Archive for the ‘Cultivation’ Category

  • Recent Local Updates from Sonoma and Mendocino Counties

    Here is a “heads up” about some of the actions taken in Sonoma County and Mendocino County related to cannabis over the past month. Stay tuned for more detailed posts about each of these jurisdictions.

    SONOMA COUNTY

    Cloverdale

    Last month, the City of Cloverdale passed a comprehensive cannabis ordinance to regulate various cannabis uses in the city. The ordinance goes into effect today, October 26. The following types of cannabis operators will be able to obtain a local permit from Cloverdale: cultivation, testing laboratories, manufacturing (both volatile and non-volatile), distributors, retailers (both storefront dispensaries and delivery-only), and microbusinesses. Additionally, on October 24 the City Council passed a resolution adopting a tax rate of 4.5% on all cannabis businesses and also voted to revise the application and permit fee schedule in order to reduce the cost to operators. Applications for every other type of cannabis business besides dispensaries will be accepted soon, however the ordinance requires a complex request for proposals (RFP) and selection process for dispensaries that will take a few months longer. The City Manager said that the RFP for dispensaries will be released on November 14, but that dispensary permits will not be issued until March of 2018.

     

    Sebastopol

    On October 24, the Sebastopol Planning Commission voted to approve a Zoning Code Interpretation that would allow a number of commercial medical cannabis uses to exist within the City. The Interpretation would permit laboratory testing, non-volatile manufacturing, infused product manufacturing, delivery-only retailers, distributors, processing, and packaging and labeling in various zones of the city based on similar uses that are allowed there. The interpretation went into effect immediately. An application checklist is forthcoming soon. Sebastopol does not currently have a special cannabis tax.

     

    Sonoma County

    The Sonoma County Board of Supervisors voted on October 26 to extend the deadline for cultivators to pay their first quarter cannabis taxes by waiving all delinquency penalties until November 17, or until November 30 for cannabis cultivators who were located in an mandatory evacuation zone during the wildfires earlier this month. More information on Sonoma County cannabis taxes, including tax rates and forms, can be found here: http://sonomacounty.ca.gov/Cannabis/Taxes/

    Cultivators who have lost or damaged crops due to the fires may be eligible for an adjustment in the amount of taxes they owe to the county. In order to qualify for a crop loss adjustment, the following elements must be met: (1) the cultivation site must fall within the fire perimeter as determined by the Cal Fire map; and (2) the cannabis must be visibly damaged; and (3) the product must be destroyed to avoid resale (the destruction will be verified by the Department). Growers wishing to take advantage of this should contact the Sonoma County Department of Agriculture/Weights & Measures at (707) 576-2371 to schedule an inspection. The inspection costs $177/hour and there is a ¼ hour minimum.

    While the tax deadline has been extended slightly, the deadline to submit penalty relief forms for existing cultivators wishing to qualify for the transition period is still October 31, 2017. More information about the transition period and penalty relief application can be found here: http://sonomacounty.ca.gov/Cannabis/Permits/Temporary-Code-Enforcement-Penalty-Relief-Program/

     

    Santa Rosa (UPDATE AS OF 11/09/17)

    The City of Santa Rosa has been a leader in Northern California in terms of regulating medical cannabis activities, and now it is vying to become one of the leaders in regulating adult use cannabis activity as well.

    On November 9, the Santa Rosa Planning Commission agreed 5-0 to include adult use cannabis businesses in its comprehensive cannabis ordinance, which will be considered by the City Council on December 12. This is exciting news for anyone who’s been keeping an eye on the 5th largest city in the Bay Area. The city’s Planning Department and Medical Cannabis Policy Subcommittee have been working on developing the comprehensive policy for quite some time. If the Santa Rosa City Council approves the Planning Commission’s recommendation, the new policy would go into effect no later than February 2018.

    The comprehensive draft ordinance would set up a permitting process for cannabis cultivation, manufacturing (both volatile and non-volatile), testing, distribution, retail, and microbusinesses. Personal cannabis cultivation would be exempt from the permit process, provided that the city’s guidelines for size and plant count are followed. Santa Rosa voters already approved a cannabis business tax during a special election in June 2017. The tax rates are as follows: for cultivators, 2% of gross receipts or $5 per square foot of canopy; for manufacturers, 1% of gross receipts; for distributors, 0%, and for medical retailers, 0%.

