SR 10-10-2017 7A
City Council Report
City Council Meeting: October 10, 2017
Agenda Item: 7.A
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Introduction and First Reading of an Ordinance Amending Article VI of the
Santa Monica Municipal Code Establishing a Selection and Permitting
Process for Medicinal Cannabis Retailers and Medicinal Cannabis Light
Manufacturing, while continuing to prohibit commercial non-medicinal
cannabis uses; Introduction and First Reading of an Interim Zoning Ordinance
making necessary interim changes to the Zoning Ordinance to authorize
Medicinal Cannabis Retailers and Medicinal Cannabis Light Manufacturing
within certain zoning districts; and Adoption of a Fee Resolution Establishing
Related Permit Fees.
Recommended Action
Staff recommends that the City Council:
1) Introduce for first reading the attached ordinance (Attachment A) amending the
Santa Monica Municipal Code adding:
a. Chapter 6.200 Commercial Cannabis, in order to establish general
regulations and definitions for commercial cannabis activities;
b. Chapter 6.201 Medicinal Cannabis Retailer, in order to establish a
regulatory permit for medicinal cannabis retailing;
c. Chapter 6.202 Medicinal Cannabis Light Industry Manufacturer, in order to
establish a regulatory permit for medicinal cannabis light manufacturing;
d. Chapter 6.210 Adult Use Cannabis, prohibiting commercial adult cannabis
non-medicinal use activities; and
2) Introduce for first reading the attached Interim Zoning Ordinance (Attachment B)
updating the definition of “Medical Marijuana Dispensaries” to conform with state
law and setting forth interim development standards for light medicinal cannabis
manufacturing; and
3) Adopt the attached Resolution (Attachment C) establishing Medicinal Cannabis
Retail Permit fee; and
4) Direct staff to examine options for a ballot measure to create new business
license tax classifications and rates for cannabis related businesses.
Executive Summary
Cannabis regulations in California are continuously evolving. As a result of decisions
made during the 2015 update of the Santa Monica Zoning Code, Council adopted an
approach to regulating retail access to so-called “medical marijuana.” Subsequent to
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that decision in November, 2016, California voters enacted Proposition 215 legalizing
trade in so-called “recreational marijuana”.
During a study session on March 7, 2017, regarding an overall approach to cannabis
regulations, Council directed staff to draft an ordinance to: create a regulatory permit
and selection process for medicinal cannabis retailers; postpone and prohibit
commercial adult cannabis non-medicinal use activities; amend the Santa Monica
Municipal Code to address changes in State law related to cannabis regulations; and
consider options for allowing certain cannabis-related manufacturing.
Since the time of the Council study session (on June 27, 2017), the Governor signed
Senate Bill 94, essentially repealing Medical Cannabis Regulation and Safety Act
(MCRSA) and consolidating certain provisions of MCRSA in the licensing provisions of
Adult Use of Marijuana Act (AUMA).
The proposed Ordinance would require medicinal cannabis retailers and medicinal
cannabis light manufacturers to obtain a local operating permit. The retailer permit
would also allow for limited cultivation in a manner that meets minimum standards for
that activity and location. Existing local law (in the Zoning Ordinance) limits the City to
two medicinal cannabis retailer uses; the proposed Ordinance maintains this limitation
and establishes a selection process with objective criteria to award the two medicinal
cannabis retailer permits. With the exception of light manufacturing, the proposed
ordinance would also prohibit all commercial adult cannabis non-medicinal use
activities, including cultivation, testing, distribution, retailing, heavy manufacturing, etc.
The proposed Interim Zoning Ordinance changes the definition of dispensary and other
cannabis related business activities to be consistent with State law and authorizes
medicinal cannabis light industry manufacturing in the Industrial Conservation District by
right, and in the Office Campus (OC) zone with a Conditional Use Permit (CUP).
The Business License Unit would administer all licenses and permits in conjunction with
Business License processing as it does currently for other regulatory permits. Cannabis
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business activity rules and regulations, and CUP requirements would be enforced by
Code Enforcement staff.
Personal adult non-medicinal use is permitted by State law, however, it would be
subject to existing smoking regulations when cannabis is consumed by smoking or
vaping. In addition to the proposed regulations, all cannabis related business activities
are subject to all State laws and regulations, which are enforceable by local
jurisdictions.
Background
On March 7, 2017, staff held a study session with Council regarding cannabis
regulations (see Attachment D). At this meeting Council directed staff to draft an
ordinance creating a regulatory permit and selection process for medicinal cannabis
retailers, prohibiting commercial adult cannabis non-medicinal use activities (as a
temporary measure), and amending the Santa Monica Municipal Code to address
changes in State law related to cannabis regulations. Council also directed staff to
consider the possibility of allowing certain forms of cannabis-related light manufacturing.
Medicinal and Adult-Use Cannabis Regulation and Safety Act
On June 27, 2017, the State adopted Senate Bill 94 as part of a budget trailer bill
creating the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).
The bill essentially repeals the MCRSA and adds certain provisions of MCRSA to the
licensing provisions of the AUMA adopted by the voters as Proposition 64 in 2016.
MAUCRSA establishes a robust set of regulations for the medicinal and adult use
cannabis markets, aligns all permit types, and authorizes certain State agencies to
establish rules governing cannabis operations and to implement the law.
MAUCRSA consolidated the regulatory structure, but also maintained separate licenses
for both medicinal and adult use to provide safeguards, presumably so that in the event
of greater federal intervention into the cannabis legalization movement by the States,
the medicinal program could continue even if adult non-medicinal use is interrupted.
For example, MAUCRSA establishes a Type 10 license for retailers. A medicinal
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retailer would be issued an M-Type 10 license and an Adult Use retailer would be
issued an A-Type 10 license. This licensing convention is the same for all twenty
cannabis license types. MAUCRSA would allow for both medicinal and adult use sales
of cannabis by the same retailer; however, they would need to be from separate
“locations,” meaning each would have to have different employees and entrances,
although the location could be in the same building and even storefront. See
Attachment E for a list of license types.
Notable MAUCRSA Changes
New provisions under MAUCRSA now allow for retailers to have a brick-and-mortar
location that is closed to the public with all sales being fulfilled through deliveries. It also
requires the State's Department of Food and Agriculture to develop an organic
designation by 2021 as well as origin regions, modeled on how the food sector
designated specialty wines and cheeses. On the marketing end, advertising will only be
able to broadcast in mass media if at least 71.6 percent of the audience is reasonably
expected to be 21 years of age or older. The bill would also require edible cannabis
products to be marked with a universal identification symbol.
