, or labeled;(e) The name, title and phone number of the on-site individual who manages the operation of the premises; (f) The name, title and phone number of an alternate contact person for the premises; (g) The number of employees at the premises; (h) The anticipated gross annual revenue from products manufactured at the premises. An applicant for an M-license shall submit the anticipated gross annual revenue from the sale of medicinal-use products manufactured at the premises and an applicant for an A-license shall submit the anticipated gross annual revenue from the sale of adult-use products manufactured at the premises; (i) A premises diagram. The diagram shall be specific enough to enable ready determination of the bounds of the property and the proposed premises to be licensed, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, windows, and common or shared entryways. The diagram must show the areas in which all commercial cannabis activities will be conducted. The diagram shall be to scale. If the proposed premises consists of only a portion of a property, the diagram shall be labeled to indicate which part of the property is the proposed premises and identifying what the remaining property is used for. (j) The following information: (1) A description of inventory control procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40282, or a copy of the standard operating procedure addressing inventory control; (2) A description of quality control procedures sufficient to demonstrate how the applicant will comply with all of the applicable requirements specified in Sections 40232- 40268 or a copy of the standard operating procedure addressing quality control; (3) A description of the transportation process to be used by the applicant that is in compliance with state law, or a copy of the standard operating procedure addressing transportation; (4) A description of security procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40200, or a copy of the standard operating procedure addressing security procedures;

(5) A description of the waste disposal procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40290, or a copy of the standard operating procedure addressing waste management. (k) A written statement signed by the owner of the property, or the owner’s agent, identifying the physical location of the property and acknowledging and consenting to the manufacture of cannabis products on the property. The name, address and contact phone number for the owner or owner’s agent shall be included. (l) Any manufacturer submitting operating procedures and protocols to the Department pursuant to the Act and this chapter may claim such information as a trade secret or confidential by clearly identifying such information as “confidential” on the document at the time of submission. Any claim of confidentiality by a manufacturer must be based on the manufacturer’s good faith belief that the information marked as confidential constitutes a trade secret as defined in Civil Code section 3426.1(d), or is otherwise exempt from public disclosure under the California Public Records Act in Government Code section 6250 et seq. Authority: Sections 26012; 26013 and 26130, Business and Professions Code. Reference: Sections26050; 26050.1; 26055; and 26130, Business and Professions Code.

Manufacturing

What are rules regarding changing a Manufacturer License?

License Constraints

(a) A manufacturer licensee shall not manufacture, prepare, package or label any products other than cannabis products at the licensed premises. For purposes of this section, the term “cannabis products” also includes products that do not contain cannabis, but are otherwise identical to the cannabis-containing product, and are intended for use as samples. (b) No licensee shall employ an individual under 21 years of age. (c) A M-licensee shall only conduct commercial cannabis activities with M-licensees. (d) An A-licensee shall only conduct commercial cannabis activities with A-licensees. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26050; and 26140, Business and Professions Code.

Change in Licensed Operations

(a) At any time after issuance of a license and prior to submission of an application to renew the license, a licensee may request to change the manufacturing operations conducted at the licensed premises. To request approval for additional manufacturing operations, the licensee shall submit the following: (1) The information required under Section 40131; and (2) A non-refundable $1,000 application processing fee to review all documents. (b) The information submitted under subsection (a) shall be evaluated on a case-bycase basis by the Department, and upon approval of the request by the Department, the licensee may begin conducting the additional manufacturing operation. The existing license shall be amended to reflect the change in operations, but the date of expiration shall not change. (c) Pursuant to section 26055, subdivision (c) of the Act, the licensee shall also obtain approval from the Department prior to making any material or substantial changes to the premises. The request describing the proposed material or substantial change shall be submitted in writing to the Department and shall be evaluated on a case-by-case basis. (d) Licensees that choose to cease operation of any licensed activity shall notify the Department within 10 days of cessation of the activity. License fees shall not be prorated or refunded upon cessation of any activity. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26050; and 26055, Business and Professions Code.

Add or Remove Owners

The licensee shall notify the Department of the addition or removal of an owner occurring any time between issuance of a license and submission of an application to renew the license within 10 calendar days of the change. The new owner shall submit the information required under Section 40130 to the Department. The Department shall review the qualifications of the owner in accordance with the Act and these regulations and determine whether the change would constitute grounds for denial of the license. The Department may approve the addition of the owner, deny the addition of the owner, or condition the license as appropriate, to be determined on a case-by-case basis.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26050; and 26057, Business and Professions Code

Manufacturing

What are the security requirements for a Manufacturer?

Every applicant and licensee shall develop and implement a security plan. At a minimum, the security plan shall include a description of the security measures to be taken to: (a) Prevent access to the manufacturing premises by unauthorized personnel and protect the physical safety of employees. This includes, but is not limited to: (1) Establishing physical barriers to secure perimeter access and all points of entry into a manufacturing premises (such as locking primary entrances with commercialgrade, non-residential door locks, or providing fencing around the grounds, driveway, and any secondary entrances including windows, roofs, or ventilation systems); (2) Installing a security alarm system to notify and record incident(s) where physical barriers have been breached; (3) Establishing an identification and sign-in/sign-out procedure for authorized personnel, suppliers, and/or visitors; (4) Maintaining the premises such that visibility and security monitoring of the premises is possible; and (5) Establishing procedures for the investigation of suspicious activities. (b) Prevent against theft or loss of cannabis and cannabis products. This includes but is not limited to: (1) Establishing an inventory system to track cannabis and cannabis products and the personnel responsible for processing it throughout the manufacturing process; (2) Limiting access of personnel within the premises to those areas necessary to complete job duties, and to those time-frames specifically scheduled for completion of job duties; (3) Supervising tasks or processes with high potential for diversion (including the loading and unloading of cannabis transportation vehicles); and (4) Providing designated areas in which personnel may store and access personal items.

(c) Secure and back up electronic records in a manner that prevents unauthorized access and that ensures the integrity of the records is maintained. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: 26011.5; and 26051.5, Business and Professions Code. §40205. Video Surveillance. (a) At a minimum, licensed premises shall have a digital video surveillance system with a minimum camera resolution of 1280 × 720 pixels. The video surveillance system shall be able to effectively and clearly record images of the area under surveillance. (b) The video surveillance system shall be accessible via remote access by the licensee. (c) To the extent reasonably possible, all video surveillance cameras shall be installed in a manner that prevents intentional obstruction, tampering with, and/or disabling. (d) Areas that shall be recorded on the video surveillance system include the following: (1) Areas where cannabis or cannabis products are weighed, packed, stored, quarantined, loaded and/or unloaded for transportation, prepared, or moved within the premises; (2) Limited-access areas; (3) Security rooms; (4) Areas containing surveillance-system storage devices shall contain at least one camera to record the access points to such an area; and (5) The interior and exterior of all entrances and exits to the premises. (e) The surveillance system shall record continuously 24 hours per day and at a minimum speed of 15 frames per second. (f) All recording and monitoring equipment shall be located in secure rooms or areas of the premises in an access-controlled environment. (g) All surveillance recordings shall be kept on the licensee’s recording device for a

minimum of 90 days. (h) All video surveillance recordings are subject to inspection by the Department and shall be copied and sent, or otherwise provided, to the Department upon request. (i) The video recordings shall display the current date and time of recorded events. Time is to be measured in accordance with the U.S. National Institute of Standards and Technology standards. The displayed date and time shall not significantly obstruct the view of recorded images.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5 and 26070, Business and Professions Code.

Manufacturing

What are permissible extracts for a Manufacturer?

a) Except as provided in subsection (b), cannabis extraction shall only be conducted using the following methods: (1) Mechanical extraction; (2) Chemical extraction using a nonvolatile solvent such as a nonhydrocarbon-based or other solvents such as water, vegetable glycerin, vegetable oils, animal fats, or foodgrade glycerin. Nonhydrocarbon-based solvents shall be food grade; (3) Chemical extraction using a professional closed loop CO2 gas extraction systemCO2 gas used for extraction shall be food grade;; (4) Chemical extraction using a volatile solvent, as defined in Section 40100; or (5) Any other method authorized by the Department pursuant to subsection (b). (b) To request authorization from the Department to conduct cannabis extraction using a method other than those specified in paragraphs (1) through (4) of subsection (a), the applicant or licensee shall submit a detailed description of the extraction method, including any documentation that validates the method and any safety procedures to be utilized to mitigate any risk to public or worker health and safety.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5 and 26130, Business and Professions Code.

Manufacturing

What are the rules for Manufacturer’s extraction systems?

Volatile Solvent Extractions. Chemical extractions using volatile solvents shall be subject to the following requirements: (a) Hydrocarbon-based solvents shall be at least 99 percent purity; (b) All extractions shall be performed in a closed loop extraction system as described in Section 40225; (c) No volatile solvent extraction operations shall occur in an area zoned as residential; and (d) The extraction operation shall be approved by the local fire code official and shall be operated in accordance with all relevant state and local requirements. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26105; and 26130, Business and Professions Code. §40223. Ethanol Extractions. (a) Ethanol used for extractions or for post-extraction processing shall be foodgrade. (b) The extraction operation shall be approved by the local fire code official and shall be operated in accordance with Division of Occupational Health and Safety (Cal/OSHA) regulations and any other relevant state and local requirements.

Authority: Section 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26130, Business and Professions Code.

Closed-Loop Extraction System Requirements. (a) Chemical extractions using CO2 or a volatile solvent shall be conducted in a professional closed loop extraction system. The system shall be commercially manufactured and bear a permanently affixed and visible serial number. The system shall be certified by a California-licensed engineer that the system was commercially manufactured, safe for its intended use, and built to codes of recognized and generally accepted good engineering practices, such as: (1) The American Society of Mechanical Engineers (ASME); (2) American National Standards Institute (ANSI); (3) Underwriters Laboratories (UL); or (4) The American Society for Testing and Materials (ASTM). (b) Professional closed loop systems, other equipment used, the extraction operation, and facilities must be approved for use by the local fire code official and comply with any required fire, safety, and building code requirements related to the processing, handling and storage of the applicable solvent or gas. (c) The certification document required pursuant to subsection (a) shall contain the signature and stamp of a California-licensed professional engineer and the serial number of the extraction unit being certified.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26011.5, Business and Professions Code.

 

Manufacturing

 

What are operational best practices for a Manufacturer?

§40235. Quality Control Program (a) Each licensee is responsible for implementing an overall quality control program to ensure that cannabis products are not adulterated or misbranded. The quality control program shall include quality control operations for all of the following: (1) The grounds, building, and manufacturing premises, as specified in Section 40240; (2) Equipment and utensils, as specified in Section 40243; (3) Personnel, as specified in Section 40246; (4) Cannabis product components, as specified in Section 40248; and (5) Manufacturing processes and procedures, as specified in Section 40250. (b) Overall quality control shall be under the supervision of one or more qualified individuals assigned responsibility for this function. (c) For purposes of this article, for those requirements that are contained in the Health and Safety Code, use of the term “food” shall include cannabis, cannabis products, components, and contact surfaces.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

§40240. Grounds, Building, and Manufacturing Premises (a) Exterior facility and grounds. The licensee shall ensure the facility exterior and grounds under the licensee’s control meet the following minimum standards: (1) Grounds are equipped with draining areas in order to prevent pooled or standing water; (2) Weeds, grass, and vegetation shall be cut within the immediate vicinity of the cannabis manufacturing premises, litter and waste shall be removed, and equipment shall be stored in order to minimize the potential for the grounds to constitute an attractant, breeding place, or harborage for pests; (3) Roads, yards, and parking lots shall be maintained so that these areas do not constitute a source of contamination in areas where cannabis products are handled or transported; (4) Openings into the building (such as windows, exhaust fans, ventilation ducts, or plumbing vent pipes) shall be screened, sealed, or otherwise protected to minimize potential for pests to enter the building; (5) Waste treatment and disposal systems shall be provided and maintained so as to prevent contamination in areas where cannabis products may be exposed to such a system’s waste or waste by-products. (6) The licensee shall implement precautions within the premises such as inspection or extermination if the premises is bordered by grounds outside the licensee’s control that are not maintained in the manner described in subsections (1) through (5) of this subsection, in order to eliminate any pests, dirt, and filth that pose a source of cannabis product contamination. Any use of insecticide, rodenticide, or other pesticide within the premises shall meet the requirements of Health and Safety Code section 114254. (b) Interior facility. The licensee shall ensure construction, design, and maintenance of the interior of the manufacturing premises as follows: (1) Walls, ceilings, and floors. Walls, ceilings, and floors shall be constructed of material that is smooth, nonporous, easily cleanable, corrosion-resistant, and suitable to the activity that will be conducted. Fixtures, ducts, and pipes shall not pose a source of drip or condensate that may contaminate cannabis products, contact surfaces or packaging material. (2) Lighting. Interior facility lighting shall meet the requirements of subdivisions (a)(1) and (3), (b)(3) and (4), and (c) of section 114252 of the Health and Safety Code. Interior facility lighting shall also meet the requirements for shatter-resistant lighting in section 114252.1 of the Health and Safety Code. The requirements of Health and Safety Code section 114252.1, subdivision (a), shall also apply to all areas where glass breakage may result in the contamination of exposed cannabis, components or products at any step of preparation. (3) Plumbing system and fixtures. (A) Water supply. Running water shall be supplied as required by Health and Safety Code section 114192 in all areas where required for the processing of cannabis products, and in all areas used for the cleaning of equipment, utensils, and packaging materials, and for employee sanitary facilities. Any water that contacts cannabis, components, cannabis products, contact surfaces, or packaging materials shall be potable. (B) Plumbing. Plumbing systems shall meet the requirements of Health and Safety Code section 114190. (C) Sewage disposal. Sewage systems shall meet the requirements of the California Plumbing Code, contained in Part 5 of Title 24, California Code of Regulations and shall be maintained and kept in good repair so that it does not pose a potential source of contamination to cannabis products, contact surfaces, or cannabis product-packaging materials. (D) Toilet facilities. Each manufacturing premises shall provide employees with access to toilet facilities that meet the requirements of Health and Safety Code section 114250. Toilet facilities shall be kept clean and shall not pose a potential source of contamination of cannabis products, contact surfaces, or packaging materials. (E) Hand-washing facilities. Each manufacturing premises shall provide handwashing facilities that meet the requirements of Health and Safety Code section 113953, subdivision (a) through (d). (F) Waste disposal. The premises shall provide waste disposal in accordance with Health and Safety Code sections 114244(a), 114244(c), and 114245.1. Cannabis waste shall be disposed of in accordance with Section 40290 of these regulations. (4) Ventilation. Ventilation systems shall meet the requirements of Health and Safety Code sections 114149 and 114149.3. (5) Cleaning and maintenance. The premises, including any fixtures, and other physical facilities therein, shall be maintained in a clean and sanitary condition and kept in good repair so as to prevent cannabis products from becoming adulterated, and shall meet the requirements of Health and Safety Code section 114257.1. (A) The premises shall have a janitorial facility that meets the requirements of Health and Safety Code section 114279(a). (B) Cleaning equipment and supplies shall be stored in a manner that meets the requirements of Health and Safety Code section 114281. (C) Poisonous or toxic materials such as cleaning compounds, sanitizing agents, and pesticide chemicals that are necessary for premises and equipment maintenance and operation shall be handled and stored in a manner that meets the requirements of Health and Safety Code sections 114254.1, 114254.2 and 114254.3. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

§40243. Equipment and Utensils Licensees shall utilize equipment and utensils that meet the following minimum requirements: (a) Design. Equipment and utensils shall be meet the requirements of Health and Safety Code sections 114130.1, 114130.2, 114130.3, and 114130.4 and shall be used in accordance with their operating instructions to avoid the adulteration of cannabis products with lubricants, fuel, metal fragments, contaminated water, or any other contaminants. (b) Installation. Equipment shall be installed so as to allow the cleaning and maintenance of the equipment and of adjacent spaces. Equipment that is not easily moveable shall meet the requirements of Health and Safety Code section 114169. (c) Cleaning, sanitizing, and maintenance. The quality control program for cleaning, sanitizing, and maintenance of equipment and utensils shall include the following elements, at minimum: (1) A detailed, written procedure for cleaning, sanitizing, and maintaining (including calibrating) equipment and utensils; (2) A schedule for cleaning, sanitizing, and maintaining equipment and utensils; (3) A procedure, including a log, for documentation of the date and time of maintenance, cleaning, and sanitizing of equipment; and (4) A detailed, written procedure for storing cleaned and sanitized equipment and utensils in a manner to protect the equipment and utensils from contamination. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40246. Personnel A licensee shall implement written procedures for personnel that include, at minimum: (a) Disease control. Any individual who by medical examination or supervisory observation is shown to have, or appears to have, an illness specified in Health and Safety Code section 113949.2(a), or an open lesion (such as boils, sores, cut, rash, or infected wounds) unless covered in accordance with the requirements of Health and Safety Code section 113949.2(b), shall be excluded from any manufacturing operations until their health condition is corrected. Personnel shall be instructed to report such health conditions to their supervisors. (b) Cleanliness. All individuals working in direct contact with cannabis products, contact surfaces, and packaging materials shall maintain personal cleanliness in order protect against allergen cross-contact and contamination of cannabis products while on duty. The methods for maintaining personal cleanliness include: (1) Wearing clean outer clothing to protect against allergen cross-contact and contamination of cannabis products, contact surfaces, and packaging materials; (2) Washing hands thoroughly in a hand-washing facility that meets the requirements of Section 40240 before starting work, after each absence from the work station, and at any time when the hands may have become soiled or contaminated; (3) Removing all unsecured jewelry and other objects that might fall into cannabis products, equipment, or containers. Hand jewelry that cannot be sanitized shall be removed during periods in which cannabis products are manipulated by hand. If such hand jewelry cannot be removed, it shall be covered by material which can be maintained in an intact, clean, and sanitary condition and which effectively protects against the contamination by these objects of the cannabis products, cannabis productcontact surfaces, or cannabis product-packaging materials; (4) Maintaining any gloves, if they are used in cannabis product handling, in an intact, clean, and sanitary condition; (5) Wearing hair nets, caps, beard covers, or other hair restraints that are designed and worn to prevent hair contact with cannabis, cannabis product, contact surfaces, or cannabis product-packaging materials; (6) Storing clothing and personal belongings in areas separate from those where cannabis products are exposed or where equipment or utensils are washed; (7) Confining the following activities to areas separate from those where cannabis products may be exposed or where equipment or utensils are washed: eating food, chewing gum, drinking beverages, and using tobacco; (c) Nothing in this section prohibits a licensee from establishing any other precautions to protect against allergen cross-contact and against contamination of cannabis products, contact surfaces, or packaging materials by microorganisms or foreign substances (including perspiration, hair, cosmetics, tobacco, chemicals, and medicines applied to the skin).

