California Cannabis Distributor Responsibilities

California Cannabis Distributor Responsibilities

What are the Responsibilities of a California Cannabis Distributor  under the regulations of the Bureau of Cannabis Control?

\California Cannabis Distributor Responsibilities

Distributor licensees are responsible for

  • Transporting cannabis goods
  • Arranging for testing of cannabis goods
  • Conducting quality assurance review of cannabis goods to ensure they comply with all the packaging and labeling requirements.

Distributor transport licenses allow for

  • Transport of cannabis goods between licensed cultivators manufacturers, and distributors.
  • A distributor transport licensee may not transport cannabis goods to a licensed retailer
  • A distributor transport licensee may not engage in any other distributor activates.

The section that follows contains excerpts from the Readopted Regulations…where you see a  “**” next to the title of the regulation, there are details that have omitted to keep this guide at a manageable size. You should ALWAYS check the actual regulations if there is a doubt. They can be found here. 

California Cannabis Distributor Responsibilities


§ 5300. Non-Cannabis Distribution Activities

 A distributor shall not store non-cannabis goods or non-cannabis accessories that are to be sold to another party on any licensed premises. Additionally, a distributor shall not distribute noncannabis goods or non-cannabis accessories at licensed premises. For the purposes of this section, non-cannabis goods are any goods that do not meet the definition of cannabis goods as defined in section 5000(c) of this division.
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§ 5301. Storage-only Services

A distributor may provide cannabis goods storage-only services to a licensed cultivator, manufacturer, microbusiness, nonprofit, or another distributor, unrelated to the quality assurance and laboratory testing processes.
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§ 5302. Storage of Batches for Testing **

(a) A distributor shall ensure that all cannabis goods batches are stored separately and distinctly from other cannabis goods batches on the distributor’s premises.

(b) A distributor shall ensure a label with the following information is physically attached to each container of each batch:
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§ 5303. Packaging and Labeling **

(a) A distributor may package, re-package, label, and re-label cannabis for retail sale.

(b) A distributor shall not package, re-package, label, or re-label manufactured cannabis products except when the distributor also holds a manufacturing license and is packaging, re-packaging, labeling, or re-labeling its own manufactured cannabis products.
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§ 5304. Testing Arrangements

After taking physical possession of a cannabis goods batch, the distributor shall contact a testing laboratory and arrange for a laboratory employee to come to the distributor’s licensed premises to select a representative sample for laboratory testing.

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§ 5305. Testing Sample **

(a) The distributor shall ensure that the batch size from which the sample is taken meets the requirements of this division.

(b) A distributor or an employee of the distributor shall be physically present to observe the laboratory employee obtain the sample of cannabis goods for testing and shall ensure that the increments are taken from throughout the batch.
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§ 5306. Laboratory Testing Results

(a) A sample “passes” a laboratory test when the sample meets specifications in chapter 6 of this division.

(b) When a batch from a manufactured or harvest batch passes, the cannabis goods may be transported to one or more retailers.

(c) A sample “fails” a laboratory test when the sample does not meet the specifications in chapter 6 of this division.

(d) If a failed sample was collected from a batch and the batch could be remediated pursuant to section 5727 of this division, a distributor may transport or arrange for the transportation of the batch to a manufacturer for remediation.

(e) A distributor shall destroy a batch that failed laboratory testing and cannot be remediated pursuant to section 5727 of this division.
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California Cannabis Distributor Responsibilities

§ 5307. Quality-Assurance Review **

When a distributor receives a certificate of analysis stating that the sample meets the specifications required by law, the distributor shall ensure the following before transporting the cannabis goods to one or more retailers:

(a) The certificate of analysis the distributor received from the testing laboratory is the certificate of analysis that corresponds to the batch;

(b) The label on the cannabis goods is consistent with the certificate of analysis regarding cannabinoid content and contaminants required to be listed by law;
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§ 5308. Insurance Requirements **

(a) An applicant for a distributor license shall provide the Bureau with a certificate of insurance that shows the types of insurance coverage and minimum amounts that have been secured as required by this section, and documentation establishing compliance with subsection (d) of this section.

(b) A distributor licensee shall at all times carry and maintain commercial general liability insurance in the aggregate in an amount no less than $2,000,000 and in an amount no less than $1,000,000 for each loss.
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§ 5309. Inventory Reconciliation

(a) A distributor shall reconcile all inventories of cannabis goods at least once every 14 days.