MAUCRSA also establishes protection of the public as the highest priority for State
licensing agencies in exercising its licensing, regulatory, and disciplinary functions, and
requires the protection of the public to be “paramount whenever the protection of the
public is inconsistent with other interests sought to be promoted”.
Additionally, MAUCRSA clears up some of the questions pertaining to how officers
would enforce open cannabis consumption. The law requires that, while a person is
operating a motor vehicle, any cannabis or cannabis product that is in a receptacle that
has been opened, or has a broken seal must be in the trunk of the vehicle. It also
prohibits a person from possessing any loose cannabis flower not in a container, while
driving a motor vehicle, unless the flower is in the trunk of the vehicle. However, this
prohibition does not apply to a person who is a qualified patient carrying a current
identification card or a physician’s recommendation and the cannabis or cannabis
product is contained in a container or receptacle that is either sealed, resealed, or
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closed. See Attachment F for the Senate Analysis of MAUCRSA for more information
on the new provisions
The City’s Zoning Ordinance (ZO) authorizes two medicinal cannabis dispensaries
within the following Mixed-Use and Commercial District locations:
Mixed-Use Boulevard District along Wilshire Boulevard between Lincoln
Boulevard and Centinela Avenue;
General Commercial District along Santa Monica Boulevard between Lincoln
Boulevard and 20th Street; and
Mixed-Use Boulevard Low District along Santa Monica Boulevard between 23rd
Street and Centinela Avenue.
The ZO currently refers to a medicinal cannabis retailer as “medical marijuana
dispensary” and has the following broad definition:
Medical Marijuana Dispensary. Any facility, building, structure, or fixed
location where one or more qualified patients and/or persons with
identification cards and/or primary caregivers cultivate, distribute, sell,
dispense, transmit, process, exchange, give away, or otherwise make
available marijuana for medical purposes. The terms “primary caregiver,”
“qualified patient,” and “person with an identification card” shall be as
defined in California Health and Safety Code Section 11362.5 et seq.1
Discussion
For the purpose of this report and to be consistent with terminology used in newly
adopted State law and the cannabis industry, this report replaces the use of the word
“dispensary” with “retailer”, uses the term “cannabis” instead of “marijuana”, uses the
term “medicinal” instead of “medical” when referring to permitted business activities
(e.g. medicinal retailer), and uses the term “adult non-medicinal use” in lieu of
1 California Health and Safety Code Section 11362.5 was established as the Compassionate Use Act of 1996.
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“recreational.”
The discussion section of this report is separated into the following 6 sections:
1. Overview of Relevant MAUCRSA Regulations
2. Interim Zoning Ordinance
3. Medicinal Cannabis Retailer Permitting
4. Medicinal Cannabis Retailer Regulatory Compliance
5. Medicinal Cannabis Light Manufacturing Permitting
6. Prohibition of Adult Non-medicinal Uses
7. Council Direction on Taxes
Section 1 - Relevant MAUCRSA Regulations
MAUCRSA establishes extensive regulatory provisions and provides considerable
authority to certain State agencies to establish rules governing all aspects of the
cannabis market, including cultivation, water use, pesticide use, manufacturing,
distribution, testing, labeling, packaging, sales, distribution, and tracking of cannabis
and cannabis products through a statewide track and trace system to assist with the
safe distribution and enforcement of cannabis products. Although local jurisdictions
maintain the option to establish their own more restrictive regulations and maintain land
use control, various agencies released proposed regulations for the MCRSA. These
licensing agencies held public hearings and accepted written comments regarding the
proposed regulations. However, in light of MAUCRSA the licensing agencies have
withdrawn the proposed medicinal cannabis regulations noticed for public comment on
April 28 and May 5, 2017.
The cannabis licensing agencies are developing proposed regulations based on the
new law for the commercial medicinal and adult-use cannabis industries. During this
process, the licensing agencies will consider the public comment already received
regarding the proposed medicinal cannabis regulations.
The licensing agencies will use the emergency rulemaking process for the new
proposed regulations. The emergency regulations are expected to be published in fall
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2017. The implementation date for the issuance of commercial cannabis licenses
remains the same: January 2, 2018. Since any proposed rules will be based on the
rules previously drafted and withdrawn, a copy of the draft rules that were recently
withdrawn are provided as Attachment G.
Dual Permitting Compliance
State agencies will not approve an application for a State license if the proposed use
violates local law. The City is required to provide to the State Bureau of Cannabis
Control a copy of any ordinance or regulation related to commercial cannabis activity as
well as the name and contact information for the person who will serve as the contact
for the State licensing agencies. The proposed ordinance would assign this role to the
Director of Planning and Community Development or designee.
The City is also required to notify the Bureau when a change in a local ordinance or
regulation is adopted or the contact person is changed.
State agencies will deny an application for a license for a commercial cannabis activity
whenever the City has notified the Bureau the activity is prohibited. The licensing
agency will notify the contact person for the City in the following situations:
When an application for commercial cannabis activity is received.
When an applicant is denied due to the local jurisdictions indication that the
commercial cannabis activity for which a license is sought is prohibited by a local
ordinance or regulation.
When a State agency notifies the City of an application they have received, the City will
have an opportunity to notify the agency whether the applicant is in compliance with
local law. If the City indicates that the applicant is not in compliance, the licensing
agency will deny the application.
If the City does not provide notification of compliance or noncompliance with local law,
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or otherwise does not provide notification indicating that the completion of the City’s
permitting process is still pending, within 60 business days of receiving the notice from a
State licensing agency, the licensing agency may make a “rebuttable presumption” that
the applicant is in compliance with all local ordinances and regulations and issue the
license if the applicant meets State requirements. After the expiration of the 60-
business-day period, the City will still have an opportunity to notify the State of any
inconsistencies of the proposed operation with local law. The State could then take
appropriate actions against the applicant. The State would also require verification from
the City of compliance with local law prior to issuance of a renewal. The City will also
retain all of its enforcement options against any cannabis business not in compliance
with local law, regardless of State licensing.
