Calif. Releases New Unified Rules Governing Pot Industry

By Sam Reisman

(September 8, 2021, 6:35 PM EDT) -- California's newly centralized Department of Cannabis Control on Wednesday published its proposed regulations governing how all legal commercial marijuana activity in the Golden State will be overseen.

The publication of the emergency regulations — approximately 400 pages of revisions and deletions — comes some two months after the state unified its regulation of all aspects of its cannabis market, including cultivation, manufacture and sale, under the DCC's purview.

"Today's action reflects the governor's commitment and our ongoing effort to streamline requirements for California cannabis businesses and simplify participation in the legal, regulated market," said Nicole Elliott, director of the DCC, in a statement. "Many of the proposed changes are the direct result of feedback received during consolidation."

The DCC consolidated functions that were previously performed by three entities: the Department of Consumer Affairs' Bureau of Cannabis Control, the Department of Food and Agriculture's CalCannabis Cultivation Licensing Division, and the Department of Public Health's Manufactured Cannabis Safety Branch.

The agency said the new emergency regulations are meant to codify and harmonize the once distinct regulatory schemes, particularly over license application criteria and who can hold equity interest in a cannabis business.

Griffen Thorne, a cannabis attorney at Harris Bricken LLP, told Law360 that the legacy rules governing ownership of cannabis licensees from the BCC, which oversaw retailers, seem to have in large part been applied to cultivators and manufacturers.

"I think life is going to be a little more difficult for manufacturers and cultivators in general," he said, referring to the need to disclose ownership to regulators. "People are going to have to go back and reevaluate, just to make sure they've done things in a kosher way."

The rules also address how to properly handle trade samples within the cannabis industry. Overseeing trade samples is a responsibility specifically delegated to the DCC by A.B. 141, the legislation that created the agency that was signed into law in July.

"Trade samples had been the bane of everyone's existence in the industry," Thorne said. "In any industry you need to sample goods. We knew that was going to come down."

The release of the regulations kicks off a five-day public notice after which the rules will be filed with the state's Office of Administrative Law. The DCC will accept comments on the regulations until Sept. 21.

-Additional reporting by Hailey Konnath. Editing by Adam LoBelia.