    The City of Santa Rosa’s cannabis webpage can be found here.

     

    MENDOCINO COUNTY

    Willits

    The City of Willits passed a new comprehensive cannabis ordinance on September 27, which will go into effect on October 28. The ordinance would allow a number of different types of medical cannabis operations to exist in the city, including cultivation, processing, laboratory testing and research facilities, manufacturing (both volatile and non-volatile), infusion, distribution, packaging, and retail. A selection process for dispensaries/retailers is laid out in the ordinance, as well as application requirements for other cannabis businesses. The permit fee schedule was considered by the City Council on October 25. The initial and renewal permit fees will be scaled based on the type of business (and also based on size for cultivators).

     

    Mendocino County

    On October 17, Mendocino County passed a comprehensive ordinance  allowing the county to issue permits for numerous types of commercial cannabis uses other than cultivation, which is already included in a separate county ordinance passed earlier this year.  The new ordinance—which includes both medical and adult-use operations—will make local permits available for processing, manufacturing, testing laboratories and research institutions, retailers, distribution, and microbusinesses.  It will go into effect on November 16. The ordinance describes the application procedures as well as operational requirements. There is a special cannabis tax in Mendocino County, which for the current year is 2.5% of gross receipts for cultivators (some minimum amounts apply), 5% of gross receipts for dispensaries, and a flat rate of $2500 for other commercial cannabis businesses.

     

  • CA Cannabis Licensing Agencies Release Responses to Public Comments

    On Friday, September 29, California’s three cannabis licensing agencies—the Department of Consumer Affairs’ Bureau of Cannabis Control, the Department of Food and Agriculture’s CalCannabis Licensing Division, and the Department of Public Health’s Manufactured Cannabis Safety Branch—released summaries of their responses to the public comments submitted for the draft medical cannabis regulations under MCRSA, which came out earlier this year.

    Even though those draft regulations were subsequently withdrawn after the Medicinal and Adult-Use Regulatory and Safety Act (MAUCRSA) unified the state’s medical and adult-use licensing systems earlier this year, the comments submitted by the public will still help guide the agencies as they develop the emergency regulations under MAUCRSA, which are expected to be published in November 2017. Temporary licenses will still be issued starting on January 1, 2018.

    A common response to public comments was that a particular requirement is mandated by statute, and thus the licensing agency does not have the authority to change that requirement. While the agencies have the ability to supplement and define the requirements included in the statutory requirements, where the statutory requirements are clear the agency will only have the authority to enforce, not interpret. Many other responses indicated that the agency is evaluating the requirement in question and may make modifications for the MAUCRSA regulations.

    Some of the summarized comments and the agencies’ responses are reprinted below:

    Department of Consumer Affairs – Bureau of Cannabis Control (“The Bureau”)

    • The regulations should permit shared premises, including multiple businesses of same and different license types, as well as permit multilevel or vertical stacking of the designated premises. The Bureau is developing regulations related to colocation of licensees on premises.
    • Security guards should be left as a business decision or local jurisdictional decision and only should be required for retailers. The Bureau is evaluating whether the security guard requirement should only be applicable to retailers.
    • The Bureau should consider permitting additional modes of transportation other than vehicles over the roadway. Specifically, bicycles should be permitted provided they use a lock box that is compliant with the Bureau’s security regulations. Business and Professions Code section 26070 requires all vehicles transporting cannabis and cannabis products for hire shall be required to have a valid motor carrier permit. Due to the express language in the law, the Bureau is determining the range of vehicles that can be issued a motor carrier permit.
    • Ten increments of manufactured edible samples for the homogeneity test, plus the primary samples and the duplicate samples, is excessive and an unreasonable burden. The Bureau should consider reducing the amount of sample mandated for testing. The Bureau is currently evaluating the requirements for homogeneity testing.
    • The Bureau should not require an additional resealable exit packaging due to additional costs for the dispensary and patient. Business and Professions Code section 26070.1 requires cannabis and cannabis products be placed in an opaque bag before leaving a retailer. The Bureau does not have the authority to change the requirement for an opaque exit bag contained in the law; however, the law does not require a resealable exit bag. The Bureau is evaluating the use of recycled or customer-provided opaque packages.
    • The regulations should permit free samples to be given to patients and employees as training tools. The Bureau is evaluating whether to allow samples and the possible methods by which samples could be provided.

