Archive for the ‘State License Types’ Category

  • Sebastopol Issues Zoning Code Interpretation; Will Allow Delivery-Only Retail (and Other Medical Uses)

    On October 24, the Sebastopol Planning Commission approved a Zoning Code Interpretation (hereafter, the “Interpretation”) that allows certain commercial medical cannabis uses to exist in zones of the city where similar uses are already allowed to operate. Sebastopol’s Planning Director, Kenyon Webster, authored the Interpretation. The Law Offices of Omar Figueroa offered guidance in the form of emails and letters to staff and the Planning Commission suggesting the Zoning Code Interpretation.

    Sebastopol is a small, progressive city in Western Sonoma County, in California’s North Bay region.   It is the home of SPARC (formerly known as Peace in Medicine) one of the state’s premier medical cannabis dispensaries.  It happens to be where the Law Offices of Omar Figueroa is located, and where most of our staff resides. In contrast to most other jurisdictions throughout the state that are limiting their regulatory discussion to commercial medical cannabis activity, many members of the Planning Commission wanted to include adult use activities in the Interpretation as well. However, the Commission decided that a decision such as that would best be left to City Council.

    City staff is currently drafting a comprehensive ordinance–which could be heard as soon as November 25–that would include new regulations for both medical and adult use cannabis businesses within Sebastopol. The new Interpretation is an interim measure that was designed with the approaching state licensing process in mind.

    The Interpretation went into effect immediately once adopted. Under the Interpretation, the following medical cannabis businesses would be able to apply to the city of Sebastopol for a local permit: testing laboratories, non-volatile manufacturers, infused product manufacturers, delivery-only retailers, distributors, processors, and packagers & labelers. Such uses are either permitted in certain zones or are subject to a Use Permit.

    Sebastopol is one of the few cities across the state to issue permits for non-storefront medical retailers (i.e., “delivery-only” dispensaries). Most other jurisdictions that allow delivery require that it be attached to a storefront dispensary. Under the new Interpretation, an office for a delivery-only retailer is a permitted use in non-residential zones throughout the city. This is good news for many delivery operators who have been looking for somewhere to locate and get permitted.

    Sebastopol already has an ordinance regulating storefront dispensaries and has two such storefront dispensaries currently in existence. The Planning Commission asked the City Council to consider adopting an urgency ordinance that would allow the existing medical cannabis dispensaries to apply for adult use retail licenses.

    For more information, including application submittal requirements and the required forms, or for assistance obtaining a commercial cannabis permit in Sebastopol in order to be eligible for state licensing, please contact the Law Offices of Omar Figueroa at (707) 829-0215 or (415) 489-0420.

     

    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, including obtaining commercial cannabis permits and licenses in California, please contact the Law Offices of Omar Figueroa at (707) 829-0215 to schedule a confidential legal consultation.

  • 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.

  • California to Issue Temporary Cannabis Licenses Starting January 1

    The Bureau of Cannabis Control (formerly the Bureau of Medical Cannabis Regulation)(hereafter the “Bureau”) released information today regarding temporary cannabis licenses, which will be available beginning on January 1, 2018. The Bureau is the primary licensing agency for cannabis distributors, testing laboratories, retail stores, and microbusinesses within California.

    Temporary state licenses will only be issued to applicants that have a local permit, license, or other authorization. What exactly this authorization looks like will depend on the local jurisdiction. No temporary license will be effective prior to January 1, 2018. Once issued, temporary licenses will be valid for 120 days (4 months), though they can be extended for 90 days and possibly longer if the Bureau takes longer than expected to issue permanent licenses. During this period, a company with a temporary license can and should be working to submit its full state license application. Companies that have received a temporary license will only be able to do business with other companies that have received temporary or permanent licenses.