Track and Trace
A significant provision established by MAUCRSA requires the implementation of a track
and trace program be the responsibility of the Department of Food and Agriculture, in
consultation with the Bureau. Staff is not proposing any additional local regulation
relating to track and trace. The Track and Trace technology systems to be implemented
by the State would provide regulators with tools to analyze aggregated compliance data
from all licensed cannabis businesses in a jurisdiction providing real time data on the
cannabis chain of custody as it moves throughout the distribution chain. The system
utilizes a unique identifier and authorizes a city to also administer a unique identifier and
associated identifying information but would prohibit this from supplanting the
Department of Food and Agriculture’s track and trace program. The data available in a
track and trace system allows visibility into areas that assist law enforcement with
preventing diversion and fraud, and ensuring contaminated products don’t reach the
market.
The system will be capable of providing information that captures, at a minimum the
following:
The licensee receiving the product.
The transaction date.
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The cultivator from which the product originates, including the associated unique
identifier.
The State will also create an electronic database containing the electronic shipping
manifests to facilitate the administration of the track and trace program, which will
include, but not be limited to, the following information:
The variety and quantity or weight of products shipped.
The estimated times of departure and arrival.
The variety and quantity or weight of products received.
The actual time of departure and arrival.
A categorization of the product.
The license number and the unique identifier issued by the licensing authority for
all licensees involved in the shipping process, including, but not limited to,
cultivators, manufacturers, distributors, and dispensaries.
Section 2 - Interim Zoning Ordinance
Staff is exploring possible approaches to amend the Zoning Ordinance to consider adult
non-medicinal uses; however, consistent with Council’s prior direction and in order to
expeditiously allow certain types of additional medicinal cannabis light manufacturing
activities and to update cannabis definitions to align with State law, staff is
recommending that Council first adopt an Interim Zoning Ordinance (IZO).
Subsequently, staff would undertake more research and community engagement
including study sessions with the Planning Commission and then return to Council with
a more permanent solution for adult use of marijuana.
Definitions
The ZO currently refers to a medicinal cannabis retailer as “medical marijuana
dispensary” and has the following broad definition:
Medical Marijuana Dispensary. Any facility, building, structure, or fixed
location where one or more qualified patients and/or persons with
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identification cards and/or primary caregivers cultivate, distribute, sell,
dispense, transmit, process, exchange, give away, or otherwise make
available marijuana for medical purposes. The terms “primary caregiver,”
“qualified patient,” and “person with an identification card” shall be as
defined in California Health and Safety Code Section 11362.5 et seq.
The proposed IZO would replace the definition of “Medical Marijuana Dispensary”
creating the new definition “Medicinal Cannabis Retailer” with the more specific
definition of:
A licensed premises which is a physical location from which retail
medicinal cannabis or cannabis products are intended to be sold for use,
pursuant to the Compassionate Use Act of 1996 (Proposition 215), found
at Section 11362.5 of the Health and Safety Code, by a medicinal
cannabis patient in California who possesses a physician’s
recommendation. The premises may be closed to the public; sales may be
made exclusively by delivery.
The proposed IZO would also amend the definition of “Limited Industry” to add light
medicinal cannabis manufacturing, defined as “medicinal cannabis, and medicinal
cannabis products using nonvolatile solvents, or no solvents”.
Operational Regulations
Certain regulations found in Chapter 9.31 of the SMMC regulating the operations of
Medicinal Cannabis Retailers were written prior to the adoption of the comprehensive
State laws regulating cannabis. The proposed IZO removes sub-sections I, K, and L of
Section 9.31.185 of the SMMC that address Staffing and Security, Required Patron
Notification, and Prohibited Activities which are either addressed in State law or can be
more effectively addressed through the proposed regulatory ordinance and rules.
Manufacturing
The methods used to produce cannabis extracts involve complicated and precise
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techniques and can include dangerous, volatile solvents, resulting in a risk of physical
harm to the manufacturers and to those around them. Butane is a common solvent used
in cannabis extracts. MAUCRSA restricts the number of permits that may be issued to
businesses using volatile solvents and requires very high standards to ensure safety.
The effect will bring the extraction community into a safer, more highly-regulated
environment as production increases.
The proposed Interim Zoning Ordinance would, in addition to the two medicinal
cannabis retailers, allow for light manufacturing within the current definition of “Limited
Industry” established in SMMC Section 9.51.030(C)(5), which includes “light industrial
activities taking place primarily within enclosed buildings and producing minimal impacts
on nearby properties”, and “the preparation, manufacturing, and/or packaging of food for
off-site consumption.” Typical food manufacturing uses include canners, roasters,
breweries, wholesale bakeries, and frozen food manufacturers.” Under the “Limited
Industry” classification, a cannabis manufacturer would be allowed to operate within the
Industrial Conservation (IC) zone, or with an approved Conditional Use Permit (CUP)
within the Office Campus (OC) zone.
The IC and OC zones are represented by the bright red outlines in the map below.
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Under this definition, medicinal cannabis business activities would not authorize
manufactures who use volatile solvents. Instead, it would be limited to assembly or
preparation of products without a retail storefront that is open to the public, such as a
manufacturer of cannabis-based lotions, or edibles. Under existing State law, any such
manufacturer would be required to obtain an M-Type Level 1 license, which would also
limit the sale of its products to medicinal retailers who also hold a State medicinal
retailer license (M-Type 10).
Section 3 - Medicinal Cannabis Retailer Permitting
The City has not been accepting applications for medicinal cannabis dispensaries
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pending the establishment of a selection process and regulatory framework, which have
been delayed due to rapidly changing cannabis related State law.
In order to license the two dispensaries the proposed ordinance would 1) establish a
regulatory framework for the selection and permitting of medicinal cannabis retailers,
and 2) prohibit for the time-being commercial adult non-medicinal use activities until
staff is able to implement the two dispensaries envisioned by the Zoning Ordinance.
Medicinal Cannabis Retailer Selection Process
The proposed ordinance would establish a selection process with objective criteria that
would require vetting of the businesses proposing to operate within the allowed areas
within the City. This would include a Request for Applications (RFA) process that would
require the applicants to provide information regarding the businesses’ financial
statements, bank records, management experience, business plan, and criminal
background. The primary objective of the selection process would be to ensure that
cannabis retailers licensed to operate in Santa Monica meet high standards. It also
provides for an orderly process.
The selection process would include a defined application period when the City would
accept applications. Those applications would be reviewed based on objective criteria
related to the proposed operator’s business experience and proposed operations. Land
Use and related location/size considerations would be later addressed as part of the
CUP application process.
Applicants who respond to the RFA would be required to provide detailed information
regarding their business, including but not limited to the following:
Names and addresses of any person with a financial interest in the retailer,
including but not limited to all principals, officers, or managers, lenders, investors,
and those with title to equipment or land.
