California Update – Review of the Final Emergency Regulations for Manufacturers

This past Thursday, the California Bureau of Cannabis Control (BCC) released their Emergency Regulations. This is an update to the drafts that were published earlier this year. After a public comment period, regulators revisited the documents and made a significant amount of changes. We sat down and thoroughly compared the draft regulations to the 99-page final emergency regulations and summarized them here. To review the full text of all the Emergency regulations that were just released, check out the California Cannabis Portal here. What are some of the BIGGEST changes?

  • Fairly accommodating exemptions for microbusinesses
  • Clear guidance for the transitional period (which could be up to 210 days), including exceptions from packaging and labeling as well as traceability requirements, making it much easier to continue operating legally while everyone gets their ducks in a row.
  • Removal of Ethanol extractions from Type 7 licensing.
  • Realistic inventory management reconciliation. The regulators finally smoked some of California’s finest and relaxed their daily requirement to something much more realistic, 30 days.
  • Language providing leeway for companies affected by this year’s tragic fires.
  • Protections of trade secrets.

Do you plan to be a microbusiness?

We have good news for you! Section 40101 (Applicability) provides exemptions for microbusiness manufacturers for the following sections:

  • 40200 – Security Plan
  • 40205 – Video surveillance
  • 40282 – Inventory control
  • 40290 – Waste Management

Will your company have an “owner” that is employed by any State agency that may have any duties related with enforcement of the Act?

A new section, 40116 “Personnel Prohibited from Holding Licenses” explicitly prohibits people holding office or employed by any agency of the State of California who may have duties related to enforcement of the Act from holding a license. This is a common sense regulation, and we applaud the state for including this language.

Temporary Licenses – The biggest unknown we have all been waiting for. Section 40126 lays out the process for obtaining a temporary license. Highlights include:

  • Will be valid for 120-days, with the option for a 90-day extension upon submission of a complete application for licensure prior to the initial temporary license expiration date.
  • Form is included at the end of the text.

Full Licenses – To be renewed annually

  • Sections 40130 and 40131 lay the requirements out. This includes the definition of who an owner is. All “owners” are required to disclose additional information.

Priority Review Period

  • Initially you had to prove you were in legal operation at the local level before January 1, 2016. This has been pushed back nine months to September 1, 2016 in order to be considered for priority review.

Application Fees

  • No application fees are required to obtain a temporary license! This means, you have until you submit your application for full licensure to pony up the funds which are laid out below:
Tier Annual Gross Revenue Fee
I Up to $100,000 $2,000
II $100,001 – $500,000 $7,500
III $500,001 – $1,500,000 $15,000
IV $1,500,001 – $3,000,000 $25,000
V $3,000,001 – $5,000,000 $35,000
VI $5,000,001 – $10,000,000 $50,000
VII $10,000,001 – Ummm? $75,000

 

Disaster Relief – New (Section 40182)

  • Were you affected by the fires that ravaged Northern California? For better or worse, the state took this into consideration and has provided several provisions to allow you more time to become operational without jeopardizing your place in line.

Video Surveillance – More realistic

  • Reduced frame requirements from 20 to 15 fps, reducing the upfront costs of equipment for you.
  • Don’t forget, microbusinesses are exempt from video surveillance requirements.
  • Increased minimum storage time for all recorded surveillance from 30 to 90 days. (Buy a bigger hard drive, they’re cheap)

Type 7 Licenses and Ethanol Extractors

  • Ethanol is now a Type 6 license. However, it still requires approval by local fire code officials, which must be documented on your application.
  • Type 7 licenses must also have their blessings from your local fire code official.
  • Closed loop extractors must be approved by a licensed engineer from the State of California. Even though you may have purchased your product from an approved out of state vendor, you must have an engineer from California independently certify it.

Documentation

  • The added language here is something we agree with, and is standard practice in most industries.
  • Conduct Hazard Analyses and Preventative Controls based on the hazards. In addition to conducting these walk downs, written plans detailing them must be produced.

Protection of Trade Secrets

  • Section 40262 clarifies that any protocols and documents that fall under the Master Manufacturing Protocol are considered “Trade Secrets” and do not need to be legally shared by anyone outside of the regulators and authorized personnel acting on behalf of state regulators for compliance purposes.

Processors of Juiced Beverages and Dried Meats

  • Planning to infuse juice with THC or some cured jerky? Article 5 covers all the guidance you will need.

Inventory Control – Section 40282

  • As mentioned at the top of the article, you will be required to reconcile your inventory every 30 days, not daily.

Cannabis Product Limits

  • Adult use packages are limited to 1,000 mg of THC while medical use packages may contain up to 2,000 mg of THC.

Failed Batches?

  • No need to risk having your entire batch destroyed because of a failed test. Section 40310 (formerly contaminants), allows you to remediate and/or reprocess your product up to two times before it must be destroyed due to failed testing.

Labeling and Marketing Requirements

  • This one is too large to cover adequately. There are a lot of things to consider, including how you word any potential health-related statements to placement of the new cannabis symbol. For assistance making sure you are not at risk of license revocation because of an unfounded claim, contact us to put you in touch with one of our preferred cannabis law firms.

Transitional Period – Exemptions

  • Shared facilities – The state has not figured out how to manage shared facilities (facilities that produce or sell both medicinal and recreational products). Because of this, they are allowing M and A facilities to conduct activities with each other until July 1, 2018 (Subchapter 7 – Transitional Period). Hopefully by then, the state will have filled in additional guidance on how to allow companies to offer both products under the same space.
  • Track and Trace system – During the period of time you hold a temporary license (up to 210 days), you will not be required to comply with the track and trace system (Section 41515).
  • Packaging and Labeling – Products produced prior to January 1, 2018 will still be allowed to be sold, regardless of whether they meet the new enhanced packaging and labelling requirements.

Contact Us. 

Orion GMP Solutions is a Pharmaceutical Process Engineering firm based out of Denver Colorado. We specialize in the implementation and auditing of GMP Cannabis Manufacturers to assist them in reaching international markets. If you would like to get more information, please send us an email at [email protected]. 

This content was written and supported by Orion GMP Solutions. 

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