California drops ‘bombs’ in updated draft of permanent rules for cannabis businesses

cannabis rules

(This story has been corrected to note that tech platforms such as Eaze are permitted to facilitate cannabis deliveries but are not allowed to share in profits from those deliveries.)

California’s proposed marijuana business regulations continue to evolve, this time in an updated draft of permanent industry rules released Friday by state officials.

The proposed rules – from the state’s Bureau of Cannabis Control, Department of Food and Agriculture and Department of Public Health – touch on areas including marijuana delivery, packaging and events.

Regulators are slated to finalize the rules by early December, following input from the public.

If permanently adopted, the latest proposed rules would deliver a raft of significant changes for MJ businesses, according to Juli Crockett, compliance director for Los Angeles-based consultancy MMLG, and Omar Figueroa, a California marijuana attorney.

In particular, Crockett said, the BCC’s changes are “going to be the talk of the town, because there are some bombs they dropped.”

Among the biggest proposed changes, according to Figueroa and Crockett:

  • Cannabis delivery would be prohibited by third-party companies that do not have state MJ commercial licenses, but the rules do allow for tech platforms to help facilitate deliveries as long as there’s no direct profit-sharing based on sales. The move could undercut business models of companies such as Eaze and Weedmaps when it comes to delivery, both Figueroa and Crockett said.
  • The draft rules would reduce the amount of inventory allowed to be carried by a single delivery vehicle, from $10,000 to $5,000. And at least $2,000 of that inventory would have to have existing orders in place from customers before drivers leave a delivery hub.
  • Licensed cannabis businesses would be required to disclose far more information about individuals and companies that hold ownership stakes – a move Figueroa said amounts to a “ban on silent partners.” Crockett added that the BCC “wants to know who’s standing to profit and who has a standing in each of these companies.”
  • Packaging and labeling provisions would change dramatically, including one that would allow manufacturers to hold off on identifying THC and CBD content before having their products tested through distributors and laboratories. That would let distributors get edibles and concentrates tested for potency and then add that information to labels before products are sent to retailers.
  • Child-resistant packaging requirements would shift and not be required for manufacturers until January 2020. That, Crockett said, would mean more onus would be placed on retailers to use child-resistant exit bags at storefronts through 2019.
  • Licensed MJ events would no longer be confined to county fairgrounds, which means there would likely be a proliferation of cannabis events of various types.
  • Licensing and branding agreements with legacy operators that were growing or manufacturing without a state permit would be expressly prohibited. Figueroa said such a move would likely cut off one more avenue for longtime MJ companies that have had a hard time obtaining the necessary permits to operate in the regulated market.
  • Testing requirements would be modified to ease the previously strict mandates that have led to a number of product failures and recalls.

These are just some of the modifications proposed by regulators in the most recent draft of industry rules.

The latest draft regulations are available here. The first draft of permanent rules was released in July.

“It seems like they’re very sensitive to the needs of the industry,” Figueroa summarized. “What makes me happy is the certainty and knowing what we have to deal with, that the rules of the game are finally crystallizing.”

Eaze’s vice president of communications, David Mack, wrote in an email to Marijuana Business Daily that the company is “happy that the BCC is providing guidance for the best way that technology platforms can support delivery from local, licensed retailers.”

Friday’s publication of the draft rules kicks off a new, 15-day public comment period that will be open through Nov. 5.

The three state agencies that oversee California’s marijuana industry are required to complete all regulatory tweaks by Dec. 3.

A spokesman for the BCC said it’s possible another draft of the rules may be released before then, depending on feedback during the comment period.

John Schroyer can be reached at [email protected]

3 comments on “California drops ‘bombs’ in updated draft of permanent rules for cannabis businesses
  1. Kelly A. Mauro on

    New proposals include lowering the inventory amount of existing $10,000 to $5,000. Any reduction in inventory amount will help the medical marijuana users. Numerous patients who get recommendations from the reputed & licensed clinics like Online Medical Card, https://www.onlinemedicalcard.com would get delivery at door without much delay.

    Reply

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