Names and addresses of any person responsible for the retail activities, including
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employees, if any.
Authorization to conduct background checks on all individuals associated with
the application.
Description of the intended business plan, including intent to operate as non-
profit or for-profit business, and any plans for including cultivation on site.
If cultivation is included, details on chemical and water use.
Description of sustainability practices (e.g. water and energy use).
Description of any proposals that would benefit the community.
If a lease is already signed, the address, owner/owner represented of the
property.
List of addresses of the owners (or their representatives) for any properties
where bona fide leasing discussions have begun.
Detailed financial information, including information on existing and proposed
loans and lenders.
Names and addresses of current and proposed suppliers for cannabis products
proposed to be sold.
Names and addresses of current and proposed testing facilities to be used to
ensure quality and potency and a full description of the quality control/testing
protocols to be followed and labeling to be used. (note: this provision is
conditional on when the State begins issuing licenses for testing facilities and
standards for such testing and quality control)
Copies of articles of organization or incorporation.
Listing of all other cannabis related business locations owned and/or operated by
applicant, including any person with a financial interest in a cannabis operation,
along with copies of any operating permits for each of the locations, and
information concerning any enforcement actions taken by the relevant
jurisdiction.
Consistent with the requirements of MAUCRSA, applicants would likely be disqualified
due to any of the following:
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Any person associated with the application has made one or more false or
misleading statements, or material omissions on the application or during the
application process;
Fails to provide information requested or required by the City;
For any reason as established in Section 26057 of the California Business and
Professions Code, such as denial if any person associated with the application
“has been convicted of an offense that is substantially related to the
qualifications, function, or duties of the business or profession for which the
application is made.” Examples include conviction of a violent felony or serious
felony (e.g. fraud, deceit, embezzlement, or sale/offering for sale of any
controlled substance to a minor). For conviction of drug trafficking where the
convicted person was substantially involved in the planning, direction, execution,
or financing of the offence as outlined in Sections 11370.4 and 11379.8 of the
California Health and Safety Code.
If any person with a financial interest, principals, officers, managers, or any
person responsible for the retail activities has, within the previous three years,
operated a marijuana retailer, cooperative, or collective without a permit issued
or approved by the governing jurisdiction, and/or has had a license sanctioned,
suspended, or revoked by another jurisdiction.
The Police Department would review the results of the background checks and provide
the results to the Director of Planning and Community Development based on the
guidelines provided (see Attachment H).
The proposed ordinance would also require establishing an Evaluation Committee with
City staff and non-City staff to review applications based on the established criteria.
Committee members would be required to complete a conflicts of interest form and
applicants would be provided with the names of the committee members in advance
with a defined period to file a protest with the Director of Planning and Community
Development regarding the participation of a particular member based on a conflict.
The committee is envisioned to include representatives from the following:
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Finance Department
Code Enforcement Division
Economic Development Division
Public Works Department (Waste Water Management / Sustainability)
Neighborhood Association(s) Representative
Representative from a City with Existing or Recent Cannabis Retailer Selection
Process
The committee would be facilitated by the Planning Division; however, no members of
the City Planning Division would participate as an evaluator. Instead the City Planning
Division would serve as an independent facilitator of the proposed selection process.
The RFA evaluation process would rank the applicants. The Director of Planning and
Community Development, or designee, would review the committee evaluation and
background check results from the Police Department, and he/she would be authorized
to request additional information to ensure that the rankings are completed fairly. The
top two ranked applicants would be issued Preliminary Selection Letters. If there is a tie
between more than two applicants, the selection would be made by lottery. The final
ranking and issuance of Preliminary Selection Letters by the Director of Planning and
Community Development would be appealable to a City Hearing Officer. The final
ratings would expire after 12 months, however, the Director or designee could extend
the list based on the progress being made in the permitting process.
Medicinal Cannabis Retailer Permit
Following the issuance of the Preliminary Selection Letter the applicant would then be
required to apply for a CUP, Santa Monica Business License, and any necessary State
or County permits, as well as obtain any additional entitlements that may be required for
the location (e.g. ARB) following approval of a CUP. The State requires that an
applicant have a location identified and verification of right to use in order for the
application to be considered complete.
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The proposed Medicinal Cannabis Retailer permit would authorize the sale of medicinal
cannabis and consistent with the ZO, allow 15% of the total floor area on site for
cultivation.
A separate on-site cultivation permit would not be needed from the City. The proposed
Medicinal Cannabis Retailer permit fee would cover the costs of processing the permit
and related compliance inspections. Medicinal Cannabis Retailers would also need to
comply with all other zoning requirements such as Architectural Review Board, and
Building/Construction permitting requirements, including waste water, fire, electrical,
plumbing, etc. (this would include identifying a floor plan with the area that will be
designated for cultivation).
The proposed permit would also require that all employees of the retailer complete a
Livescan background check prior to hire. Prior to issuing the business license and
permit, Code Enforcement would verify that existing employees have completed their
background checks as part of the first compliance inspections and would be verified
during each additional compliance inspection. More information on compliance
inspections is discussed later in this report.
Medicinal Cannabis Retailer Local Permitting Fees and Taxes
The Medicinal Cannabis Retailer would be required to pay the City the following fees
and taxes (these do not include fees related to construction or tenant improvements).
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Permit/Tax Fee
Conditional Use Permit $17,204.55 (includes $1,899.19
in mailing and preliminary
review fees)
Annual Medicinal Cannabis Retailer Permit $1,822.102
Business License Tax (If operating as a for
profit business)
$75 on first $60,000, and $1.25
for each $1,000 or fraction
thereof of gross receipts in
excess of $60,000
State Mandated Fee CASp $1.003
Business License Planning Review Fee $398.57
Fingerprint/Live Scan Fee (per person) $107.13
Medicinal Cannabis retailers would not collect sales tax on behalf of the City as
medicinal cannabis sales are exempt.
Medicinal Cannabis Retailer State Permits and Taxes
The two successful Medicinal Cannabis Retailer applicants would need to apply for
State licenses and meet all State requirements. Applicants would likely need to obtain
two State permits, an M-Type 10 Retailer and M-Type 2 Cultivation indoor-small.
Medicinal Cannabis Retailers would also need to obtain a Seller’s Permit from the
California Board of Equalization. Retailers would be subject to State taxes on
cultivation. More information concerning coordination with the State to ensure
compliance with local law when issuing permits for cannabis commercial activities is
provided in the next section of this report.
