Last week, the Bureau of Cannabis Control issued the first licenses for California’s new market. The first license went to Moxie, a cannabis distribution company out of Lynwood.
As of the publication of this article, the Bureau, the state authority tasked with leading the regulation of the industry, has issued 43 temporary licenses. So far, four laboratories have received licenses, along with a number of retailers, distributors, microbusinesses in both medical and adult-use markets.
The labs to receive their temporary licenses so far are pH Solutions, Steep Hill Labs, Pure Analytics and ORCA Cannalytics. Judging by the number of temporary medical and adult-use licenses awarded so far, it appears the Bureau is trying to issue a similar amount for each sector, distributing the number of licenses between the two equitably.
You can find the list of licensees here, and search between the dates of 12/15/17 to 1/2/18 to get the most up-to-date list of licenses awarded. “Last week, we officially launched our online licensing system, and today we’re pleased to issue the first group of temporary licenses to cannabis businesses that fall under the Bureau’s jurisdiction,” says Lori Ajax, Bureau of Cannabis Control Chief. “We plan to issue many more before January 1.”
According to the press release, temporary licenses are only issued to applicants with prior local authorization in the form of a license or permit from the jurisdiction where the business is. Those licenses will become effective on January 1, 2018. The temporary licenses will work for 120 days, or May 1, 2018, after which businesses will need to have a permanent license to continue operating.
More than 1,900 users have registered with the Bureau’s online system, and more than 200 applications have been submitted, according to the press release.
The various regulatory bodies in California have worked diligently for months now to roll out proposed emergency regulations, setting strict requirements for manufacturers, growers, retailers and testing labs. Manufacturing regulations, including specific labeling, packaging and processing requirements, give a good snapshot of how regulators plan to move forward. Testing requirements could also be significantly firmer, with rules for documentation, sample sizes, sampling procedures, storage and transportation.
Yet when the adult-use sales become fully legal on January 1, 2018, those regulations will not be fully implemented.
Donald Land, a UC Davis chemistry professor and chief scientific consultant at Steep Hill Labs Inc., told The Associated Press, “Buyer beware.” There will be a six-month range where existing inventory will be allowed on the shelves, products that might not meet the standards of the new rules. So dispensaries will get half a year of sales before all products have to meet the new, stricter testing requirements.
In late November, California released their proposed emergency regulations for the cannabis industry, ahead of the full 2018 medical and adult use legalization for the state. We highlighted some of the key takeaways from the California Bureau of Cannabis Control’s regulations for the entire industry earlier. Now, we are going to take a look at the California Department of Public Health (CDPH) cannabis manufacturing regulations.
According to the summary published by the CDPH, business can have an A-type license (for products sold on the adult use market) and an M-type license (products sold on the medical market). The four license types in extraction are as follows:
Type 7: Extraction using volatile solvents (butane, hexane, pentane)
Type 6: Extraction using a non-volatile solvent or mechanical method
(food-grade butter, oil, water, ethanol, or carbon dioxide)
Type N: Infusions (using pre-extracted oils to create edibles, beverages,
capsules, vape cartridges, tinctures or topicals)
Type P: Packaging and labeling only
As we discussed in out initial breakdown of the overall rules, California’s dual licensing system means applicants must get local approval before getting a state license to operate.
The rules dictate a close-loop system certified by a California-licensed engineer when using carbon dioxide or a volatile solvent in extraction. They require 99% purity for hydrocarbon solvents. Local fire code officials must certify all extraction facilities.
In the realm of edibles, much like the rule that Colorado recently implemented, infused products cannot be shaped like a human, animal, insect, or fruit. No more than 10mg of THC per serving and 100mg of THC per package is allowed in infused products, with the exception of tinctures, capsules or topicals that are limited to 1,000 mg of THC for the adult use market and 2,000 mg in the medical market. This is a rule very similar to what we have seen Washington, Oregon and Colorado implement.
On a somewhat interesting note, no cannabis infused products can contain nicotine, caffeine or alcohol. California already has brewers and winemakers using cannabis in beer and wine, so it will be interesting to see how this rule might change, if at all.
The rules for packaging and labeling are indicative of a major push for product safety, disclosure and differentiating cannabis products from other foods. Packaging must be opaque, cannot resemble other foods packaged, not attractive to children, tamper-evident, re-sealable if it has multiple servings and child-resistant. The label has to include nutrition facts, a full ingredient list and the universal symbol, demonstrating that it contains cannabis in it. “Statute requires that labels not be attractive to individuals under age 21 and include mandated warning statements and the amount of THC content,” reads the summary. Also, manufacturers cannot call their product a candy.
