Proposed Prop 64 Trailer Bill Reflects Some Interesting Turns

Proposed Prop 64 Trailer Bill Reflects Some Interesting Turns

Flickr / Martin Jambon / CC BY 2.0

By Silvia San Nicolas, Esq.

 
Some big proposed changes came down on April 4, 2017, in the California Bureau of Cannabis Control’s Proposed Trailer Bill Legislation. As the industry digests and considers the implications of these proposed changes, some of the more notable changes seem to reflect a friendlier approach to cannabis regulation in some key areas.

For starters, the trailer bill replaces the word marijuana with cannabis and would create two separate categories of license types, M for Medical and A for Adult Use, each having the same regulatory requirements.

The trailer bill also proposes to allow vertical integration, enabling licensees to hold multiple licenses, including distribution. A big 180 from previously disallowing anyone holding a distribution license from also holding any other type of cannabis license. While a licensee could hold both an M license and an A license, the operations would be required to be at different locations and it would be no different for distributors. A distributor with an M license could only distribute cannabis to M-type licensees. A distributor with an A license could only distribute cannabis to A-type licensees; however, a distributor could have both license types and be vertically integrated with other license types in the same A or M category.

A new cultivator license has been proposed: a Type 1C, or “specialty cottage,” for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, of 2,500 square feet or less of total canopy size for mixed-light cultivation, up to 25 mature plants for outdoor cultivation, or 500 square feet or less of total canopy size for indoor cultivation, on one premise.

There is a new yet specific laundry list of unique identifiers for track-and-trace requirements and requirements added to the license application concerning water use that would require the identification of the water source, including thresholds and conditions concerning diversion and documentation requirements.

An area of surprise is that beginning on Jan. 1, 2018, a licensee could sell cannabis or cannabis products that have not been tested for a limited and finite time as determined by the bureau. The cannabis and cannabis products would be required to have a label affixed to each package containing cannabis or cannabis products that clearly states, “The product has not been tested as required by the Adult Use of Cannabis Act and must comply with any other requirement as determined by the bureau.”

Other states have experienced issues when implementing new regulations with hefty testing requirements, such as steep shifts in the supply of legal cannabis due to failed test results which increases the illegal “untested” or “failed test” supply of cannabis, as operators get up to par with regulations in their processes. This proposed regulation is clearly learning from the experiences of its sister jurisdictions with this interim fix.

The trailer bill would also unexpectedly remove the restriction prohibiting a retailer of alcoholic beverages from holding a cannabis license, and the new proposed provision states that a licensee could not sell alcoholic beverages or tobacco products on or at any premises licensed under this division. Should this proposed language be adopted, it will open up previously prohibited licensing opportunities to those in the retail alcohol industry.
 

Silvia San Nicolas, Esq., is the Chief Strategy Officer of Compliance for MJIC Compliance.

Guest Contributor designates a writer who is guest publishing content with MJINews.

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