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

 

What are production and process controls for a Manufacturer?

Production and Process Controls

§40250. General Provisions. (a) Appropriate quality control operations shall be employed to ensure that cannabis products are suitable for human consumption or use, and that cannabis product packaging materials are safe and suitable. (b) Overall sanitation of the premises shall be under the supervision of one or more qualified individuals assigned responsibility for this function. (c) Adequate precautions shall be taken to ensure that production procedures do not contribute to allergen cross-contact and to contamination from any source.

(d) Chemical, microbial, or extraneous-material testing procedures shall be used where necessary to identify sanitation failures or possible allergen cross-contact and cannabis product contamination. (e) Any cannabis product that has become contaminated to the extent that it is adulterated shall be rejected, or if appropriate, treated or processed to eliminate the contamination, as determined by a qualified individual. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40252. Quality of Raw Materials and Ingredients. The licensee shall establish and implement written policies and procedures to ensure the quality of raw materials and ingredients as follows: (a) Raw materials and other ingredients shall be inspected, segregated, or otherwise handled as necessary to ensure that they are clean and suitable for processing into cannabis products, and shall be stored under conditions that protect against allergen cross-contact and contamination, and in such a way as to minimize deterioration. (b) Raw materials must be washed or cleaned as necessary to remove soils and other contaminates. Water used for washing, rinsing, or conveying cannabis product ingredients must be safe and of adequate sanitary quality. (c) Raw materials and other ingredients shall not contain levels of microorganisms that render the cannabis product injurious to human health, or shall be pasteurized or otherwise treated during manufacturing so that they no longer contains levels of microorganisms that would cause the cannabis product to be adulterated. (d) Raw materials and other ingredients susceptible to contamination with aflatoxin or other natural toxins, pests, or extraneous material shall not exceed generally acceptable limits set by the U.S. Food and Drug Administration in the Defect Levels Handbook (Rev. February 2005), which is hereby incorporated by reference, before these raw materials or other ingredients are incorporated into finished cannabis products.

(e) Raw materials and other ingredients shall be held in bulk, or in containers designed and constructed so as to protect against allergen cross-contact or contamination, and shall be held at such temperature and relative humidity and in such a manner as to prevent the cannabis products from becoming adulterated. (f) Frozen raw materials and other ingredients shall be kept frozen. If thawing is required prior to use, it shall be done in a manner that prevents the raw materials and other ingredients from becoming adulterated. (g) Raw materials and other ingredients that are food allergens shall be identified and held in a manner that prevents cross-contact with other raw materials or ingredients. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40254. Manufacturing Operations. The licensee shall establish and implement written manufacturing operation procedures to ensure the following: (a) All cannabis product manufacturing shall be conducted under such conditions and controls as are necessary to minimize the potential for the growth of microorganisms, allergen cross-contact, contamination of cannabis products, and deterioration of cannabis products. (b) Cannabis products capable of supporting the rapid growth of undesirable microorganisms shall be held at temperatures that prevent the cannabis product from becoming adulterated during manufacturing, processing, packing and holding. (c) Measures such as sterilizing, irradiating, pasteurizing, cooking, freezing, refrigerating, controlling pH, or controlling water activity that are undertaken to destroy or prevent the growth of undesirable microorganisms shall be adequate under the conditions of manufacture, handling, and transfer to prevent the cannabis product from being adulterated. For purposes of this chapter, “water activity” (aw) is a measure of the free moisture in a manufactured cannabis product and is the quotient of the water vapor

pressure of the substance divided by the vapor pressure of pure water at the same temperature. (d) Work-in-process shall be handled in a manner that protects against allergen cross-contact, contamination, and growth of microorganisms. (e) Measures shall be taken to protect finished cannabis products from allergen cross-contact and from contamination by raw materials, other ingredients, rejected components, or waste. When raw materials, other ingredients, or waste are unprotected, they shall not be handled simultaneously in a receiving, loading or shipping area if such handling could result in allergen cross-contact or contaminated cannabis products. Cannabis products transported by conveyer shall be protected against allergen cross-contact and against contamination as necessary. (f) Equipment, containers, and utensils used to convey, hold, or store raw materials and other ingredients, work-in-process, or other cannabis products shall be constructed, handled, and maintained during manufacturing, processing, packing, and holding in a manner that protects against allergen cross-contact and contamination. (g) Adequate measures shall be taken to protect against the inclusion of metal or other extraneous material in cannabis products. (h) Adulterated cannabis products, raw materials, or other ingredients shall be either: (1) Disposed of in a manner that protects against the contamination of other cannabis products or ingredients; or (2) Reprocessed, if appropriate, using a method that has been proven to be effective and subsequently reexamined and found to be unadulterated. (i) Steps such as washing, peeling, trimming, cutting, sorting, inspecting, mashing, dewatering, cooling, shredding, extruding, drying, whipping, defatting, and forming shall be performed so as to protect cannabis products against allergen cross-contact and contamination. Cannabis products shall be protected from contaminants that may drip, drain, or be drawn into the cannabis product. (j) When required in the preparation of cannabis products capable of supporting microbial growth, heat blanching shall be conducted by heating the cannabis product or component to a temperature to control microbial growth, holding at that temperature for an amount of time to control microbial growth, and then either rapidly cooling the

cannabis product or passing it to subsequent manufacturing without delay. Growth and contamination by thermophilic microorganisms in blanchers shall be minimized by the use of adequate operating temperatures and by periodic cleaning and sanitization as necessary. (k) Batters, breading, sauces, gravies, dressings, dipping solutions, and other similar preparations that are held and used repeatedly over time shall be treated or maintained in such a manner that they are protected against allergen cross-contact and contamination, and in a manner that minimizes the potential growth of undesirable microorganisms. (l) Filling, assembling, packaging, and related operations shall be performed in such a way that the cannabis product is protected against allergen cross-contact, contamination and growth of undesirable microorganisms. (m) Cannabis products that principally rely on the control of water activity (aw) for preventing the growth of undesirable microorganisms (such as dry mixes, nuts, and dehydrated cannabis products) shall be processed and maintained at a safe moisture level. For purposes of this section “safe moisture level” is a level of moisture low enough to prevent the growth of undesirable microorganisms in the finished product under the intended conditions of manufacturing. The safe moisture level for an edible cannabis product is related to its aw. An aw will be considered safe for a manufactured cannabis product if adequate data is available to demonstrate that at or below the given aw the manufactured cannabis product will not support the growth of undesirable microorganisms. (n) When ice is used in contact with cannabis products, the ice shall be made from water that is safe, potable, and of adequate sanitary quality. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40256. Hazard Analysis

The licensee shall conduct and prepare a written hazard analysis to identify or and evaluate known or reasonably foreseeable hazards for each type of cannabis product produced at their facility in order to determine whether there exist any hazards requiring a preventive control. The hazard analysis shall include: (a) The identification of potential hazards, including: (1) Biological hazards, including microbiological hazards; (2) Chemical hazards, including radiological hazards, pesticide(s) contamination, solvent or other residue, natural toxins, decomposition, or food allergens; and/or (3) Physical hazards, such as stone, glass, metal fragments, hair or insects. (b) The evaluation of the hazards identified in order to assess the severity of any illness or injury that may occur as a result of a given hazard, and the probability that the hazard will occur in the absence of preventive controls. (c)The hazard evaluation shall consider the effect of the following on the safety of the finished cannabis product for the intended consumer: (1) The sanitation conditions of the manufacturing premises; (2) The product formulation; (3) The design, function and condition of the manufacturing facility and its equipment; (4) The raw material, ingredients and other components used in a given cannabis product; (5) Product transportation and transfer practices; (6) The manufacturing and processing procedures; (7) The packaging and labeling activities; (8) The storage of components and/or the finished cannabis product; (9) The intended or reasonably foreseeable use of the finished cannabis product; (10) Any other relevant factors. Authority: Sections 26012; 26013, and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40258. Preventive Controls.

Upon completion of the hazard analysis, the licensee shall identify and implement written preventive controls to provide assurance that any hazards requiring a preventative control will be significantly minimized or prevented such that the manufactured cannabis product is not adulterated or misbranded. The preventive controls shall include the following components: (a) The identification of critical control points. The points, steps or procedures in a given process in which control can be applied, and as a result, a hazard can be prevented, eliminated, or reduced to acceptable levels. (b) The establishment of critical limits for each critical control point. The maximum or minimum value to which a physical, biological, or chemical hazard must be controlled in order to prevent, eliminate, or reduce to an acceptable level the occurrence of an identified hazard. For example: the establishment of specific limits on temperature, humidity, or pH. (c) The establishment and implementation of monitoring procedures in order to use monitoring results to adjust a given process and maintain control. This shall include specifying the frequency and documentation requirements for monitoring. (d) The establishment and implementation of corrective actions to be taken when monitoring indicates there is a deviation from an established critical limit. This shall include procedures for ensuring: (1) Appropriate action is taken to identify and correct a problem that has occurred with implementation of a preventative control; (2) Appropriate action is taken, when necessary, to reduce the likelihood that a problem will recur; (3) All affected material(s) or product(s) are evaluated for safety; (4) All affected material(s) or product(s) are prevented from entering into commerce if the safety or quality of that material(s) or product(s) cannot be verified. (e) The establishment and implementation of record keeping procedures to document hazard analyses and control plans, identify the person responsible for each step, and identify the corrective actions that were taken upon of the discovery of a deviation. These records shall be subject to review by the Department

(f) The establishment and implementation of verification procedures in order to validate that preventative controls are consistently implemented and are effective in minimizing or preventing identified hazards; and that monitoring activities are being conducted as required. Authority: Sections 26012; 26013, and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40260. Equipment and Machinery Qualification. (a) The licensee shall establish and implement written procedures to ensure that each piece of equipment and machinery is suitable for its intended use prior to operation. These procedures include, but are not limited to: (1) Procedures for validating that all equipment and machinery has design specifications, operating procedures, and performance characteristics appropriate for its intended use by the licensee. (2) Procedures for validating that all equipment and machinery are built as designed with proper materials, capacity, and functions, and properly installed, connected, and calibrated. (3) Procedures for validating that all equipment and machinery perform in accordance with quality requirements in all anticipated operating ranges using the licensee’s standard operating procedures. Operating ranges shall be shown to be capable of being held as long as would be necessary during routine production. (4) The establishment of a schedule for routine re-verification of all equipment and machinery. (b) The licensee shall maintain verification records for all equipment and machinery, which contain at minimum: (1) Documentation of successful verification of each piece of equipment and machinery, dated and signed by the person conducting the verification. (2) Documentation of successful re-verifications of each piece of equipment and machinery upon any modification to the equipment or machinery, intended use, or standard operating procedure.

(3) A log documenting the verification and re-verification of all equipment and machinery in operation on the licensed premises. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40262. Master Manufacturing Protocol. The licensee shall establish and follow a written master manufacturing protocol for each unique formulation of cannabis product manufactured, and for each batch size, to ensure uniformity in finished batches and across all batches produced. (a) The master manufacturing protocol shall: (1) Identify specifications for the points, steps, or stages in the manufacturing process where control is necessary to ensure the quality of the cannabis product and that the cannabis product is packaged and labeled as specified in the master manufacturing protocol; and (2) Establish controls and procedures to ensure that each batch of cannabis product manufactured meets the specifications identified in accordance with subsection (a)(1) of this section. (b) The master manufacturing protocol shall include: (1) The name and intended cannabinoid(s) concentration per serving of the cannabis product to be manufactured, and the strength, concentration, weight, or measure of each ingredient for each batch size; (2) A complete list of components to be used; (3) The weight or measure of each component to be used; (4) The identity and weight or measure of each ingredient that will be declared on the ingredients list of the cannabis product; (5) A statement of theoretical yield of a manufactured cannabis product expected at each point, step, or stage of the manufacturing process where control is needed to ensure the quality of the cannabis product, and the expected yield of the finished product, including the maximum and minimum percentages of theoretical yield beyond

which a deviation investigation of a batch is necessary and material review is conducted and disposition decision is made; (6) A description of packaging and a representative label, or a cross-reference to the physical location of the actual or representative label; (7) Written instructions, including the following: (A) Specifications for each point, step, or stage in the manufacturing process where control is necessary to ensure the quality of the cannabis product and that the cannabis product is packaged and labeled as specified in the master manufacturing record; (B) Procedures for product and/or batch sampling and a cross-reference to procedures for tests or examinations of products and/or batches; (C) Specific actions necessary to perform and validate points, steps, or stages in the manufacturing process where control is necessary to ensure the quality of the cannabis product and that the cannabis product is packaged and labeled as specified in the master manufacturing record. (D) Special notations and precautions to be followed; and (E) Corrective action plans for use when a specification is not met. (8) The master manufacturing protocol for any given product may include the ability to adjust the amount or weight of cannabinoid-containing ingredients in order to account for the variability of cannabinoid content in harvest batches. (c) Nothing in this chapter requires disclosure of the master manufacturing protocol to any person other than the individuals conducting activities that utilize the protocol or to the Department and its inspectors and agents, or other law enforcement agencies. The licensee may consider the master manufacturing protocol subject to trade secret protection. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

§40264. Batch Production Record.(a) The licensee shall prepare a written batch production record every time a batch of a cannabis product is manufactured. The batch production record shall accurately follow the appropriate master manufacturing protocol, and each step of the protocol shall be performed in the production of the batch. (b) The batch production record shall document complete information relating to the production and control of each batch, including all of the following details: (1) The UID, and if used, the batch or lot number, of the finished batch of cannabis product and the UIDs of all cannabis products used in the batch. (2) The equipment and processing lines used in producing the batch; (3) The date and time of the maintenance, cleaning, and sanitizing of the equipment and processing lines used in producing the batch, or a cross-reference to records, such as individual equipment logs, where this information is retained; (4) The identification number assigned to each component (or, when applicable, to a cannabis product received from a supplier for packaging or labeling as a cannabis product), packaging, and label used; (5) The identity and weight or measure of each component used; (6) A statement of the actual yield and a statement of the percentage of theoretical yield at appropriate phases of processing; (7) The actual results obtained during any monitoring operation; (8) The results of any testing or examination performed during the batch production, or a cross-reference to such results; and (9) Documentation, at the time of performance, of the manufacture of the batch, including: (A) The date on which each step of the master manufacturing protocol was performed; and (B) The initials of the persons performing each step, including: (i) The initials of the person responsible for weighing or measuring each component used in the batch; (ii) The initials of the person responsible for verifying the weight or measure of each component used in the batch; (iii) The initials of the person responsible for adding the component to the batch; and

(iv) The initials of the person responsible for verifying the addition of components to the batch. (10) Documentation, at the time of performance, of packaging and labeling operations, including: (A) An actual or representative label, or a cross-reference to the physical location of the actual or representative label specified in the master manufacturing record; (B) The expected number of packaging and labels to be used, the actual quantity of the packaging and labels used, and, when label reconciliation is required, reconciliation of any discrepancies between issuance and use of labels; and (C) The results of any tests or examinations conducted on packaged and labeled cannabis products (including repackaged or relabeled cannabis products), or a crossreference to the physical location of such results. (11) Documentation at the time of performance that quality control personnel: (A) Reviewed the batch production record; (B) Reviewed all required monitoring operation(s) required by this article; (C) Reviewed the results of all tests and examinations, including tests and examinations conducted on components, in-process materials, finished batches of cannabis product, and packaged and labeled cannabis products; (D) Either approved and released, or rejected, the batch for distribution; and (E) Either approved and released, or rejected, the finished cannabis product, including any repackaged or relabeled cannabis product. (12) Documentation at the time of performance of any required material review and disposition decision. (c) The batch production record shall: (1) Contain the actual values and observations obtained during monitoring and, as appropriate, during verification activities; (2) Be accurate, indelible, and legible; (3) Be created concurrently with performance of the activity documented; and (4) Be as detailed as necessary to provide history of work performed; including: (A) Information to identify any associated manufacturing facility (e.g., the name, license number, and when necessary, the location of the facility);

(B) The date and the time of the activity documented; (C) The signature or initials of the person performing the activity; and (D) The identity of the product, the UID, and the lot number or batch identifier, if any. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40266. Product Complaints. The licensee shall establish and implement written procedures to ensure that: (a) A qualified individual shall review and investigate all product complaints to determine whether such complaints involve a possible failure of a cannabis product to meet any of its specifications; (b) Quality control personnel shall review and approve decisions determining whether to investigate a product complaint and shall review and approve the findings and follow up action(s) of any investigation performed; (c) Pursuant to subdivisions (a) and (b) in this section, any review and/or investigative activities by qualified individuals and quality control personnel shall extend to all relevant batches and records. (d) Quality control personnel shall maintain written records for every product complaint and subsequent investigation, if any. The records shall include: (1) The name and description of the cannabis product; (2) The batch number or UID of the cannabis product, if available; (3) The date the complaint was received and the name, address, and/or telephone number of the complainant, if available; (4) The nature of the complaint including, if known, how the product was used; (5) The reply to the complainant, if any; and (6) Any findings of the investigation and/or follow-up action taken when an investigation is performed. (e) For purposes of this section, “product complaint” means any written, electronic, or oral communication that contains any allegation expressing concern, for any reason, with the quality of a cannabis product that could be related to the manufacturing

practices. Examples of product complaints may include but are not limited to: foul odor, off taste, illness or injury, disintegration time, color variation, foreign material in a cannabis product container, improper packaging, mislabeling, cannabis products that contain incorrect concentration of cannabinoids, or cannabis products contain an unidentified ingredient, or any form of contaminant. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40268. Recalls. A licensee shall establish and implement written procedures for recalling cannabis products manufactured by the licensee that are determined to be misbranded or adulterated. These procedures shall include: (a) Factors which necessitate a recall; (b) Personnel responsible for implementing the recall procedures; and (c) Notification protocols, including: (1) A mechanism to notify all customers that have, or could have, obtained the product, including communication and outreach via media, as necessary and appropriate; (2) A mechanism to notify any licensees that supplied or received the recalled product; (3) Instructions to the general public and/or other licensees for the return and/or destruction of recalled product. (d) Procedures for the collection and destruction of any recalled product. Such procedures shall meet the following requirements: (1) All recalled products that are intended to be destroyed shall be quarantined for a minimum of 72 hours. The licensee shall affix to the recalled products any bills of lading, shipping manifests, or other similar documents with product information and weight. The product held in quarantine shall be subject to auditing by the Department. (2) Following the quarantine period, the licensee shall render the recalled cannabis product unusable and unrecognizable in accordance with Section 40290, and do so on

video surveillance in accordance with Section 40205. A recalled cannabis product that has been rendered unusable and unrecognizable is considered cannabis waste and shall be disposed of in accordance with Section 40290. (3) A licensee shall dispose of chemical, dangerous, or hazardous waste in a manner consistent with federal, state, and local laws. This requirement shall include but is not limited to recalled products containing or consisting of pesticide or other agricultural chemicals, solvents or other chemicals used in the production of manufactured cannabis batches, and cannabis soaked in a flammable solvent for the purpose of producing manufactured cannabis batches. (4) A licensee shall not dispose of recalled cannabis product in an unsecured area or waste receptacle that is not in the possession and/or control of the licensee. (e) In addition to the tracking requirements set forth in Section 40512, a licensee shall use the track-and-trace database and on-site documentation to ensure that recalled cannabis products intended for destruction are identified, weighed, and tracked while on the licensed premises and when disposed of in accordance with this section. For recalled cannabis products, the licensee shall enter the following details into the track and trace database: the weight of the product, reason for destruction, and the date the quarantine period will begin. (f) The licensee shall notify the Department of any recall within 24 hours of initiating the recall.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code.

