California Cannabis Department Rolls Out New Regulations

The Department of Cannabis Control (DCC) has announced the rollout of new regulations for California cannabis growers. The goal of these changes is to make the regulator process easier for the department and cultivators. Keep reading to learn more.

Statement from DCC Director

California Department of Cannabis Control Director Nicole Elliot says that the department is introducing these regulations with the hope that industry leaders, growers, and distributors will be able to participate in the industry according to streamlined regulatory standards.

Elliot says, “This proposal is a direct result of DCC’s engagement with stakeholders and the thoughtful feedback received through letters, conversations, meetings, and previous rulemaking processes. We are deeply [committed] to creating a cannabis regulatory structure that works for all Californians, including California’s cannabis industry, consumers, and communities.”

The new structure is part of an industry-wide initiative to smooth the transition to a unified department and improve the conditions for workers and products for consumers. As a part of this process, the DCC is allowing cannabis businesses to submit their own commentary on the transition and offer first-hand accounts of how these regulations are affecting their companies. The public comment period will end on April 19, 2022, and a live hearing will take place on the same day.

Regulatory Changes

The DCC is adopting the following policy changes:

• Businesses must obtain and maintain a valid license per premises
• Only licensed businesses can participate in B2B transactions, but retail licensees can sell to customers and nonprofits
• Licensed distributors and micro-businesses can only participate in the transport of medicinal cannabis to a retail licensee with a medicinal designation
• Retail licensees may only sell medicinal goods to customers with a medical marijuana card
• Licensees cannot occupy buildings that require customers to walk through premises that sell alcohol or tobacco and must not include the living area of a private resident
• Shipping containers and modular buildings not affixed to the ground are not considered lawful business locations
• The DCC will grant cannabis business owners a six-month grace period to adhere to the new regulations
• Restrooms, changing areas, and break rooms must be separated from marijuana storage areas by floor-to-ceiling walls
• Licensees using an Appellation of Origin must submit a Notice of Use within 30 days
• Immediate suspension of a provisional license must be in writing and describe the reason for suspension
• A copy of the licensee’s signature is required for businesses entering the industry
• All licensees participating in a cannabis event must be disclosed along with the products and goods displayed and sold
• Employees of cannabis retailers do not need to be disclosed
• Ownership of a cannabis business must be disclosed and willing to maintain liability and responsibility for keeping their license current
• Any person who enters into an intellectual property licensing agreement for a share of the profit is considered a holder of the cannabis business
• Laboratory testing must be performed separately from the licensee.
• Laboratory leasing cannot occur within personal property owned by the business
• Laboratories are not permitted to hire anyone who does not work as a technician
• There are no requirements regarding the designation of separate areas for cannabis or nonmanufactured products under administrative holds
• Laboratories cannot offer preferential treatment like discounted testing to any licensees
• Diagrams can include highlighting
• Closed-loop extraction system locations must be included in all diagrams along with a serial number
• Cultivators do not have to have a minimum of two hours of operation per day
• Documents proving the approval of extraction operations are no longer required
• Operating procedures provided upon request are limited to one form
• License modification will include the specification of modifications for each license type before approval

Other requirements can be found in the DCC’s regulatory register for cannabis licensees and businesses.

Preparing Your Business

These regulatory changes are not sweeping reforms, but measured adjustments. The goal of this process is to ensure that the industry is running safely and legally, and that the DCC can evaluate performance and compliance more easily.

Most of the changes will go into effect in Fall 2022, but in the meantime, you can take important steps toward preparing your cannabis business now. Purdy & Bailey, LLP is a premier cannabis business law firm that focuses on helping business owners grow and maintain their businesses according to California law. Our experienced attorneys can assist clients with business formation, compliance, licensing, permits, and more.

Schedule a consultation with our attorneys to learn more.