California Cannabis Advisory Committee's 2018 Annual Report: Part 1

California’s Cannabis Advisory Committee (CAC) released their 2018 Annual Report earlier this month. Within the annual report are recommendations and suggestions for policy related to the adult-use cannabis market.

The CAC provides recommendations and advice to the California state cannabis licensing authorities. The committee gives feedback which directly informs the standards and regulations for the state’s cannabis market. The stated goal of the CAC is to reduce and eliminate the cannabis black market, so this advisory group should be advising the state with your business interests in mind. It’s important to pay attention to what this group advises, given that they will have a direct impact on the growth of adult-use cannabis in California.

CAC has established 10 subcommittees related to specific parts of the cannabis market. The subcommittees include: Cultivators, Distributors, Enforcement, Equity, Licensing Application, Manufacturers, Microbusiness, Public Health and Youth, Retailers, and Testing Laboratories. In 2018, the subcommittees made 79 subcommittee recommendations, 47 of which were adopted by the CAC.
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We’ll cover the subcommittee recommendations which were adopted by CAC in a three-part series. This first part includes adopted recommendations by Cultivators, Distributors, and Retailers.

CAC Subcommittee for Cultivators

The Subcommittee for Cultivators made five recommendations this year, two of which were fully implemented by the California state cannabis authorities. One has been partially adopted. The recommendations included:

1. Generator Hour Meters: this recommendation asked the CDFA to allow after-market non-resettable hour meters to be installed where feasible. The CDFA implemented this regulation in section 8306 of their permanent regulations.
2. Outdoor Cultivation Definition: change the definition of outdoor cultivation to allow the use of light deprivation techniques, provided that, it does not allow for the increase in the number of crop cycles. This recommendation was not adopted by the CDFA.
3. Transfer Between A and M Licenses: the Subcommittee asked to recognize the burden of keeping adult-use and medicinal use licenses separate; they asked that the CDFA allow cultivated materials to be transferred between A and M license types until the point of sale. This recommendation was implemented by CDFA. Cultivators may sell cannabis to adult-use licensees and medical-use licenses without being required establish separate and distinct cultivation areas.
4. Compassionate Use Programs: the Subcommittee asked to create a cultivation-based tax incentive for products being set aside for compassionate use programs. This recommendation was not implemented by the CDFA – yet.
5. Self-Transport Distribution: this resolution was partially implemented by the CDFA. It asked to create a way for cultivators to self-transport their product to a centralized processing facility, manufacturing facility, distributor, or lab for pre-testing. See section 5315. Distributor Transport Only License (g) for details.

CAC Subcommittee for Distributors

The Subcommittee on Distributors had four adopted by the CAC committee at large. Of the adopted recommendations, the licensing authorities have implemented two. These were the recommendations the Subcommittee for Distributors made this year.

1. Selling Samples: the Subcommittee asked the Bureau of Cannabis Control to address how, if at all, licensees may provide cannabis samples for a nominal fee. This is something we’ve covered in the past as it relates to your cannabis taxes. The Bureau did not implement this suggestion, as they do not require cannabis goods to be sold at a specific price.
2. Additional Label: the Subcommittee asked for guidance related to packaging and labeling: is a distributor permitted to apply an additional label to the final product, if the final product’s test results are inconsistent with the existing printed results? This recommendation was implemented by the Bureau. Refer to section 5303, Packaging, Labeling, and Rolling, (a); section 5307. Quality-Assurance Review; and section 5307.1. Quality-Assurance Review for Labeling Cannabinoids and Terpenoids for details.
3. Storage Only Center License: this recommendation asked to create a subcategory license for storage-only centers that would only be used to hold inventory and transport product. This was not implemented by the Bureau.
4. Transition Period Extension: the Subcommittee asked to extend the transition period from six months to 12 months to allow transactions between A and M licenses. This was implemented by the Bureau. Applicants may conduct both A and M activities at the same licensed premises, and also conduct business across license types regardless of A or M designation.

CAC Subcommittee for Retailers

Last but not least, the Subcommittee on Retailers made a total of nine recommendations. Of these, one was adopted by the committee and has been partially implemented by California’s state licensing authorities.

That recommendation was related to methods of delivery. The Subcommittee asked to clarify and simplify methods of delivery, including:

• Increased flexibility regarding vehicles and hours;
• Increasing the value amounts that can be carried at one time;
• Clarifying the delivery receipt that eliminates the need for an address and instead uses the state license number;
• Increased flexibility in allowing local government to allow changes in hours of operation if they so choose.

This ask was only partially implemented by the Bureau.

• “Clarify and simplify methods of delivery…”—Implemented by the Bureau.
  See section 5415; Delivery Employees, section 5415.1; Deliveries Facilitated
  by Technology Platforms, section 5416; Delivery to a Physical Address and
  section 5421 Delivery Route.
• “Increase Flexibility regarding vehicle and hours”—Not implemented by
  the Bureau
• “…increasing the value amounts that can be carried”—Implemented by the
  Bureau. See section 5418. Cannabis Goods Carried During Delivery.

Overall, it’s important to know that the California Cannabis Advisory Committee has your business interests in mind when making policy recommendations to state regulators. They’ve made some significant changes to the original adult-use cannabis regulatory environment. If you have feedback for them, you can contact the CAC through the Bureau of Cannabis Control or talk to one of our experts by clicking to get started. Stay tuned for Part 2 of our coverage of the 2018 CAC Annual Report.