Manufacturing

 

What are special processing requirements for a Manufacturer?

Special Processing Requirements

Juice Processing. (a) Requirements of this section shall apply to manufacturers of cannabis-infused juice to be sold as either 100% juice or to be used as an ingredient in other products. The requirements of this section do not apply to manufacturers of infused beverages that use non-infused juice as an ingredient.

(b) Manufacturers of juice shall prepare a written juice hazard analysis and control plan in accordance with the requirements of 21 CFR, Part 120, subpart B, (Rev. January 2001), which is hereby incorporated by reference. Authority: Sections 26012; 26013, and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code. §40272. Dried Meat Processing. Manufacturing of cannabis-infused dried meat products shall be conducted in accordance with the United States Department of Agriculture FSIS Compliance Guideline for Meat and Poultry Jerky Produced by Small and Very Small Establishments: 2014 Compliance Guideline (Rev. 2014), which is hereby incorporated by reference. Meat for processing into dried meat products shall be acquired from a commercially-available source.

Authority: Sections 26012; 26013, and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26131, Business and Professions Code

Manufacturing

What are a Manufacturer’s other responsibilities?

§40275. Standard Operating Procedures. A licensee shall establish and maintain written standard operating procedures that are easily accessible to onsite personnel. The standard operating procedures shall, at minimum, include the following: (a) Any policies or procedures developed in accordance with the security plan required by Section 40200; (b) Emergency response procedures; (c) Policies and procedures developed in accordance with Article 3 of this subchapter (Good Manufacturing Practices);

(d) Policies and procedures developed in accordance with Article 4 of this subchapter (Production and Process Control); (e) Procedures for complying with the track-and-trace requirements established in Article 2 of subchapter 5; (f) Inventory control procedures in compliance with Section 40282; and (g) Waste management procedures in compliance with Section 40290. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26053, 26130; and 26160, Business and Professions Code. §40277. Weights and Measures (a) Weighing devices used by a licensee shall be approved, tested, and sealed in accordance with the requirements in Chapter 5 (commencing with Section 12500) of Division 5 of the Business and Professions Code, and registered with the county sealer consistent with Chapter 2 (commencing with 12240) of Division 5 of the Business and Professions Code. Approved and registered devices shall be used whenever: (1) Cannabis or cannabis product is bought or sold by weight or count; (2) Cannabis or cannabis product is packaged for sale by weight or count; (3) Cannabis or cannabis product is weighed or counted for entry into the trackand-trace system; and (4) The weighing device is used for commercial purposes as defined in section 12500 of Business and Professions Code. (b) For the purposes of this chapter, “count“ means the numerical count of the individual cannabis product units. (c) Bulk shipments of cannabis and cannabis products shall be weighed by a licensed weighmaster, and shall be issued a certificate consistent with the requirements in Chapter 7 (commencing with section 12700) of Division 5 of Business and Professions Code.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26060, Business and Professions Code. §40280. Training Program. (a) The licensee shall implement a training program to ensure that all personnel present at the premises are provided information and training that, at minimum, covers the following topics: (1) Within 30 days of the start of employment: (A) Health and safety hazards; (B) Hazards presented by all solvents or chemicals used at the licensed premises as described in the material safety data sheet for each solvent or chemical; (C) Emergency procedures; (D) Security procedures; (E) Record keeping requirements; and (F) Training requirements. (2) Prior to independently engaging in any cannabis manufacturing process: (A) An overview of the cannabis manufacturing process and standard operating procedure(s); (B) Quality control procedures; (C) Hazard analysis and control procedures, as appropriate; (D) Proper and safe usage of equipment or machinery; (E) Safe work practices applicable to an employee’s job tasks, including appropriate use of any necessary safety or sanitary equipment; (F) Cleaning and maintenance requirements; (G) Emergency operations, including shutdown; and (H) Any additional information reasonably related to an employee’s job duties. (3) Additionally, a licensee that produces edible cannabis products shall ensure that all personnel who prepare, handle, or package edible products successfully complete a California food handler certificate course from an entity accredited by the American National Standards Institute (ANSI) within 90 days of commencing employment at the premises and again every three years during employment. For licensees in operation

pursuant to Section 40126, applicable personnel shall complete the ANSI-accredited food handler course no later than 90 days after the effective date of the annual license. The licensee shall obtain documentation evidencing the fulfillment of this requirement. (4) The licensee shall ensure that all personnel receive annual refresher training to cover, at minimum, the topics listed in this section. This annual refresher training must be completed within 12 months of the previous training completion date. (b) The licensee shall maintain a record which contains at minimum: (1) A list of all personnel at the premises, including at minimum, name and job duties of each; (2) Documentation of training topics and dates of training completion, including refresher training, for all personnel; (3) The signature of the individual personnel and the licensee verifying receipt and understanding of each training or refresher training completed by the personnel; and (4) Any official documentation attesting to the successful completion of required training by personnel. (c) The licensee may assign responsibility for the training of individual personnel to supervisory personnel. Assigned supervisory personnel must have the education, training, or experience (or a combination thereof) necessary to ensure the production of quality cannabis products by all personnel. The designated training personnel shall sign and date a document on an annual basis attesting that he or she has received and understands all information and training provided in the training program. This documentation shall be maintained as part of the record requirements. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26130; and 26160, Business and Professions Code. §40282. Inventory Control – Cannabis and Cannabis Products. (a) A licensee shall establish and implement a written inventory control plan capable of tracking the location and disposition of all cannabis and cannabis products at the licensed premises

(b) A licensee shall reconcile the on-hand inventory of cannabis and cannabis products at the licensed premises with the records in the track-and-trace database least once every thirty (30) calendar days. Reconciliation shall be performed by one person and independently verified by a second person. (c) If a licensee finds a discrepancy between the inventory and the track-and-trace database, the licensee shall conduct an audit. (d) The licensee shall notify the Department within 24 hours of the completion of the audit if the audit reveals a discrepancy that is not within five percent of the documented inventory. (e) If a licensee finds evidence of suspected theft or diversion, the licensee shall report the suspected theft or diversion to the Department within 24 hours of the discovery. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26130, Business and Professions Code. §40290. Waste Management. (a) A licensee shall dispose of all waste, including cannabis waste, in accordance with applicable state and local laws and regulations. It is the responsibility of the licensee to properly evaluate waste to determine if it should be designated a hazardous waste under section 40141 of the Public Resources Code. (b) A licensee shall dispose of any cannabis waste in a secured waste receptacle or secured area on the licensed premises. For the purposes of this section, “secured waste receptacle” or “secured area” means that physical access to the receptacle or area is restricted to the licensee, employees of the licensee, the local agency, waste hauler franchised or contracted by local government, or private waste hauler permitted by the local government only. Public access to the designated receptacle or area shall be strictly prohibited. (c) No cannabis product shall be disposed of in its packaging, and all cannabis products shall be unrecognizable and unusable at the time of disposal.

(d) Cannabis waste shall be entered into the track-and-trace system as required under Section 40512. (e) If a local agency, a waste hauler franchised or contracted by local government, or a private waste hauler permitted by local government is being used to collect and process cannabis waste, a licensee shall do all of the following: (1) Provide the Department with the name of the entity hauling the waste; (2) Obtain documentation from the entity hauling the waste that indicates the date and time of each collection of cannabis waste at the licensed premises; and (3) Obtain a copy of the certified weight ticket, or other documentation prepared by the entity hauling the waste confirming receipt of the cannabis waste at one, or more, of the following solid waste facilities: (A) A manned fully permitted solid waste landfill or transformation facility; (B) A manned fully permitted composting facility or manned composting operation; (C) A manned fully permitted in-vessel digestion facility or manned in-vessel digestion operation; or (D) A manned fully permitted transfer/processing facility or manned transfer/processing operation. (f) If a licensee is self-hauling cannabis waste to one, or more, of the solid waste facilities in subsection (e)(3) of this section, a licensee shall obtain for each delivery of cannabis waste by the licensee a copy of a certified weight ticket or receipt documenting delivery from the solid waste facility. Only the licensee or its employees may transport self-hauled cannabis waste. Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26013; and 26130, Business and Professions Code. §40292. Consent to Sample Collection. A manufacturer licensee that transfers possession but not title of cannabis products to a licensed distributor shall allow the Bureau, upon the Bureau’s request, to collect samples for purposes of conducting oversight of licensed testing laboratories.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26013; and 26130, Business and Professions Code.

Manufacturing

What are prohibited products for a Manufacturer?

§40300. Prohibited Products. The following types of products shall not be sold as edible cannabis products:

(a) Alcoholic beverages, as defined in section 23004 of the Business and Professions Code. For purposes of this section, “alcoholic beverage” does not include tinctures.

(b) Any product containing any non-cannabinoid additive that would increase potency, toxicity, or addictive potential, or that would create an unsafe combination with other psychoactive substances. Prohibited additives include, but are not limited to, nicotine and caffeine. This prohibition shall not apply to products containing naturally occurring caffeine, such as coffee, tea, or chocolate.

(c) Any cannabis product that must be held at or below 41 degrees Fahrenheit to keep it safe for human consumption, including, but not limited to, cream or custard-filled pies; pies or pastries which consist in whole or in part of milk or milk products, or eggs; or meat-filled pies or pastries. This prohibition shall not apply to juices or beverages that need to be held below 41 degrees Fahrenheit if the juice or beverage was processed in accordance with Section 40270;

(d) Any low-acid cannabis product with a finished equilibrium pH greater than 4.6 and water activity greater than 0.85, packed in a hermetically sealed container in a reduced oxygen package (e.g. vacuum packed);

(e) Any juice that is not shelf-stable or that is not processed in accordance with Section 40270;

(f) Dairy products of any kind, as prohibited by subdivision (t) of section 26001 of the Business and Professions Code, except that butter purchased from a licensed milk products plant or retail location that is subsequently infused or mixed with cannabis may be sold as a cannabis product;

(g) Meat products other than dried meat products prepared in accordance with Section 40272;

(h) Seafood products of any kind;

(i) Any product that is manufactured by application of cannabinoid concentrate or extracts to commercially available candy or snack food items without further processing of the product;

(j) Any cannabis product that the Department determines, on a case-by-case basis, is attractive to children, as defined in Section 40410;

(k) Any cannabis product that the Department determines, on a case-by-case basis, is easily confused with commercially available foods that do not contain cannabis.

(l) Any cannabis product in the shape of a human being, either realistic or caricature, animal, insect, or fruit.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26130, Business and Professions Code; Section 37104, Food and Agricultural Code.

Manufacturing

What are Manufacturer requirements for edible products?

§40305. Requirements for Manufacturer – Requirements Edible, Oral Consumption

(a) Edible cannabis products shall not contain more than ten (10) milligrams of THC per serving.

(b) Edible cannabis products shall not contain more than one hundred (100) milligrams of THC per package.

(c) Except for cannabis, cannabis concentrate, or terpenes, no product ingredient or component shall be used in the manufacture of an edible cannabis product unless that ingredient or component is permitted by the United States Food and Drug Administration for use in food or food manufacturing, as specified in Everything Added to Food in the United States, available at

https://www.fda.gov/Food/IngredientsPackagingLabeling/FoodAdditivesIngredients/ucm115326.htm

(d) Edible cannabis products that consist of more than a single serving shall either be:

(1) Scored or delineated to indicate one serving if the edible cannabis product is in solid form. For purposes of this section, “delineated” includes directly marking the product to indicate one serving or providing a means by which a consumer can accurately identify one serving; or

(2) If the edible cannabis product is not in solid form, packaged in a manner such that a single serving is readily identifiable.

(e) Each serving of an edible cannabis product in a multi-serving package shall be homogenized to contain the same concentration of THC, within the variance established by the Bureau through regulation in Section 5716 of Title 16 of the California Code of Regulations.

Authority: Sections 26012; 26013; and 26130 Business and Professions Code. Reference: Sections 26011.5; and 26130, Business and Professions Code.

Manufacturing

CDPH

What are Manufacturer requirements for topical products and concentrates?

Manufacturer – Topical, Lotions, Emulsions, Concentrates

The following addresses requirements for Manufacturer – Topical, Lotions, Emulsions, Concentrates.

§40306. Requirements for Topical Cannabis Products, Concentrates, and Other Cannabis Products.

Manufacturer - Topical, Lotions, Emulsions, Concentrates,
California Dept. of Public Health

(a) A cannabis product that is not an edible cannabis product and that is manufactured for the adult-use market shall not contain more than 1,000 mg of THC per package.

(b) A cannabis product that is not an edible cannabis product and that is manufactured for the medicinal market shall not contain more than 2,000 mg of THC per package.

(c) Topical cannabis products shall only contain ingredients permitted for cosmetic manufacturing in accordance with Title 21, Code of Federal Regulations, Part 700, subpart B (section 700.11 et seq.) (Rev. March 2016), which is hereby incorporated by reference

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26011.5, Business and Professions Code

Manufacturing

What are Manufacturer requirements for failed batches?

§40310. Failed Product Batches.

(a) No finished cannabis product shall contain a contaminant identified in Section 26100 of the Act at a level set by the Bureau in Section 5718 to 5723, inclusive, of Title 16 of the California Code of Regulations. Any cannabis product batch that fails a laboratory testing requirement required by section 26100 of the Act is adulterated and may be embargoed pursuant to section 26133 of the Act.

(b) Any cannabis product batch that fails quality assurance review required pursuant to section 26100 of the Act is misbranded and may be embargoed pursuant to section 26133 of the Act.

(c) Failed product batches shall be destroyed unless a corrective action plan for remediation or reprocessing is approved by the Department. Corrective action plans shall be approved by the Department on a case-by-case basis.

(d) Remediation or reprocessing of failed product batches or the use of harvest batches that have failed any laboratory test shall comply with any requirements and procedures established by the Bureau in Sections 5727 and 5728 of Title 16 of the California Code of Regulations, in addition to the requirements of this chapter.

(e) Edible products that fail laboratory testing requirements shall not be remediated or reprocessed and shall be destroyed. If any edible product that has failed laboratory testing is remediated, reprocessed, or otherwise mixed with another batch of cannabis product, such action shall render the final cannabis product adulterated, regardless of the defect level of the final cannabis product.

(f) Notwithstanding subsection (e), a cannabis product that is determined through laboratory testing to be labeled with an incorrect amount of THC per package or per serving may be relabeled with the correct information in accordance with a corrective action plan approved by the Department, provided that the THC limits under Sections 40305 and 40306 are met.

(g) Prior to any remediation or reprocessing of a failed product batch or the use of a failed harvest batch, the licensee shall submit a corrective action plan to the Department to include, at minimum, a description of how the product or harvest batch will be remediated such that the product or any product produced therefrom will meet all laboratory testing and quality assurance requirements. A failed product or harvest batch shall not be remediated or reprocessed by a licensee unless the Department has approved the licensee’s corrective action plan. Remediation or reprocessing of edible products shall not be approved.

(h) Any remediation or reprocessing of a product batch that has failed laboratory testing or quality assurance review or the use of a failed harvest batch by a licensee shall be documented in the manufacturing records. All remediated product batches and products produced therefrom shall be tested and undergo quality assurance review in accordance with the requirements established by the Bureau in Article 7 of Chapter 6 of Division 42 of Title 16 of the California Code of Regulations prior to retail sale.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26131, Business and Professions Code.

Manufacturing

What are the general requirements for a Manufacturer for labeling and packaging?

§40400. Applicability. (a) The requirements in this subchapter shall apply to finished cannabis products and shall not apply to cannabis or cannabis products that are transferred between licensees for purpose of further processing or packaging. (b) Except as otherwise provided in Section 40601, the requirements of this subchapter shall apply to any cannabis product manufactured on or after January 1, 2018. Authority: Section 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26130; Business and Professions Code. §40401. Release to Distributor as Finished Product. Prior to release of a product to a distributor, a licensee shall ensure that the product is in finished form and is labeled and packaged in its final form for sale.

Authority: Section 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5 and 26130, Business and Professions Code.

Manufacturing

What are the Manufacturer labeling requirements?

§40403. General Provisions.

(a) Any information required to be listed on a label shall be written in English.

(b) A label shall be unobstructed and conspicuous so that it can be read by the consumer.

(c) All required label information shall be located on the outside container or wrapper of the finished product to be sold at a retailer.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26120, Business and Professions Code.

§40405. Primary Panel Labeling Requirements: All Products.

(a) The label for a cannabis product shall include a primary panel that includes the following information in a type size no less than 6 point font and in relation to the size of the primary panel and container:

(1) The identity of the product in a text size reasonably related to the most prominent printed matter on the panel;

(2) The universal symbol as prescribed in Section 40412;

(3) The net weight or volume of the contents of the package;

(4) The THC content and CBD content for the package in its entirety expressed in milligrams per package.

(b) Nothing in this section prohibits the inclusion of additional information on the primary panel. The content of other cannabinoids or terpenes may be included if such information is verified by the certificate of analysis issued by a licensed testing laboratory.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26120, Business and Professions Code. §40406.