Foods that require refrigeration and any potentially hazardous food, like meat and seafood, cannot be used in cannabis product manufacturing. They do allow juice and dried meat and perishable ingredients like milk and eggs as long as the final product is up to standards. This will seemingly allow for baked goods to be sold, as long as they are packaged prior to distribution.
Perhaps the most interesting of the proposed rules are requiring written standard operating procedures (SOPs) and following good manufacturing practices (GMPs). Per the new rules, the state will require manufacturers to have written SOPs for waste disposal, inventory and quality control, transportation and security.
According to Donavan Bennett, co-founder and chief executive officer of the Cannabis Quality Group, California is taking a page from the manufacturing and life science industry by requiring SOPs. “The purpose of an SOP is straightforward: to ensure that essential job tasks are performed correctly, consistently, and in conformance with internally approved procedures,” says Bennett. “Without having robust SOPs, how can department managers ensure their employees are trained effectively? Or, how will these department managers know their harvest is consistently being grown? No matter the employee or location.” California requiring written SOPs can potentially help a large number of cannabis businesses improve their operations. “SOPs set the tempo and standard for your organization,” says Bennett. “Without effective training and continuous improvement of SOPs, operators are losing efficiency and their likelihood of having a recall is greater.”
Bennett also says GMPs, now required by the state, can help companies keep track of their sanitation and cleanliness overall. “GMPs address a wide range of production activities, including raw material, sanitation and cleanliness of the premises, and facility design,” says Bennett. “Auditing internal and supplier GMPs should be conducted to ensure any deficiencies are identified and addressed. The company is responsible for the whole process and products, even for the used and unused products which are produced by others.” Bennett recommends auditing your suppliers at least twice annually, checking their GMPs and quality of raw materials, such as cannabis flower or trim prior to extraction.
“These regulations are only the beginning,” says Bennett. “As the consumer becomes more educated on quality cannabis and as more states come online who derives a significant amount of their revenue from the manufacturing and/or life science industries (e.g. New Jersey), regulations like these will become the norm.” Bennett’s Cannabis Quality Group is a provider of cloud quality management software for the cannabis industry.
“Think about it this way: Anything you eat today or any medicine you should take today, is following set and stringent SOPs and GMPs to ensure you are safe and consuming the highest quality product. Why should the cannabis industry be any different?”
Last week, the California Bureau of Cannabis Control released their proposed emergency regulations for the industry. The Bureau, the government agency tasked with regulating California’s cannabis industry, announced the proposed emergency regulations ahead of the highly anticipated January 2018 start date.
Temporary licenses will allow businesses to operate for 120 days while their annual license application is being processed. Not surprisingly, local jurisdictions have considerable autonomy. Getting a license seems to be contingent on first getting local approval to operate. According to Josh Drayton, communications and outreach director at the California Cannabis Industry Association (CCIA), working with local governments will be crucial to making progress. “Now that the Brown Administration has created the framework for medical and adult use cannabis, the main challenge we face as an industry is getting local municipalities to move forward with regulations,” says Drayton. “California has a dual licensing process which means that cannabis operators must receive a local permit/license/authorization before being able to apply for a state license. A majority of California cities and counties have yet to finalize their regulations which will delay state licensing.”
The initial reactions to these proposed regulations seem positive, given that this is a culmination of efforts over several years. “The California Cannabis Industry Association welcomes the release of the emergency regulations,” says Drayton. “These regulations represent years of hard work and collaboration between the administration, the regulating departments, and the cannabis industry.”
A-type licenses are for businesses in the adult-use market, while M-type licenses are for the medical market. Laboratory licenses don’t have this distinction, as they can test both medical and adult-use products.
The record keeping and security requirements seem relatively straightforward, requiring normal surveillance measures like 24-hour video, commercial-grade locks and alarm systems. The rules also lay out guidelines for disposing of waste, including securing it on the premises and not selling it.
Distributor licenses appear to have a number of compliance documentation requirements, such as arranging for all product testing, quality assurance and packaging and label accuracy. “Cannabis and cannabis products must pass through a distributor prior to being sold to customers at a retail establishment,” reads the overview the Bureau published. There is also a transport-only distributor license option. Those regulations appear to be more comprehensive than others, with a number of regulations pertaining to appropriate transportation and security measures.
Everything has to be packaged before it gets to retail; Retailers are not allowed to package or label cannabis products on premises. Microbusiness licenses will be available, which should be an exciting new development to follow as the market matures.