    Applicants will be required to provide the following information for a temporary license from the Bureau:

    1. Local jurisdiction authorization – Applicants must provide a copy of a valid license, permit, or other authorization issued by the local jurisdiction where the business is operating that allows the applicant to conduct commercial cannabis activity at the location. The authorization must specify that the applicant is authorized to conduct cannabis activity.
    2. Name – Applicants must provide a name of the individual or entity requesting the license.
    3. License type requested – Distributor, Retailer, Microbusiness, or Testing Laboratory.
    4. License designation requested – A-license (adult use) or M-license (medicinal).
    5. Contact information – Applicants must provide a designated primary contact including first and last name, title, address, phone number(s), and email address(es).
    6. Owners – For each owner that meets the criteria of Business and Professions Code section 26001 (al), the owner’s name, mailing address, and email address.
    7. Physical address – Location of the proposed premises.
    8. Authorization to use the location – A copy of the title or deed to the land where the premises is proposed to be located. If the applicant does not own the land, a document from the landowner stating that the applicant has the right to occupy the property and may use the property for the commercial cannabis activity.
    9. Premises diagram – A diagram of the business’s layout at the proposed location.

    Lori Ajax, Chief of the Bureau, says that temporary licensees will receive approval via e-mail and will be able to print their temporary license from home. The final regulations for medical and adult use cannabis businesses will be released in November, and full-length license applications will be available soon after that.

    The Bureau and the other two California cannabis licensing agencies, the Department of Food & Agriculture’s CalCannabis Licensing Division and the Department of Public Health’s Manufactured Cannabis Safety Branch (formerly OMCS) plans to hold licensing workshops around the state starting in October. Be sure to check the Bureau’s website at www.bcc.ca.gov for more information and updates related to cannabis licensing.

     

  • Summary of Local Ordinances Released by Bureau of Cannabis Control

    The Bureau of Cannabis Control (Bureau), formerly named the Bureau of Medical Cannabis Regulation, is working on regulations pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to establish a licensing and enforcement program for commercial cannabis distributors, retailers, testing laboratories, and microbusinesses.

    As lead agency under the California Environmental Quality Act (CEQA), the Bureau has prepared an Initial Study/Proposed Negative Declaration (IS/ND).  The entire document can be downloaded by clicking the image below.

    The Initial Study/Proposed Negative Declaration (IS/ND) is huge at 491 pages; however, it contains three very helpful summaries.  These summaries have been extracted for your convenience and can be downloaded by clicking the image below or here.

    The summaries are:

    Table C-1: Summary of County Ordinances (as of August 17, 2017)

    Table C-2. Summary of Ordinances in the Ten Largest California Cities (by population) (as of August 17. 2017)

    Table C-3. Summary of Regulations in Other States that Have Passed Legislation Authorizing Adult Use of Cannabis (as of August 17, 2017)

    These official summaries provide helpful information to: 1) regulators seeking guidance from other local jurisdictions, 2) entrepreneurs looking for cannabis-friendly local jurisdictions issuing local permits, and 3) those who seek to understand cannabis policy in California and other states that have passed legislation authorizing the adult use of cannabis.

    NOTE: Ordinances, laws, and regulations are in a state of evolution, and change from day to day.  The official summaries are current as of August 17, 2017, meaning they are probably already out of date.  We cannot guarantee the accuracy of these official summaries, which are provided for informational purposes.

    Please check directly with the local jurisdiction (the city for activity within city limits, or the county for activity within the unincorporated area of the county) to find the latest ordinances pertaining to cannabis.

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    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 in obtaining local permits and/or state licenses, please contact the Law Offices of Omar Figueroa at (707) 829-0215 or (415) 489-0420 to schedule a confidential legal consultation.

  • Summary of Expected Emergency MAUCRSA Regulations Released

    The Bureau of Cannabis Control (Bureau), formerly named the Bureau of Medical Cannabis Regulation, is developing regulations pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to establish a regulatory licensing and enforcement program for commercial cannabis distributors, retailers, testing laboratories, and microbusinesses. As lead agency under the California Environmental Quality Act (CEQA), the Bureau has prepared an Initial Study/Proposed Negative Declaration (IS/ND).  The entire document can be downloaded by clicking the image below.

