California’s New Cultivation and Manufacturing Regulations Are Here

In order to reach compliance with the cannabis legalization bill voters passed in November, lawmakers have been working relentlessly to prepare for the Jan. 1, 2018 opening of the state’s legal marijuana market.

The first step was collecting input from concerned citizens, business owners, and stakeholders to determine what should and shouldn’t be covered in the state’s legalization language. Now, with New Year’s Day looming, the state’s Bureau of Cannabis Control must merge the ever-evolving proposed medical and recreational regulations into one all-encompassing set of rules for the entire industry to abide by.

On Thursday, the bureau made public their emergency regulations, meant to unify the medical and recreational regulations that had already been established, as well as addressing any issues brought forward during the public comment periods. While these regulations are certainly not final, they will at least provide a solid base during this transitional period from which everyone in oversight or in the industry can learn and adapt.

With conservative estimates valuing the legal market in California at $7 billion in 2018, there is a lot at stake for both lawmakers, business owners, and consumers — so all ears in the industry were on the announcement of new regulations.

Roughly 45 days remain until opening day, and one area of great concern to many in the industry was how the bureau would categorize licenses and what fees would be associated with obtaining those licenses.

Cannabis Cultivation Licenses and Fees

For cultivation licenses, governed by the California Department of Food and Agriculture (CDFA), there will be a one-time fee, ranging from $135-$8,655 depending on the size of the grow and license type to have the CDFA review a cultivation site’s application for an annual license. Once a grower is approved for a license, the fee schedule is scaled to reflect the annual production of the cultivation site, ranging from $1,205 to $77,905.

Many growers who currently hold local permits to cultivate medical marijuana in California have been worried there would be a lapse in their legal protections, but the emergency regulations state annual license applicants who have already obtained local authorization to grow may be considered for a temporary license from the state, which will allow for cultivation before an annual license is approved.

Because of the enormous environmental footprint of traditional cannabis cultivation techniques, it was crucial for the bureau to establish a firm set of regulations surrounding the waste management processes of grows and their utilization of renewable energy sources to alleviate the drain on already precious water and electricity resources in California. To allow for a reasonable transition for these cultivators, the CDFA is allowing the renewable energy requirements to be phased in slowly over the next five years. Starting in 2022, growers holding an annual license must show the state their energy consumption and providers. In 2023, cultivators must be able to restrict their usage to the “average electricity greenhouse-gas-emissions intensity required of their local utility provider.”

One primary concern among cultivators leading up to the release of California regulations was an acreage limit on commercial grow sites. Initial estimates said the state would limit cultivators to between 1-4 acres, but the first release of rules carries no such restriction.

Cannabis Manufacturing Rules

Once cannabis is grown, there will be a number of different licenses for businesses looking to process that marijuana into other ancillary products like edibles and concentrates. The California Department of Public Health will oversee the manufacturing side of the industry through the Manufactured Cannabis Safety Branch (MCSB).

Like the cultivation licensing process, the state will allow for temporary licenses to be issued to businesses already operating with local authorization. The temporary licenses will be free and good for 120 days, with available 90-day extensions as needed. Companies must submit an application for an annual license to be considered for a temporary commercial manufacturing license.

When the application process for manufacturers opens in December, businesses that have been in operation since Sept. 1, 2016 or before will have their applications reviewed first. Hopeful applicants will have to provide the MCSB with information on the owners and stakeholders of the operation, details on the premises, waste management procedures, quality control standards, inventory system details, and what type of security and transportation the company will employ. Standard operating procedures for all those components of the business must be submitted with the annual license application.

License Categories & Types

Anyone conducting commercial cannabis manufacturing must obtain a license from CDPH. Each license issued will have one category and one type.

The two license categories are:

Cannabis products for sale in the adult-use market

Cannabis products for sale in the medicinal market

A business may hold both M- and A-Licenses at the same premises as long as separate applications are completed.

The four license types are:

Type 7
Extraction using volatile solvents (ex: butane, hexane, pentane)

Type 6
Extraction using a non-volatile solvent or mechanical method (ex: food-grade butter, oil, water, ethanol, or carbon dioxide)

Type N
Infusions (ex: using pre-extracted oils to create edibles, beverages, capsules, vape cartridges, tinctures or topicals)

Type P
Packaging and labeling only

The Transition Period

To ensure existing business have adequate time to meet the new regulations, beginning Jan. 1, 2018 through July 1, 2018, licensees will be permitted to:

  • Conduct business regardless of the Medical or Adult-Use license designation
  • Sell cannabis products that do not meet the new labeling requirements by attaching a sticker with the correct warning
  • Sell cannabis products held in inventory without child-proof packaging if the retailer places the product in a child-proof package
  • Sell cannabis products that do not adhere to the new THC limits per package

Cover image courtesy of Allie Beckett

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