Overview of DCC’s adopted cannabis regulations in California

Last Friday 11/11, the Department of Cannabis Control (“DCC”) adopted regulations to govern California’s medical and adult use cannabis industry. These regulations went into effect immediately so it’s imperative that licensees understand the updates, changes, and clarifications within these new set of rules.

In addition to releasing the full rule set, the DCC also released its Final Statement of Reasons, a document explaining the reasoning behind each rule, as well as a Comparison Table summarizing some of the changes. Finally, likely anticipating confusion, the DCC released two Guidance Documents, clarifying some of the new requirements around Inhaled Products and Cannabis Tinctures and Beverages.

See the links to the DCC’s site below for a set of all released documents:

• Full Text of Comprehensive Regulations

• Final Statement of Reasons for Medical and Adult Use Cannabis Regulations

• Comparison Table of Consolidated Regulatory Text Modifications

• Guidance Document: New Requirements for Inhaled Cannabis Products

• Guidance Document: New Requirements for Cannabis Tinctures and Beverages

The adopted regulations maintain several provisions from the previous emergency regulations, but also reflect necessary changes incorporating feedback from licensees and other stakeholders. Some of the key provisions in the adopted regulations that are now in effect are outlined as follows:

·        Definition of final form amended to clarify that it refers to cannabis and cannabis products that are in the form in which they will be consumed or used. (Regulation Sections 15000).

·        Definition of outdoor cultivation amended to remove exclusion of light deprivation. Now outdoor cultivators will have greater flexibility to use traditional light deprivation without requiring a license change. (Regulations Sections 15000, 16202).

·        Definition of nonmanufactured cannabis products amended to include leaf, pre-roll filter tips, or paper. This was necessary for accuracy and consistency with pre-rolls. (Regulation Section 15000).

·        Definition of terpenes added to clarify that the term includes terpenoids, flavonoids, polyphenols, and other naturally occurring phytochemicals and secondary metabolites that contributes to the natural flavor and aroma of cannabis. Now manufacturers are limited in what flavonoids may be added to inhaled products to only those that are naturally occurring and contribute to the flavor of cannabis. The reasoning behind this rule change is to “reduce the risk of cannabis appealing to minors through the use of flavors that mask the natural flavor and aroma of cannabis.” Thus, any artificial, synthetic, or natural flavorings that does not contribute to the natural aroma of cannabis are not permitted, including menthol, mint, mango, strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, coffee, popcorn, and bubblegum. The Guidance document went on to state that any noncomplying goods already in the supply chain, should be pushed through as quickly as possible and any manufacturer should immediately cease manufacture of any inhaled cannabis products noncompliant with these new rules. (Regulation Section 15000).

·        Limits what may be in cannabis products intended for inhalation to cannabis, cannabis concentrate, terpenes, rolling paper, leaf, pre-roll filter tips, or ingredients permitted by the United States Food and Drug Administration. (Regulations Sections 15000, 17303.1).

·        Clarifies that structures included as part of a licensed premises must be permanent structures, including, but not limited to, buildings, barns, sheds, shipping containers, and modular buildings. It removes the specification that permanent structures must be permanently affixed to the land. For example, shipping containers can be used for storage of cannabis inventory if their storage needs exceed their available space. (Regulations Section 15000.3, 15000.7).

·        Requires employees on a licensed premises or handling cannabis to be age 21 or older (Regulations Section 15000.6)

·        Ensures testing laboratories are independent and free of conflicts of interest, including prohibiting labs from employing any person employed by a licensee for any other activity besides testing. Labs also cannot provide discounted testing to any other licensees unless the offer is available to all licensees (Regulations Section 15004.1).

·        Expands prohibitions on marketing, advertising and merchandise attractive to youth and specifies that licensees cannot market and advertise cannabis goods that are labeled with terms used to describe alcohol. This does not prohibit the use of a company name or brand that is also associated with alcohol. (Regulations Section 15040).