    California Department of Public Health – Manufactured Cannabis Safety Branch (“CDPH”)

    • CDPH received a range of comments regarding the prohibition on certain products (§40300).
      • Alcoholic beverages: Clarification was requested as to whether the prohibition would extend to a prohibition on tinctures. This prohibition is not intended to restrict the production of tinctures. CDPH will make clarifying changes to the text for the MAUCRSA regulations. Clarification was requested as to whether the prohibition was applicable to just infusion with THC or included CBD as well. CDPH will continue to review the issue. Requests were made to allow THC-infused alcoholic beverages. CDPH continues to have concerns regarding the combination of THC and alcohol, and we will continue to review the issue.
      • Caffeine as an additive: Clarification was requested regarding the prohibition on caffeine as an additive. This prohibition is not intended to restrict the manufacture and cannabinoid infusion of products with naturally-occurring caffeine, such as coffee, tea, and chocolate. CDPH will make clarifying changes to the text for the MAUCRSA regulations. Requests were made to allow caffeine, perhaps a capped amount, to be added to products. CDPH will review the comments provided and remains committed to protecting public health.
      • Potentially hazardous foods as products: A majority of commenters expressed concerns regarding the prohibition on the manufacture of any product considered a potentially hazardous food. The most common concerns cited included: That the prohibition would eliminate a large segment of the existing industry, Many manufacturers and patients would turn to the black market, Patient needs and desires for these products would not be met. On the other side, local jurisdictions, public health organizations, and the California Medical Association expressed support for the prohibition, due to the decreased risk of foodborne illnesses. CDPH continues to have concerns about product safety. Because cannabis is still considered an adulterant under federal laws, the same food safety laws and levels of oversight are not applicable to cannabis products. CDPH will continue to review the issue to ensure public health concerns are addressed.
      • Potentially hazardous foods as ingredients: Clarification was requested as to whether this restriction would apply to ingredients used in manufacturing. The restriction on the use of potentially hazardous foods is not intended to apply to ingredients (such as milk, butter, eggs, or juice), as long as the final product does not need time temperature controls to maintain its quality and safety. CDPH will make clarifying changes to the text for the MAUCRSA regulations. Similarly, clarification was requested as to whether the prohibition on canned foods would prohibit the use of cans as a packaging option. The prohibition only intended to apply to low-acid canned products, the kind that pose a risk of botulism. CDPH will make clarifying changes to the text for the MAUCRSA regulations.
    • Shared Facilities. A request to allow for shared facilities or community kitchens (a shared facility is one in which multiple licensees share the same premises and equipment) was another common theme. Commenters expressed numerous potential benefits to shared facilities. However, because the definition of “premises” added to MAUCRSA limits a premises to only one licensee, CDPH does not believe it has the authority to permit shared facilities and that a statutory change would be necessary in order to do so.
    • THC Product Symbol. Comments on the THC product symbol recommended changes to be made to the symbol (changes to the color, requests for a pictorial element such as a cannabis leaf). CDPH will be revisiting the specifications of the symbol.
    • License Type: Ethanol. Based upon comments received, CDPH will further clarify the use of ethanol in manufacturing. Ethanol extraction, if used in a manner that creates a risk of explosion or fire, such as high heat or pressure, would be classified as a Type 7 license. Other uses of ethanol, such as tinctures or “winterization” to refine extracts, would be considered Type 6.

    California Department of Food and Agriculture – CalCannabis Licensing Division (“CDFA” or “CalCannabis”)