(b) A distributor shall keep an inventory log containing the following information for each batch:

(1) The name and license number of the manufacturer or cultivator who provided the batch;

(2) The date of entry into the distributor’s storage area;

(3) The unique identifiers and batch number associated with the batch;

(4) A description of the cannabis goods with enough detail to easily identify the batch;

(5) The weight of or quantity of units in the batch;

(6) The best-by, sell-by, or expiration date of the batch, if any; and

(7) Where on the premises the batch is kept.

(c) If a distributor finds a discrepancy between the inventory of stock and the inventory log or track and trace system that is outside of normal weight loss caused by moisture loss, the distributor shall commence a full audit of the batch in which the discrepancy was found.
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§ 5310. Records

(a) In addition to the records required by section 5037 of this division, a distributor shall maintain the following records:

(1) Records relating to branding, packaging, and labeling;

(2) Inventory logs and records;

(3) Transportation bills of lading and shipping manifest for completed transports and for cannabis goods in transit;

(4) Vehicle and trailer ownership records;

(5) Quality-assurance records;

(6) Records relating to destruction of cannabis goods;

(7) Laboratory-testing records;

(8) Warehouse receipts;

(9) Records relating to tax payments collected and paid under Sections 34011 and 34012 of the Revenue and Taxation Code.
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§ 5311. Requirements for the Transportation of Cannabis Goods

The following requirements apply when transporting cannabis goods between licensees or licensed premises:

(a) Transportation shall only be conducted by persons holding a distributor license under the Act, or employees of those persons.

(b) All vehicles transporting cannabis goods for hire shall be required to have a motor carrier permit pursuant to Chapter 2 (commencing with Section 34620) of Division 14.85 of the Vehicle Code.

(c) Transportation by means of aircraft, watercraft, drone, rail, human-powered vehicle, and unmanned vehicle is prohibited.

(d) Cannabis goods shall only be transported inside of a vehicle or trailer and shall not be visible or identifiable from outside of the vehicle or trailer.

(e) Cannabis goods shall be locked in a box, container, or cage that is secured to the inside of the vehicle or trailer. For purposes of this section, the inside of the vehicle includes the trunk.

(f) While left unattended, vehicles and trailers shall be locked and secured.

(g) A distributor shall not leave a vehicle or trailer containing cannabis goods unattended in a residential area or parked overnight in a residential area.

(h) At a minimum, a distributor shall have a vehicle alarm system on all transport vehicles and trailers. Motion detectors, pressure switches, duress, panic, and hold-up alarms may also be used.

(i) Packages or containers holding cannabis goods shall not be tampered with, or opened, during transport.

(j) A distributor transporting cannabis goods shall only travel between licensees shipping or receiving cannabis goods and its own licensed premises when engaged in the transportation of cannabis goods. The distributor may transport multiple shipments of cannabis goods at once in accordance with applicable laws. A distributor shall not deviate from the travel requirements described in this section, except for necessary rest, fuel, or vehicle repair stops.

(k) Under no circumstances may non-cannabis goods, except for cannabis accessories as defined in Business and Professions Code section 26001(g), be transported with cannabis goods.

(l) Vehicles and trailers transporting cannabis goods are subject to inspection by the Bureau at any licensed premises or during transport at any time.

(m) Notwithstanding subsections (d) and (e) of this section, if it is not operationally feasible to transport cannabis goods inside of a vehicle or trailer because the licensed premises that the cannabis goods will be transported from and the licensed premises that will be receiving the cannabis goods are located within the same building or on the same parcel of land, the cannabis goods may be transported by foot, hand truck, forklift, or other similar means. A shipping manifest that complies with this division is required when transporting cannabis goods pursuant to this subsection.
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§ 5312. Required Transport Vehicle Information  **

California Cannabis Distributor Responsibilities

§ 5313. Transport Personnel Requirements **

(a) No person under the age of 21 years old shall be in a commercial vehicle or trailer transporting cannabis goods; and

(b) Only a licensee or, an employee of the distributor, or security personnel who meets the requirement
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§ 5314. Shipping Manifest **

(a) Prior to transporting cannabis goods, a distributor shall generate a shipping manifest through the track and trace system for the following activities:

(1) Testing and sampling;

(2) Sale of cannabis goods to a licensee;

(3) Destruction or disposal of cannabis goods; and

(4) Any other activity, as required pursuant to this division, or by any other licensing authority.