·        Allows immature plants, seeds, and propagated material to be designated or provided to licensees as trade samples by licensed nurseries. Also, allows for the designation of trade samples to be changed to medicinal donation by the licensee originally designating the cannabis goods as a trade sample. (Regulations Section 15041.2)

·        Allows manufacturers to provide non-cannabis infused product samples to all licensees, except cultivators, distributor transport only licensees, testing laboratories, and cannabis event organizers. This was necessary as manufacturers may need to provide samples to induce distributors, retailers, and microbusinesses to carry their products by demonstrating flavor profiles and other characteristics of products. (Regulations Section 17117)

·        Removes caffeine from the list of prohibited additives. (Regulations Section 17300).

·        Adds prohibition on 1) inhalable cannabis goods that are delivered into the lungs through a metered-dose inhaler or drypowder inhaler; 2) cannabis goods that are administered through the eye or the nasal passages; and 3) cannabis goods that are injected into the body by piercing the skin. Clarifies that the prohibition on dry-powder and metered-dose inhalers does not extend to other dry-powder cannabis products or metered-dose vaporizers containing cannabis or cannabis oil. (Regulations Section 17300).

·        Adds requirements for tinctures, including that they be no more than 2 fluid ounces and include a calibrated dropper or similar device. (Regulations Section 17303.1).

·        Allows the universal symbol to be in black or white. Also, removes requirements that bottles containing liquids be opaque. (Regulations Section 17411).

·        Clarifies the process for remediation and adds requirements for corrective action plans. Now the batch UID, batch size, and email address of the contact person for remediation is required. (Regulations Section 17305).

·        Clarifies that multiple licensed premises that are contained within the same building or on the same parcel of land may utilize a single alarm system covering the entire building or parcel of land under certain circumstances. (Regulations Section 15047)

Traceability

·        Removes “RFID” from the definition of plant tag.

·        Clarifies that tags may not be reused and how they are to be discarded.

·        Allows for batch harvesting and recording the wet weight of each harvest batch rather than each individual plant.

·        Now allows returns between licensees for any lawful business purpose. However, this requires that any returned product to undergo a new round of testing and quality assurance before being transported to a retailer.

·        Requires that a licensee that originated a rejected shipment physically accept the rejected shipment and record it within Metrc. (Regulations Sections 15047.1-15052)

Regulatory Compliance Testing

·        Clarifies that all pre-rolls must be packaged and labeled prior to regulatory compliance testing.

·        Clarifies requirements related to batches that fail regulatory compliance testing and remediation of those batches.

·        Allows for the certificate of compliance to be provided electronically.

·        Specifies that the distributor shall destroy a failed batch that cannot be remediated within 60 days of failure of the batch or within 30 days of receiving notification that the batch may not be remediated. (Regulations Sections 15303, 15306).

·        Amending definition of Total THC to include Delta 8 to ensures cannabinoid content labeling reflects common, intoxicating forms of THC (Regulations Section 15700)

·        Provides that a licensed testing laboratory may test items not regulated by the DCC. (Regulations Section 15701)

·        Provides for a 10% deviation in total THC and/or total CBD claimed to be present on a label, from the percentage on the certificate on analysis (COA). (Regulations Section 15724)

Quality Assurance

·        Clarifies requirements related to cannabis goods that are found to be not fit for sale during quality assurance review.

·        Provides that a distributor may relabel cannabis goods but may not remediate them.

·        Requires that a licensed distributor, manufacturer, or microbusiness engaged in manufacturing submit a correction active plan and receive approval from the DCC before repackaging, relabeling, reformulating, or modifying cannabis goods.

Transportation

·        While all vehicles used for distributors must be owned or leased by the licensee, the licensee is not required to be the sole owner or lessor of the vehicle and all owners and lessors may use the vehicle for non-commercial cannabis activity.

·        Clarifies that the required motor carrier permit must be issued to the licensed distributor.

·        Makes less burdensome the requirements for enclosing cannabis goods during transport. Now requires a secured area that may be comprised on three sides of any part of the body of the vehicle. (Regulations Sections 15311, 15312)

Enhanced consumer access

·        Permanently allows for curbside delivery practices which safely served customers during COVID-19 and clarifies the requirements for curbside delivery. (Regulations Sections 15402).