    • Indoor, Outdoor and Mixed-light cultivation: The Department received significant input on the proposed definition of ‘mixed-light,’ as well as the proposed definitions for ‘outdoor’ and ‘indoor’ cultivation. Stakeholders suggested that light deprivation practices should be permitted in the outdoor category. Recommendations were also made to reduce the watts per square foot threshold and clearly differentiate the use of supplemental light preventing plants from flowering from the use of high intensity lighting supporting flower production. Stakeholders suggested a separate tier license for light deprivation. It is clear to the Department that the cultivation category definitions will require further refinement.
    • Waiver of Sovereign Immunity: The Department received a number of comments on the waiver of sovereign immunity for federally-recognized tribes to participate in the licensed marketplace. Commenters questioned whether the Department has the authority to require an immunity waiver from sovereign nations and that the proposed regulation potentially infringes on tribal sovereignty. Recommendations included a removal of the proposed regulation in the interim. The Department, in collaboration with the Department of Consumer Affairs and Department of Public Health, will continue to work with stakeholders on this issue.
    • Commingling: The Department received comments from a number of concerned stakeholders regarding the proposed prohibition on commingling. Comments ranged from requesting clarification to asserting the regulation is prohibitive of small business practices. Many requested that commingling be allowed because the robust track-and-trace system should be able to link commingled flowers to the associated cultivation sites. The Department will continue to work with stakeholders on this issue.
    • Cannabis Waste Disposal: The Department received substantial feedback that the proposed cannabis waste disposal requirements were overly burdensome, would lead to excess waste being contributed to landfills, and that the five day holding period was too long and could lead to pest infestations. Commenters requested clarification on the allowance of composting onsite. There were also suggestions to introduce a new license type that could process cannabis waste off-site. Note, MAUCRSA exempts mature plant stalks from the definition of cannabis. This will be taken into consideration as the composting and waste disposal requirements are improved.
    • Generator Prohibition: The Department received input that the proposed prohibition of generators would be problematic for rural and off-grid cultivators. Commenters made recommendations to allow generators approved or permitted by other agencies and to include a phase-in approach for the regulation. Clarification about the definition of generator was also requested. The Department will continue to work with stakeholders to develop regulations that protect the environment while allowing existing operators to enter the regulated market.
    • 42% Renewable Energy Source: The Department received significant feedback on the proposed requirement to use 42% renewable energy sources for indoor license types. Commenters favored both reducing and increasing the percentage. It was recommended that this requirement be phased-in and also apply to mixed-light license types. Clarification about how this section would be implemented was requested. The Department is considering changes in renewable energy requirements to better align with current state energy goals using a phased-in approach and will revisit the renewable energy source requirement and provide further specificity regarding implementation for this requirement.

     

    You can read the agencies’ full responses to the comments here:

    Bureau of Cannabis Control (Distribution, Testing, Retail, Microbusinesses)

    Bureau of Cannabis Control (Testing Laboratories)

    CA Department of Food and Agriculture (Cultivation)

    CA Department of Public Health (Manufacturing)

    Be sure to visit the California Cannabis Portal at www.cannabis.ca.gov for more information and updates.

     

    The above information is provided as a public service.  It is not intended as legal advice.

    For answers to your legal questions or legal assistance, please contact the Law Offices of Omar Figueroa at (707) 829-0215 to schedule a confidential legal consultation.

  • Governor Brown Signs SB-94; MAUCRSA Becomes California Law

    On June 27, 2017, Governor Brown signed SB-94, a budget trailer bill that makes significant changes to California’s commercial cannabis regulatory scheme. The new law, called the
    combines the medical and adult-use cannabis systems into one licensing structure with the same regulatory framework governing medical and adult use facilities.

    The license types for both medical and adult-use cannabis businesses will be as follows:

    1. Type 1 – Cultivation; Specialty outdoor; Small.
    2. Type 1A – Cultivation; Specialty indoor; Small
    3. Type 1B – Cultivation; Specialty mixed-light; Small
    4. Type 1C – Cultivation; Specialty cottage; Small
    5. Type 2 – Cultivation; Outdoor; Small
    6. Type 2A – Cultivation; Indoor; Small
    7. Type 2B – Cultivation; Mixed-light; Small
    8. Type 3 – Cultivation; Outdoor; Medium
    9. Type 3A – Cultivation; Indoor; Medium
    10. Type 3B – Cultivation; Mixed-light; Medium
    11. Type 4 – Cultivation; Nursery
    12. Type 5 – Cultivation; Outdoor; Large
    13. Type 5A – Cultivation; Indoor; Large
    14. Type 5B – Cultivation; Mixed-light; Large
    15. Type 6 – Manufacturer Level 1 [non-volatile solvents]
    16. Type 7 – Manufacturer Level 2 [volatile solvents]
    17. Type 8 – Testing Laboratory
    18. Type 10 – Retailer
    19. Type 11 – Distributor
    20. Type 12 – Microbusiness

