California Cannabis Manufacturers and AB 2679

AB 2679: California Issues Guidance for California Cannabis Manufacturers

On September 29, 2016 Governor Jerry Brown, signed AB 2679 into law in order to provide guidance for cannabis manufacturers that are currently operating in the state of California. The bill's authors were the same legislators that designed the Medical Cannabis Regulation and Safety Act (MCRSA).

A cannabis manufacturer is any company that uses methods to prepare cannabis or its by-products for commercial retail and/or wholesale, including, but not limited, to the processes of drying, cleaning, curing, packaging, and extraction of the active ingredients of cannabis in order to create marijuana-related products and concentrates. Examples of companies that are considered as cannabis manufacturers are companies that produce marijuana extracts and concentrates.

Although all cannabis businesses are still illegal under federal law, California cannabis manufacturers are particularly at risk due to a state law which made the manufacturing of a controlled substances, such as cannabis, by chemical extraction illegal.

Prior to the passage of AB 2679, there was very little guidance available to cannabis manufacturers informing them of how to ensure that their business operations were compliant with California law. However, AB 2679 has now exempted collectives and cooperatives that engage in the manufacture of cannabis products from criminal penalties, if they meet certain requirements.

Under AB 2679, cannabis manufacturers are required to:

1. Only use processes that: do not require solvents or only make use of nontoxic, nonflammable solvents that have been determined to be safe by the Federal Food, Drug, and Cosmetic Act (FD&C Act), and/or use solvents that have been determined to be safe by the FD&C Act only within a closed-loop system that has been especially designed to prevent off-gassing and lower the risk of fire and that has been certified by a licensed engineer via a certification document.
   
2. Obtain approval for its operation, equipment, facility, and closed-loop manufacturing system from local fire officials.
   
3. Meet all state, federal, or international standards with regard to fire, safety and building codes.
   
4. Obtain a valid cannabis seller's permit issued by the California Board of Equalization (BOE).
5. Maintain valid authorization in the form of a license or permit for medical cannabis manufacturing from the city or county in which the business is located. The business must also be in compliance with all local laws pertaining to the manufacture of medical cannabis.

In the same way that the current laws govern California medical cannabis cooperatives and collectives, these new provisions for cannabis manufacturers are designed to be repealed during the year following the announcement that state marijuana licenses are being issued from the Bureau of Medical Cannabis.

Once this occurs, the California Department of Public Health (CDPH) will take on the job of issuing licenses to these cannabis manufacturing businesses per the MCRSA. The CDPH is also responsible for developing the standards that apply to the manufacturing and labeling of manufactured medical marijuana products.

In addition, the CDPH has been tasked with identifying and creating reports of any medical marijuana products that have been misbranded or adulterated. The CDPH is currently holding meetings in order to address concerns regarding cannabis manufacturer licensing.

However, until 2018, which is when the CDPH officially takes over as the regulatory body for cannabis manufacturing, state legislators are hoping that AB 2679 can provide cannabis manufacturers with adequate protection from unnecessary raids from local law enforcement agencies, enabling them to continue with their normal operations.

For those cannabis manufacturers who were waiting for this guidance, the passage of AB 2679 should provide relief and the information that they need to bring their businesses into compliance with California law in preparation for the issuing of cannabis manufacturing licenses in 2018.