The state will require ISO 17025 accreditation for testing labs. A provisional license is required for a lab to operate in the short term, expiring after 12 months. Laboratory personnel are required to go in the field and do the sampling. Documentation requirements, sample sizes, sampling procedures and storage and transportation rules are also laid out.
Testing labs are required to test for cannabinoids, foreign material, heavy metals, microbial impurities, mycotoxins, moisture content and water activity, residual pesticides, residual solvents and processing chemicals and terpenoids (terpenes). Infused and edible products are required to be tested for homogeneity in THC and CBD concentrations as well. Drayton and the CCIA welcome these new testing regulations, hoping it might improve overall public safety. “We believe that these regulations will address public health issues by mandating the testing of all cannabis products,” says Drayton. “The evolution of the cannabis industry will continue, and we will continue to advocate for good policy that creates solutions for the problems that arise. I believe that we will be visiting and revisiting cannabis regulations for many years to come.”
Certificates of analysis (COA) will be required, showing whether a batch passes or fails testing requirements. Harvest batches that fail testing can be processed for remediation. “Testing laboratories are required to develop and implement a quality assurance program that is sufficient to ensure the reliability and validity of the analytical data produced by the laboratory,” reads the statement on QA and QC.
The Bureau, at the end of their regulatory overview document, lays out some possible enforcement actions, disciplinary actions and citations that could come from noncompliance. “These emergency regulations create a framework for both medical and adult use consumers,” says Drayton. “January 1, 2018 will be the first date that adults 21 years and older will be able to purchase cannabis without a medical card.”
In the coming weeks, we’ll be breaking down and analyzing the other proposed emergency regulations that the state released. Stay tuned for a breakdown of the California Department of Food & Agriculture (CDFA) regulations on cannabis cultivation, as well as The California Department of Public Health (CDPH) cannabis manufacturing regulations.
Those rules cover everything from sampling standard operating procedures to detection limits for pesticide analytes, which some say are absurdly strict as is. According to Jeffrey Raber, Ph.D, chief executive officer of The Werc Shop, a cannabis consulting firm located in Monrovia, CA, these rules will immediately raise prices. “The regulations are quite extensive and will undoubtedly drive the costs of patient medicine upward,” says Raber. “Regulations are not intended to be so detailed in these fashions, but are supposed to provide the floor and specific framework upon which operators can build best practices and differentiate themselves from others in a competitive market that drives prices downward.”
“Comparable guidance from other states operating today, and even federal regulations, are not nearly as specific in certain aspects,” says Raber. “While there are some very good parts to the current draft, and the bureau has certainly aimed to provide strong consumer protections, as they should, the idea of benzene even being mentioned or possibly permitted, or a completely cold transportation chain being required, and pesticide levels so low it pushes the limits of the most sophisticated and modern analytical equipment while going far past sensible EPA limits, strongly suggests there is work to be done to dial back the current position and make for far more workable and fully balanced regulations before they are fully finalized.”
It is important to note that nothing is set in stone yet. The bureau will hold four public hearings throughout the month of June for the lab testing rules. In addition to that, concerned stakeholders can send written comments through June 20th.
Dave Egerton, vice president of technical operations at CW Analytical, a cannabis-testing lab based in Oakland, is pleased they are finally regulating the market, but definitely plans on providing some feedback to change the rules a bit. “CW Analytical applauds the state’s efforts to regulate laboratories and the cannabis industry in general,” says Egerton. “…Many aspects of the proposed regulations for labs will make for a marked shift in the way our businesses operate, but the motivation behind them is well-intended.” His sentiment is consistent with many who operate cannabis laboratories and other stakeholders who see these proposed rules as overreach.
“Unfortunately, some of the regulations as written will create undo burden upon the industry and carry a strong probability of limiting supply to medical patients,” says Egerton. “During the current review period, CA laboratories will be providing feedback on some of the details within the law in order to streamline their quality assurance goals into a more tenable document that still protects patients.” That public comment period is a crucial part of the rulemaking process, as the rules will most likely change after cannabis laboratories’ voices are heard.
Last week, Governor Brown’s Administration released a set of proposed rules for the medical cannabis, attempting to provide some oversight to the once unregulated market. In 2015, the governor signed three bills into law that established a regulatory framework via the Medical Cannabis Regulation and Safety Act. That legislation set up the Bureau of Medical Cannabis Regulation inside the Department of Consumer Affairs as the overseeing regulatory agency.
According to the press release, the proposed regulations for manufacturing and cultivation have also been published. “The proposed licensing regulations for medical cannabis are the result of countless hours of research, stakeholder outreach, informational sessions and pre-regulatory meetings all across the state,” says Lori Ajax, chief of the Bureau of Medical Cannabis Regulation. “And while we have done quite a bit of work and heard from thousands of people, there is still so much more to do. In order to make our program successful we still need your feedback.”