Section 4 - Medicinal Cannabis Retailer Regulatory Compliance
MAUCRSA authorizes cities to establish more restrictive regulations than issued by the
2 The permit fee is a cost recovery fee that includes the cost of $99.58 for processing the permit, which is
consistent with other regulatory permit application fees, plus 4 two hour inspections at an hourly rate of $180.94
for a total of $361.88 for each inspection, and 15 minutes of City Attorney Time at an hourly rate of $275. The
hourly rates are based on the costs of a Lead Code Enforcement Officer and Deputy City Attorney III fully
encumbered. (($180.94* 2) * 4) + ($275 *.25) + $99.58 = $1,822.10. The proposed fee would be prorated based
on the month the application is submitted to account for the number of inspections required for the first fiscal
year in operation.
3 California CASP Fee: SB1186, effective 01/01/13, sunsets 12/31/2018, added a State Mandated Fee of $1.00 on
any applicant for a business license and renewal of business license. The fee is for the purpose of increasing
disability access and compliance with construction related accessibility requirements and developing educational
resources for businesses to facilitate compliance with federal and State disability laws.
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State, however, because of the extensive regulations governing cannabis, and the
complexity and considerable public input into the State regulations, the proposed
cannabis operating permit for Santa Monica would rely almost exclusively on State rules
and regulations such as labeling, cultivation, testing, record keeping, etc. Currently, the
ZO imposes some operational regulations which are more restrictive than those
provided under State law and the anticipated rules established by the responsible State
agencies. These more restrictive regulations include the following:
Maximum of 2 Medicinal Cannabis Retailers
Footprint may be no larger than 2,500 square feet.
May not be within 600 feet of a Child Care and Early Education or Family Day
Care Facility, park, school, library, Social Service Center, or other Cannabis
retailer. (Although the State also imposes a 600-foot distancing requirement, it
does not include as many sensitive uses. Also, the State does not use distance
from other cannabis businesses, instead a formula based on “concentration” is
used.)
May operate between the hours of 10:00 a.m. and 8:00 p.m. Monday through
Saturday and 12:00 p.m. to 7:00 p.m. on Sundays.
A maximum area of 15% of the total floor area may be used for on-site cultivation
of medicinal marijuana.
A centrally monitored alarm system shall be installed and maintained in good
working order.
An on-site supervisor must be present at all times that the retailer is in operation.
The retailer shall provide the Chief of Police and neighbors within 500 feet of the
retailer with the name, phone number, and facsimile number of an on-site
community relations staff person to whom one can provide notice if there are
operating problems associated with the retailer. The retailer is required to make a
good faith effort to encourage members of the public to call the community
relations contact person to try to solve operating problems, if any, before calls or
complaints are made to the City.
Employees of the establishment shall be at least 21 years of age and patients a
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minimum of 18 years of age; (MAUCRSA allows a Medicinal Licensee to
employee 18 year olds who possess medicinal referrals).
Outdoor trash receptacles shall be available near the entrances to and exits from
the establishment. The premises shall be continuously maintained in a safe,
clean, and orderly condition with twice daily litter pick-up within 500 feet of the
retailer.
Retailer staff shall notify patrons of the following verbally and through posting of a
sign in a conspicuous location readily visible to persons entering the premises:
Use of medicinal marijuana shall be limited to the patient identified on the
doctor’s recommendation. Secondary sale, barter, or distribution of medicinal
marijuana is a crime and can lead to arrest.
Patrons must immediately leave the site and not consume medicinal
marijuana until at home or in an equivalent private location. Retail staff shall
monitor the site and vicinity to ensure compliance.
Forgery of medicinal documents is a felony crime.
Entry into the premises by persons under the age of eighteen is prohibited
unless they are a qualified patient and accompanied by a parent or legal
guardian.
As discussed in Section 2 above, the proposed IZO removes two sub-sections listed
above that address Staffing and Security and Required Patron Notification. In addition
to the requirements outlined in the Zoning Ordinance, the proposed ordinance would
authorize the Director of Planning or designee to issue rules to assist with the
implementation of the Cannabis Ordinance.
Medicinal Cannabis Retailer Compliance Inspections
The proposed fee would fund four inspections that would be conducted by Code
Enforcement staff and include a Pre-Issuance inspection prior to the issuance of the
permit to verify the retailer has complied with all requirements prior to the release of the
operating permit and business license. Items that would be verified would include but
not be limited to verification that employees have passed a background check, security
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system is installed and operational, State permit(s) is/are issued, CUP requirements are
met, any other land use approvals needed have been obtained (e.g. Architectural
Review Board), and any building permit sign offs have been obtained.
Code Enforcement would also conduct additional unannounced compliance inspections
throughout the fiscal year to ensure continued compliance with local law, particularly as
it relates to employee background checks and security measures. Code Enforcement
staff may make referrals to the police department or State enforcement authorities as
warranted.
Staff will submit proposed budget requests for any potentially needed resources and
fines for violations of specific section of local law with the normal FY2018-19 exception
based budget cycle.
State Enforcement Related to Retail Operations
State law also provides for enforcement provisions that would be enforced by state and
local law enforcement, including but not limited to the following:
1. State agencies are required to address environmental impacts of cannabis
cultivation and are required to coordinate when appropriate with cities and
counties and their law enforcement agencies in enforcement efforts. This is
applicable to any cultivation that would be performed in a retail operation
2. A retailer is required to notify the State licensing agency and the local law
enforcement authorities within 24 hours after discovering any of the following:
Significant discrepancies identified during inventory.
Diversion, theft, loss, or any criminal activity pertaining to the operation of the
retailer.
Diversion, theft, loss, or any criminal activity by any agent or employee of the
retailer pertaining to the operation of the retailer.
The loss or unauthorized alteration of records related to cannabis or cannabis
products, registered qualifying patients, primary caregivers, or retailer
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employees or agents.
Any other breach of security.
3. All employees of a retailer, microbusiness, or nonprofit delivering cannabis or
cannabis products are required to carry a copy of the licensee’s current license
and a government-issued identification with a photo of the employee, such as a
driver’s license. The employee shall present that license and identification upon
request to state and local law enforcement.
4. During delivery, the law requires that a licensee maintain a physical copy of the
delivery request and make it available upon request by a law enforcement officer.
The delivery request documentation is subject to state and federal law regarding
the protection of confidential medical information.
5. A customer requesting delivery is required to maintain a physical or electronic
copy of the delivery request and shall make it available upon request by law
enforcement officers.