    Licenses will be designated as either “M” (medical) or “A” (adult-use), except for testing laboratories which will be able to test both medical and adult-use cannabis products. The requirements for “M” and “A” licenses are the same unless otherwise specified. As currently written, the cross-licensure restrictions from MCRSA were mostly removed, so a person or entity can hold two or more licenses in different categories except for testing laboratories, which must be totally independent. Also, large cultivators, which will not be allowed until 2023, cannot hold distribution or testing licenses but can hold all other license types. Additionally, the premises of each license must be separate and distinct. A person can also hold both “M” and “A” licenses, but it is unclear at this point whether co-location of M and A licensees will be allowed.

    A big victory for small farmers is the removal of an independent distributor requirement. Distribution is still a required process, but now any license holder (except testing labs and large cultivators) can apply for a distributor license.

    One of the most significant changes relates to local control. Under MCRSA, an applicant was not eligible for a state license until they had a local permit or approval. Under AUMA, an applicant did not have to first obtain a local permit, but could not be in violation of any local ordinances or regulations. MAUCRSA adopts a method similar to AUMA, where an applicant may voluntarily provide proof of a license, permit, or other authorization from their local jurisdiction, but this is not required. Instead, the burden is on the local jurisdiction to provide the state with its ordinances and regulations related to commercial cannabis and to designate a contact person who will contact the state if local ordinances or regulations change, and on the state licensing agency to check with the local jurisdiction to see whether an applicant is in violation of local law. If the local jurisdiction does not respond within 60 days saying the applicant is violating local law, then the licensing agency will presume the applicant is in compliance.

    You can read the full text of the new law here: Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)

    For more details about the changes in MAUCRSA, check out our previous post, “Legislature Consolidates MCRSA and AUMA into MAUCRSA”: http://www.omarfigueroa.com/posts/

     

  • Message from the State Water Resources Control Board

    State Water Resources Control Board Releases Forms to Comply with CalCannabis Licensing

    If you are planning to obtain a California Department of Food and Agriculture Cannabis Cultivation (CalCannabis) License beginning on January 1, 2018, you must provide documentation of your water supply source with your cultivation license application. Certain water diversion types require completion and submittal of special forms to the State Water Resource Control Board (State Water Board) by June 30, 2017. Some water right types, including Small Irrigation Use Registrations and existing Water Right Permits do not require information to be submitted to the State Water Board by this date. Please review the Cannabis Cultivation licensing requirements for additional information.

    In accordance with the Business and Professions Code Section 19332.2 (b), CalCannabis requires cultivators to provide documentation to the State Water Board – Division of Water Rights by June 30, 2017 for the following situations:

    1. Water is already being diverted under a riparian right. An Initial Statement of Diversion and Use must be on file with the Division of Water Rights.

    2. Pending application to appropriate water.

    3. Water is planned to be diverted and used under a riparian right and no diversion occurred in any calendar year between January 1, 2010 and January 1, 2017; Form 19332.2 (b)(5)

    4. The water diversion is from a spring that does NOT flow off the property on which it is located. The aggregate diversions from this person do not exceed 25 acre-feet in any year; Form 19332.2 (b)(4)

    5. A notice is on file with the State Water Board for the recordation of groundwater extractions and diversion of Los Angeles, Riverside, San Bernardino and Ventura Counties; Form 19332.2 (b)(4)

    6. A diversion is regulated by a Watermaster appointed by the Department of Water Resources and included in annual reports filed with a court or the State Water Board by a Watermaster, which reports identify the persons who divert water and describe the general purposes and the place, the use, and the quantity of water that has been diverted from each source; Form 19332.2 (b)(4)

    7. A diversion is included in annual reports filed with the court or State Water Board by a Watermaster appointed by a court or filed pursuant to statute to administer a final judgment determining rights to water, for which reports identify the persons who have diverted water and give the general place of use and the quantity that has been diverted from each source. Form 19332.2 (b)(4)

    If you are unsure which category your water source belongs, or need further assistance, please visit our Cannabis webpage or contact Division of Water Rights staff at WB-DWR-CannabisReg@waterboards.ca.gov or 916-341-5300.