According to their website, the legislation divides responsibility for licensing businesses between three regulatory bodies: The CA Department of Food and Agriculture the CA Department of Public Health and the Bureau of Medical Cannabis Regulation, which will be the leading body in charge of licensing. The proposed regulations are not set in stone, but give us an important glimpse into how the state hopes to regulate the market.
Among the proposed rules are a number of regulatory compliance nuances expected to raise prices, but provide extra measures to protect consumer safety. According to the SF Gate, regulators expect prices could climb $524 per pound. But with that price jump comes a lot of regulations that other states have so far successfully implemented. The laboratory testing and traceability stipulations are presumably designed to safeguard public health, preventing things like black market diversion and off-label pesticide use.
In addition to the medical regulations, the proposed manufacturing regulations set some notable requirements. Those rules are set by the Office of Manufactured Cannabis Safety, established in the Center for Environmental Health of the California Department of Public Health (CDPH) after the 2015 legislation was signed into law. Good Manufacturing Practices, food product standards, operational and labeling requirements are included in the provisions, along with a list of licensing tiers, application requirements and fees. They have a handy summary of the proposed regulations for those looking for the key highlights.
Omar Figueroa, an attorney with a cannabis law practice in California, says his clients in the industry are preparing to suggest changes to the proposed regulations and possibly legal challenges. “They are looking at this as overregulation by people that are not in the cannabis industry,” says Figueroa. “These are outsiders with a limited knowledge base creating somewhat uninformed regulations.” He says a good example of this is the potency limit on infused products. “They make perfect sense for [the recreational market] but for the medical market it is simply unacceptable. Patients develop a tolerance to THC and would have to increase their caloric intake and buy more infused products if this proposed regulation becomes final.” He says there are a number of regulations that seem kind of arbitrary. “Like prohibiting cannabis-infused caffeine products; there doesn’t seem to be a necessity in the rulemaking for this,” says Figueroa. “A lot of these regulations are going to be susceptible to challenges because California requires regulations to be necessary and alternatives to be considered.”
Although the lab testing regulations won’t be published for another few days, Figueroa expects them to be a huge disruptor for the market. “Most labs in the state are not ISO 17025-accredited, which means many labs might not be able to issue certificates of analysis when the regulations get enforced,” says Figueroa. He says it is safe to say California regulators are looking at other jurisdictions, like Colorado and Oregon for example, in crafting these rules, but we can expect a sea change in these regulations before they get enforced.
Manufacturers will be required to use a cannabis product symbol with a ‘THC!’ marking on their labels. There is also a 100-milligrams-per-package limit for THC in infused products, which is similar to rules we saw Colorado and Oregon roll out during a preliminary period of legal recreational cannabis.
For those looking to get involved in the regulatory process, there is a 45-day comment period on the proposed rules.
The government of Canada published a press release on April 13th proposing a piece of legislation, the Cannabis Act, which would regulate the industry by July of 2018. The press release puts a heavy emphasis on keeping cannabis away from children, curbing impaired driving and reducing criminal and organized crime profits.
The press release says the legislation would set up a regulatory framework “for controlling the production, distribution, sale and possession of cannabis in Canada.” It would set the minimum age to purchase cannabis at 18, but provinces can increase that minimum age how they see fit. Health Canada, the Royal Canadian Mounted Police, the Canada Border Services Agency and the Department of Public Safety would be responsible for enforcing the regulations.
The Cannabis Act states they plan on implementing a fully functioning regulatory framework by July of 2018. Transporting cannabis across international borders or selling to minors would be serious criminal offenses. If the legislation becomes law, adults could have up to 30 grams of cannabis on their person and grow up to four plants in their home.
Individual provinces would ultimately be the regulating authorities, but if local jurisdictions do not have a regulatory framework in place, the press release says Canadians could purchase cannabis online and have it shipped to them. In addition to establishing the regulatory framework, the Cannabis Act would tighten laws on impaired driving. “Additionally, the proposed legislation would authorize new tools for police to better detect drivers who have drugs in their body,” reads the press release. That would give the police authorization to use oral fluid drug screeners, but cannabis is particularly difficult to detect at low concentrations. It is unclear exactly how that would be enforced and specifically what technology they would use.
In a Facebook post this morning, Justin Trudeau announced the proposed legislation to his followers. “It’s too easy for our kids to get marijuana,” says the Prime Minister. “We’re going to change that.” That mention of keeping cannabis out of reach of the Canadian youth is heavily emphasized in the press release as well.
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