Cannabis Distribution Challenges

Cannabis Distribution Challenges

It has become very apparent that the cannabis distribution challenges represent the most difficult element in the commercial cannabis industry in California under regulation. The regulators have placed tremendous responsibility on the Distributors, while IRC Sec. 280E will likely cause a substantial portion of their operating costs to be non-deductible. This page is the place where we will seek to explore some of

Cannabis Distribution Challenges
Cannabis Distribution Challenges

those challenges.

Specifically:

  1. Distributors are the only license type that can transport marijuana products and they’re also the only licensees that can coordinate the required third-party testing of licensees’ products.
  2. Prior to any retail sale, licensees must ensure that a distributor undertakes quality assurance packaging and labeling reviews of their products.
  3. Perhaps most importantly, distributors are almost exclusively in charge of collection and remittance of the cultivation and excise taxes to the California Department of Tax and Fee Administration (“CDTFA”).

The regulations provide for:

Detailed requirements for the Storage of Inventory.