    The Initial Study/Proposed Negative Declaration (IS/ND) is huge at 491 pages; however, it contains a very helpful Summary of Expected Emergency MAUCRSA Regulations.  The official summary can be downloaded by clicking the image below.

    The Summary of Expected Emergency MAUCRSA Regulations can also be downloaded here.  This official summary provides a helpful preview to those who want to plan to comply with the anticipated MAUCRSA regulations.

    Highlights of the expected regs:

    Applicants will be required to submit identifying information for every owner.  Applicants will also be required to provide information regarding their funding sources and owners’ criminal conviction histories.

    In the regulations, the Bureau will specify the types of records that licensees must keep, including financial, personnel, and security records; training records; contracts; and permits, licenses, and local business authorizations. The regulations will require that these records can be produced when requested by the Bureau.

    Licensees and persons acting for or employed by a licensee must display photo identification badges while engaging in any commercial cannabis activity. isitors to any licensed premises will be required to be escorted by an employee when visiting limited‐access areas of the premises.

    All licensees will be required to install and maintain a video surveillance system to record all entries and exits, as well as all areas where cannabis is received, processed, and stored, as well as security rooms. Retailers will also be required to record all point‐of‐sale areas and areas where cannabis is displayed for sale. Cameras must record 24 hours per day, and recordings must be kept for a specified period of time.

    Licensed premises will have an alarm system that is monitored and maintained by a licensed alarm company.

    Distributors are also the only license type that can transport commercial cannabis goods. Distributors may act as wholesalers or may charge other licensees a fee for conducting distribution on their behalf.

     

    The regulations will provide that distributors may package and label or repackage and relabel cannabis in the form of dried flower on behalf of a cultivator or another distributor. Distributors may not package, repackage, label, or relabel manufactured cannabis goods.

    Cannabis goods will be required to be transported inside commercial vehicles or trailers. Transportation may not be done by aircraft, watercraft, rail, drones, human powered vehicles, or unmanned vehicles.

    Vehicles used for transporting cannabis goods must contain a box that can be locked and that is secured to the inside of the vehicle or trailer. Cannabis goods must be locked in the box during transport.

    After taking physical possession of a cannabis batch, a distributor will contact a licensed testing laboratory to arrange for testing, unless the distributor plans to sell the batch to another distributor. At that point, a laboratory agent will come to the distributor’s licensed premises to take a sample. The sample selection will be recorded on video, and both the distributor and the laboratory agent must witness and attest to the sample selection.

    After the sample has been tested, the testing laboratory will provide the distributor with a certificate of analysis. If a sample passes testing, the distributor may transport the cannabis goods to one or more retailers for sale. If a harvest batch fails testing, it can be remediated for use in a manufactured product, if doing so would not result in harm to consumers.

    Cannabis goods may be displayed only in the retail area, and only during business operating hours. Cannabis goods may not be displayed where visible from outside the premises.

    Retailers may not provide free samples to anyone or allow representatives of other companies or organizations to provide free samples on the licensed premises.

    Retailers must receive cannabis goods only from licensed distributors. Cannabis goods must be packaged and labeled for final sale at the time the retailer receives them.

    Following a sale, the retailer must place cannabis goods in an opaque exit package before the customer leaves the retailer premises.

    Delivery employees may not consume cannabis during delivery.

    Vehicles used for delivery must have a dedicated, active GPS device that enables the dispensary to identify the geographic location of the vehicle during delivery.

    Retailers may receive shipments of inventory only from licensed distributors.

    Retailers must keep records of all sales transactions, including the names of the sales employee and the customer, the list and quantity of products sold and their price, and the date and time of the transaction.

    The Bureau’s regulations will include a grace period for compliance with packaging and testing requirements. During the grace period, retailers may package and sell cannabis goods that have not been packaged by a cultivator or distributor. In addition, during the same time frame, retailers may sell untested cannabis if they place a label on the package with the date of purchase and the statement, “This product has not been tested under the Medicinal and Adult‐Use Cannabis Regulation and Safety Act.”

