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Cannabis Compliance In California: What Canna-businesses Need To Know About the Newest Regulations

On July 13, the three agencies that oversee California’s cannabis industry released 315 pages of documents with proposed regulations.

The keyword here is “proposed” there's a 45-day public comment period for the public on the proposed regulations, which are designed to eventually replace the emergency regulations that are currently in place. So it’s essential for cannabis business owners to familiarize themselves with these new regulations so they can offer feedback before Monday, August 27.

For readers who are new to the complex world of cannabis compliance, these are the three agencies that regulate commercial medicinal and adult-use cannabis in California:

  1. The Bureau of Cannabis Control (which oversees retailers, delivery only retail, microbusinesses, distributors, and labs)
  2. The Department of Public Health (which oversees manufacturers)
  3. The Department of Food and Agriculture (which oversees cultivators and processors)

Here are some of the highlights from the proposed regulations:

  1. Red Tape Eased For Adult-Use & Medical Industries

Cannabis Now observed that the proposed regulations include “plenty of hits and misses.” Among the hits: industry supporters applauded the elimination of redundancies in paperwork for licensed companies that provide to both the recreational and medical markets.


According to the California Cannabis Industry Association, one of the biggest challenges of this new era was the designations “medical” or “adult” for businesses, which doubled application and licensing fees for companies that serve both markets, so this change will actually lessen red tape for many cannabis businesses.

M” and “A” licensees would now be able to conduct business with each other regardless of their “M” or “A” designation.


  1. Exit Bag Requirements Draw Criticism

The regulations around exit bags for dispensary purchases have drawn critique from business owners and environmentalists alike. Requirement for exit bags to be child-resistant were reinstated, and all exit packaging must be resealable, child-resistant, and opaque.


While the Bureau of Cannabis Control asserts that exit packaging will make it more difficult for young children to gain access to the commercial cannabis goods, critics say that much packaging is too costly for businesses and environmentally unsound.


CCIA Communications and Outreach Director Josh Drayton told Cannabis Now that the exit bags are a temporary solution, but essential for safety. He asked that the community continue the conversation on how to create reasonable child-resistant packaging standards “that don’t wreak havoc on the environment.”


  1. Advertising Requirements Made Stricter

Other changes include the requirement that all outdoor advertising to be affixed to a building or permanent structure, and comply with the Outdoor Advertising Act.


The rules expand restrictions on cannabis advertising that might appeal to children, such as the use of inflatables, toys, or cartoon characters. Advertisers must show that 71.6 percent of their audience is 21 years old or older.


  1. A Win For Delivery Businesses

In good news for cannabis delivery services, licensed marijuana deliveries will now be permitted in any city or county in the state, even those that do not allow cannabis retail outlets, processing and cultivation. The Recorder reported that “Companies including WeDrop Cannabis Delivery, CannaWagon and Weedmaps lobbied for the bill.” Local municipalities will not be able to ban cannabis delivery services.


  1. More Stringent Requirements For Organics

Use of the word organic (or any variation of that word) on any product label will now be deemed false or misleading unless the National Organic Program (the federal regulatory program governing organic food) authorizes organic designation and certification for cannabis and the cannabis or cannabis product meets the requirements for such designation and certification.


  1. Changes In Categories And Permissions for Manufacturers

CannaLawBlog listed some other new rules from the Department of Public Health for manufacturers:

  1. Some terms have been revised. The word “concentrate” would now include inhaled products (such as shatter, dab, or wax) and “edible cannabis product” as well as a cannabis product that resembles traditional foods or beverages and cannabis products that dissolve or disintegrate in the mouth.


They’ve also proposed the terms “infused pre-roll,” which would mean a pre-roll into which cannabis concentrate or other ingredients have been incorporated and "orally consumed concentrate” to mean cannabis concentrates that are consumed by mouth and are not otherwise considered edibles.


  1. You can’t manufacture, prepare, package or label any products other than cannabis products at a licensed premises. “Cannabis products” also includes packaged cannabis, pre-rolls, and products that do not contain cannabis, but are otherwise identical to the cannabis-containing product, and are intended for use as samples.
  2. You can’t manufacture, prepare, package, or label cannabis products in a location operating as a retail food establishment or as a processed food registrant, and you can’t do the same in any location licensed by the Department of Alcoholic Beverage Control.


Compliance Challenges For Business Owners

Kristi Knoblich Palmer, co-founder of Oakland-based Kiva Confections, a leading edibles company, acknowledged that coming into compliance has been enormously stressful and costly. “There's a lot of change to existing business processes,” she told the East Bay Express. “And there's a lot of cost added to making those changes."

But she also pointed out that these kinds of growing pains are to be expected in a newly regulated industry.

"There's going to be pain whether we do it now or six months from now... That's what you're seeing across the industry right now — an incredible amount of bloodshed."

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Compliance with state regulation is in many ways the biggest challenge for businesses looking to join the state legal cannabis market.


Business owners invest millions of dollars in the cannabis industry and these huge investments are at risk of flowing down the drain because of compliance issues.

According to a Forbes article, operators fail in many areas, including inventory (76%), security and surveillance(72%), labeling and packaging (67%), transport ans storage (53%), and business records (64%).

The struggle is real.


With these compliance hurdles, getting the proper permits from your local jurisdiction in the states isn’t easy, but once an owner obtains them, they must then continue to maintain compliance.

Rather than thinking of licensing and compliance as a hurdle to be jumped and forgotten, cannabis businesses need to make compliance part of their ongoing operations.


As Habib Bentaleb at CannaLawBlog argued,

“Compliance isn’t a four-letter word, nor should it be treated like one. A robust compliance protocol will lead to a standardized and reliable cannabis product, and if a purchaser down the supply chain (and ultimately the consumer) can rely on your product to meet the same standard every time, you will differentiate yourself in a competitive marketplace.”

And while regulation can seem onerous, in the long run, businesses will benefit: many in the cannabis community say the challenges of compliance are just one more argument for industry members to step forward and help shape these new laws.


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Public comments on the proposed regulations will be accepted in writing and during public hearings held throughout the state by each of the three regulatory bodies. California Cannabis Portal helpfully compiled all of the dates and locations for each agency’s public comment hearings.

Posted in Business on October 19 at 08:28 PM

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