California Emergency Regulations – Inside

California Emergency Regulations – Inside

California Emergency Regulations - Inside
BCC, CDFA CalCannabis and CDPH MCSB

California Emergency Regulations – Inside  The triumvirate of California cannabis industry regulators – Bureau of Cannabis Control [“BCC”] [Retail and Distribution Licenses, Event Licenses], California Dept. of Food and Agriculture – “CDFA”’s CalCannabis [Cultivation Licenses, and California Department of Public Health [“CDPH”]’s Manufactured Cannabis Safety Board [“MCSB”] extended Emergency Licenses for 180 days.

Full Text of Readopted Regs

Bureau of Cannabis Control [“BCC”] [Retail and Distribution Licenses, Event Licenses],

California Dept. of Food and Agriculture – “CDFA”’s CalCannabis [Cultivation Licenses,] and

California Department of Public Health [“CDPH”]’s Manufactured Cannabis Safety Board [“MCSB”]

 

  • ADULT-USE AND MEDICINAL LICENSES
    • Applicants may complete one license application and request an A-designation, an M-designation, or both for the license.
    • Regardless of designation requested, applicants, will pay one license fee
    •  Licensees may engage in commercial cannabis activities with any licensee, regardless of designation.

 

  • LICENSING
    • A financial interest includes an agreement to receive a portion of the profits of a business.
    • Clarifies what items must be identified on a premises diagram so the bureau can determine whether the proposed premises meet the requirements for licensure.
    • Requires use of the Commercial Cannabis Licensee Bond form under Title 11, California Code of Regulations, Article 56, Section 118.1 (Title 16, California Code of Regulations section 5008).
    • Clarifies a licensee’s notification requirements when there are certain modifications to the business (e.g., standard operating procedures, license designations, premises location).
    • Fees have been revised to account for the proposed licensing changes and better reflect the updates in funding needs.

 

  • ADVERTISING
    • Prohibits advertising or marketing from using depictions or images of minors under 18 years of age.

 

  • PREMISES
  • Clarifies activities licensees may conduct on their premises. Licensees authorized for retail sales may not sell or deliver cannabis goods through a drive-through or pass-out window. Deliveries of cannabis goods shall not be made to people within motor vehicles.
  • Clarifies premises location restrictions. Proposed premises shall not be within a private residence or in a location that requires persons to pass through a private residence.
  • Provides that premises adjacent to other premises engaging in manufacturing and cultivation must be separated by walls and doors.

 

  • SECURITY MEASURES
    • Identifies certain security personnel requirements, including age restrictions, qualifications, and when security personnel is required.
    • No longer requires non-storefront retailers to have security personnel
    • Clarifies requirements for sharing security personnel, video surveillance systems, and alarm systems when multiple premises are contained in the same building.
    • Identifies door and lock requirements for limited access areas.
  • RELABELING
    • Allows distributors to relabel packages with the accurate amount of cannabinoids and terpenoids post-laboratory testing in certain circumstances.

 

  • REMEDIATION • Restricts remediation of cannabis goods that fail to test to licensed manufacturers.

 

  •  TRANSPORT
    • Clarifies the requirements for the transportation of cannabis goods. Permits for cannabis goods to be transported by foot, forklift, or similar means, when cannabis goods are transported to premises located in the same building or same parcel of land.
    •  Allows security personnel, licensed by the Bureau of Security and Investigative Services, to be in a transport vehicle.
    •  Clarifies how a distributor may verify that cannabis goods received are accurately reflected in the shipping manifest without unpacking and inventorying all boxes.

 

  • DELIVERY
  • Permits a delivery employee to complete multiple deliveries of cannabis goods if they are prepared by the retailer prior to the delivery employee leaving the licensed premises. The total amount of cannabis goods in the delivery vehicle may be up to $10,000. Requires delivery drivers to conduct age verification of customers.

 

  • MICROBUSINESSES
    • Clarifies microbusiness requirements. Also provides that areas of the premises designated for manufacturing and cultivation must be separated from the distribution and retail areas.

 

  • TESTING LABORATORIES
    •  Licensees are no longer required to collect field duplicate samples.
    • Clarifies laboratory limit of quantification (LOQ) requirements for all Category I residual solvents or processing chemicals.
    • Clarifies laboratory LOQ requirements for all Category I residual pesticides.
    • Adds malathion and its corresponding action levels to Category II residual pesticides.
    • Clarifies certain Certificate of Analysis requirements when a content label is affixed to the cannabis or cannabis product batch at the time of testing.

 

  •  PRACTICAL POINTERS FOR LEASING AND SHARED FACILITIES

 

  • “Premises” distinctions defined. SB 94 and AB 133, the statutes enacted in 2017 to implement and refine Prop 64, both defined a licensed “premises” as a “designated structure” that is held “under the control” of the licensee for commercial cannabis activity and must be contiguous and held by only one licensee. The statutes did not, however, define what those terms meant with regard to physical segregation of licensed spaces, which is an important factor for places like warehouse spaces where multiple tenants want to operate concurrently, or any rental space with common areas. The new emergency regulations address this issue by clarifying that for the areas of licensed premises required to be under a licensee’s exclusive control for operations, actual walls and locked doors will be required, but that common or shared spaces will be allowed for multi-tenant spaces without violating that requirements.

 

  • The potential for shared entrances.  The new rules contemplate the use of a shared entrance so that each licensed premises need not have its own exclusive access to the outside world. The catch, however, is that if neighboring licensees share a common entryway, and state inspectors are prevented from accessing licensed premises due to neighboring licensed premises preventing passage, then both licensees shall be responsible for the access violation and subject to discipline.

 

  • No change to license stacking – But despite all the controversy, the new regulations do not change the situation: a single licensee can still hold an unlimited amount of cultivation licenses each for up to 10,000 square feet of canopy, with no requirement that those licenses each have separate and distinct premises.

 

  • Strict separation of residential and commercial buildings – The rules now require that the premises diagram in the license application clearly define which buildings on site are residential and which are commercial, and prohibit any licensed premises from being located within a private residence or from requiring a person to pass through a private residence to access the licensed premises.

 

  • Expanded access to shared utilities – The new emergency regulations provide additional opportunities for tenants in a multi-tenant building or shared space to pool resources, including security camera systems, security guard services, and alarm systems. The catch, however, is that if multiple licensees decide to share such resources, each licensee is responsible for the violation of any regulations by any other licensee as it pertains to the shared resource.

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