    Laboratories will be required to test samples for cannabinoid content. The cannabinoids that are required to be tested for are tetrahydrocannabinol (THC), tetrahydrocannabinolic acid (THCA), cannabidiol (CBD), cannabidiolic acid (CBDA), cannabigerol (CBG), and cannabinol (CBN). For each of these cannabinoids, laboratories must report the concentration. They may also test for other cannabinoids at the election of the test requester.

    Laboratories will be required to analyze samples of manufactured cannabis goods for residual solvents and processing chemicals. Dried flower, kief, and hashish need not be analyzed for residual solvents.

    Testing laboratories will be required to test samples for residual pesticides.

    Laboratories will be required to test samples of cannabis and cannabis products for microbiological impurities, which will include Shiga toxin producing Escherichia coli and Salmonella spp. Laboratories must also test for the pathogenic species Aspergillus funigatus, A. flavus, A. niger, and A. terreus in all cannabis goods intended for consumption by inhalation, including dried flower, kief, hashish, oil, and waxes.

    Testing laboratories will be required to analyze samples for mycotoxins.

    Testing laboratories will analyze dried flower harvest batch samples for water activity and moisture content.

    Testing laboratories will be required to test samples for filth and foreign material. This includes, but is not limited to, mold, hair, insects, feces, packaging contaminants, and manufacturing waste and byproducts. Samples that contain these contaminants above the specified action levels will fail laboratory testing.

    Laboratories may be required to analyze samples for concentrations of heavy metals.

    After completion of testing, the testing laboratory will issue a certificate of analysis that details the results of each test. The certificate of analysis will also report whether the laboratory detected any unknown or unidentified substances or materials during analysis of a sample. If the laboratory finds a contaminant that is not listed in these regulations that could be injurious to human health at the levels detected, the laboratory must notify the Bureau within 24 hours. Samples found to contain synthetic cannabinoids will fail testing.

    A batch may not be retested unless it has undergone a remediation process. Before a batch can be retested, the distributor must provide a document to the laboratory specifying how the product was remediated.

    Testing laboratories will be required to develop and implement a laboratory quality assurance program

    A microbusiness license allows the licensee to cultivate cannabis in an area of less than 10,000 square feet and to act as a licensed distributor, Level 1 (nonvolatile solvent) manufacturer, and retailer. (Bus. Prof. Code §26070.) For both medicinal and adult‐use cannabis operations, CDFA is the licensing authority for stand‐alone cannabis cultivation activities and CDPH is the licensing authority for stand‐alone cannabis manufacturing activities.

    With regard to distribution and retail sale, the regulations applicable to those activities are anticipated to be the same for a microbusiness as for a standalone business. For cultivation activities, it is expected that applicants will be required to follow applicable provisions of the cultivation regulations that will be adopted by CDFA for cannabis cultivation, and CDFA is anticipated to provide assistance to the Bureau related to cultivation by a microbusiness. Similarly, it is expected that microbusiness applicants conducting manufacturing activities will be required to follow CDPH manufacturing regulations, and CDPH is anticipated to provide assistance to the Bureau related to manufacturing by a microbusiness.

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    Provided for informational purposes only; this is not intended as legal advice.  Please contact the Law Offices of Omar Figueroa for legal counsel or assistance regarding the Expected Emergency MAUCRSA Regulations, or other legal issues, at (707) 829-0215, at (415) 489-0420, or at info@omarfigueroa.com.

  • Marin County Releases Draft Ordinance for Medicinal Cannabis Delivery-Only Retailer (MCDORe) licenses

    Marin County has released its draft ordinance for issuing Medicinal Cannabis Delivery-Only Retailer (MCDORe) licenses.

