California wants to require a lot of stuff on cannabis labels

California Cannabis Warning SymbolDepending on how quickly the California Bureau of Marijuana Control (BMC) gets their final regulations and licensing system in place, you may see the first products on the shelf under the new medical cannabis regs as soon as January 1st. Based on the initial dump of proposed regulations by three different agencies in California, you’re going to see a lot of words on those labels.
Continue reading “California wants to require a lot of stuff on cannabis labels”

California’s proposed medical cannabis regulations give a glimpse of what’s to come

header-organizationAll eyes are on California right now as the state moves aggressively to take the extraordinary steps to reconcile two sets of laws (one for medical cannabis and one for recreational, or “adult use” cannabis), draft and approve regulations for laws that are probably not final yet, create regulatory, licensing, and “track and trace” systems, and review and approve applications to allow licensed businesses to operate by January 1st, 2018.

Sound challenging? A California legislator likened it to “flying an airplane while it is still being built.”

The California Bureau of Marijuana Control (BMC) took two major initial steps last month to move these multiple tasks forward by releasing proposed “trailer” legislation to be included in the budget bill as well as proposed regulations for the medical marijuana system. To help you understand how all of these pieces fit together, below is a high-level timeline on cannabis laws and regulations in California.

  • 1996: Voters approve Prop 215, legalizing the use of medicinal cannabis. Since then, little regulation was established, and most of that was done by local governments.
  • 2015: Legislature enacts three bills – AB243, AB266, ad SB643. These bills became known collectively as the Medical Cannabis Regulation and Safety Act, or MCRSA.
  • 2016: Legislature enacts SB 837, which builds on the MCRSA framework to add environmental safeguards to protect streams and rivers.
  • 2016: Voters approve Prop 64, other wise known as Adult Use of Marijuana Act, or AUMA.
  • April, 2017: Department of Consumer Affairs, Bureau of Cannabis Control introduces Proposed Trailer Bill Legislation. This proposed language is meant to consolidate the differences between AUMA and MCRSA by combining the two laws into a single code that would regulate both medical and adult-use cannabis.
  • April, 2017: Department of Public Health, through their new Office of Manufactured Cannabis Safety, drops regulations for medical cannabis manufacturers.
  • April, 2017: Bureau of Marijuana Control sends out a Notice of Proposed Rulemaking with proposed regulations for medical cannabis use for distributors, transporters, and dispensaries.
  • April, 2017: Department of Food & Agriculture’s (CDFA) CalCannabis Cultivation Licensing division, which is responsible for regulating cannabis cultivation, introduces proposed regulations for medical cannabis cultivation.

The proposed regulations for medical cannabis are the first glimpse into the details of what the Bureau of Marijuana Control (BMC) has in mind for regulating cannabis in California. However, it’s important to note that these regulations are very likely subject to change, so therefore should be used primarily as a guide for what is to come. If the legislature passes the proposed trailer legislation either as-is or with modifications, the law would change and the various departments would have to issue new regulations for the consolidated system. So, although you should expect changes coming from the legislature, the medical regulations are helpful for now as a roadmap for what’s to come for California’s cannabis regulatory system.

In future posts, we’ll break down the 58-page medical cannabis regulations (as well as the “trailer” legislation) for distributors, transporters, and dispensaries. These regulations create the rules under which businesses can operate, including details about how to get licensed (get ready to open the kimono!), what details are required for the track and trace system, which information is required for labeling, and generally which activities are permitted and which are prohibited.

One thing to keep an eye on here in particular is the issue of “vertical integration”. In the world of beverage alcohol, most states enforce a “three tier” system that prohibits businesses from owning licenses in multiple tiers (production, wholesale distribution, and retail). AUMA (full integration) and MCRSA (limits on integration) are at odds on whether to allow full vertical integration for cannabis businesses in California. Advocates on both sides of this issue are debating it furiously.

The bottom line here is that things are moving extremely quickly in California right now and it’s time to pay attention and provide feedback to the regulatory authorities before bills are codified and regulations are finalized. We’ll be keeping up with the changes here and breaking down the different parts to help you better understand what’s going on.

California ABC issues $400,000 settlement against beer wholesalers

The California ABC issued a press release stating that they had issued on of the biggest penalties in the history of the ABC. Primarily levied against Anheuser-Busch, LLC’s distributorships, the settlement is for prohibited marketing practices. The distributors are accused of providing “things of value” to retailers, thus creating an unfair marketplace. The year-long investigation in this case begun back in 2015.

Our Take: Some of the infractions seem minor here, but many ABCs around the country take “Tied House” laws very seriously and won’t stand for any things of value to be provided. It’s a bit surprising to see the California ABC issue such a major settlement, akin to what has become standard fines from the New York SLA. California is clearly sending a message to the rest of the industry here.

California ABC is Actively Enforcing Credit Laws

John Hinman has an explanatory blog post and accompanying video that explain the active enforcement by the California ABC regarding credit laws. Both suppliers and retailers can face significant, escalating fines for violating the credit laws, so wineries, breweries, distilleries, importers, and retailers doing business in California should pay close attention to these developments.

The “Booze Rules” blog post does a great job of describing why the credit laws exist (suppliers are not allowed to provide a “thing of value” to retailers, and extending credit was commonly used as an incentive for retailers prior to prohibition) and what suppliers and retailers should do to make sure they’re in compliance. In short, study up on the credit laws, which exist both at the federal level and in each state where you’re doing business, and make sure your accounting and sales teams are trained and have the systems and processes in place to monitor invoices and accounts receivable.

The Dose: Michigan sued over wine shipping laws, Californians are confused about cannabis regulations

California marijuana business owners in legal fog as they await statewide rules: Californians are waiting for regulations for the new adult-use AND medical cannabis laws. Administrators are promising to be ready by Jan 1, 2018, but uncertainty abounds in the interim. Interesting quote from this article: “99.5% of California’s marketplace is either quasi-legal or illegal.”

Illinois state treasurer asks Trump for clarity on MMJ banking: State treasurers in California and Illinois put pressure on the President to clarify cannabis policies.

Denver MJ company recalls products for possible pesticides: Green Man Cannabis joins at least a dozen companies that implemented voluntary cannabis product recalls due to pesticide issues.

High-end cannabis pipe maker sues to defend trademark: Roor has filed over 200 lawsuits since 2013 to protect the trademark on its high-end bongs.

Indiana Wine Seller Disputes Michigan Shipping Ban: Michigan’s new wine shipping law, which discriminates between in-state and out-of-state retailers, gets a challenge in federal court.

Online giant Amazon will begin charging sales tax in Missouri
Amazon will collect, pay Mississippi tax on online sales
Wyoming to be taxed by Amazon
Amazon is adding 3 more states to the list of 34 where they already collect sales and use taxes. Missouri and Mississippi taxes will begin on February 1st, and Wyoming will commence on March 1st.

At Least Six States Mull Bills on Remote Sales Tax Collection: At least six, but up to TWENTY states will introduce new remote sales and use tax laws this year, putting even more pressure on Congress and the Supreme Court to clarify sales tax laws.