Although cannabis is now a legal consumer product in California, the state regulations that govern its production and availability to consumers are nonetheless strict. Compliance with these regulations is anything but a formality: It’s a matter of avoiding criminal charges amid the state’s ever-evolving attitude toward marijuana.
It’s for this reason that every cannabis business owner and hopeful entrepreneur should understand the seriousness of compliance and what’s at stake.
Key Cannabis Laws & Regulations
Although there are many different laws and regulations governing cannabis businesses in California, there are several key issues that stand out when it comes to compliance.
You Must License Your Cannabis Business
You can’t begin business operations involving cannabis without obtaining the proper licensing from California’s Department of Cannabis Control (DCC). Getting your license involves a detailed application process, a thorough background check, and paying the required fees. You must also comply with any local licensing requirements that apply to the city and/or county in which you intend to conduct business.
Be Careful About Advertising
While it may be enticing to market your cannabis to as wide of an audience as possible, California has strict advertising requirements for marijuana. You must not make your products appeal to minors, and you must avoid making false or misleading claims—this is especially important when it comes to making medicinal claims about a cannabis product.
You must also be careful where you advertise your business. Displaying ads near places where minors are present, such as a school, could run afoul of state law.
Package & Label Your Products with Care
While many cannabis companies view the packaging of their products as a part of the consumer’s overall experience, there are some basic requirements every company must meet. For example, you must make sure your packaging is resealable, tamper-evident, and difficult for children to open. You must also clearly label that it is a cannabis product and include other relevant information such as ingredients, THC and CBD content, and warning statements.
Test Your Cannabis Products
California requires all cannabis products to undergo testing before they can reach the shelves. Testing includes screening for pesticides, heavy metals, harmful microbes, and potency. Failure to properly test a product before offering it to consumers can result in serious criminal and civil liability consequences.
Secure Your Products & Business Premises
Security is more than a matter of protecting your company against theft—it’s a matter of law. California requires cannabis businesses to have a comprehensive security plan that may include alarm systems, video surveillance, secure storage areas, and even the presence of security personnel. Additionally, all employees must be trained on security measures.
Cannabis Business Compliance Penalties
Failure to comply with regulations can result in a range of penalties that can severely impact your business operations. Understanding these penalties is crucial for maintaining compliance and ensuring the longevity of your business.
The following are a few of the consequences any cannabis owner can face for non-compliance:
- Fines: Non-compliance can result in significant fines. These fines can vary depending on the severity of the violation but can reach up to tens of thousands of dollars per infraction.
- License suspension: Regulatory bodies have the authority to suspend your business license, halting your operations until compliance issues are resolved.
- License revocation: In severe cases, persistent non-compliance can lead to the revocation of your business license, effectively putting you out of business.
- Product seizure: Non-compliant products can be seized and destroyed, resulting in financial losses and potential shortages in your supply chain.
- Product recalls: If safety standards are not met, products may need to be recalled, damaging your brand reputation and incurring additional costs.
- Criminal charges: Certain violations can lead to criminal charges against business owners and employees, potentially resulting in imprisonment.
- Civil penalties: Businesses may face civil lawsuits from consumers or other entities affected by non-compliance, leading to costly legal battles and settlements.
It’s possible to avoid facing penalties such as these by working with an experienced cannabis business lawyer who can help you ensure compliance with state regulations.
Contact Us for Legal Assistance
If you’re a cannabis business owner or wish to start a new cannabis business, it helps to work with an attorney who can address the unique legal demands of your industry. We at Purdy & Bailey, LLP can provide the legal support you need to ensure compliance with California’s cannabis regulations, which can protect your company against making unfortunate mistakes.
Learn more about how we can help by sending us a message.