    Highlights of the draft delivery-only ordinance:

    • “The MCDORe license is more restrictive than a State Retailer license because it requires the retailer’s premises to be closed to the public and to conduct sales exclusively by delivery.” Section 6.86.030, License Requirements.
    • Up to four MCDORe licenses may be issued for “premises within the unincorporated areas of Marin County for a medicinal cannabis retailer which is closed to the public and conducts sales exclusively by delivery.”  Section 6.86.032, Limitation on number of licenses.
    • A MCDORe “may only be located in the C1, CP, AP, OP, and IP” zoning districts.  One can look up zoning information for a particular location in unincorporated Marin County by clicking here.
    • A MCDORe must not be within a 600-foot radius of a playground, tobacco store, school, day care center, youth center, or “another cannabis retailer.”  Section 6.86.033, Limitation on location.
    • License applications will go through multiple phases: prescreening, lottery (if there are more than four applicants; lottery winners win the opportunity to continue to compete for a license), application pre-submittal, and application review based on a 100 point scale.  Section 6.86.041, Review of Applications.

    A public workshop and Question & Answer session is scheduled for Sep. 19 at 6:30 p.m. in the Marin County Board of Supervisors chamber, Suite 330, 3501 Civic Center Drive, in San Rafael.  The draft ordinance is set for a first reading by the Board of Supervisors on Sep. 26 and could be adopted as soon as October 10, 2017.

    The draft ordinance can be downloaded below.

    Marin County Draft Delivery-Only Ordinance

    More information about the draft ordinance is available at:
    http://www.marincounty.org/main/medicalcannabis

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    If you are interested in applying for a Marin County Medicinal Cannabis Delivery-Only Retailer (MCDORe) license, please contact the Law Offices of Omar Figueroa at (415) 489-0420 or (707) 829-0215. Due to the limited number of licenses, we are only able to represent one applicant for a Marin County Medicinal Cannabis Delivery-Only Retailer (MCDORe) license. Lawyer up quick!

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  • 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/

     

  • Legislature consolidates MCRSA and AUMA into MAUCRSA


    On Thursday June 15, the California Senate and Assembly passed two bills, SB-94 and AB-110, which are the state legislature’s versions of Governor Brown’s Trailer Bill. The Trailer Bill is the administration’s effort to reconcile the medical and adult use cannabis systems in California. Now that these bills have passed, Governor Brown has until July 1 to sign them into law, which he is expected to do. The law would then go into effect immediately once signed.

    We contacted the Bureau of Medical Cannabis Regulation to ask what would happen next. Their official response was:

    “The bureau will withdraw the proposed MCRSA regulations and propose a new set of regulations consistent with the changes in the law. However, public comments on the proposed MCRSA regulations are still very important. Many of the provisions in the MCRSA proposed regulations will carry over to the new regulations. Public comment from the MCRSA proposed regulations will provide information for the bureau to use when crafting any new regulations.”

    The emergency rule-making process will most likely be used for the next round of proposed regulations.

    Below are some of the main changes coming soon to California cannabis.

     

    Name of the Law and Rebranding of Regulatory Agency

    The new name for the combined medical and adult use cannabis regulatory systems is the “Medicinal and Adult Use Cannabis Regulation and Safety Act” (MAUCRSA–we think this would be pronounced MAO-KUR-SA) (BPC §26000). The Bureau of Medical Cannabis Regulation will be renamed the “Bureau of Cannabis Control” (BPC §26001(e)).

     

    License Types and Combinations

    The license types for medical and adult use cannabis operations will be the same. There will be no transporter or producing dispensary licenses. Licenses will be identified as medical or adult use with an “M” or “A,” respectively, except for testing laboratories which shall not be designated as either. The requirements for M-licenses and A-licenses shall be the same, unless otherwise specified (BPC §26050(b)). Regarding which combinations of licenses a person may hold, the law removes MCRSA’s limitation on holding licenses in more than two separate categories. Large cultivators, which will not be allowed until 2023, cannot hold distribution or testing licenses but can hold all other license types.

     

    Definition of “Owner”

    The new law eliminates the distinction between public and private companies; the threshold is 20% interest in the company to be an owner; and the CEO of a company (if applicable) ; and all members of the Board of Directors of a nonprofit (if applicable); and anyone who exercises direction, management or control of the company (if applicable) (BPC §26001(al)).

