What you need to know about California’s updated marijuana rules

When California released its latest marijuana industry regulations on Friday, the response from cannabis businesses in the state was largely muted.

This perhaps indicates that the most disruptive changes are farther down the road before the rules are finalized later this year.

“That first step that Neil Armstrong took on the moon, everybody noticed, but by step No. 43, nobody really cared anymore,” joked Hezekiah Allen, the executive director of the California Growers Association.

“We’re sort of there. Everything to do with cannabis is a little exciting, but this is just one foot in front of the other, to be honest.”

California’s marijuana regulators made several noteworthy updates, according to legislative advocate Max Mikalonis of Sacramento-based K Street Consulting, which tracks state MJ policy closely.

He called the updates “business-friendly.”

“Generally, we’re very positive about what happened,” Mikalonis said. “The regulators have been listening … to the concerns raised by the industry.”

The updated rules came from the three agencies that oversee the California MJ industry: The Bureau of Cannabis Control governs retailers, distributors, testing labs and microbusinesses; the Department of Food and Agriculture regulates licensed growers; and the Department of Public Health governs edibles makers and manufacturers.

Highlighted changes

Perhaps the biggest news Friday was that a policy already in effect now is likely to be permanent, Mikalonis said.

Under the emergency industry rules issued last November, companies that hold medical licenses (dubbed “M” for short) were allowed to do business with those that held only adult-use permits (“A” for short).

“I can’t overestimate how big of a deal that would have been if that change had not been made permanent,” Mikalonis said.

That regulation allows for a unified supply chain so that nobody along the line has to arbitrarily decide if products need to be only “A” or “M” – except for highly potent topicals.

In addition, the Bureau of Cannabis Control, which regulates retailers and delivery companies, made several switches regarding cannabis deliveries:

  • The monetary value of product that delivery drivers may carry at any time was increased from $3,000 to $10,000.
  • A ban was placed on what many in the industry refer to as the “ice cream truck model.”

That’s a system in which MJ delivery trucks essentially are stocked as much as a retail store and drive around filling orders as they’re placed online.

“Mobile fulfillment,” as Mikalonis calls it, was essentially banned by the first set of emergency regulations issued by the state last year.

But Mikalonis said the new regulations make it explicit that drivers must receive orders and stock their vehicles at a physical location before hitting the road to deliver them.

That could put a crimp in how some cannabis delivery operators do business.

“I’ve heard that prominent delivery companies have concerns with this development,” said Mikalonis.

There also were changes seen as favorable to small businesses:

  • Single facilities that house multiple licensees now may utilize the same common areas, such as break rooms and restrooms.
  • Industry-friendly tweaks eliminated unnecessary overlaps for security and testing samples.
  • A handful of changes favored by the Growers Association were added, such as expanded water source protection and transportation of immature plants.

Unanswered questions

Just as significant as what was changed in the regulations was what was unchanged. Or what wasn’t addressed.

Perhaps the most pressing question, Mikalonis said, is whether the state will allow previously untested product to be returned to distributors for testing so that it can be sold after July 1, when only lab-tested products can be sold to consumers.

“There is this open question of, ‘What happens to 2017-2018 product on the shelves?'” he said. “Because that wasn’t touched in the transition-period regs, (it) may mean a lot of product will need to be destroyed come July 1.

“A better solution would be to allow it to be returned to distributors to be tested and see if it’s clean or not.”

Another unsettled policy dispute is over cultivation acreage caps.

The Growers Association filed suit in January over what it contends is a regulatory loophole that commercial-scale cultivators are exploiting.

In essence, the association wants an acreage cap to encourage competition and smaller farms, while larger companies want to be able to grow as much as they want. Right now, the larger companies are getting their way.

Though Allen didn’t expect to see that situation addressed in the new emergency regulations, he said it’s a policy fight that must be resolved.

“The important step in that process is the regular rules, and we hope to see draft regular rules sooner rather than later,” Allen said, adding that he’s still hopeful there will be an acreage cap of some sort.

Also at issue, Mikalonis said, is an unsettled question about free samples of cannabis products, which were banned in the first set of emergency regulations as an advertising restriction.

The issue is broader than just advertising, Mikalonis said, and speaks instead to whether retailers are allowed to provide free medical marijuana to the indigent or poor. It’s an issue he said is still a priority for MJ companies.

It’s also related to the discussion of a statewide social equity policy, which would give more of an industry foothold to those affected by the war on drugs.

“The topic of equity is very important at the state level,” Mikalonis said, “and we’re seeing (state lawmakers) put forward … a state equity program.

“That may still be addressed, if not this year in the regs, then in statute, which could affect the regs next year.”

John Schroyer can be reached at [email protected]

17 comments on “What you need to know about California’s updated marijuana rules
  1. Erik on

    They need to stop letting cities and counties ban cultivation and store fronts. It violates the very nature of the law and it inhibits tax revenue growth. How does the state expect to make billions in revenue and eliminate the black market when legal weed is still banned in 80% of the state? WHY ARE PEOPLE NOT ADDRESSING THIS?! Everybody on the outside looking in knows that this is the main reason why tax revenue fell way short of where they projected it would. Yet the state doesn’t want to admit that it’s a problem. They don’t want to admit that in order for this to work they WILL have to force cities and counties to allow legal cultivation and distribution at some point. I have product that I want to sell LEGALLY. I want to be part of the system and pay my taxes and do my part, but my city WILL NOT let me do things the legal way, so in a way, the small cities and counties that continue the act of prohibition are only causing the black market to flourish.