Additional Primary Panel Labeling Requirements: Edible Products. In addition to the requirements of Section 40405, the primary panel of an edible cannabis product shall include the following information:

(a) The words “cannabis-infused” immediately above the identity of the product in bold type and a text size larger than the text size used for the identity of the product.

(b) The THC content and CBD content per serving expressed in milligrams per serving.

Authority: Sections 26012; 26013; 26120; and 26130, Business and Professions Code. Reference: Section 26120, Business and Professions Code.

§40408. Informational Panel Labeling Requirements.

(a) The label for a cannabis product shall include an informational panel that includes the following:

(1) The licensed manufacturer and its contact number or website address;

(2) The date of the cannabis product’s manufacture and packaging;

(3) The following statement in bold print: “GOVERNMENT WARNING: THIS PRODUCT CONTAINS CANNABIS, A SCHEDULE I CONTROLLED SUBSTANCE. KEEP OUT OF REACH OF CHILDREN AND ANIMALS. CANNABIS PRODUCTS MAY ONLY BE POSSESSED OR CONSUMED BY PERSONS 21 YEARS OF AGE OR OLDER UNLESS THE PERSON IS A QUALIFIED PATIENT. THE INTOXICATING EFFECTS OF CANNABIS PRODUCTS MAY BE DELAYED UP TO TWO HOURS. CANNABIS USE WHILE PREGNANT OR BREASTFEEDING MAY BE HARMFUL. CONSUMPTION OF CANNABIS PRODUCTS IMPAIRS YOUR ABILITY TO DRIVE AND OPERATE MACHINERY. PLEASE USE EXTREME CAUTION.”

(4) If the cannabis product is intended for sale in the medicinal-use market, the statement “FOR MEDICAL USE ONLY;”

(5) A list of all product ingredients in descending order of predominance by weight or volume;

(6) If the edible cannabis product contains an ingredient, flavoring, coloring, or an incidental additive that bears or contains a major food allergen, the word “contains,” followed by a list of the applicable major food allergens;

(7) If an edible cannabis product, the names of any artificial food colorings contained in the product;

(8) If an edible cannabis product, the amount, in grams, of sodium, sugar, carbohydrates, and total fat per serving;

(9) Instructions for use, such as the method of consumption or application, and any preparation necessary prior to use;

(10) The product expiration date, “use by” date, or “best by” date, if any; and

(11) The UID and, if used, the batch number.

(b) The informational panel text shall be in a text size of no less than 6 point font and in relation to the size of the primary panel and container unless there is the insufficient area on the container available to print all the required information in a text size of no less than 6 point font. In such a case, the label shall include the warning statements required by paragraph (3) in a text size of no less than 6 point font, and the product shall be accompanied by a supplemental labeling that includes all of the information required by this section. The text of the supplemental labeling shall be no less than 8 point font.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26120; and 26121, Business and Professions Code.

§40410. Labeling Restrictions. The label shall not contain any of the following:

(a) Claims that the cannabis product was produced from cannabis grown in a California county when the cannabis was not grown there.

(b) The name of a California county unless the cannabis used in the product was grown there.

(c) Content that is or designed to be attractive to individuals under the age of 21, including but not limited to:

(1) Cartoons;

(2) Any likeness to images, characters, or phrases that are popularly used to advertise to children;

(3) Any imitation of candy packaging or labeling; or

(4) The terms “candy” or “candies.”

(d) Any information that is false or misleading.

(e) Any health-related statement that is untrue or misleading. Any health-related statement must be supported by the totality of publicly available scientific evidence (including evidence from well-designed studies conducted in a manner which is consistent with generally recognized scientific procedures and principles), and for which there is significant scientific agreement, among experts qualified by scientific training and experience to evaluate such claims.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26062.5; 26120; 26121; and 26154, Business and Professions Code.

§40411. Statement of Characteristic Anticipated Effects.

A cannabis product may include information on the characteristic anticipated effects of the cannabis product if the manufacturer has substantiation that the information is truthful and not misleading. Such information may be located on the informational panel of the label or as an insert included in the product package.

For purposes of this section, “characteristic anticipated effect” includes any physiological effect (a temporary effect on the body related to the consumption of cannabis) that is common to or expected from the particular cannabis strain, but excludes any claim of health benefits (i.e. claims of therapeutic action as a result of the consumption of cannabis)

Authority: Sections 26012; 26013, and 26130, Business and Professions Code. Reference: Sections 26120; and 26130, Business and Professions Code.

§40412. Universal Symbol.

The primary panel of a cannabis product shall be marked, stamped, or otherwise imprinted with the universal symbol.

(a) The symbol shall replicate the following in form and shall be black in color:

(b) The symbol shall be no smaller in size than half (.5) inch by half (.5) inch and shall be printed legibly and conspicuously. For packaging that is dark in color, the symbol may be made conspicuous by printing the symbol on or outlining the symbol with, a contrasting color.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26120; 26121; and 26130, Business and Professions Code.

What are the Manufacturer packaging requirements?

Manufacturer – Packaging Requirements

The manufacturer packaging requirements are

§40415. Packaging. A package used to contain a cannabis product shall adhere to the following requirements:

(a) The package shall protect the product from contamination and shall not expose the product to any toxic or harmful substance.

(b) The package shall be tamper-evident, which means that the product shall be packaged in packaging that is sealed so that the contents cannot be opened without obvious destruction of the seal.

(c) The package shall be child-resistant. A package shall be deemed child-resistant if it satisfies the standard for “special packaging” as set forth in the Poison Prevention Packaging Act of 1970 Regulations (16 C.F.R. §1700.1(b)(4)) (Rev. December 1983), which is hereby incorporated by reference.

(d) The package shall not imitate any package used for products typically marketed to children.

(e) If the product is an edible product, the package shall be opaque.

(f) If the package contains more than one serving of cannabis product, the package shall be re-sealable so that child-resistance is maintained throughout the life of the package.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26120; and 26121, Business and Professions Code

Packaging

What are Manufacturer Record-Keeping Requirements?

Manufacturer Record-Keeping Requirements

This question contains the Manufacturer Record-Keeping Requirements

§40500. Record-Keeping Requirements.

(a) The licensee shall have the following documents available on the premises at all times and shall make the documents available to the Department and any enforcement agency upon request:

(1) The valid state license issued by the Department;

(2) Any other valid license issued by a state cannabis licensing agency;

(3) The valid license, permit, or other approval issued by the local jurisdiction;

(4) The premises diagram, as specified in Section 40131;

(5) The current standard operating procedures as defined in Section 40275;

(6) Shipping manifests;

(7) Employee records, including evidence of employee qualifications and training procedures and logs, as specified in Section 40280; and

(8) Any other record or documentation required to be kept pursuant to this Chapter or the Act.

(b) The records required pursuant to subsection (a) shall be maintained on the premises in a manner immediately accessible to the Department and any enforcement agencies upon request for a period of seven (7) years. Outdated standard operating procedures shall not be accessible to onsite employees.

(c) All documentation shall be maintained in English.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; and 26160, Business and Professions Code.

Track-Trace

What are the Manufacturer Track and Trace requirements?

§40510. Track-and-Trace System General Requirements.

(a) A licensee shall enter all commercial cannabis activities into the track-and-trace system within 24 hours of occurrence.

(b) Within ten (10) calendar days of notification from the Department that the annual license application fee has been processed, a licensee shall register for track-and-trace system training provided by the Department of Food and Agriculture or its designee.

(c) If a licensee has not registered for track-and-trace system training pursuant to subsection (b), the licensee shall register for training within five (5) business days of notification from the Department that the annual license has been approved.

(d) A licensee shall designate at least one owner to be the track-and-trace system account manager. The track-and-trace system account manager shall have the following responsibilities:

(1) Designate authorized track-and-trace system users and require designated users to be trained in the proper and lawful use of the track-and-trace system before the designated user can access the system;

(2) Maintain an accurate and complete list of all track-and-trace system account managers and users and update the list within three (3) business days upon any change;

(3) Ensure that each track-and-trace account manager and user has a unique login, consisting of a username and password, which shall not be shared with or used by any other person;

(4) Immediately cancel any track-and-trace system account manager or user from a track-and-trace system account if the individual is no longer a licensee representative;

(5) Obtain UID tags from the Department of Food and Agriculture, or its designee, and ensure that a sufficient supply of UIDs is available at all times;

(6) Ensure that all inventory is tagged and entered in the track-and-trace system as required by Section 40512;

(7) Correct any information that is entered into the track-and-trace system in error within three (3) business days of discovery of the error;

(8) Monitor all notifications from the track-and-trace system and resolve all issues identified in the notification. The notification shall not be dismissed by an account manager until the issue(s) identified in the notification has been resolved.

(e) No person shall intentionally misrepresent or falsify information entered into the track-and-trace system. The track-and-trace system shall be the system of record. The licensee is responsible for the accuracy and completeness of all data and information entered into the track-and-trace system. Information entered into the track-and-trace system shall be assumed to be accurate and may be used to take enforcement action against the licensee if not corrected.

(f) The licensee is responsible for all actions that a track-and-trace system account manager or user acting as a licensee representative takes while logged into the track-and-trace system or otherwise conducting commercial cannabis activities.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26067; and 26160, Business and Professions Code

§40512. Track-and-Trace System Reporting Requirements.

(a) A system account manager or user shall record all of the following activities in the track-and-trace system within 24 hours of the activity:

(1) Receipt of cannabis material;

(2) The transfer to or receipt of cannabis products for further manufacturing from another licensed manufacturer; and

(3) All changes in the disposition of cannabis or cannabis products. A change in disposition includes, but is not limited to:

(A) Processing of the cannabis or further processing of the cannabis product; and

(B) The packaging of the cannabis products.

(4) Transfer of cannabis products to a distributor.

(b) The following information shall be recorded for each activity entered into the track-and-trace system:

(1) The licensed entity from which the cannabis material or product is received, including that entity’s license number, and the licensed entity to which the cannabis product is transferred, including that entity’s license number.

(2) The name and license number of the distributor that transported the cannabis material or cannabis product.

(3) The type of cannabis material or cannabis product received, processed, manufactured, or transferred.

(4) The weight or count of the cannabis material or cannabis product received, processed, packaged, or transferred.

(5) The date and time of receipt, processing, packaging, or transfer.

(6) The UID assigned to the cannabis material or cannabis product.

(7) Any other information required by other applicable licensing authorities.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26067; and 26160, Business and Professions Code

§40513. Track-and-Trace System – Loss of Access.

(a) If a licensee loses access to the track-and-trace system for any reason, the licensee shall prepare and maintain comprehensive records detailing all required inventory tracking activities conducted during the loss of access.

(b) Upon restoration of access to the track-and-trace system, all inventory tracking activities that occurred during the loss of access shall be entered into the track-and- trace system within three (3) business days.

(c) A licensee shall document the date and time when access to the track-and-trace system was lost and when it was restored and the cause for each loss of access.

(d) A licensee shall not transfer cannabis products to a distributor until such time as access to the track-and-trace system is restored and all information is recorded into the track-and-trace system.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26067; and 26160, Business and Professions Code

§40515. Track-and-Trace System – Temporary Licenses.

(a) A licensee operating under a temporary license issued pursuant to Section 40126 is not required to record commercial cannabis activity in the track-and-trace system as otherwise required by this article. Temporary licensees shall track all commercial cannabis activities on a paper sales receipt or invoice that includes the following information:

(1) Name, address, and license number of the seller;

(2) Name, address, and license number of the purchaser,

(3) Date of sale or transfer and invoice number;

(4) Description or type of cannabis or cannabis product;

(5) Weight or quantity of cannabis or cannabis product sold or transferred;

(6) The cost to the purchaser of the cannabis or cannabis product.

(b) After issuance of an annual license, the licensee may continue to conduct commercial cannabis activities with temporary licensees in accordance with subsection (a). Any commercial cannabis activity conducted between annual license holders shall be recorded in the track-and-trace system.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26067; 26160; and 26161 Business and Professions Code.

§40517. Track-and-Trace System – UID Tag Order.

(a) A licensee shall order UID tags within five (5) business days of receiving access to the track-and-trace system. The receipt of the UID tags by the licensee shall be recorded in the track-and-trace system within three (3) business days of receipt.

(b) Any licensee in operation at the time access to the track-and-trace system is granted shall input all inventory into the track-and-trace system no later than 30 calendar days after receipt of the UID tags.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26067; 26160; and 26161, Business and Professions Code.

METRC

What are the Manufacturer advertising requirements?

§ 40525. Advertising and Marketing.

(a) A licensee shall ensure that all advertising and marketing of its cannabis products meet the requirements of Chapter 15 (commencing with section 26150) of the Act. Any health-related statement shall also meet the requirements of section 40410. (

b) A licensee shall accurately and legibly include its name and license number on all advertising and marketing for its products.

(c) A licensee shall maintain records and documentation to establish that its advertising and marketing meet the requirements of Chapter 15 (commencing with section 26150) of the Act. The records shall be maintained in accordance with section 26160 of the Act and Section 40500 of this chapter.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26150, Business and Professions Code.

Advertising – Marketing

What are the Manufacturer inspection requirements?

§40550. Inspections.

(a) The Department and its inspectors or agents may conduct an on-site inspection prior to issuing a new or renewal license.

(b) The Department and its inspectors or agents shall have access at reasonable times to the manufacturing premises, storage areas, records, production processes, labeling and packaging processes, and conveyances used in the manufacture, storage or transportation of cannabis products so that it may determine compliance with the provisions of the Act and these regulations. Departmental inspections shall include all pertinent equipment, raw material, finished and unfinished materials, containers, packaging, and labeling that has a bearing on whether the cannabis product complies with the Act and these regulations

(c) The Department may inspect any record or document that has a bearing on whether the labeling, advertising or marketing of a cannabis product complies with the requirements of Chapter 15 (commencing with section 26150) of the Act.

(d) To the extent necessary for the enforcement of the Act and this chapter, the Department may secure any sample or specimen of any cannabis product or ingredient used therein by the manufacturing operation. The Department’s inspector or agent shall leave a receipt for the licensee describing any sample obtained prior to leaving the premises.

(e) The Department may analyze or examine any sample obtained. If an analysis is made of a sample, a copy of the results of the analysis shall be promptly furnished to the licensee by the Department.

(f) The Department may conduct investigations concerning the adulteration, misbranding, false or misleading advertising or marketing, or unlicensed production of any cannabis product including the ability to enter and inspect any place where any cannabis product is suspected of being manufactured or held in violation of the Act or these regulations.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26130; 26132; 26133; 26134; 26135; and 26160, Business and Professions Code.

Humboldt Delivers

Testing Lab

What are the Manufacturer transitional requirements?

§40600. License Designations.

Notwithstanding any other provision, until July 1, 2018, licensees may conduct commercial cannabis activities with any other licensee, regardless of the A or M designation on the license.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Section 26050,

Business and Professions Code. §40601.

Packaging and Labeling. –  Any cannabis product that is in possession of a manufacturer prior to January 1, 2018, and that does not meet all applicable requirements of Subchapter 5 may enter into the commercial cannabis market provided that all of the following conditions are met:

(a) The cannabis product is packaged in child-resistant packaging that meets the requirements of subsection (c) of Section 40415. A secondary package that is child resistant shall be sufficient to meet the requirements of this subsection.

(b) The cannabis product contains the government warning required pursuant to paragraph (3) of subsection (a) of Section 40408. A sticker with the required statement that is placed on the outside of the package or secondary package shall be sufficient to meet the requirements of this subsection.

(c) The cannabis product meets the applicable THC limits under Sections 40305 or 40306.

(d) The cannabis product contains the amount of THC and, if applicable, CBD per serving and per package. A sticker with the THC and CBD amount that is placed on the outside of the package or secondary package shall be sufficient to meet the requirements of this subsection.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26050; 26120; and 26130, Business and Professions Code.

Manufacturing

What are Standard Conditions of Probation?

Standard Conditions of Probation

The protection of the public is the highest priority of the Bureau. In disciplinary matters where probation as been imposed, the Bureau believes conditions should be imparted to ensure public protection and to allow the probationer the opportunity to demonstrate rehabilitation. The following conditions of probation provide for consumer protection and establish a mechanism to monitor the rehabilitation progress of a probationer.

Generally, the Bureau recommends a minimum of three (3} years’ probation, Introductory Language and Conditions 1-7 are required as follows:

1. OBEY LAW’S Respondent shall obey all state and Local laws. A full and detailed account of any and all violations of laws shall be reported by the respondent to the Bureau in writing within seventy-two (72) hours of occurrence, To permit monitoring of compliance with this condition, respondent shall submit completed fingerprint forms and fingerprint fees within 45 days of the effective date of the decision, unless previously submitted as part of the licensure application process.

CRIMINAL COURT ORDERS: If respondent is under criminal court orders, including probation or parole, and the order is violated, this shall be deemed a violation of these probation conditions, and may result in the filing of an accusation and/or petition to revoke probation.

2. SUBMIT WRITTEN REPORTS Respondent, during the period of probation, shall submit or cause to be submitted such written reports/declarations and verification of actions under penalty of perjury, as required by the Bureau, but no more frequently than once each calendar quarter. These reports/declarations shall contain statements relative to respondent’s compliance with all the conditions of the Bureau’s Probation. Program. Respondent shall immediately execute all release of information forms as may be required by the Bureau or its representatives.

3. REPORT IN PERSON Respondent, during the period of probation, shall appear in person at interviews/meetin6s as directed by the Bureau or its representatives.

4. COMPLY WITH CONDITIONS OF PROBATION Respondent shall fully comply with the conditions of probation established by the Bureau and cooperate with representatives of the Bureau in its monitoring and investigation of the respondent’s compliance with the Bureau’s Probation Program. Respondent shall inform the Bureau. in writing within no more than 15 days of any address change. Upon successful completion of probation, respondent’s license shall be fully restored.

5. POSTING OF SIGN During the period of suspension, Respondent shall prominently post a sign or sins, provided by the Bureau, indicate the beginning and ending dates of the suspension and be indicating the reason for the suspension. The sign or signs shall be conspicuously displayed in a location or locations open to and frequented by customers. The locat.ion(s) of the s~gn(s) shall be approved by the Bureau and shall remain posted during the entire period of actual suspension. Additionally, the Respondent shall circulate a notice of the conditions of probation to al] employees, and post the notice in a conspicuous place where notices to employees are posted or available to employees. New employees shall also be provided a copy of the notice of the conditions of probation.