     

    Delivery

    Deliveries may only be made by a licensed retailer or microbusiness (BPC §26090). However, retailers are allowed to conduct business exclusively by delivery. Such a retailer must still have a licensed premises, but the premises may be closed to the public (BPC §26070). Deliveries includes the use of technology platforms that are either independently licensed or owned and controlled by another licensee (BPC §26001(p)).

     

    Volatile Solvents

    The definition of “volatile solvents” has been completely changed, and no longer includes references to specific compounds. Instead, a volatile chemical is defined by MAUCRSA as “a solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures.” (HSC §11362.3(b)(3)).

     

    Lab Testing

    The bureau will issue testing laboratory licenses, but these licenses will not be designated as “M” or “A” (BPC §26050(b)). Holders of a testing laboratory license may not hold a license in any other category (BPC §26053(b)). Testing laboratories are responsible for obtaining samples and transporting them back to the laboratory

     

    Distribution

    Transportation of cannabis can only be done by licensed distributors (BPC §26070(a)(2)), but anyone, except testing laboratory license holders, can apply for a distributor license (BPC §26110).

     

    No More Prohibition on ABC Licensees Holding Cannabis Licenses

    MCRSA and AUMA prohibited a holder of an alcohol license from obtaining a license for commercial cannabis. The new legislation does away with that prohibition. Instead, the law would prohibit any cannabis licensee from serving alcoholic beverages or tobacco on the licensed premises (BPC §26054).

     

    Special Events

    Temporary event licenses that would allow on-site consumption may be available, if all participants are licensed and the local jurisdiction allows it (BPC §26200(e)).

     

     

  • Draft Regs: Potential Issues Related to “Ownership”

     

    The proposed medical cannabis regulations released by California’s medical cannabis regulatory agencies — the Bureau of Medical Cannabis Regulation (BMCR), the Department of Food and Agriculture (CDFA), and the Department of Public Health (CDPH) — would require licensees to submit a new application any time there is a change in ownership or organizational structure.

    This is potentially problematic for cannabis companies for two reasons. First, the definition of “owner” is very broad, and it includes the following: 

    For public companies, an owner is anyone holding 5% or more interest in the company.
    For private companies an owner is any of the following:
    Someone holding an aggregate ownership interest (other than a security interest, lien, or encumbrance) of 20% or more interest in the cannabis business;
    The CEO and all members of the board of directors of any entity that holds an aggregate ownership interest of 20% or more in the cannabis business; or
    Any other person who participates in the direction, control or management of the commercial cannabis business.

    (BMCR § 5004; similar provisions are contained in CDFA’s and CDPH’s proposed regulations.) All individuals and entities considered to be “owners” must disclose personal and financial information about themselves. 

    Each individual named on this list shall submit the following information:
    (A) The full name of the owner.
    (B) The owner’s title within the applicant entity.
    (C) The owner’s date of birth and place of birth.
    (D) The owner’s social security number or individual taxpayer identification number.
    (E) The owner’s home address.
    (F) The owner’s telephone number. This may include a number for the owner’s home, business, or mobile telephone.
    (G) The owner’s email address.
    (H) The date the owner acquired an ownership interest in the applicant entity.
    (I) The percentage of the ownership interest held in the applicant entity by the owner.
    (J) If applicable, the number of shares in the applicant entity that the owner holds.
    (K) Whether the owner has a financial interest in any other licensee under the Act. For purposes of this section “financial interest” means an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other equity interest in a commercial cannabis business.
    (L) A copy of the owner’s government-issued identification. Acceptable forms of identification are a document issued by a federal, state, county, or municipal government that includes the name, date of birth, physical description, and picture of the person, such as a driver license.
    (M) A detailed description of the owner’s convictions. A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere. Convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must be disclosed. Juvenile adjudications and traffic infractions under $300 that did not involve alcohol, dangerous drugs, or controlled substances do not need to be included. For each conviction, the owner shall provide the following:
    (i) The date of conviction.
    (ii) Dates of incarceration if applicable.
    (iii) Dates of probation if applicable.
    (iv) Dates of parole if applicable.
    (v) A detailed description of the offense for which the owner was convicted.
    (vi) A statement of rehabilitation for each conviction. The statement of rehabilitation is to be written by the owner and shall contain all evidence that the owner would like the bureau to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, a certificate of rehabilitation under Penal Code section 4852.01, and dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual providing the reference.
    (N) A copy of the owner’s completed application for electronic fingerprint images submitted to the Department of Justice.
    (O) Attestation to the following statement: Under penalty of perjury, I hereby declare that the information contained within and submitted with the application is complete, true, and accurate. I understand that a misrepresentation of fact is cause for rejection of this application, denial of the license, or revocation of a license issued.
    (P) The following information regarding an individual with a community property interest in the commercial cannabis business under Family Code section 760 shall be provided by the owner:
    (i) The full name of the individual.
    (ii) The individual’s date of birth and place of birth.
    (iii) The individual’s social security number or individual taxpayer identification number.
    (iv) The individual’s mailing address.
    (v) The individual’s telephone number. This may include a number for the owner’s home, business, or mobile telephone.
    (vi) Whether the individual has a financial interest in any other licensee under the Act. For purposes of this section “financial interest” means an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other equity interest in a commercial cannabis business.

