Fox Rothschild LLP

On July 12, 2021, California Gov. Gavin Newsom signed into law Assembly Bill 141 (AB-141), which creates the Department of Cannabis Control (DCC). The DCC will consolidate the three state cannabis programs – the Bureau of Cannabis Control (BCC), the California Department of Food and Agriculture’s (CDFA) CalCannabis Cultivation Licensing Division, and the California Department of Public Health’s (CDPH) Manufactured Cannabis Safety Branch – under a single department in an effort to centralize and simplify regulatory and licensing oversight in California. Governor Newsom has appointed Nicole Elliott as the initial Director of the DCC.

The complexities associated with dealing with California’s three-headed cannabis regulatory monster – for example, determining which regulatory body to answer to, understanding how the various regulatory bodies play into vertical integration, and keeping track of each program’s frequent updates – sometimes impeded the success of entrepreneurs and businesses in the cannabis industry.

The creation of the DCC aims to eliminate these issues. AB-141 transfers the “powers, duties, purposes, functions, responsibilities, and jurisdiction” of the BCC, CDFA, and CDPH to the DCC.

“The state’s consolidation effort delivers on the commitment made by the Newsom Administration to listen to and work with California’s legal cannabis industry to streamline participation in the legal market by offering a central point of contact for licensed operators,” Lourdes Castro Ramirez, secretary of the Business, Consumer Services and Housing (BCSH) Agency, said in a statement.

In addition to consolidating California’s cannabis regulatory bodies, the DCC will also increase licensing transparency within the cannabis industry. AB-141 will require the DCC to provide information on its internet website related to the status of every license issued by the DCC, including the county of a licensee’s address of record. Beginning January 1, 2022, AB-141 will require this information to include information on suspensions and revocations of licenses and final decisions adopted by the DCC. However, AB-141 will prohibit the sharing of personal identifying information, including home addresses, home telephone numbers, dates of birth, or social security numbers.

AB-141 contains some additional noteworthy changes:

  • The deadline for the DCC to issue and renew provisional licenses is extended from January 1, 2022 to June 30, 2022. The DCC may issue a provisional license if the applicant has submitted a completed license application, which includes meeting the following requirements:
    • The applicant can prove compliance with the California Environmental Quality Act (CEQA) or can provide evidence that compliance is underway.
    • The applicant can prove compliance with local ordinances or provide evidence that compliance is underway.
    • For a license application that includes cultivation, the applicant provides any of the following documents
      • a final streambed alteration agreement;
      • a draft streambed alteration agreement provided by the Department of Fish and Wildlife (DFW) and signed and returned to the DFW;
      • written verification by the DFW that a streambed alteration agreement is not needed;
      • written verification by the DFW that the applicant has submitted a 1602 notice, submitted payment of applicable fees, and is “responsive” to the DFW.
    • If an application for a cultivation license is submitted on or after January 1, 2022, the DCC will not be permitted to issue a provisional license if the issuance of such license would cause the licensee to hold multiple cultivation licenses on contiguous premises to exceed one acre of total canopy for outdoor cultivation, or 22,000 square feet for mixed-light or indoor cultivation.
    • The definition of “commercial cannabis” is revised to include acting as a cannabis event organizer for temporary cannabis events. The bill would revise the definition of “manufacture” to include package or label a cannabis product. The bill would remove the definition of “manufacturer.”

The steady growth of the cannabis industry in California calls for a centralized regulatory body, and the passage of AB-141 provides the solution. The creation of the DCC is a positive step towards creating a navigable system where participants have adequate access to resources and a better understanding of the processes associated with owning and operating a cannabis business in California.

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