6. MAINTAIN VALID LICENSE Respondent shall, at all times while on probation, maintain a current and valid license with the Bureau, including any period during which suspension or probation is tolled.

7. COST RECOVERY Respondent shall pay to the Bureau costs associated with its investigation and enforcement pursuant to Business and Professions Code Section 26031 in the amount of money Respondent shall be permitted to pay these costs in a payment plan approved by the Bureau, with payments to be completed no later than three months prior to the end of.the probation term.

If respondent has not complied with this condition during the probationary term, and respondent has presented sufficient documentation of his or her good faith efforts to comply with this condition, and if no other conditions have been violated, the Bureau, in its discretion, may grant an extension of the respondent’s probation period up to one year without further hearing in order to comply with this condition. During the one year extension, all original conditions of probation will apply.

8. LICENSE SURRENDER During respondent”s term of probation, if he or she ceases business or is otherwise unable to satisfy the conditions of probation, respondent may surrender his or her license to the Bureau The Bureau reserves the right to evaluate respondent”s request and to exercise its discretion whether to grant the request, or to take any other action deemed appropriate and reasonable under the circumstances, without further hearing.

Upon formal acceptance of the tendered license, respondent will~no longer be subject to the conditions of probation. Surrender of respondent’s license shall be considered a disciplinary action and shall become a part of respondent’s license history with the Bureau.

9. VIOLATION OF PROBATION If a respondent violates the conditions of his or her probation, the Bureau after giving the respondent notice and an opportunity to be heard, may set aside the stay order and impose the stayed discipline (revocation/suspension) of the respondent’s license.

If during the period of probation, an accusation or petition to revoke probation. is filed against respondent’s license, or the Bureau has served the respondent a notice of intent to set aside the stay, the Bureau shall have continuing jurisdiction, and the probationary period shall automatically be extended and shall not expire until final resolution of the matter.

Ownership 

What are core Disciplinary Guidelines?

Bureau Cannabis Control – Disciplinary Guidelines

I. INTRODUCTION Pursuant to Business and Professions Code section 26011.5, the protection of the public is of the highest priority for the Bureau of Cannabis Control (Bureau). In keeping with its mandate to protect the public, the Bureau has adopted these recommended uniform guidelines in order to promote consistency in disciplinary orders for similar offenses on a statewide basis. This document is intended for use by those involved in- the administrative disciplinary process (e.g., Administrative Law Judges (ALJ)-, Deputy AtCorneys General {DAG), Bureau licensees and their legal counsel, and other interested parties), and may be revised from time to time, and distributed to interested parties upon request. The Bureau requests t11at the suggested disciplinary orders contained in these guidelines be levied consistently and appropriately, based on the nature and seriousness of the violations) confirmed in an administrative action. The BureaEi recognizes that mitigating or aggravating circumstances, in addition to other factors, may necessitate departure from these recommended orders and terms of probation.. If there are any deviations from the guidelines, the Bureau requests that the ALJ hearing the matter include an explanation in the Proposed Decision so that the circumstances can be better understood and evaluated by the Bureau before final action is taken. Additionally, these guidelines only apply to formal administrative disciplinary processes. These guidelines do not apply to other alternatives available to the Bureau, such as administrative citations and fines, except in cases where an Accusation has been filed against a registrant or licensee for failure to pay an assessed. administrative fine and/or comply with an order of abatement issued by the Bureau.

II. FACTORS TO BE CONSIDERED IN DETERMINING PENALTIES In determining whether revocation, suspension, probation, fine, or a combination is to be imposed in a given case, factors such as the follotivina should be considered: 1. Nature and severity of the act(s), offenses, or crimes) ul~der consideration. 2. Actual or potential harm to the public. 3. Actual or potential harm to any patient. 4. Prior disciplinary record. ~. Number and/or variety of current violations. 6. Mitigating evidence. 7. Rehabilitation evidence, including but not limited to, a statement of rehabilitation containing any evidence that demonstrates fitness for licensure, or a certificate of rehabilitation under Penal Code section 4852.01. g. In case of a criminal conviction, compliance with conditions of sentence and/or courtordered probation. 9. Overall criminal record. 1Q. Tiine passed since the acts) or offenses) occurred. 11. If applicable, evidence of expun~ement proceedings pursuant to Penal Code Section. 1203.x.

III. DISCIPLINARY GUIDELINES The Medicinal and Adult-Use Cannabis Re~u(ation and Safety Act (I~TAUCRSA) specifies the offenses fir tiahich the Bureau may take disciplinary action. Following are samples of the codes and regulation numbers, titles of the offenses and the associated Bureau determined disciplinary recommendations. When filing an accusation, the Bureau or Office of the Attorney General are not limited to the violations listed herein. They may also cite any and all additional related statutes and regulations violated not listed below. The fo(lowin~ is not a comprehensive list of potential violations and in no way, should limit the Bureau or the Attorney General’s Office from asserting any relevant and applicable violation. The Bureau suggests that for cases with multiple violations, suspensions or other disciplines run concurrently. All standard terms of probation as stated herein shall be included for all probations. As used herein, statutes and regulations are referenced as follows: Business and Professions Cade: (B&P) Title 16, California Code o~Regulations: (CCR) Penal Code: (PC) California Code of Regulations Disciplinary Order Guidelines -Tier 1 Minimum: revocation stayed, 5 to 1~-day suspension, a fine (as determined by the “Fine Formula” below), or a combination of a suspension and fine. Maximum: revocation Tier 1 discipline is recommended for: • violations which are potentially harmful…….. Violations of the following codes are representative of this category:

Proposed Regs. – October 19, 2018

This section has been revised to reflect the accurate date of the Disciplinary Guidelines. This is necessary as the proposed regulations and Disciplinary Guidelines are amended throughout the regulatory process.

Section I of the Disciplinary Guidelines provides a brief description of the guidelines as well as providing information regarding the intended use of the Disciplinary Guidelines. Section I has been revised to remove the phrase “against a registrant or licensee,” from the third paragraph. This is necessary to provide additional clarity.

Section II of the Disciplinary Guidelines contains the factors to be considered in determining penalties. This section provides some level of consistency in determining penalties as the listed factors may all be considered when determining a penalty. The factors take into consideration things such as the actual or potential harm caused by the violation, the licensee’s history of committing violations, and any mitigating circumstance. Section II of the Disciplinary Guidelines has been amended to add the nature and severity of the violations, as a factor to be considered. This is necessary to clarify that violations are included and considered part of the acts and offenses under consideration for discipline and probation. Whether the licensee has been convicted of a felony based on possession or use of cannabis goods that would not be a felony if the person was convicted during the time of licensure. This is necessary for consistency with the factors considered when issuing a license.

Section III contains the disciplinary guidelines. The types of violations have been categorized into three tiers. Tier 1 contains a list of violations that have been determined to be the least potentially harmful. Penalties for tier 1 violations range from suspension or fine, to revocation. Tier 2 violations typically involve a more serious potential for harm or a greater risk and disregard for public safety. Tier 2 violations are potentially more harmful that tier 1 violations, but less harmful than tier 3 violations. The recommended penalty for a tier 2 violation is generally more severe than the penalty for a tier 1 violation. Tier 3 violations involve a knowing or willful violation of the rules or fraudulent acts relating to the licensee’s business. Tier 3 violations are potentially the most harmful. The recommended penalty for tier 3 violations is generally a longer suspension, a larger fine, or revocation.

The Disciplinary Guidelines have also been amended to include and more accurately reflect the changes in the proposed regulations. This includes adding language to clarify the violations. This includes specifying and clarifying language under Section III, and the Disciplinary Order Guidelines, that failure to pay appropriate fees; failure to destroy a license; use of a cannabis diffuser or vaporizer on the licensed premises; failure of a licensee or employee to properly display a licensee-issued identification badge; giving away or furnishing of free cannabis accessories; failure to comply with security measures; unauthorized distribution activities; improper transfer of cannabis goods between retailer premises; allowing for the sale, storage or consumption of alcoholic beverages on licensed premises; failure to comply with accounting requirements; and making false or misleading health-related statements, may be considered violations subject to discipline under Tier 1 of the disciplinary order guidelines.

Testing procedures were also added to Tier 1 violation descriptions, including the failure to maintain proper chain of custody of a testing sample, failure to submit a certificate of analysis and results to the Bureau in a timely manner, and failure to supply requested data to the Bureau in a timely manner as it relates to the data package required under proposed section 5732. This was necessary to make distinct certain requirements and violations that would not fall under Tier 2, where violations of other testing requirements are encompassed.

Changes also include removal of certain violation descriptions, such as failure to comply with a record of sales requirements under section 5425, and its ensuing authority reference, as well as the authority for cannabis destruction under section 5055, as these sections were removed from the proposed regulations. These violations descriptions are amended or added to tier 1 as serious offenses not rising to the level of tier 2 or tier 3 violations, based on, but not limited to, the seriousness of the offense and potential or resulting harm, the protection of the public as a priority, and the probable degree of intentional or willful misconduct.

Some violation descriptions were moved from Tier 2 violations to Tier 1 violations after consideration of comments as concerns and/or questions relating to certain operations and activities. Violation descriptions relating to the failure to confirm the age of customers, failure to properly display cannabis goods, and the unauthorized return of cannabis goods, were moved to Tier 1, as violations that are less potentially harmful, and may occur more frequently due to licensee confusion and/or education and training.

Additional violation descriptions added to Tier 2 of the Disciplinary Order Guidelines, include, holding an interest in a licensed testing laboratory and another non-laboratory commercial cannabis license, sale or delivery of cannabis goods to persons within a motor vehicle, unauthorized storefront activities with a non-storefront license, failure to ensure proper sampling, unauthorized remediation of failed sample batches, engaging in any prohibited restraint of trade or other prohibited act to create a monopoly or injure competitors, violating a building standard or regulation relating to hazardous materials, and failing to comply with manufacturing standards. These violations descriptions are added to tier 2 as serious offenses not rising to the level of tier 3 violations, based on, but not limited to, the seriousness of the offense, the protection of the public as a priority, and the probable degree of intentional or willful misconduct.

Changes to the violation description relating to the failure to verify age of customers was changed to a failure to confirm age of customers, to more accurately reflect the language used in the proposed regulations, under proposed section 5404.

Testing procedure violations were also added to Tier 2 violation descriptions, including the failure to present an entire cannabis goods batch with accurate information and in its final form, reporting results when laboratory quality control data is outside of acceptance criteria or not properly analyzed, failure to follow good laboratory practices, failure to obtain a representative sample, and unauthorized re-sample or re-testing. This was necessary to make distinct certain requirements and violations from other similar violations of testing requirements under Tier 2.

Additional violation descriptions added to Tier 3 of the Disciplinary Order Guidelines, include, engaging in business modification practices without Bureau approval, restricting or hindering the examination of equipment, failing to notify the Bureau of labor standards violations, false reporting of a disaster, retail sale of untested cannabis goods, unauthorized release of patient information, sale of customer-returned cannabis goods, failure to provide access for inspection, conviction of a crime substantially related to qualifications for licensure, and failure to pay taxes. These violations descriptions are added to tier 3 violations, based on, but not limited to, the seriousness of the offense, the protection of the public as a priority, and the probable degree of intentional or willful misconduct.

Testing procedure violations were also added to Tier 3 violation descriptions, including the unauthorized release of a cannabis goods batch for retail or distribution transfers, failure to complete all required analysis at one licensed laboratory premises or otherwise allowing for subcontracting of testing, and amending or changing a regulatory compliance certificate of analysis after issuance. This was necessary to make distinct certain requirements and violations of testing requirements that are more serious in nature than other violations of testing requirements under Tier 1 or Tier 2. Violation descriptions relating to the unauthorized release of a cannabis goods batch for retail sale was clarified to include dry-labeling and false reporting of results.

These additional violation descriptions are not additional restrictions or prohibitions for licensees. They are existing rules and regulations, for which the Bureau may enforce and take action on. They are included in the Disciplinary Order Guidelines for clarification purposes, and any absence of a violation or description of a violation does not preclude the Bureau from taking necessary administrative, or other, action against a licensee.

The minimum and maximum fine amounts have also been amended to more accurately reflect the changes in the fee schedule under proposed section 5014. Reference to proposed section 5015 was also changed to section 5014, to more accurately reflect the license fee schedule. The section has also been clarified to add that the maximum fine amounts listed do not limit any statutorily provided fine amount that exceeds the maximum fine amount listed. This is clarified through Business and Professions Code section 26160 which provides that a licensee can be subject to up to $30,000 for violating the requirement to maintain or provide records. Additionally, the minimum fine amount is clarified as not being less than $1,000 for any violation. This is necessary to establish a base penalty amount for violating provisions of the Act or its implementing regulations.

The Cannabis Sales used in the fine formula was revised to Gross Revenue, a determination that will be more easily made by all licensees and which is used to calculate the fees. The Number of Days Open in Calculation Period was amended to The Number of Days During the Preceding 12 Months, to provide a more determinative figure in calculating the average daily sale amount. This was also necessary as there have been comments and concerns as to how to determine the number of days open in a calculation period. Additionally, the formula was amended to use 50% of the average daily sale amount to determine the potential fine amount, a figure that creates a more reasonable calculation and potential fine amount, based off the changes to the annual license fee schedule.

The fine amount schedule was amended to reflect the changes in the annual license fee schedule, which was amended to adjust the calculation of the license fee based off of gross revenues, instead of the value of operations. The fine amounts were adjusted to a calculation of a minimum fine that is half of the associated license fee amount, and a maximum fine that is double the associated license fee amount. This was necessary to provide a more reasonable fee calculation and scale that reflects the operations of the licensee and its violations.

Typing and grammatical errors were addressed, and changes made, specifically, under the Disciplinary Order Guidelines authority, for all tiers, to remove reference to title 16 of the California Code of Regulations, as redundant, and to Section VI, Standards Conditions of Probation, including specifying that the required introductory language and conditions include sections 1 through 9.

Section IV of the Disciplinary Guidelines were amended, under the provision to obey all laws, to clarify that the respondent under criminal court orders applies to all individual owners of the licensee probationer, and that the provision pertaining to reporting in person, is amended to clarify that the respondent licensee on probation, through a designated owner-individual, is the responsible party to report in person. Additionally, the fifteen days under subsection 4, to Comply with Conditions of Probation was also amended to clarify that the days referenced are calendar days, to avoid confusion or ambiguity.

Bureau of Cannabis Control

Disciplinary Guidelines

 

What is covered by required testing by a Testing Laboratory?

§ 5716. Homogeneity Testing of Edible Cannabis Products (a) The laboratory shall analyze a sample of edible cannabis product that contains more than one serving per unit to determine whether the edible cannabis product is of homogeneous THC content. (b) The laboratory sha11 perform homogeneity testing when the first batch of edible cannabis product is tested before entering the retail market. Once the initial batch of the product passes homogeneity testing, and provided that the process for manufacturing and the composition of the edible cannabis product remains the same, a batch of edible cannabis product shall be tested for homogeneity every 6 months thereafter. (c) A sample of edible cannabis product shall be deemed to have passed homogeneity testing if the relative standard deviation of THC concentration between the samples collected does not exceed plus or minus 10%. (d) If a sample fails homogeneity testing, or the laboratory fails to perform homogeneity testing as required by this section, the batch from which the sample was collected fails homogeneity testing and may not be released for retail sale. (e) If a sample passes homogeneity testing, the laboratory shall perform all other analyses required under this chapter. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5717. Moisture Content and Water Activity Testing (a) The laboratory shall analyze a sample of cannabis to determine the level of water activity and the percentage of moisture content. (b) A cannabis sample shall be deemed to have passed water activity testing if the water activity does not exceed 0.65 Aw. The laboratory shall report the result of the water activity test on the certificate of analysis (COA) and indicate “pass” or “fail” on the COA. (c) A cannabis sample shall be deemed to have passed moisture content testing if the moisture content does not exceed 13.0%. The labaratory shall report the result of the moisture content test in percentage on the COA and indicate “pass” ar “fail” on the COA.

(d) The laboratory shall analyze edible cannabis products to determine the level of water activity. A solid or semi-solid edible cannabis product shall be deemed to have passed water activity testing if the water activity does not exceed 0.85 Aw. The laboratory shall report the result of the water activity test on the COA and indicate.”pass” or “fail” on the COA. (e) If a sample fails moisture content testing, the batch from which the sample was collected fails moisture content testing and sha11 not be released for retail sale. (fl If a sample fails water activity testing, the batch from which the sample was collected fails water activity testing and shall not be released for retail sale. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5718. Residual Solvents and Processing Chemicals Testing (a) The laboratory sha11 analyze a sample of cannabis product to determine whether residual solvents or processing chemicals are present. (b) The laboratory shall report the result of the residual solvents and processing chemicals testing in unit micrograms per gram (µg/g) on the COA and indicate “pass” or “faiP’ on the COA. (c) A sample shall be deemed to have passed the residual solvents and processing chemicals testing if both of the following conditions are met: (1) The presence of any residual solvent or processing chemical listed in the following tables in Category I is not detected, and (2) The presence of any residual solvent or processing chemical listed in the following tables in Category II does not exceed the indicated action levels. Category I Residual Solvent or CAS No. Processing Chemical 1,2-Dichloroethane 107-06-2 Benzene 71-43-2 Chloroform 67-66-3 Ethylene oxide 75-21-8 Methylene chloride 62-73-7 Trichloroethylene 79-01-6

Residual Solvent or CAS No. Inhalable Cannabis and Other Cannabis and Processing Chemical Cannabis Products Cannabis Products Acetone 67-64-1 3100 5000 Acetonitrile 75-OS-8 6 410 Butane 106-97-8 5000 5000 Ethanol 64-17-5 5000 5000 Ethyl acetate 141-78-6 5000 5000 Ethyl ether 60-29-7 5000 5000 Heptane 142-82-5 5000 5000 Hexane 110-54-3 70 290 Isopropyl alcohol 67-63-0 320 5000 Methanol 67-56-1 400 3000 Pentane 109-66-0 5000 5000 Propane 74-98-6 5000 5000 ..Toluene 108-88-3 30 890. Total xylenes (ortho-, 1330-20-7 10 2170 meta-, para-) (d) If a sample fails residual solvents and processing chemicals tesring, the batch from which the sample was collected fails residual solvents and processing chemicals testing and shall not be released for retail sale. Authority: Section 26013, Business, and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5719. Residual Pesticides Testing (a) The laboratory shall analyze a sample of cannabis or cannabis product to determine whether residual pesticides are present. (b) The laboratory shall report the result of the residual pesticides tesring in unit micrograms per gram (µg/g) on the COA and indicate “pass” ar “fail” on the COA.