    (BMCR § 5006; similar provisions are contained in CDFA’s and CDPH’s proposed regulations.) As noted, the draft regulations would require submitting a new license application any time the ownership of a cannabis business changed. It seems excessive to require a new license to be obtained whenever a single individual who may be considered an “owner” is added to or removed from the company. For example, let’s say an LLC held a 25% interest in another company that has a commercial cannabis license. If one member of the LLC’s board of directors changed, then the other company would have to re-apply for an entirely new license to continue operating the way it had been, even though its board may not have changed and even though the LLC still holds a 25% interest.

    Second, the requirement that a new application be submitted whenever there is a change in the organizational structure of a commercial cannabis business is troubling. For  years in California, many medical cannabis businesses have structured their entities as nonprofit mutual benefit corporations (MBCs) or nonprofit cooperatives. This is because Senate Bill 420 stated it did not authorize “any individual or group to cultivate or distribute marijuana for profit,” and that qualified patients and primary caregivers who “collectively or cooperatively cultivate cannabis for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570.” In 2008, California’s state Attorney General Edmund Brown issued “Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use” which talked about statutory cooperatives (agricultural and consumer) and non-statutory collectives as being two types of options for medical cannabis patients and caregivers to “collectively or cooperatively” grow cannabis.

    Now, however, the tide has shifted. Under the Medical Cannabis Regulation and Safety Act (MCRSA), a “person” is defined as an individual or corporate entity, and it is implied that medical cannabis businesses may no longer have to operate on a not-for-profit basis under this new regulatory scheme. To clear this up, there is a bill pending in the state legislature, AB64, which would explicitly state that medical cannabis licensees may lawfully operate on a for-profit basis. (AB 64 would do a number of other things as well, such as allow for cannabis-specific state trademarks and place certain restrictions on cannabis advertising.) Thus, the need for nonprofit cooperatives and collectives will be largely gone soon (not to mention the collective and cooperative provision, Health & Safety Code § 11362.775, has a sunset clause which will likely take effect in early January of 2019, 12 months after the state licenses are issued), and many of these existing cannabis companies that are set up as MBCs or statutory cooperatives will likely want to restructure their entity in a way that makes sense for their business. It seems unnecessary and overly burdensome to require a cannabis company to submit a new license application whenever its organizational structure changes, especially since licensees are already required to notify their licensing agency when there is a change in any item listed in the application, which would include the list of owners and entity structure.

    This could also create problems between local jurisdictions and the state. If the state requires one to obtain a new license every time ownership changes, then the local permit that was issued to the company before its change in ownership may no longer be valid, triggering the need to go back and get a new local permit as well. However, a local jurisdiction may not be issuing any new cannabis permits, meaning the company that previously had a local permit and state license would suddenly be without a valid local permit or authorization, simply due to what could be a minor change in ownership or entity structure.

