On Friday, April 28, 2016, the State of California released proposed medical cannabis regulations through three regulatory agencies: the Bureau of Marijuana Control (formerly the Bureau of Medical Cannabis Regulation) within the Department of Consumer Affairs, the Office of Manufactured Cannabis Safety within the Department of Public Health, and the CalCannabis Licensing Office within the Department of Food and Agriculture.
THE ADMINISTRATIVE RULEMAKING PROCESS
Governmental agencies, such as the California Department of Consumer Affairs, the California Department of Public Health, and the California Department of Food and Agriculture, are part of the executive branch of the State of California. Although their leadership is not elected, agencies have the power to make laws through what’s known as the rulemaking process. The rulemaking process is governed by California’s Administrative Procedure Act (APA). In a nutshell, agencies are given legislative authority to create rules, regulations and standards (“rules”) in order to implement and expand upon certain statutes, but must follow special procedures in doing so and give the public a chance to provide feedback.
First, the agency must draft the proposed regulations and conduct impact assessments. Once that has been completed and the proposed regulations are ready to be shown to the public, the agency must publish three documents: a Notice of Proposed Rulemaking (NOPR); the text of the proposed regulations; and an Initial Statement of Reasons (ISOR). This kicks off a minimum 45-day public comment period during which anyone can read the proposed regulations and submit comments to the agency. Public hearings are typically held during the public comment period to give the People an opportunity to meet the regulators and provide feedback in-person. After the public comment period is over, the agency must consider the comments it received and may make changes to the draft regulations. If the changes are significant, a new 45-day public comment period is needed. If the changes are minor, then the agency will publish three more documents: an updated informative digest, a final statement of reasons with a summary of and response to the comments received, and the final text of the regulations. The agency would then adopt the final regulations into law.
A flowchart of the administrative rulemaking process can be found here.
45 DAY PUBLIC COMMENT PERIOD HAS BEGUN
In this case, there are three agencies going through the rulemaking process for medical cannabis. The 45-day public comment period began after the draft regulations were published online on April 28, 2017. Comments can be written and submitted to the agencies, or presented during the public hearings that have been scheduled. All comments must be received by the Bureau of Marijuana Control, the Department of Public Health, and the Department of Food and Agriculture by 5:00pm on June 13, 2017.
There will be two public hearings for manufacturing, four public hearings for cultivation, and four public hearings for testing/retail/distribution/transportation. The dates and locations of the public hearings are posted on our “Regulations” page.
THREE NEW LICENSE TYPES PROPOSED: PROCESSOR, TYPE P, TYPE N
The California Department of Food and Agriculture, CalCannabis Cultivation Licensing, released proposed regulations that would create a new cultivation license type, the “Processor” license, for “a cultivation site that conducts only trimming, drying, curing, grading or packaging of cannabis and nonmanufactured cannabis products.”
§ 8203. Cultivation License Types. License types include:
(f) “Processor” a cultivation site that conducts only trimming, drying, curing, grading or packaging of cannabis and nonmanufactured cannabis products.
The California Department of Public Health, Office of Manufactured Cannabis Safety, released proposed regulations that would create two new manufacturing license types: 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,” and the “Type P” license, for “entities that only package or repackage medical cannabis products or label or relabel the cannabis product container.”
§40118. Manufacturing License Classifications.
The following license types are available from the Department:
(a) “Type P,” for entities that only package or repackage medical cannabis products or label or relabel the cannabis product container. Entities that engage in packaging or labeling of their own product as part of the manufacturing process do not need to hold a separate Type P license. For purposes of section 19328 of the Business and Professions Code, a Type P license shall be subject to the same restrictions as a Type 6 license.
(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.
MORE KEY PROVISIONS
There are hundreds of pages in the combined draft regulations, and a lot of information to absorb. Here are some of the key points:
– For all licensees, the definition of “owner” for a publicly traded company is someone who has 5% or more interest, and for a privately held company, an owner is any of the following: someone who owns 20% or more of the company, the CEO and all members of the board of directors of any entity that holds 20% or more ownership in the company, and any individual that engages in the direction, control, and management of the company. Additionally, there are people who do not qualify as “owners” but who still must be disclosed on applications.
– There is a distinction between premises and parcel. Multiple premises and licensees can exist on a single parcel / property. For cultivators, there can be multiple licensees on the same property provided that they each have a unique entrance and immovable physical barriers between them.
– “Volatile solvent” means any 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. Examples of volatile solvents include but are not limited to, butane, hexane, propane, and ethanol. “Nonvolatile solvent” means any solvent used in the extraction process that is not a volatile solvent. Carbon dioxide is defined as a nonvolatile solvent.
– Edibles must be individually dosed to 10mg of THC per serving and 100mg of THC per package. Non-edible cannabis products are limited to 1000 mg of THC per serving. A triangular warning symbol, designated a “Cannabis Product Symbol”, must be included on all cannabis product labels.
– There are also a number of categorical prohibitions on cannabis-infused products, including: alcoholic beverages, nicotine products, and caffeine products, food that must be kept below 41 degrees Fahrenheit, juice or juice products, canned products, meat products, seafood products, dairy products, perishable bakery products that require refrigeration, and products made by applying cannabis to commercially available foods.
– Dispensaries can’t give away free samples, or allow another company to give away free samples at the dispensary. Exit packaging must be child-resistant, opaque, and re-sealable (unless the product sold is already in a child-resistant packaging). There is a 180-day grace period after state licensing for dispensaries to comply with the testing and packaging requirements.