6. The California Department of Public Health is required to maintain a 24-hour, toll-
free telephone number that will enable state and local law enforcement officers to
have immediate access to information necessary to verify the validity of an
identification card issued by the Department, until a cost-effective Internet Web-
based system can be developed for this purpose.
State agencies are also authorized to take disciplinary action against a licensee when a
violation is committed by the licensee’s officers, director’s owners, agents, or employees
while acting on behalf of the licensee or engaged in commercial cannabis activity. A
State issued cannabis commercial license may be revoked for violations of cannabis
rules and regulations, including but not limited to failing to comply with the requirement
of a local law regulating commercial cannabis activity, intentionally and knowingly
selling medicinal cannabis or medicinal cannabis products to a person without a
physician’s recommendation. In addition to direct local enforcement, Santa Monica
Police and Code Enforcement staff could refer matters to a State agency for
investigation and disciplinary action.
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If a retailer’s license is suspended or revoked, the licensing agency is required to inform
the Bureau of Cannabis Control (“Bureau”). The Bureau is then required to inform all
other licensing agencies.
Section 5 - Medicinal Cannabis Light Manufacturing Permitting
The proposed Medicinal Cannabis Light Manufacturing permit would authorize
medicinal cannabis related “light industrial activities taking place primarily within
enclosed buildings and producing minimal impacts on nearby properties”. The type of
light manufacturing proposed would include commercial activities related to the
assembly of products for resale, with no extraction or concentration of cannabis taking
place on site.
The proposed Medicinal Cannabis Light Manufacturing permit fee would cover the costs
of processing the permit. Medicinal Cannabis Light Manufactures would also need to
comply with all other zoning requirements such as Architectural Review Board, and
Building/Construction permitting requirements, including waste water, fire, electrical,
plumbing, etc.
As noted in Section 1 of this report, MAUCRSA establishes extensive regulations and
State agencies are also establishing rules to govern the activities of cannabis
businesses. The proposed ordinance does not impose any additional regulations on
cannabis light manufacturing commercial activities, other than to require a background
check of the owners, disclosure of investors and lenders, and to allow for inspections by
City staff. Because light manufacturing would not be open to the public for sales and
would be regulated by both the State and potentially the County, neither a cap on the
number of light manufactures or a selection process are proposed. However, it should
be noted that the Industrial Conservation Zone is intended to preserve space for
existing industrial uses and affordable space for small-scale industrial and
manufacturing uses. It is also intended as a place for the adaptive reuse of industrial
buildings into affordable workspace for artists and the creative industry. The IZO
provides the opportunity for staff to monitor the effects of allowing cannabis-related light
24 of 28
manufacturing activities and propose adjustments as necessary to ensure that it does
not in inadvertently result in existing businesses being displaced and the loss of
affordable workspace.
Staff proposes relying heavily on State regulations, which the Police Department and
Code Enforcement would be authorized to enforce. The proposed regulatory permit
would be conditioned on complying with State regulations. The Police Department and
Code Enforcement would also be able to make referrals to the State enforcement
agencies for violations of relevant State regulations governing cannabis commercial
activities, such as regulations on packing, transporting, storing, destroying cannabis,
etc.
Medicinal Cannabis Light Manufacturing Local Permitting Fees and Taxes
The Medicinal Cannabis Light Manufacture would be required to pay the City the
following fees and taxes (these do not include fees related to construction or tenant
improvements).
Permit/Tax Fee
Conditional Use Permit (if applicable) $17,204.55 (includes mailing
and preliminary review fees)
Annual Medicinal Cannabis Light
Manufacturing Permit
$99.58
Business License Tax (If operating as a for
profit business)
$75 on first $60,000, and $1.25
for each $1,000 or fraction
thereof of gross receipts in
excess of $60,000
State Mandated Fee CASp $1.00
Business License Planning Review Fee $398.57
Fingerprint/Live Scan Fee (per person) $107.13
A Medicinal Cannabis Light Manufacturer may also be required to obtain a County
Health permit depending on the products being produced and sold.
Medicinal Cannabis Light Manufacturing State Permits and Taxes
MAUCRSA provides for two types of manufacturing permits, which includes the
25 of 28
concentration and extraction process. A Type 6 manufacturing license is for operators
who manufacture products using non-volatile or no solvents. A Type 7 is for operators
who use volatile solvents, such as butane, hexane, or ethanol.
Any Medicinal Cannabis Light Manufactures would also need to obtain a State license
and meet all State requirements prior to being issued a local permit. Under current law,
applicants would need to obtain an M-Type 6 manufacturing permit.
State law also makes explicit that an M-Type 6 licensee, which is for medicinal cannabis
product manufacturing, is only allowed to manufacture cannabis products for sale by a
medicinal cannabis retailer. Medicinal Cannabis Manufacturers would also likely need
to obtain a Seller’s Permit from the California Board of Equalization as a wholesaler.
Section 6 - Postponement of Commercial Non-medicinal Business Activity Licensing
MAUCRSA allows for strong local controls for any type of medicinal or non-medicinal
cannabis business authorized by State law. This includes prohibiting all cannabis sales
or banning just non-medicinal cannabis businesses but allowing medicinal cannabis.
Due to the difficulty in expressly prohibiting or permitting every possible unlawful or
lawful use, the Santa Monica ZO is established under the principles of permissive
zoning, meaning that the ZO expressly lists permitted uses. Any uses not listed are
presumed to be prohibited. The MAUCRSA, does not contain any language respecting
or disapproving permissive zoning. While it is very likely that, consistent with precedent,
courts would uphold the City’s permissive zoning scheme’s prohibition against
commercial adult cannabis non-medicinal uses, in an excess of caution and for the sake
of clarity, staff recommends adopting a clear and explicit prohibition. Accordingly, the
proposed ordinance explicitly prohibits all commercial adult cannabis non-medicinal use
activities. However, this prohibition is envisioned to be temporary for the reasons noted
above.
General Law Enforcement Needs
Although staff is recommending a delay in allowing adult non-medicinal use commercial
26 of 28
activities, as noted during the study session with Council, with the legalization of adult
use cannabis, law enforcement staff will need to be prepared for the impacts of the
legalization of adult use cannabis statewide. This is particularly true since Los Angeles
shares multiple borders with Santa Monica and cannabis-related tourism in the region
will likely grow. The legalization of cannabis will bring increased challenges and costs
for law enforcement, as seen in Colorado and Washington where legalization is already
in place. Police and Code Enforcement will require adequate and appropriate staffing
for enforcement activities and training since local enforcement agencies will enforce
many aspects of MAUCRSA, particularly as it relates to diversion, “open containers”,
driving while under the influence (THC or THC-Combination w/Alcohol) and integration
of the new State mandated track and trace systems.
