For marijuana businesses operating in California the rules are still very much in flux, as shown by a new set of regulations proposed by state regulators. The state Department of Food and Agriculture, Department of Public Health, and Bureau of Cannabis Control (BCC) first proposed a set of marijuana-industry regulations in July 2018 and, after a public comment period, submitted revised proposed regulations on October 19th. The changes are substantial, and impact topics fundamental to operation of a marijuana business, including the following:
Labeling and Packaging – There are substantial changes to the labelling and packaging requirements for both distributors and retailers. As to retailers, the proposed new regulations state that until January 1, 2020 all packaging containing cannabis goods must be tamper-evident, but does not have to be child resistant. However, all products must be placed in a resealable, child resistant, and opaque “exit package.” After January 1, 2020, all product packaging must be child-resistant, and the exit package will no longer need to be child resistant or resealable.
Marijuana Deliveries – The new regulations prohibit marijuana deliveries by companies that do not have state-issued licenses. The regulations do allow for “technology platforms,” like the apps Eaze and Weedmaps, to facilitate sales between licensed dealers and customers, but prohibits profit-sharing based on sales. This prohibition on profit-sharing could impact Eaze and Weedmaps’ business model going-forward. The new proposed regulations also make changes to the prior set of proposed regulations relating to marijuana delivery drivers, vehicles, and limit to $5,000 the value of cannabis goods that can be carried by a delivery vehicle at any one time.
Ownership Disclosures – Marijuana businesses operating in compliance with California’s regulatory scheme would be required to disclose substantial information about all parties who have an ownership stake in the business. Under the proposed regulations “all entities and individuals with a financial interest” in the marijuana business shall be disclosed to the BCC, and the proposed regulations include specific definitions of what it means to have a financial interest in a cannabis business.
Licensed Events – The original set of proposed regulations limited temporary cannabis events (where cannabis can be sold and consumed on-site) to county fairgrounds. The new proposed regulations allow such events at other venues that are approved by the local jurisdiction. This means that, if the regulations are adopted, local authorities will have discretion to determine where cannabis events can be held, which could lead to a higher number of such events.
These are only some of the changes to the original draft set of proposed regulations, which have been sent out for a 15-day comment period that runs through November 5th. The proposed regulations can be found here. Fox Rothschild will continue to follow California’s marijuana industry rule-making process, as the state’s regulatory scheme may well become a model for other states considering legalizing adult use of marijuana.