(c) A sample shall be deemed to have passed the residual pesticides tesring if both of Che following conditions aze met: (1) The presence of any residua] pesticide listed in the following tables in Category I are not detected, and (2) The presence of any residual pesticide listed in the following tables in Category II does not exceed the indicated action levels. Category I CAS No. Residual Pesticide Aldicarb 116-06-3 Carbofuran 1563-66-2 Chlordane 57-74-9 Chlorfenapyr 122453-73-0 Chlorpyrifos 2921-88-2 Coumaphos 56-72-4 Daminozide 1596-84-5 DDVP (Dichlorvos) 62-73-7 Dimethoate 60-51-5 Ethoprop(hos) 131947-48-4 Etofenprox 80844-07-1 Fenoxycazb 72490-01-8 Fipronil 120068-37-3 Imazalil 35554-44-0 Methiocazb 2032-65-7 Methyl parathion 298-00-0 Mevinphos 7786-34-7 Paclobutrazol 76738-62-0 Propoxur 114-26-1 Spiroxamine 118134-30-8 Thiacloprid 111988-49-9

(d) If a sample fails residual pesricides testing, the batch from which the sample was collected fails pesticides testing and shall not be released for retail sale

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5720. Microbial Impurities Testing (a) The laboratory shall analyze a sample of cannabis or cannabis product to determine whether microbial impurities are present. (b) The laboratory shall report the result of the microbial impurities testing by indicating “pass” or “fail” on the COA. (c) A sample of inhalable cannabis or inhalable cannabis product shall be deemed to have passed the microbial impurities testing if all of the following conditions aze met: (1) Shiga toxin producing Escherichia toll is not detecCed in 1 grain; (2) Salmonella spp. is not detected in 1 gram; and (3) Pathogenic AspergilZus species A. fumigatus, A. flavus, A. niger, and A. terreT{s are not detected in 1 gram. (d) A sample of other cannabis or cannabis product sha11 be deemed to have passed the microbial _ impurities testing if both the following: (1) Shiga toxin producing Eseherichia eoli is not detected in 1 gram, and (2) Salmonella spp. is not detected in 1 gram. (e) If a sample fails microbial impurities testing, the batch from which the sample was collected fails microbial impurities testing and shalt not be released for retail sale: Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 572E Mycotoxin Testing (a) The laboratory shall analyze a sample of cannabis ar cannabis product to determine whether mycotoxins are present. (b) The laboratory shall report the result of the mycotoxins testing in unit micrograms per kilograms (µg/kg) on the COA and indicate “pass” ar “fail” on the COA. (c) A sample shall be deemed to have passed mycotoxin testing if both the following conditions are met: (1) Total of aflatoxin B1, B2, G1, and G2 does not exceed 20 µg/kg of substance, and (2) Ochratoxin A does not exceed 20 µg/kg of substance. (d) If a sample fails mycotoxin testing, the batch from which the sample was collected fails mycotoxin testing and shall not be released for retail sate.

Authority: Secrion 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5722. Foreign Material Testing (a) The laboratory shall analyze a sample of cannabis or cannabis product to determine whether foreign material is present. (b) The labaratary sha11 report the result of the foreign material test by indicaring “pass” or “fail” on the COA. (c) The laboratory shall perform foreign material testing on the total primary sample prior to sample homogenization. (d) When the laboratory performs foreign material testing, at minimum, the laboratory shall do all of the following: (1) Examine both the exterior and interior of the cannabis sample, and (2) Examine the exterior of the cannabis product sample. (e) A sample shall be deemed to have passed the foreign material testing if the presence of foreign material does not exceed: (l) 1/4 of the total sample area covered by sand, soil, cinders, or dirt; (2) 1(4 of the total sample area covered by mold; (3) 1 insect fragment, 1 rodent hair, or 1 count mammalian excreta per 3.0 grams; ar (4) 1 /4 of the total sample area covered by an imbedded foreign material. (~ If a sample fails foreign material testing, the batch from which the sample was collected fails foreign material testing and shall not be released for retail sale. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5723. Heavy Metals Testing (a) The laboratory shall analyze a sample of cannabis or cannabis product to determine whether heavy metals aze present. (b) The laboratory shall report the result of the heavy metals test in micrograms per gram (µg/g) on the COA and indicate “pass” or “fail” on the COA. (c) A sample shall be deemed to have passed the heavy metals testing if the presence of heavy metals does not exceed the action levels listed in the following table. (d) If a sample fails heavy metals tesCing, the batch from which the sample was collected fails heavy metals testing and shall not be released for retail sale.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5724. Cannabinoid Testing (a) The laboratory shall analyze a sample of cannabis or cannabis product to determine whether the cannabinoid profile of the sample conforms to the labeled content. of each cannabinoid such as THC; THCA; CBD; CBDA; CBG; and CBN. (b) The laboratory shall report the result of the cannabinoid testing on the COA both as a percentage and in milligrams per gram (mg/g) dry-weight using the following equation and indicate “pass” or “fail” on the COA: Dry-weight percent cannabinoid =wet-weight percent cannabinoid / (1 —percent moisture / 100) (c) If the labeled content of any one cannabinoid is expressed as a total concentration of the cannabinoid, the laboratory shall calculate the total cannabinoid concentration as follows: Total cannabinoid concentration (mg/g) _ (cannabinoid acid form concentration (mg/g) x 0.877) + cannabinoid concentration (mg/g) (d) A sample shall be deemed to have passed the cannabinoid testing if the concentration of any one cannabinoid does not exceed the labeled content of the cannabinoid, plus or minus 10%. (e) If the sample fails cannabinoid Testing, the batch from which the sample was collected fails cannabinoid testing and shall not be released for retail sale. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5725. Terpenoid Testing (a) The laboratory_shall analyze a sample of cannabis or cannabis product to determine whether the terpenoid profile of the sample conforms to the labeled content of terpenoids.

(b) The laboratory shall report the result of the terpenoid tesring on the COA both as a percentage and in milligrams per gram (mg/g) and indicate “pass” or “fail” on the COA. (c) A sample shall be deemed to have passed the terpenoid testing if the concentration of terpenoids does not exceed the labeled content of total terpenoids, plus or minus 10 percent. (d) If a sample fails terpenoid testing, the batch from which the sample was collected fails terpenoid testing and shall not be released for retail sale.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code.

Testing Laboratory

What are the operating requirements for a Testing Laboratory?

§ 5701. General Laboratory License Requirements (a) A licensed laboratory shall maintain ISO/IEC 17025 accreditation for the testing of the following: (1) Cannabinoids; (2) Heavy metals; (3) Microbial impurities; (4) Mycotoxins; (5) Residual pesticides; (6) Residual solvents and processing chemicals; and (7) If tested, terpenoids. (b) A licensed laboratory shall retain, and make available to the Bureau upon request, all records associated with the licensee’s ISO/IEC 17025 certificate of accreditation. Authority: Section 26013, Business and Professions Code. Reference: Section 26100, Business and Professions Code

§ 5702. Laboratory License Application In addition to the information required in section 5002 of this division, an application for a testing laboratory license includes the following: (a) A valid certificate of accreditation, issued by an accreditation body, that attests to the laboratory’s competence Yo perform testing of the following: (1) Cannabinoids; (2) Heavy metals; (3) Microbial impurities; (4) Mycotoxins; (5) Residual pesticides; (6) Residual. solvents and processing chemicals; and (7) I£tested,terpenoids. (b) Standard operating procedures for the following testing methods: (1) Cannabinoids; (2) Foreign material; (3) Heavy metals; (4) Microbial impurities; (5) Moisture content and water activity; (6) Mycotoxins; (7) Residual pesticides; (8) Residual solvents and processing chemicals; (9) If tested, terpenoids; and (10) If tested, homogeneity. (c) Standard operating procedures for the sampling of cannabis and cannabis products. Authority: Section 26013, Business and Professions Code. Reference: Sections 26012, 26050, 26051.5, 26055, 26102 and 26104, Business and Professions Code.

§ 5703. Provisional Testing Laboratory License (a) A laboratary may apply for a provisional license prior to receiving ISO/IEC 17025 accreditation provided that the applicant meets all other licensure requirements for a testing laboratory and submits to the Bureau an application in compliance with section 5002 of this division and an attestation that the applicant has or intends to seek ISO/IEC 17025 accreditation for all testing methods required. by this division. (b) A provisional testing laboratory license shall be valid for 12 months. The annual license fee for a provisional license shall be determined pursuant to section 5014 of this division. (c) To timely renew a provisional license, a completed license renewal form and the annual renewal license fee pursuant to section 5014 of this division shall be received by the Bureau from the licensee no earlier than 60 calendar days before the expiration of the license and no later than 5:00 p.m. Pacific Time on the last business day before the expiration of the license if the renewal form is submitted to the Bureau at its office(s), or no later than 11:59 p.m. on the last business day before the expiration of the license if the renewal form is submitted to the Bureau through its electronic licensing system. Failure to receive a notice for license renewal does not relieve a licensee of the obligation to renew a provisionallicense as required. (d) In the event the license is not renewed prior to the expgation date, the licensee must not test any cotmnercial cannabis goods until the license is renewed. (e) A licensee may submit a license renewal form up to 30 days after the license expires. Any, late renewal’ form will be subject to a Iate fee. equal to 50 percent of the applicable licensing Fees :required by subsection (c) of this section, (fl The license renewal form shall contain the following; (1) The name of the licensee. For licensees who are individuals, the applicant shall provide both the first and last name of the individual. For licensees who are business entities, the licensee shall provide the legal business name of the applicant; (2) The license number and expiration date; (3) The licensee’s address of record and premises address; and (4) An attestation that all information provided to the Bureau in the original application under section 5002 of this division or subsequent notification under secrion 5023 of this division is accurate and current. (g) The Bureau may renew a provisional license for an initial renewal period of 12 months. (h) After one renewal, the Bureau may renew the provisional license for additional 12-month periods if the licensee has submitted an application for the ISO/IEC 17025 accreditation. In addition to the information required for a renewal form pursuant to subsection (fl o£ this section, any renewal request pursuant to this section sha11 also include an attestation that the licensee’s application for eachISO/IEC 17025 is pending with the accrediting body, themine of the accrediting body, and the date the application was submitted to the accrediting body.

(i) The licensee shall notify the Bureau if the applicarion for each ISO/IEC 17025 accreditation is granted or denied within 5 business days of receiving the decision from the accrediting body. If the accrediting body grants or denies the licensee’s application for any ISO/IEC 17025 accreditation before the expiration of the provisional license, the Bureau may terminate the provisional license at that time. (i) The Bureau may revoke a provisional license at any time., Authority: Section 26013, Business and Professions Code. Reference: Sections 26012 and 26050, Business and Professions Code. Article 3. Sampling Cannabis and Cannabis Products § 5704. Sampling Standard Operating Procedures (a) The laboratory sha11 develop and implement a sampling standard operating procedure (SOP) that describes the laboratory’s method for obtaining representative samples of cannabis and cannabis product. (b) The sampling SOP shall include the following information: (1) A procedure for obtaining samples of each matrix type the laboratory samples, and (2) A procedure for the collection of samples to perform homogeneity analysis of edible cannabis products. (c) The sampling SOP shall specify that during sampling, the sampler shall, aY minimum: (1) Follow the laboratory’s sampling SOP; (2) Ensure that the sampling area is free of contaminants;. (3) Sanitize sampling tools between each batch; (4) Use disposable. gloves and change gloves between each batch; (5) Weigh samples to within 0.1 gram of accuracy using a calibrated balance; (6) Collect both a primary and a field duplicate sample from each batch; (7) Place the sample in a container capable of preventing degradation or contamination and seal the sample container with tamper-evident material; (8) Assign a unique sample identifier to both the primary and field duplicate samples; (9) e Record on the sample field log the conditions under which the sample is transported and stored; (10) Follow chain of custody protocols; and (11) Complete the sample field log.

(d) The supervisory or management laboratory employee shall review, approve, sign, and date the sampling SOP and each revision thereto. (e) The laboratory shall retain a copy of the sampling SOP on the laboratory premises and ensure that the sampling SOP is accessible to the sampler during sampling. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26102, 26104 and 26110, Business and Professions Code. § 5705. General Sampling Requirements (a) The laboratory that obtains samples from a distributor shall perform the required testing. (b) The laboratory may obtain and analyze samples only from batches in final form as required by Business and Professions Code section 26100. (c) The laboratory shall collect both a primary sample and a field duplicate sample from each batch. The primary sample and field duplicate sample shall be stored and analyzed separately. (d) The laboratory shall ensure that the sample is transported and subsequently stored at the laboratory in a manner that prevents degradation, contamination, and tampering. If the caimabis or cannabis product specifies on the label how the product shall be stored, the laboratory sha11 store. the sample as indicated on the label (e) The laboratory shall complete a chain of custody form and sample field log for each sample that the laboratory collects and analyzes. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 ………and 26110,Business and Professions Code. § 5706. Sample Field Log The sampler shall use a sample field log to record the following informarion for each sampled batch: (a) Laboratory’s name, address, and license number; (b) Sampler’s names) and titie(s); (c) Date and time sampling started and ended; (d) Distributor’s name, address;and license number; (e) Cultivator’s, manufacturer’s, or microbusiness’ name, address, and license number; (fl Batch number of the batch from which the sample was obtained; (g) Sample matrix; (h) Total batch size, by weight or unit count; (i) Total weight or unit count of the primarq sample;(j) Total weight or unit count of the field duplicate sample; (k) The unique sample identification number for each sample; and (1) Sampling conditions or problems encountered during the sampling process, if any. Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 2611Q Business and Professions Code. § 5707. Harvest Batch Sampling (a) The sampler shall obtain both a primary sample and a field duplicate sample from each prepacked or unpacked harvest batch. The primary sample and field duplicate sample must each weigh 0.35% of the total harvest batch weight. The sampler shall collect the field duplicate sample contemporaneous to, and in the same manner. as, collection of the primary saanple. (b) A sampler may collect greater than 0.35% of a prepacked or unpacked harvest batch per primary sample and field duplicate sample if necessary to perform the required testing or to ensure that the samples obtained are representative. (c) The prepacked or unpacked harvest batch from which a sample is obtained shall weigh no more than 50.0 pounds. Laboratory analyses of a sample collected frmn a harvest batch weighing more than 50.0 pounds shall be deemed invalid and the harvest batch from which the sample was obtained may not be released for retail sale. (d) When the sampler obtains a primary sample and a field duplicate sample from an unpacked harvest batch, the sampler shall do all the following: (1) Collect the number of increments per primary sample and field duplicate sample relative to the unpacked harvest batch size as listed in the following table; (2) Obtain increments from random and varying locations of the unpacked harvest batch, both vErtically and horizontally. To the extent practicable, the increments obtained from an unpacked harvest batch shall be of equal weight; and (3) To the extent practicable, collect an equal number of increments from each container if the unpacked harvest batch is stored in multiple containers. Unpacked Harvest Batch Size Number of Increments (pounds) (per sample) < 10.0 8 10.1-20A 16 20.1 — 30.0 23 30.1 — 40.0 29 40.1 — 50.0 34

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code. § 5708. Cannabis Product Batch Sampling (a) The sampler shall collect both a primary sample and a field duplicate sample from each cannabis product batch. The sampler shall collect the field duplicate sample contemporaneous Co, and in the same manner as, collection of the primary sample. (b) The sampler may collect a greater number of increments per primary sample and field duplicate sample if necessary to perform the required testing or to ensure that the samples obtained are representative. (c) The cannabis product batch from which a primary sample and a field duplicate sample are obtained sha11 contain no more Phan 150,000 units. Laboratory analyses of a sample collected from a cannabis product batch containing more than 150,000 units shall be deemed invalid and the cannabis product batch from which the primary sample and a field duplicate sample were obtained may. not be released for retail sale. (d) The sampler shall obtain a primary sample and a field duplicate sample of cannabis product by collecting, at minimum, the mm~ber of increments per sample relative to the cannabis product batch size as listed in the following table. Each increment consists of 1 packaged unit. Cannabis Product Batch Size Number of Increments (uniCs) (per sample) < Sp 2 51 —150 3 151 — 500 5 501 — 1,200 8 1,201 — 3,200 13 3,201 — 10,000 20 10,001 — 35,000 32 35,001 —150,000 50

Proposed Regs. – Oct 19, 2018

§ 5701. General Laboratory License Requirements

This section has been amended by adding Section 26012 of the Business and Professions Code to the reference section. This change is necessary for accuracy.

§ 5702. Laboratory License Application

This section has been amended to require that the standard operating procedures for testing foreign material be included with an application for licensure. The section has been amended to remove foreign material and moisture content from the required method validation reports for certain testing methods. These amendments were necessary for consistency with regulations regarding testing for these items. The section has been renumbered to account for these amendments.

This section has also been amended to remove section 26051.5 of the Business and Professions Code from the reference section. This is necessary for accuracy.

§ 5703. Interim Testing Laboratory License

The title of this section has been amended from “Provisional Testing Laboratory License.” The term “provisional” has also been replaced with the term “interim” throughout the section. These changes were necessary due to a recent change in legislation that created a provisional license category for all commercial cannabis licensees. Subsection (a) has been revised by replacing “A laboratory” with “An applicant” to specify and clarify that the provision applies to an applicant. This change is necessary for consistency in the use of terms throughout the regulations.

Subsection (b) has been revised to clarify and specify that the annual license fee is determined pursuant to the requirements in section 5014 for annual license fees for a testing laboratory license. This change was necessary to provide applicants clarity on how their licensing fee is determined.

Subsection (i) has been amended to require licensed testing laboratories to notify the Bureau if the licensees application for ISO/IEC 17025 accreditation have been approved or denied within 1 day of receiving the decision. This is being changed from requiring the licensee to provide notice to the Bureau within 5 days of receiving the decision. This is necessary because the Bureau has determined that it is critically important that the Bureau be informed of a denial and for consistency with the statute. Additionally, the Bureau has determined that the additional burden to the licensee caused by this change is relatively small. Subsection (i) has also been amended to incorporate by reference a form for licensees to submit to the Bureau the required notification in this section. This is necessary to provide clear direction to licensees on how to submit the required notification.

The reference section has been revised to include section 26102 of the Business and Professions Code.