Section 7 - Council Direction on Taxes
Staff recommends that Council provide direction to staff to examine options for a tax
ballot measure to create new business license tax classifications and rates for cannabis
related businesses to coincide with the review to be conducted by the Planning Division
to update the Zoning Ordinance to consider commercial adult cannabis non-medicinal
use activities and their potential impacts.
Other local jurisdictions have adopted special taxes for cannabis related businesses.
For example, in 2016, the voters of Los Angeles approved a $50 per $1000 of gross
receipts tax on the sales of cannabis by medicinal cannabis businesses, and a $100 per
$1000 of gross receipts tax on the sales of cannabis on non-medicinal cannabis
businesses; and a $10 per $1000 of gross receipts on cannabis commercial
transportation and testing or research business activities, and $20 per $1000 of gross
receipts on cannabis commercial manufacturing, cultivation or other commercialization
of cannabis. In 2016, Monterey County voters approved a $25 per square foot tax on
cultivation with an annual adjustment by Consumer Price Index (CPI) thereafter; $5 per
square foot on nurseries with annual CPI adjustment thereafter; and 10% of gross
receipts on other marijuana business activities with no CPI.
The earliest opportunity to submit a proposed tax ballot measure to the voters of Santa
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Monica would be November 2018.
Next Steps
Initiate the request for application and selection process.
Establish a review committee.
Provide the State with a copy of the City’s relevant cannabis laws and
regulations.
Provide the State with the name of the City’s contact person.
Train relevant staff on the new regulations.
Initiate the Planning Commission process to update the Zoning Ordinance and
other planning documents, as necessary, to conform local law with State law,
and to consider commercial adult cannabis non-medicinal use activities.
Evaluate necessity for additional fees or taxes to fund enforcement, compliance,
and education programs related to adult use legalization (e.g. tourist and youth
education programs).
Financial Impacts and Budget Actions
For FY2017-18, staff anticipates tax and fee revenues related to the permitting and
licensing of two Retailers and one Light Manufacturer to be approximately $34,053.
This does not include any fees related to construction permitting, which are dependent
on the scope of work for any tenant improvements. An additional Conditional Use
Permit fee of $17,204.55 would be collected if the one Light Manufacturing business
that is assumed in these calculations selects a location in the Office Campus zoning
district. Revenue impacts will be evaluated during the FY 2017-18 mid-year budget.
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Two Medicinal Cannabis Retailer Permits $1,922
One Medicinal Cannabis Light Manufacting Permit $100
Two Conditional Use Permits $34,409
Three Business Licenses Minimum Tax $225*
Three Business License Planning Review Fees $1,196
Total Revenue $37,852
* Any additional taxes for FY2017-18 would be calculated and paid when
the Business License is renewed for FY2018-19 and recorded as FY2018-
19 revenue.
Prepared By: Salvador Valles, Assistant Director of PCD
Approved
Forwarded to Council
Attachments:
A. Ordinance - Regulations
B. Ordinance - Zoning
C. Resolution
D. Council March 7, 2017 Study Session Staff Report
E. License Types
F. Senate Floor Analyses
G. MCRSA Proposed Rules (withdrawn)
H. Background Check Standards
I. Written Comments
J. Powerpoint Presentation
Cannabis License Types
Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA)
License Types
Activity
AUMA
Cultivation
Type 1 = Cultivation; Specialty outdoor; Small
Type 1A = Cultivation; Specialty indoor; Small
Type 1B = Cultivation; Specialty mixed‐light; Small
Type 1C = Specialty Cottage; Small
Type 2 = Cultivation; Outdoor; Small
Type 2A = Cultivation; Indoor; Small
Type 2B = Cultivation; Mixed‐light; Small
Type 3 = Cultivation; Outdoor; Medium
Type 3A = Cultivation; Indoor; Medium
Type 3B = Cultivation; Mixed‐light; Medium
Type 4 = Cultivation; Nursery
Type 5 = Cultivation Outdoor; Large
Type 5A =Cultivation Indoor; Large
Type 5B = Cultivation; Mixed‐light; Large
Manufacturing Type 6 = Manufacturer 1
Type 7 = Manufacturer 2
Testing Type 8 = Testing laboratory
Retail Sales Type 10 = Retailer
Distribution Type 11 = Distributor (includes transporting)
Microbusiness
Type 12 =Microbusiness ‐ small retailers with farms not
exceeding 10,000 sq. ft. Permit holders to cultivate
cannabis, and act as a licensed distributor, manufacturer
(using either nonvolatile solvents or no solvents), and
retailer.
Note: Type 5 licenses, will not be issued until January 1, 2023. The same license types are used for
both medicinal and adult use licenses; to distinguish the type approved, the license will be noted with
either an “M” or “A” to denote Medicinal or Adult Use (e.g. M‐Type 10 or A‐Type 10).
Attachment E
SENATE RULES COMMITTEE
Office of Senate Floor Analyses
(916) 651-1520 Fax: (916) 327-4478
SB 94
UNFINISHED BUSINESS
Bill No: SB 94
Author: Committee on Budget and Fiscal Review
Amended: 6/9/17
Vote: 27
SENATE FLOOR: Not relevant
ASSEMBLY FLOOR: 66-3, 6/15/17
(ROLL CALL NOT AVAILABLE)
SUBJECT: Cannabis: medicinal and adult use
SOURCE: Author
DIGEST: This bill is the cannabis trailer bill for the Budget Act of 2017. This bill
establishes a single system of administration for cannabis laws in California. It
contains changes related to the Budget Act of 2017 that are necessary for state
licensing entities to implement a regulatory framework pursuant to the Medical
Cannabis Regulation and Safety Act (MCRSA), established by AB 266 (Bonta,
Chapter 689, Statutes of 2015), AB 243 (Wood, Chapter 688, Statutes of 2015), SB
643 (McGuire, Chapter 719, Statutes of 2015), and SB 837 (Committee on Budget
and Fiscal Review, Chapter 32, Statutes of 2016), and the Adult Use of Marijuana
Act (AUMA) of 2016 (Proposition 64). This bill conforms MCRSA and AUMA
into a single system that prioritizing consumer safety, public safety and tax
compliance. Among other things, the bill creates agricultural cooperatives, a
method for collecting and remitting taxes, a process for testing and packaging, and
a process for collecting data related to driving under the influence.