    Additionally, the proposed regulations explicitly do not allow for the transfer of licenses, and the requirement that a new license be obtained whenever there is a change in ownership or organizational structure effectively prohibits the transfer of licenses as well. For example, let’s say Dispensary A is licensed. Mr. B wants to buy Dispensary A, because he wants a licensed dispensary. Mr. B makes the arrangements and buys Dispensary A, but Dispensary A’s license becomes invalid as soon as the transaction is complete since there is now a new owner who must apply for a new license. This is likely not how most investors and operators in the cannabis industry envisioned an industry-friendly license transfer process.

    If you have concerns with any of the proposed regulations, please make sure your comments are submitted by 5:00pm on June 13/14/20 (depending on which license type), 2017. Information about submitting a public comment can be found here: BMCR, CDPH, CDFA. You can comment in writing or in person at one of the scheduled public hearings.

     

    The above information is for informational purposes only, may become outdated, and is not intended as legal advice.  Please consult with a lawyer for legal counsel.  Please contact the Law Offices of Omar Figueroa if you have questions about the regulatory process or would like the assistance of counsel in advocating for changes to the proposed regulations.

    Photo by Nik MacMillan on Unsplash.

  • Proposed Manufacturing Regulations: New License “Type N”

    The California Department of Public Health, Office of Manufactured Cannabis Safety, released proposed regulations on April 28, 2017 that would create a new license type, the “Type N” license, for “manufacturers that produce edible products or topical products using infusion processes, or other types of medical cannabis products other than extracts or concentrates, and that do not conduct extractions.”

    The manufacturing licenses established by Medical Cannabis Regulation and Safety Act (MCRSA) only address manufacturers that engage in extractions, and set forth two types of licenses, Type 6 for extractions using non-volatile solvents, and Type 7 for extractions using volatile solvents.

    Many manufacturers do not conduct extractions, but rather purchase cannabinoid concentrates from other manufacturers and incorporate the concentrate into their own products.  Thus, this new license type has been proposed in the draft regulations.  The new “Type N” license type for infusion-only is one of the types of licenses for extraction-related operations overseen by the Office of Manufactured Cannabis Safety.

     

    §40118. Manufacturing License Classifications.

    The following license types are available from the Department:

    (b) “Type N,” for manufacturers that produce edible products or topical products using infusion processes, or other types of medical cannabis products other than extracts or concentrates, and that do not conduct extractions. For purposes of section 19328 of the Business and Professions Code, a Type N license shall be subject to the same restrictions as a Type 6 license.

    The ISOR for Section 40118 explains the reasoning behind the new “Type N” license.

    “Manufacturing License Classifications. The Act establishes two license types for manufacturers – Type 6 for manufacturers using nonvolatile solvents and Type 7 for manufacturers using volatile solvents. (Bus. & Prof. Code §19300.7 subd. (k) and (l).) However, Business and Professions Code section 19302.1(f) allows the Department to create additional license types as needed. This section is necessary to make specific the Department’s licensing authority.

    Subsection (b) creates a new license category of “Type N” for manufacturers that only infuse cannabinoids into a product formulation to produce a cannabis product. The manufacturing licenses established by the Act only address manufacturers that engage in extractions. Many manufacturers do not conduct extractions, but rather purchase cannabinoid concentrates from other manufacturers and incorporate the concentrate into their own products. Establishing a new license type for infusion-only is reasonably necessary for the Department to appropriately oversee licensing operations.

    This subsection also provides that holders of a Type N license are subject to the same additional license restrictions as a Type 6 license. As discussed above, this provision is reasonably necessary to conform this proposal to the intent of the Act.

    The above information is provided for informational purposes only and is not intended as legal advice.  Please contact a lawyer for legal counsel.

    If you would like legal assistance in advocating for changes to the proposed regulations, please get in touch with us.  If you are interested in a legal consultation about the Type N license, the draft medical marijuana regulations proposed by California’s cannabis regulatory agencies, and compliance with California’s cannabis laws, please contact the Law Offices of Omar Figueroa at (707) 829-0215 or at (415) 489-0420.