Changes Made to Article 3. Sampling Cannabis and Cannabis Products

The Sampling -Standard Operating Procedures Form, BCC-LIC-021 (New 10/18) was amended to correct for typographical and grammatical errors. Specifically, section 4 for the signature of the supervisory or management laboratory employee was amended to section 3, to correct the numbering of the section.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code..

 

What are the phase-in reqs for Test Labs?

§ 5715. Phase-In of Required Laboratory Testing (a) Cannabis and cannabis products shall not be sold or transferred to a retailer, or released for retail sale,. unless a representative sample of the cannabis or cannabis product has undergone and passed all testing as required by this section. (b) All cannabis harvested on or after January 1, 2018, and all cannabis products manufactured on or after January 1, 2018, sha11 be tested for the following analytes, if applicable: (1) Cannabinoids as required in section 5724 of this division; (2) Moisture content as required in section 5717 of this division; (3) Category II Residual Solvents and Processing Chemicals as required in section 5718 of this division; (4) Category I Residual Pesticides as required in section 5719 of this division; (5) Microbial Impurities as required in section 5720 of this division; and (6) Homogeneity as required in section 5716 of this division. (c) In addition to the requirements of subsection (b) of this section, all cannabis harvested on or after July i, 2018, and all cannabis products manufactured on or after July 1, 2018, shall be tested for the following analytes, if applicable: (1) Category I Residual Solvents and Processing Chemicals as required in section 5718 of this division; (2) Category II Residual Pesticides as required in section 5719 of this division; and (3) Foreign Material as required in section 5722 of this division. (d) In addition to the requirements in subsections (b) and (c) of this section, all cannabis harvested on or after December 31, 2018, and ail cannabis products manufactured on or after December 31, 2018, shall be tested for the following analytes, if applicable: (1) Terpenoids as required in section 5725 of this division; (2) Mycotoxins as required in section 5721 of this division; (3) Heavy Metals as required in section 5723 of this division; and (4) Water Activity as required in section 5717 of this division. (e) Licensees may have a sample of cannabis or cannabis products tested for analytes that are not yet required to be tested. However, if the sample fails any additional tests) not required pursuant to this section on the date of testing, the batch from which the sample was collected fails testing and shall not be released for retail sale.

Proposed Regs. – Oct. 19, 2018

§ 5715. Phase-In of Required Laboratory Testing

This section has been amended by adding Section 26110 of the Business and Professions Code to the reference section. This change is necessary for accuracy.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100 and 26104, Business and Professions Code.

What are the definitions applicable to Testing Laboratories?

§ 5700. Defwitions In addirion to the definitions in section 5000 of this division, the following definitions apply to this chapter. (a) “Acceptance criteria” means the specified limits placed on the. characteristics of an item or method that are used to determine data quality. (b) “Accredited college or university” means a college ar university accredited by a regional or national accrediting agency that is an accreditar recognized by the Secretary of the US Department of Education. (c) “Accreditation body” means an impartial non-profit arganization that operates in conformance with the International Organization for Standardization (ISO) /International Electrotechnical Commission (IEC) standard 17011 and is a signatory to the International Labaratory Accreditation Cooperation (ILAC) Mutual Recognition Arrangement (MRA) for Testing. (d) “Action level” means the threshold value that provides the. criterion fpr determining whether a sample passes or fails an analytical test. (e) “Analyte” means a chemical, compound, element, bacteria, yeast, fungus, or toxin to be identified or measured. (fl “Analytical batch” means a group of samples that is prepared together for the same analysis. . and analyzed sequentially using the same instrument calibration curve and that have common analytical quality control checks. (g) “Analytical method” means a technique used qualitatively or quantitatively to determine the composition of a sample or a microbial contamination of a sample. (h) “Cannabinoid” means a class of diverse chemical compounds derived from a cannabis plant. (i) “CAS number” means the unique numerical identifier assigned to every chemical substance by Chemical Abstracts Service, a division of the American Chemical Society. (j) “CBD” means cannabidiol, CAS number 13956-29-L (k) “CBDA” means cannabidiolic acid, CAS number 1244-58-2. (1) “CBG” means cannabigerol, CAS number 25654-31-3. (m) “CBN” means cannabinol, CAS number521-35-7. (n) “Certificate of accreditation” means a document issued by an accreditation body that attests to the laboratory’s competence to carry out specific testing analysis.

(o) “Certificate of analysis” means the report prepared by the laboratory about the analytical testing performed and results obtained by the laboratory. (p) “Certified reference materiaP’ means a reference material prepared by a certifying body or a party independent of the laboratory with ISO/IEC 17034 accreditation. (c~ “Continuing calibration verification” means a type of quality control sample that is a midrange calibration standard which checks the continued validity of the initial calibration of the inshument. (r) `Exclusivity” means the specificity of the test method for validating microbial testing methods. Tt evaluates the ability of the method to disringuish the target organisms from similar buY genetically distinct non-target organisms. (s) “Field duplicate sample” means a sample that is taken in the identical manner and from the same cannabis batch being sampled as the primary sample. It is analyzed separately from the primary sample and is used for quality control purposes only. (t) “Foreign material” means any filthy, putrid, or decomposed substance including hair, insects, excreta, or related adulterant that. may be hazardous or cause illness or injury to the consumer. (u) “Frequency” means the number of items occurring in each category. Frequency maybe determined by analytical method ar laboratory specific requirements for accuracy, precision of the analysis, or statistical calculation. (v) “Sample increment” means a portion of a batch that, together with other increments, makes up the sample. (w) “Inclusivity” means, related to microbiological method validation, the sensitivity of the test method. It evaluates the ability of the test method to detect a wide range of target organisms by a defined relatedness, (x) “Inhalable” means consumable in gaseous or vapor form through the lungs. (y) “ISO/IEC” means the joint technical committee of the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC). (z) “ISO/IEC 17025” means the general requirements specified by the ISO/IEC for the competence of testing and calibration laboratories. (aa) “ISO/IEC 17034” means the general requirements established by the ISO/TEC for the competence of reference material producers. (bb) “ISO/IEC 17043” means the general requirements established by the ISO/IEC for proficiency testing. (cc) “Laboratory” means “testing laboratory” as defined at Business and Professions Code .section 26001(as).

(dd) “Laboratory replicate sample” means a duplicate sample of the primary sample used for quality control purposes to demonstrate reproducibility. It is prepared in the identical manner as the primary sample and analyzed separately from the primary sample. (ee) “Laboratory quality assurance” means the set of operating principles that enable laboratories to produce defensible data of known accuracy and precision and includes employee training, equipment preventative maintenance procedures, calibration procedures, and quality control testing, among other things. (f~ “Limit of detection” means the lowest quantity of a substance or analyte that can be distinguished from the absence of that substance within a stated confidence limit. (gg) “Lunit of guantitarion” means the minimum concentration of an analyte in a specific matrix that can be reliably quantified while also meeting predefined goals for bias and imprecision. (hh) “Matrix”.means the substances fhat are present in a sample except for the analyte(s) of interest. (ii) “Matrix spike duplicate” means the duplicate sample of the matrix spike sample that is prepared by adding a known quantity of a target analyte to a sample matrix or to a matrix that is as closely representative of the matrix being analyzed as possible. (jj) “Matrix spike sample” means a sample prepazed by adding a lrnown quantity of the target analyte to a sample matrix or to a matrix that is as closely representative. ofthe matrix being analyzed as possible. (kk) “Method blank” means an analyte free matrix fo which all reagents are added in the same volumes orproportions as used in the sample preparation. (11) “Moisture content’ means the percentage of water in a sample; by weight. (mm) “Non-target organism” means an organism that the test method or analytical procedure is not testing for and can be used in evaluating the specificity of a test method. (nn) “Percent recovery” means the percentage of a measured concentration relative to the added (spiked) concentration in a reference material, matrix spike sample, or matrix spike duplicaCe. A laboratory shall calculate the percent recovery by dividing the sample result by the expected result then multiplying that the quotient by 100. (oo) “Practical experience” means experience performing scientific analytical tests in a labaratory setting using equipment, instruments, kits, and materials routinely found in a laboratory. Practical experience includes experience in any type of laboratory setting and is not lunited to cannabis-specific laboratories. (pp) “Primary sample” means a sample that is comprised of several increments of either cannabis or cannabis products that are collected from a batch for testing. (qq) “Proficiency tesP’ means an evaluation of a laboratory’s performance against preestablished criteria by means of interlaboratory comparisons of test measurements.

(rr) “Proficiency test sample” means a sample that is prepared by a party independent of the testing laboratory with the ISO/IEC 17043 accreditation, where the concentration and identity of an analyte that is known to the independent party, but is unknown to the testing labaratory and testing laboratory employees. (ss) “Quality control” means the set of measures implemented within an analytical procedure to ensure that the measurement system is operating in a state of statistical control for which errors have been reduced to acceptable levels. (tt) “Quality control sample” means a sample that is produced and used by a laboratory for the purpose of assuring the quality of the data and results. Quality control samples include blank samples, matrix spike samples, field duplicate samples, replicate samples, and reference material samples. (uu) “Reagent” means a compound or mixture added to a system to cause a chemical reaction ar test if a reaction occurs. A reagent may be used to tell whether a specific chemical substance is present by causing a reaction to occur with the chemical substance. (vv) “Reference material” means material containing a known concentration of an analyte of interest that is in solution or in a homogeneous matrix. (ww) “Reference method” means the method by which the performance of an alternate method is measured or evaluated. (xx) “Relative percent difference” means the comparative statistic that is used to calculate precision or random errar. RPD is calculated using the following equation: RPD = ~ (primary sample measurement —duplicate sample~measurement) I / ([primary sample measurement +duplicate sample measurement] / 2) X 100% (yy) “Relative standard deviation” means the standard deviation expressed as a percentage of the means recovery. RSD is calculated using the following equation: RSD = (s / x) X 100%; where s =standard deviation and x =mean (zz) “Representative” means a small quantity of the batch whose characteristics represent, as accurately as possible, the entire batch, thus allowing the results to be generalized. (aaa) “Requester” means the person who submits a request to the laboratory for testing of catmabis or cannabis product from an entity licensed under this division. (bbb) “Sample” means a representative part of, or a single item from, a batch which is comprised of several sample increments. (ccc) “Sampler” means the laboratory employee responsible for obtaining samples of cazmabis or cannabis product from a distributor. (ddd) “Sanitize” means to sterilize, disinfect, or make hygienic.

(eee) “Scope of accreditation” means the tests or types of tests per#~ormed, materials or producTs tested, and the methods used for testing cannabis or cannabis products for which the accreditarion has been granted. (fffl “Tamper-evident’ means aone-time-use security tape or seal that is affixed to the opening of a package, allowing a person to recognize whether the package has been opened. (ggg) “Target organism” means an organism that is being tested for in an analytical procedure or test method. (hhh) “THC” and “delta-9 THC” means tetrahydrocannabinol, CAS number 1972-08-3. (iii) “THCA” means tetrahydrocannabinolic acid, CAS number 23978-85-0. (jjj) “Validation” means the confirmation by examination and objective evidence that the requirements for a specific intended use or analytical method aze fulfilled. (kkk) “Water activity” means the measure of the quantify of water in a product that is available and therefore capable of supporting bacteria, yeasts, and fungi and which is reported in units Aw.

Proposed Regs. October 19, 2018

§ 5700. Definitions

The numbering of the section has been modified to allow for the inclusion of additional definitions. The definitions for the terms “accreditation body” and “accredited college or university” have been reordered in order to properly place the terms in alphabetical order.

A definition of “cannabis concentrate” has been added to the section and defines a cannabis concentrate as cannabis that has undergone a process to concentrate one or more active cannabinoids, thereby increasing the product’s potency. The definition clarifies that cannabis concentrates includes the following items: the separated resinous trichomes of cannabis, tinctures, capsules, suppositories, extracts, vape cartridges, inhaled products (such as dab, shatter, and wax), and tablets as defined by the State Department of Public Health in regulation. This is necessary to clarify what a cannabis concentrate is, and to align with the term as it is used by other licensing authorities and in regulations.

The definition of “continuing calibration verification” has been revised to further clarify that a licensed testing laboratory must be able to test for each required analyte.

A definition of “good laboratory practice” has been added to the section and defines good laboratory practice as being a quality system of management controls for laboratories to ensure the uniformity, consistency, reliability, reproducibility, quality, and integrity of analyses performed by the testing laboratory. This definition is necessary because the term is used in the regulations to ensure that laboratories are operating in accordance with general laboratory standards.

The definition of “initial calibration verification” has been amended to remove “targeted” and replace it with “each of the targeted” for clarity. This is necessary to ensure that licensees understand that each analyte must be included.

The definition of “laboratory control sample” has been amended to clarify that spiked concentration must be at a mid-range concentration of the calibration curve for the target analytes. This change is necessary to ensure accuracy in testing procedures.

A definition of “linear regression” has been added to the section and defines linear regression as the determination, in analytical chemistry, of the best linear equation for calibration data to generate a calibration curve. The concentrate of an analyte in a sample can then be determined by comparing a measurement of the unknown to the calibration curve. A linear regression uses the following equation: y = mx + b, where m =slope and b=intercept. This definition is necessary because the term is used in the regulations and ensures laboratories analyze cannabis goods samples using accurate calibration data.

The definition of “matrix spike sample” has been revised to provide additional clarity. This is necessary to ensure standardization in the licensees’ quality control procedures.

A definition for “orally-consumed product containing alcohol” has been added. This addition is necessary to clarify that an “orally-consumed product containing alcohol” means a liquid solution that contains more than 0.5% alcohol by volume as an ingredient, is not otherwise an alcoholic beverage as defined in Business and Professions Code section 23004, is packaged in a container no larger than two (2) fluid ounces and includes a capped calibrated dropper capable of accurately measuring servings. This definition is necessary to align with regulations promulgated by the State Department of Public Health which allows for certain products to contain alcohol as an ingredient. Without this definition testing laboratories would not be able to determine which cannabis products are exempt from the ethanol limit for residual solvent testing under proposed section 5718.

A definition for “orally-dissolving product” has been added. This is necessary to clarify that the term “orally-dissolving product” as used in the regulations means an edible cannabis product that is intended to dissolve and release cannabinoids directly into the mouth, which allows them to enter the bloodstream through the tissue, such as sublingual lozenges or mouth strips. The definition further clarifies that orally dissolving products are not intended to be eaten or swallowed to enter the digestive system. This definition is also necessary to ensure consistency between regulations adopted by the Bureau and the State Department of Public Health.

A definition for pre-roll has been added to specify that for purposes of this chapter, pre-roll has the same meaning as in section 5000(q) and also includes pre-rolls infused with cannabis concentrate. This is necessary to ensure testing laboratories have accurate guidance to identify the type of cannabis goods being tested.

A definition for “quadratic regression” has been added to the section and defines quadratic regression as means the determination, in analytical chemistry, of the best parabola equation for calibration data to generate a calibration curve. The concentrate of an analyte in a sample can then be determined by comparing a measurement of the unknown to the calibration curve. A quadratic regression uses the following equation: y = ax2 + bx + c, where a, b, and c are numerical coefficients. This definition is necessary because the term is used in the regulations and ensures laboratories analyze cannabis goods samples using accurate calibration data.

The definition of “relative percent difference” has been amended to provide an abbreviation for the term defined, RPD, to allow for subsequent use of the abbreviated term in the regulations.

The definition of “relative standard deviation” to provide an abbreviation for the term defined, RSD, to allow for subsequent use of the abbreviated term in the regulations.

The definition of “representative sample” to clarify and specify what a “representative sample” comprises of, which is several sample increments of cannabis goods that are collected from a batch for testing.

The definition of “requester” has been amended to clarify and specify the requirement referenced in this subsection is a requirement under MAUCRSA, not under the proposed regulations.

The definition of “sampler” has been amended to clarify that a licensed microbusiness authorized to engage in distribution, not just any microbusiness, is included. This is necessary for clarity and consistency throughout the regulations.

A definition for “topical cannabis goods” has been added. This is necessary to clarify that the term “topical cannabis goods” means cannabis products intended to be applied to the skin and not intended to be ingested or inhaled. Liquid solutions shall only be considered topical cannabis goods if they are packaged in a container no larger than two (2) fluid ounces.

A definition for “total CBD” has been added and defines total CBD as the molar sum of CBD and CBDA. Total CBD is calculated using the following equation in which “M” is the mass or mass fraction of CBD and CBDA: M total CBD = M CBD + (0.877 x M CBDA). This definition is necessary so that laboratories have the correct formula to calculate total CBD.

A definition for “total THC” has been added and defines total THC as the molar sum of THC and THCA. Total THC is calculated using the following equation in which “M” is the mass or mass fraction of delta-9 THC or delta-9 THCA: M total delta-9 THC = M delta-9 THC + (0.877 x M delta-9 THCA). This definition is necessary so that laboratories have the correct formula to calculate total THC.

 

Authority: Section 26013, Business and Professions Code. Reference: Sections 26013 and 26100, Business and Professions Code.

What are the disciplinary provisions contained in the Emergency Regulations?

Disciplinary Provisions Conduct – Emergency Regulations

The Disciplinary Provisions Conduct – Emergency Regulations provide a set of standards for:

§ 5806. Attire and Conduct

(a) No license shall allow the following:

(1) Employment or use of any person in the sale or service of cannabis goods in or upon the licensed premises while such person is unclothed or in such attire, costume, or clothing as to expose to view any portion of the male or female breast below the top of the areola or of any portion of the pubic hair, anus, cleft of the buttocks, vulva, or genitals.

(2) Employment or use of the services of any host or another person to miil~le with the patrons while such hostess or other person is unclothed or in such attire, costume, or clothing as described in subsection (a)(1) of this section2.

(3) Encouraging or permitting any person on the licensed premises to touch, caress, or fondle the breasts, buttocks, anus, or genitals of any other person.

(4) Permitting any employee or person to wear or use any device or covering, exposed to view, which simulates the breast, genitals, anus, pubic hair, or any portion thereof.

Authority: Section 26013, Business and Professions Code. Reference: 26011.5, Business and Professions Code.

§ 5807. Entertainers and Conduct

(a) Live entertainment is permitted on a licensed premises, except that:

(1) No licensee sha11 permit any person to perform acts of or acts Yhat simulate:

(A) Sexual intercourse, masturbation, sodomy, bestiality, oral copulation, flagellation, ar any sexual acts that are prohibited bylaw.

(B) Touching, caressing, or fondling of the breast, buttocks, anus, or genitals.

(C) Displaying of the buttocks, breasts, pubic hair, anus, vulva, or genitals.