(b) The distributor shall transmit the shipping manifest to the Bureau and the licensee that will receive the cannabis goods prior to transporting the cannabis goods.
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§ 5315. Distributor Transport Only License **

(a) A distributor transport only licensee may transport cannabis goods between licensees; however, they shall not transport any cannabis goods except for immature plants and seeds to a retailer or to the retailer portion of a microbusiness.

(b) A complete application for a distributor transport only license shall include all the information required in an application for a Type 11-Distributor license.

(c) The licensing fee for a distributor transport only license will be based in part upon whether the licensee intends to transport only cannabis goods that the licensee has cultivated or manufactured (self-distribution), or whether the licensee intends to transport cannabis goods cultivated or manufactured by other licensees.

(d) A distributor transport only licensee shall comply with all of the requirements for a holder of a Type 11-Distributor license, except for those related to quality assurance and testing.

(e) A distributor transport only licensee shall not hold title to any cannabis goods unless the licensee also holds a state-issued cultivation, manufacturing, retailer, or microbusiness license.

(f) Holding a distributor transport only license shall not authorize a licensee to:

(1) Engage in the delivery of cannabis goods as defined in Business and Professions Code section 26001(p);

(2) Engage in the wholesale, destruction, packaging, labeling, or storing of cannabis goods; or

(3) Arrange for the testing of cannabis goods by a testing laboratory.
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Check out our tools for dealing with California Cannabis Distributor Responsibilities

Distributor Due Diligence Checklist

Commercial Cannabis Document Suite 

Distributors – Rule Changes in the Proposed Regulations
  • Clarifies that a distributor shall only distribute and store cannabis goods, cannabis accessories, and licensees’ branded merchandise or promotional materials and may not store live plants.
  • Clarifies that licensed distributors are allowed to package prerolls.
  • Requires distributors that relabel cannabis goods with the accurate amount of cannabinoids or terpenoids to provide the Certificate of Analysis to the manufacturer of the cannabis product.
  • Adds that the net weight on any package of dried flower shall not be considered inaccurate if the actual weight is within 2.5 percent of the labeled weight.
  • Changes amount of time video recordings documenting sampling shall be kept from 180 days to 90 days.
  • Clarifies that once a batch passes testing, it may be transported to one or more licensed retailers, licensed distributors, or licensed microbusinesses.
  • Clarifies that licensed distributors may conduct quality-assurance reviews of cannabis goods received from another distributor who has already completed the state-mandated testing.
  • Requires that licensed distributors have a completed sales invoice or receipt before transporting cannabis goods, only transport cannabis goods identified on the invoice or receipt, and do not alter the invoice or receipt once transport begins.
  • The limited-access area rules to all licensees, not just retailers.
Distributor Required Testing – Transition

California Cannabis Distributor Responsibilities

Special Considerations for Microbusinesses
  • Reiterates that all activities performed by a licensee are to occur on the same licensed premises.
  • Clarifies that microbusiness licensees are responsible for adhering to the rules and regulations applicable to the license type suitable for the activities of the licensee.
  • Clarifies that a suspension or revocation of a microbusiness licensee shall affect all commercial cannabis activities
California Cannabis Distributor Responsibilities

 

Author: abizcannabis

Managing Director & CEO of integrated transactional financial advisory, tax, and technology consulting firm - aBIZinaBOX Inc New York, Chicago, and OaklandCPA.CITP.CISM.CGEIT.CGMAExpertise with: Alt. Investments/Private Equity, Real Estate, Professional Services, CA Cannabis, Tech Start-Ups and Distressed Assets/DebtTechnology Certifications including:Advanced & High Complexity Cloud Integrator AICPA PCPS, CAQ,, IMTA, CITP ISACA CGEIT, CISMState CPA Societies in California, Florida, Illinois, New York and TexasExpertise with Regulatory Compliance - US - HIPAA, FINRA, SEC Rule 17(a)(3)/(4), eDiscovery, FINCEN - EU- EBA, ESMA, EIOPA UK - BoE, PRA, FCA