·        Allows retailers operating a consumption area to sell prepackaged non-cannabis infused and non-alcoholic food and beverages if allowed by the local jurisdiction. (Regulations Sections 15407).

·        Clarifies that consumers may bring or receive non-cannabis infused and non-alcoholic food and beverages for consumption in a designated consumption area. (Regulations Sections 15407).

·        Adds requirements for providing free cannabis goods to medicinal consumers and specifies verification and recordkeeping procedures. (Regulations Sections 15411)

·        Supports expanded access to safe and tested products through delivery into regions of the state with limited access to legal cannabis by increasing the value of goods that may be carried during delivery to $10,000 and removes the limit on carrying cannabis goods that have not yet been ordered. (Regulations Section 15418).

Licensing Requirements

·        Includes Assessor Parcel Numbers as an option for a physical address of a premises. This change was necessary as sometimes it is the only means of identifying the physical location of a property. (Regulation 15002)

·        Removes requirement that acceptable government-issued identification include height. This was necessary to accommodate passports, which generally do not contain a person’s height. (Regulation 15002)

·        Reincorporates requirement to provide a copy of the signature page of the labor peace agreement if the business has entered into one. (Regulation 15002)

·        Removes requirement to provide extensive financial documentation (Regulations Section 15002)

·        Removes requirement for businesses to continuously update lists of low-level investors (Regulations Section 15004)

·        Removes requirement that premises diagrams be in black and white and not contain any highlighting. Also adds requirement for inclusion of closed-loop extraction system’s location and serial # on the diagram, as applicable. (Regulations Section 15006).

·        Updated forms that businesses need to provide information required for CEQA review. (Regulations Section 15010)

·        Allows applicants to include annual scheduled closure periods for their site. (Regulations Section 15011).

·        Removes the requirement to provide a document evidencing approval of an extraction operation by a local fire code official at the time of application. (Regulations Section 15011)

·        Limits required operating procedures to be provided upon request for manufacturers, distributors, retailers, and testing laboratories and consolidates SOPs into one Form DCC-LIC-019 (New 2/22). (Regulations Section 15011)

·        Clarifies that, following a change in ownership, the former owner’s inventory will be transferred to the new owner’s traceability account upon issuance of the license.

·        Streamlines the modification process by specifying modifications for each license type that require prior DCC approval and allows for notification of modifications where prior approval is unnecessary. For all licensees, material changes requiring prior approval includes any change in the total physical size or capacity of the licensed premises; any physical change that would require a building permit, zoning change, or other approval from the local jurisdiction. For non-cultivation licensees, prior approval is also required for any physical change that would require installation of additional video surveillance cameras or a change in the video surveillance or alarm systems.

·        For cultivators, material changes include, the removal, creation, or relocation of canopy, processing, packaging, composting, harvest storage, and chemical storage areas, as well as a change in water or power source(s). (Regulations Section 15027)

·        Simplifies process for changing license information by allowing licensees to submit requests for approval of a physical change, alteration, or modification through the licensing system or by submitting form DCC-LIC-027 (Amended 2/22). (Regulations Section 15027)

·        Requires a licensee to notify the DCC of a revocation of a local license held by the licensee or any owner in their individual capacity. (Regulations Section 15035).

·        Allows for written documentation from the water supplier that service will be provided at the premises address to satisfy supplemental water source information. (Regulations Section 16311)

For more information or to speak with a cannabis consultant, fill out the form below:

by Simone Sandoval
Partner / Director of Licensing and Compliance

[email protected]

Simone focuses on cannabis licensing and compliance and has extensive experience in understanding and deciphering complex cannabis regulations. Prior to entering the cannabis industry, Simone worked in Washington, D.C. as an intern for Congressman Raul Ruiz, M.D. (CA-36). During her time on the Hill, she worked on legislation, and researched policy on renewable energy, healthcare, and tribal relations.