California’s Final Draft of Cannabis Rules
In response to 6,000 public comments presented earlier this year regarding proposed regulations pertaining to California’s cannabis industry. The Department of Public Health, Bureau of Cannabis Control (BCC), and the Department of Food and Agriculture, have presented several amendments.
Consumers in California may finally get legal permission to access cannabis statewide under rules scheduled to be finalized this December. A final draft containing the permanent rules that govern the cannabis industry has already been submitted by state officials. The public had been given 15 days to express their views with the deadline set on November 5, 2018.
Under the amendments, smaller operators benefit from the reduced annual license fees. The proposed changes adapt lower revenue caps. For instance, retailers with sales below $500,000 will be required to pay $2,500 compared to $4,000 under the old rules. Larger companies will be hit hard. Retailers who generate over $7.5 million in sales and above will owe $96,000 a year for licensing.
These are just some of the changes in place effecting Cannabis Businesses:
- Licensed marijuana businesses will be required to divulge more information about companies and individuals who have ownership stakes.
- Delivery of cannabis will be prohibited by third parties who don’t have MJ commercial licenses. The rules, on the other hand, allow tech platforms to aid in facilitating deliveries on condition that there isn’t any direct profit-sharing from sales.
- The draft rules will reduce the inventory carried by each delivery vehicle by half. That would mean the amount will be cut from $10,000 to $5,000. Out of the $5,000, about $2,000 would need existing customer orders before drivers exit the delivery hub.
- Branding and licensing agreements with the legacy operators who were manufacturing or growing without state permits will be prohibited. This move is likely to cut off various avenues for MJ companies who still hadn’t obtained the required permits to operate in the regulated cannabis market.
- Labeling and packaging provisions will change considerably. One of the modifications will allow the manufacturers to hold off on establishing the CBD and THC content before having the products tested through labs and distributors. This will enable distributors to get potency tests for concentrates and edibles and then include the information on the labels before retailers receive the products.
- Retailers will still use child-resistant bags at their storefronts all through 2019.
- Modification of testing requirements will ease the strict mandates that previously led to various product recalls and failures.
- MJ events that have been licensed will no longer be restricted to county fairgrounds.
Many are appreciative of the new rules in place, however, there still remains a good number of people who are not satisfied at all with the permanent rules.
Advertisements that may attract anyone under 21 will be prohibited. This includes cartoon characters, toys, movie characters, inflatables and any other images or displaces that would appeal to minors. Cannabis businesses are no longer allowed to offer any giveaways or free cannabis products in their marketing and advertising.
Cannabis businesses can be subject to have their licenses revoked or suspended. They can also be fined or put on probation if they fail to comply with state regulations. The Bureau of Cannabis Control has the authority to penalize business who violate the following rules.
- Non Payment of Appropriate Fees
- Non-Compliance of Security Requirements
- Not Accounting for Inventory
- Late submission of Requested Data from The Bureau of Cannabis Control
- Failure to verify customers’ age
- Permitting tobacco and alcohol products to be sold consumed or stored on licensed premises
- Medical claims that have not been proved
- Neglecting to efficiently perform lab practices.
These are a small number of new changes to the rules that come with serious penalties. It’s important that existing businesses familiarize themselves with the new changes to avoid penalties that can cost their businesses a lot of money in the form of fines or a loss of profit due to a temporary or permanent shut down.
The root of contention remains: a rule that bans retail sales, while allowing deliveries of legal cannabis in cities. The California Police Chiefs Association and The League of California Cities have voiced concern of new rules which allows marijuana to be delivered. They state that the sale of marijuana in retail stores was banned because of safety concerns, which is now being undercut by allowing marijuana to be delivered to consumers.
The insiders of the industry are still trying to figure out the overwhelming addition of rules. It’s evident that regulations remain that conflict with existing rules. This is proving to be a problem that is confusing the operators. The rules have also added to the regulatory burden of cannabis businesses, which unfortunately will hit their customers pockets.
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