    Reply
    • Steve Martin on

      The ONLY way Prop. 64 would have passed was to allow cities the right to NOT ALLOW cannabis businesses. What you wish for will NEVER happen so get over it…. or better yet MOVE somewhere else that allows what you wish for.

      Reply
  2. thom Herb on

    it would be real nice if anyone asked patients who need the medicine what they need …..instead of just Business & Government deciding what our medical needs are .
    this whole thing is about the monopoly of the rich while screwing over patients , caretakers for patients who cant grow their own.

    80% of the state cannabis is banned , patients who are sick cant afford a separate outbuilding with a/c , plumbing , ventilation ….this entire get rich plan of the corrupt CA government who cant account for even billions in gas tax & has $6 billion in the bank just keeps milking citizens for every dime they have ……………….only asking business owners & government what is needed while pissing on patients & telling them its raining .

    Reply
    • Steve Martin on

      Still hanging onto the myth that weed is actually medicine I see ……..LOL … keep fighting the fight man.

      Reply
        • AP on

          I had been a big believer and proponent of this theory, but my belief was shaken recently when I got a huge liposarcoma (cancerous fatty tumor) and had to have it surgically removed… this was after years of heavy, heavy vaping. I believed cannabis was probably protecting me from such things. In this case, at least, it wasn’t.

          Reply
          • Edu-Cann on

            The other thing we’ve learned is that vaping, smoking and edibles are NOT efficient delivery systems when it comes to paring living, dynamically interacting chemical compounds in cannabis (entourage effect) with the endocannabinoid system in charge of maintaining/restoring homeostasis in our bodies. The best way to take in pure and potent cannabis medicine (another challenge to find them) is through the membrane of the mouth, direct to the blood stream. I’m sorry your liposarcoma was not helped by vaping. But we have plenty of patients whose tumors, skin cancer (including myself) were healed with thc oil and high cbd tinctures. It’s not a theory. THC killing cancer was acknowledged by the NIH in 1975. I could go on…..

  3. Patricia Smith on

    Gavin Newsom sold out patients in favor of big money doners. We were promised that big biz would be prohibited for 5 years. That lasted about 5 days.

    Reply
  4. Hastings RH on

    Yep 85% of cities and counties have banned cannabis.. Prop 64 was a sham and continues to be one.. Forbes estimated the Cali industry at 74 billion back in 2001 so at a 10% tax the state would scoop up 7.4 billion a year. If politicians and regulators were smart they’d make it easy to get legal and pay taxes -too bad they are not smart..

    Reply
  5. Angela Ellis on

    The stigma still held close by uniformed city and county law makers needs to be addressed in public forum. When people gather and let their voice be heard, there can be some change. It will take awhile. Take the comment of a responder to this thread: Steve Martin, he doesn’t believe cannabis is medicine and that is the part of the problem. There is a gap in the knowledge of what cannabis is and is not. The manner in which people conduct themselves when in public, drunken disorderly is not tolerated, and powers that be see this as a potential problem with cannabis users. The ability to sell within city limits in towns along the western slope of Colorado is the same battle as in Cali.

    Reply
  6. Carlos on

    I believe it is of utmost importance to NOT give unfair advantages to those individuals and businesses with more money and political connections, who are pandered to, and are allowed to cultivate MANY acres. This will be have a “Walmart Effect,” in which the small grower WILL be detrimentally affected by the unfair competition and resources of those bigger cheaters, and their unethical political “public servants”, serving?“their constituents.” 🙂

    Reply
  7. Brett Roper on

    With this latest rule change many cultivators are finding their heads spinning when it comes to the definition of a very simple term, Canopy.  Initially, it was based upon room sizing where any cannabis plant was being grown … then it became tray or table based similar to that of the Oregon definition … now it is back to room sizing of mature or flowering plants.  We have several clients in CA that have had to change their designs three times now and a few that are actually active that may now find their use of the interpretation given in November of last year that the went live with is now in jeopardy? Hmmm ….

    Reply
  8. Carrie Hanlon on

    I am an insurance defense attorney in Las Vegas and interested in exploring the issue of CGL coverage for dispensaries, homeowner coverage issues, product liability, med mal, etc. I’d appreciate it if you could put me in touch with the pioneers in this new area of insurance products and coverage.

    Reply
  9. Peter hagelis on

    most of my friends and their friends have stopped going to the legal shops, not only expensive but as a protest. The state has failed the cottage grown and suppliers and mom and pop shops in favor of people like Med man who operates how many? And their product is so so. This was built on the backs growers and distributors over the last 40+ years. The state needs to open it up, lic those who want, without having 100,000 bucks in the bank. Cali is way different from other states, we already had a well established network, rough at it was, but it employeed many people, now I’m seeing people out of work. LA should be like Oakland , open it up, enough of this pre 2007 priority.

    Reply
  10. Old timer on

    California legalization is a failure on so many levels. I had been arrested, prosecuted, and punished before legalization. Now, the overregulation prevents many from participating. It is unrealistic for me to even attempt getting licensed. It would be throwing my hard earned money away. I am 60 years old, with a net worth between 2 and 3 million, living in the LA area. I am willing to spend my money and work hard to build a successful enterprise. Under current laws, what should be investment is high risk speculation. I am positive minded and have overcome many challenges in life. I built and operate a successful business.
    The BCC and local municipalities are keeping most of us out. NOT REALLY LEGAL.

    Reply

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