(b) No licensee shall permit any person to use artificial devices or inanimate objects to depict any of the prohibited activities described above.

(c) No lice~isee sha11 permit any person to remain in or upon the licensed premises who exposes to public view any portion of his or her breast, buttocks, genitals, or anus.

Authority: Section 26013, Business and Professions Code. Reference: 2601.1.5, Business and Professions

Code. § 5808. Additional Grounds for Discipline

The following include, but are not limited to, additional grounds that constitute a basis for disciplinary action:

(a) Failure to take reasonable steps to correct objectionable conditions on the licensed premises, including the immediately adjacent area that is owned, leased; or rented by the licensee that constitute a nuisance, within a reasonable time after receipt of a notice to make those corrections, under Section 373a of the Penal Code.

(b) Failure to take reasonable steps to correct objectionable conditions that occur during operating hours on any public sidewalk abutting a licensed premises and constitute a nuisance,. within a reasonable time after receipt of notice to correct those conditions from the Bureau. This subsection sha11 apply to a licensee only upon written notice to the licensee from the Bureau. The Bureau shall issue this written notice upon its own determination, or upon a request from the local law enforcement agency in whose jurisdiction the premises is located, that is supported by substantial evidence that persistent objectionable conditions are occurring on the public sidewalk abutting the licensed premises. For purposes of this subsection:

(1) “Any public sidewalk abutting a licensed premises” means the publicly owned, pedesYriantraveled way, not more than 20 feet from the premises, that is located between a licensed premises, including any immediately adjacent area that is owned, leased, or rented by the licensee, and a public street.

(2) “Objectionable conditions that constitute a nuisance” means disturbance of the peace, public intoxication, drinking alcoholic beverages in public, smoking or ingesting cannabis or cannabis products in public, harassment. of passersby, gambling, prostitution, loitering, public urination, lewd conduct, drug trafficking, or excessive loud noise.

(3) “Reasonable steps” means all of the following:

(A) Calling the local law enforcement agency. Timely calls to the local law enforcement agency that are placed by the licensee; or his or her agents or employees, shall not be construed by the Bureau as evidence of objectionable conditions that constitute a nuisance.

(B) Requesting those persons engaging in activities causing objectionable conditions to cease those activities, unless the licensee, or his or her agents or employees, feel that their personal safety would be threatened in making that request.

(C) Making good faith efforts to remove items that facilitate loitering, such as furniture, except those structures approved or permitted by the local jurisdiction. The licensee shall not be liable for the removal of those items that facilitate loitering.

(4) When determining what constitutes “reasonable steps,” the Bureau shall consider site configuration constraints related to the unique circumstances of the nature of the business.

(c) Notwithstanding that the licensee corrects the objectionable conditions that constitute a nuisance, the licensee has a continuing obligation to meet the requirements of subsections (a) and (b), and failure to do so sUa11 constitute grounds for disciplinary action.

(d) If a licensee has knowingly permitted the illegal sale, or negotiations for the sales, of controlled substances or dangerous drugs upon his or her licensed premises. Successive sales, or negotiations for sales, over any continuous period of time shall be deemed evidence of permission. As used in this section, “controlled substances'” shall have the same meaning as is given that term in Article l (commencing with Section 11000) of Chapter 1 of Division 10 of the Health and Safety Code, and “dangerous drugs” shall have the same meaning as is given that term in Article 2 (commencing with Section 4015) of Chapter 9 of Division 2 of the Business and Professions Code.

(e) If the licensee has employed or permitted any persons to solicit or encourage others, directly or indirectly, to buy such persons cannabis goods in the licensed premises under any commission, percentage, salary, or other profit-sharing plan, scheme, or conspiracy.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26011.5 and 26030,

Business and Professions Code. § 5809.

Disciplinary Actions

(a) When an accusation recommending disciplinary action against a license has been filed pursuant to Section 26031 of the Business and Professions Code, the accusation shall be served on the licensee in accordance with Section 11505 of the Government Code.

(b) A hearing shall be conducted in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code to determine if cause exists to take action against the licensee. At such a hearing, the Bureau shall have all the powers granted therein and by the Business and Professions Code.

(c) If a hearing on an accusation against a licensee results in a fording that the licensee has committed any of the acts or omissions constituting grounds for disciplinary action, the Bureau may order the license revoked, suspended outright for a specified period of time, or suspended on probationary restriction for a specified period of time on such terms and conditions of probation as in its judgment are supported by its findings, impose a fine, or any combination thereof. The Bureau may also issue such other lawful orders it considers to be appropriate on the basis of its findings. (

d) An accusation may be terminated by written stipulation at any time prior to the conclusion of the hearing on the accusation. If a licensee submits a proposed stipulation to the Bureau for its consideration and the Bureau subsequently declines to accept flee proposed stipulation, the Bureau shall not thereafter be disqualified from hearing evidence on the accusation and taking action thereon as authorized in this section.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26012, 26031 and 26034, Business and Professions Code.

§ 5810. Interim Suspension

(a) Pursuant to Business and Professions Code section 494, the Bureau may petition for an interim order to suspend any license or impose licensing restrictions upon any licensee, ie.

(1) The licensee has engaged in acts or omissions constituting a violation of the Business and Professions Code or this division, or been convicted of a crime substantially related to the licensed activity, and

(2) Permitting the licensee to continue to engage in the licensed activity would endanger the public health, safety, or welfare.

(b) An interim order for suspension or restrictions any issue with notice, as follows:

(1) The Bureau sha11 provide the licensee with at least 15 days’ notice of the hearing on the petition for an interim order.

(2) The notice shall include documents submitted in support of the petition.

(c) An interim order for suspension or restrictions may issue without notice to the licensee, as follows:

(1) If it appears from the Bureaus. petition and supporting documents that serious injury would result to the public before the matter could be heard on notice.

(2) The Bureau shall provide the licensee with a hearing on the petition within 20 days after issuance of the initial interim order.

(3) Notice of the hearing shall be provided within two days after issuance of the initial interim order.

(d) The Bureau shall file an accusation, pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, within 15 calendar days of the issuance of the interim order.

Authority: Section 26013, Business and Professions Code; Reference: Sections 494, 26011.5, 26012 and 26031, Business and Professions

Code. § 5811. Posting of Notice of Suspension

(a) A licensee whose license has been suspended shall conspicuously and continuously display a notice on the exterior of the licensee’s premises for the duration of the suspension.

(b) The notice shall be two feet in length and 14 inches in width. The notice sha11 read: NOTICE OF SUSPENSION The Bureau of Cannabis Control Licenses) Issued For This Premises Has Been Suspended For Violation of State Law

(c) Advertising or posting signs to the effect that the premises have been closed or that business has been suspended for any reason other than the reason provided in the decision suspending the license, shall be deemed a violation of this section.

(d) Failure to display the notice as required in this section or removal of the notice prior to the expiration of the suspension sha11 be a violation of this section and may result in additional disciplinary action.

(e) A licensee shall notify the Bureau within 24 hours of discovering that the notice under subsection (b) of this section has been removed or damaged to an extent that makes the notice illegible.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26011.5 and. 26012, Business and Professions Code.

§ 5812. Posting of Notice of Revocation

(a) A licensee whose license has been revoked shall conspicuously display a notice on the exterior of the licensee’s premises indicating that the license has been revoked. The notice shall remain continuously on the licensed premises for at least 15 calendar days.

(b) The notice shall be two feet in length and 14 inches in width. The notice shall read: NOTICE OF REVOCATION The Bureau of Cannabis Control Licenses) Issued For This Premises Has Been Revoked For Violation of State Law

(c) Advertising or posting signs to the effect that the premises have been closed or that business has been suspended for any reason other than the reason provided in the decision revoking the license sha11 be deemed a violation of this section.

(d) If the Bureau revokes a license at a licensed premises that has one or more licenses at the location that will remain active after the revocation, the revocation notice shall remain posted for a period of at least 15 calendar days.

(e) Failure to display for the tone required in this section shall be a violation of this section and may result. in additional disciplinary action.

(f) A licensee shall notify the Bureau within 24 hours of discovering that the notice under subsection (b) of this section has been removed or damaged to an extent that makes the notice illegible.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26011.5 and 26012, Business and Professions Code.

§ 5813. Enforcement Costs

(a) In any order in resolution of a disciplinary proceeding for suspension or revocation of a license, the Bureau may request the administrative law judge to direct a licensee found to have committed a violation or violations of the Act, or any regulation adopted pursuant to the Act, to pay a sum not to exceed the reasonable costs of the investigation and enforcement of the case.

(b) A certified copy of the actual costs, or a good faith estimate of costs where actual costs are not available, signed by the Bureau’s designated representative shall be prima facie evidence of reasonable costs of investi~atiou acid prosecution of the case. The costs shall include the amount of investigative and enforcement costs up to the date of the hearing, including, but not limited to, charges imposed by the Attorney General.

(c) The administrative law judge shall make a proposed finding of the amount of reasonable costs of investigation and prosecutioiz of the case when requested pursuant to subsection (a). The Bureau may reduce or eliminate the cost award, or remand to the administrative law judge where the proposed decision fails to make a finding on costs requested pursuant to subsection (a).

(d) Where an order for recovery of costs is made and timely payment is not made as directed in the decision, the Bureau may enforce the order for repayment in any appropriate court. This right of enforcement shall be in addition to any other rights the Bureau may have as to any licensee to pay costs.

(e) In any action for recovery of costs, proof of the decision shall be conclusive proof of the validity of the order of payment and the terms for payment.

(f) Except as provided in subsection (g) of this section, the Bureau shall not renew or reinstate any license of any licensee who has failed to pay all of the costs. ordered under this division.

(g) Notwithstanding subsection (fl ofthis section, the Bureau may, in its discretion, conditionally renew or reinstate for a maxiinusn of one year the license of any licensee who demonstrates financial hardship and who enters into a formal agreement with the Bureau for reimbursement within that one-year period for the unpaid costs.

(h) Nothing in this section shall preclude the Bureau from including the recovery of the costs of investigation and enforcement o£a case in any stipulated settlement:

Authority: Section 26013, Business and Professions Code; Reference: Sections 125.3 and 26031, Business and Professions Code

§ 5814. Disciplinary Guidelines

In reaching a decision on a disciplinary action under the Act and the Administrative Procedures Act (Govt. Code section 11400 et seq.), the Bureau shall consider the disciplinary guidelines entitled “Bureau of Cannabis Control Disciplinary Guidelines November 2017,” which are. hereby incorporated by reference. Deviation from these guidelines and orders, including the standard terms of probation, is appropriate where the Bureau in its sole discretion determines that the facts of the particular case warrant such a deviation, e.g., the presence of mitigating factors, the age of the case, or evidentiary problems.

Authority: Section 26013, Business and Professions Code; Reference: Section 26031, Business and Professions Code.

Bureau of Cannabis Control

Licensing

What are the Chain of Custody requirements for a Testing Laboratory?

§ 5709. Chain of Custody (COC) Protocol

(a) The laboratory shall develop and implement a COC protocol to ensure accurate documentation of the transport, handling, storage, and destruction of samples.

(b) The COC protocol shall require the use of a COC form that contains, at a minimum, the following information:

(1) Laboratory’s name, physical address, and license number;

(2) Distributor’s name, physical address, and license number;

(3) Unique sample identifier;

(4) Date and time of the sample collection;

(5) Printed and signed names) of the distributor(s);

(6) Printed and signed names) of the sampler(s); and

(7) Printed and signed names) of the testing laboratory employee who received the sample.

(c) Each time the sample changes custody between licensees is transported, are destroyed, the date, time, and the names and. signatures of persons involved in these activities sha11 be recorded on the COC form.

Proposed Regs. – October 19, 2018

Subsection (a)(1) and (a)(2) have been deleted. New subsection (a)(1) consolidated the requirements of former (a)(1) and (a)(2) and revised them for clarity, to provide requirements for the transportation of cannabis samples. This is necessary to ensure that the rules for the movement of cannabis goods in a vehicle are consistent throughout the regulations.

Subsection (a)(4), formerly (a)(5), has been amended to remove vehicle from the term alarm system. This is necessary for consistency with other sections of the regulations.

Subsection (a)(6), formerly (a)(7) of this section has been amended by clarifying and specifying that the compliance referred to, is regulatory compliance, and by removing the language pertaining to travel from the laboratory’s licensed premises when engaged in the transportation of cannabis goods. This is necessary to streamline the provision, as such language is unnecessary, in indicating that the laboratory employee may travel back to its own licensed premises.

Subsections (a)(7)-(a)(11) have been renumbered to account for the consolidation of subsections (a)(1) and (a)(2).

Subsection (b)(1) has been amended to require proof that the laboratory is the registered owner under the Vehicle Code for each vehicle used to transport samples. This change is necessary for consistency with changes made under section 5312.

Subsection (d) has been amended to clarify that the information licensees must provide to the Bureau is the information required under subsection (c) of the section. Subsection (d) has also been amended to incorporate by reference a form for licensees to use to submit to the Bureau the required notifications in this section.

The reference section has been revised to correct a typographical error.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code.

Testing Laboratory

What are procedures for Samples obtained by a Testing Laboratory from a Distributor?

§ 5710. Laboratory Receiptof Samples-Obtained from a Distributor (a) The laboratory may accept and analyze a sample from a distributor for the required testing under section 5714 of this division only if there is an accompanying COC form for the sample. (b) The laboratory sha11 not analyze a sample obtained from a distributor, and the batch from which the sample was obtained may not be released for retail sale, if the any of the following occur: (1) The sample is received at the laboratory without the requisite COC form; (2) The tamper-evident material is broken prior to the sample being received at the laboratory; or (3) There is evidence of sample commingling, contamination, degradation, or a related occurrence rendering the sample unusable for analytical testing when the sample is received at the laboratory.

Proposed Regs. – Oct. 19, 2018

Subsection (a) has been revised to specify that the subsection applies to microbusinesses that have been authorized to engage in distribution. This is necessary to prevent potential confusion regarding which type of microbusiness the subsection may apply to.

Subsection (b) has been revised to specify that the subsection applies to microbusinesses that have been authorized to engage in distribution. This is necessary to prevent potential confusion regarding which type of microbusiness the subsection may apply to. Subsection (b) has also been revised to correct a typographical error.

Changes Made to Article 4. Standard Operating Procedures:

Authority: Section 26013, Business and Professions Code. Reference: Sections 26100, 26104 and 26110, Business and Professions Code.

Testing Laboratory

What is contained in a Testing Laboratory Certificate of Analysis?

§ 5726. Certificate of Analysis (COA) (a) The laboratory shall generate a COA only for each primary sample that the laboratory analyzes. (b) The laboratory shall, within 1 business day of completing analyses of a sample, both enter the COA information into the track and trace system and provide a copy of the COA to the requester. (c) The COA shall contain, at a minimum, the following information: . (1) Laboratory’s name, address, and license number; (2) Distributor’s name, address, and license number; (3) Cultivator’s, manufacturer’s, or microbusiness’ name, address, and license number; (4) Batch number of the.batch from which the sample was obtained; (5) Sample identifying information, including matrix type and unique sample identifiers; (6) Sample history, including the date collected, the date received by the laboratory, and the dates) of sample analyses and corresponding testing results; (7) For cannabis samples, the total weight, in grams, of both the primary sample and the total batch size; (8) For cannabis product samples, the total unit count of both the primary sample and the total batch size; (9) The identity of the analytical methods used and corresponding Limits of Detection (LOD) and Limits of QuantiCation (LOQ); and (10) Analytes detected during the analyses of the sample that are unknown, unidentified, or injurious to human health if consumed, if any. (d) The laboratory sha11 report test results for each primary sample on the COA as follows: (1) When reporting quantitative results for each analyte, the laboratory shall use the appropriate units of measurement as required under this chapter;

(2) When reporting qualitative results for each analyte, Che laboratory shall indicate “pass” or “fail”• (3) When reporting results for each test method, the laboratory sha11 indicate “pass” or “fail”; (4) When reporting results for any analytes that were detected below the analytical method LOQ, indicate ”

Proposed Regs. – October 19, 2018

Subsection (c) has been amended to specify the email address for which certificates of analysis (COA) are submitted to at the Bureau. This is necessary to ensure that licensees are correctly submitting the COAs, and that the Bureau is receiving them. Subsection (c) has also been amended to remove the requirement that the testing laboratories must provide the test results to other requestors.

Subsection (d) has been added to the section. The addition of subsection (d) has required the renumbering of subsequent subsections accordingly. New subsection (d) specifies and clarifies that the laboratory shall not release to any person any cumulative or individual test results prior to completing all analysis and providing the COA to the Bureau. This is necessary to ensure that test results remain confidential, pursuant to statutory requirements, and to preserve the integrity of the testing.

A new subsection (e)(1) has been added that requires the COA form to contain the term “Regulatory Compliance Testing” on the upper-right corner of each page of the COA, in a font no smaller than 14-point, with no text or images appearing above that term on any page of the COA. This is necessary to ensure that those reviewing the COA are aware it is a COA for regulatory compliance testing, and to preserve the integrity of the testing.

Subsections (e)(2) through (e)(7) have been renumbered and revised to clarify and specify that the address referred to, is the licensed premises address. This is necessary to ensure that the COA contains correct information that accurately reflects the licensee information.

Subsection (e)(2) has been amended to remove the term “physical” and replace it with “licensed premises” for clarity.

Subsection (e)(3) has been revised to specify that the subsection applies to microbusinesses that have been authorized to engage in distribution. This is necessary to prevent potential confusion regarding which type of microbusiness the subsection may apply to.

Subsection (e)(4) has been amended to remove the term “physical” and replace it with “licensed premises” for clarity.

Subsection (e)(5) has been revised to clarify that packaged cannabis goods must have a labeled batch number that matches the batch number of the COA. This is necessary to ensure that licensees and the Bureau are able to clearly identify the batches held by the licensee as well. This will also reduce the risk of potential error and confusion in matching up COAs with their respective batches.

Subsection (e)(8) has been renumbered and revised to clarify and specify that the picture on the COA of a sample must include an unobstructed image of the packaging if the sample is pre-packaged. This is necessary to ensure accurate identification of the sample and compliance with testing and labeling.

Subsection (f)(5) has been amended to clarify that the section does not apply to the reporting of cannabinoid results. Former subsection (f)(5) has been removed because it is no longer necessary due to the changes in label claim review.

 

Testing Laboratory

MARCUSA

Cannabis Tax

Micro Business