Assembly Amendments delete the Senate version of the bill and insert the current
language.
ANALYSIS: Specifically, this bill creates one regulatory system for commercial
cannabis activity - the "Medicinal and Adult-Use Cannabis Regulation and Safety
Act" – by doing the following:
Attachment F
SB 94
Page 2
1) General provisions:
a) Technical Changes – Makes various changes throughout multiple code
sections to replace references to “marijuana” with “cannabis” and delete
code sections that are no longer required due to the integration of the
medicinal and adult use systems.
b) Definitions - Adds, amends, or deletes multiple definitions.
c) Bureau of Cannabis Control – Recasts the section creating the Bureau of
Cannabis Control (bureau) within the Department of Consumer Affairs.
d) Emergency Regulation Authority - Deletes existing provision granting
emergency regulation authority and adds a new one that also provides
authority to re-adopt emergency regulations (one time), specifies that
adopted or re-adopted emergency regulations remain in effect for no more
than 180 days.
2) Incorporates various components of MCRSA, including:
a) Public Protection - Specifies that protection of the public shall be the
highest priority for all licensing authorities.
b) Property Owner Protection - Provides protection for property owners who
lease or rent a property to a licensee from asset forfeiture.
c) Patient Exemption - Specifies that a qualified patient that is not engaged in
commercial activity is exempt from the licensure requirements of MCRSA.
Applies the same standards to a primary caregiver.
d) Licensing - Clarifies that all commercial cannabis activity can only be
conducted between licensees.
e) Distribution License Transportation Requirements – Requires that
distribution drivers be directly employed by the licensee. Clarifies that all
state laws and regulations governing commercial transport apply to those
transporting cannabis or cannabis products.
f) Retail Security Measures - Outlines security measures for retailers and
requires notification to licensing authorities and local law enforcement when
inventory discrepancies or criminal activities are found.
g) Testing Laboratories – Includes requirements for laboratories that were in
MCRSA and are not in conflict with AUMA. These include: 1) use of a
standard operating procedure to confirm or refute bad results, 2) requiring
the destruction of the remains of samples, 3) notification to the bureau
within one day of any change in accreditation, and 4) establishing a standard
operating procedure for chain of custody controls for samples.
SB 94
Page 3
h) Cannabis Study on Motor Skills - Requires the bureau to contract with the
California Marijuana Research Program, known as the Center for Medicinal
Cannabis Research, to develop a study that identifies the impact of cannabis
on motor skills.
i) Local Control - Clarifies that this division does not limit the authority or
remedies of a city, county, or city and county under any provision of law,
including, Section 7 of Article XI of the California Constitution.
j) Pesticide Intent Language – Adds the following intent language: The use of
pesticides is not adequately regulated due to the omissions in federal law,
and cannabis cultivated in California for California patients can and often
does contain pesticide residues. Lawful California medical cannabis growers
and caregivers urge the Department of Pesticide Regulation to provide
guidance, in absence of federal guidance, on whether the pesticides currently
used at most cannabis cultivation sites are safe for use on cannabis intended
for human consumption.
3) Contains additional public and consumer protection provisions, including:
a) Exit Packaging – Requires that all cannabis and cannabis products
purchased by a consumer cannot leave a retail premises unless they are
placed in an opaque packaging.
b) Advertisement - Requires that a technology platform and outdoor advertising
company ensure that a licensee include their license number on any
advertisements.
c) Driving Under the Influence of Drugs (DUID) Task Force - Creates a DUID
Task Force with a balanced membership to make recommendations
regarding prevention of impaired driving, means of identifying impaired
driving, and responses to impaired driving that reduce reoccurrence.
d) Open Container Standard - Creates a new infraction if a person has opened
cannabis or cannabis products in the car. Creates an exemption for a
qualified patient who is carrying either a state medical identification (ID)
card or a physician’s recommendation.
e) California Highway Patrol Funding - Appropriates $3 million to the
California Highway Patrol (CHP) to be used to for training drug recognition
experts. Program costs may include training, overtime, and backfill of state
and local law enforcement officers to attend training.
f) Monopoly, Excessive Concentration – Maintains excessive concentration
provisions of AUMA, applies the Cartwright Act, the Unfair Practices Act,
and the Unfair Competition Law to all licensees. In addition, makes it
unlawful for any person to monopolize, or attempt to monopolize, or to
SB 94
Page 4
combine or conspire with any person or persons, to monopolize any part of
the trade or commerce related to cannabis. Gives the Attorney General the
authority to enforce these provisions.
g) Fire and Life Safety Standards – Adds a clarification that local fire officials
retain the authority to carry out fire and life safety requirements.
h) Quality Assurance and Compliance Monitoring - Creates a quality assurance
compliance monitor, employed by the bureau to conduct random quality
control inspections and verify compliance with the packaging and labeling
standards. The compliance monitor will also be responsible for independent
tax verification.
i) Cannabis Destruction - Clarifies that only a peace officer can seizes and
destroys cannabis.
j) Volatile Substance Definition - Codifies the definition of volatile substance
included in recently released draft regulations.
k) Local Verification Process - Require local jurisdictions to provide the
bureau a copy of any ordinance or regulation related to commercial cannabis
activity and a contact to serve as a liaison between the state licensing entities
and the local jurisdiction. Outlines a process by which locals and the state
licensing authorities will communicate regarding an applicant for licensure.
4) Enhances Tax and Cash Payment Provisions, including:
a) Cultivation and Excise Taxes:
i) Creates a methodology to implement the two taxes imposed by
Proposition 64, the cultivation tax (9.35 per dry weight ounce for flowers
and $2.75 for leaves) and excise tax (15 percent of the sales price).
ii) Clarifies that the cultivation tax shall be imposed when the cannabis or
cannabis products enter the commercial marketplace.
iii) Requires the distributor to collect and remit the cultivation tax at the time
of distribution and create a tax liability for the excise tax at the same
time. The excise tax is due and payable 90-days after the transfer of the
products.
iv) Allows the Board of Equalization (BOE) or its successor agency to
determine refund policies to ensure that there is no overpayment of tax.
v) The bill does not change the incidence of tax and requires that BOE or its
successor agency determine the actual tax.
b) Cash Collection – Establishes that by January 1, 2018, the Secretary of
Business, Consumer Services, and Housing or his or her designee work with
SB 94
Page 5
the Legislature, the Department of Consumer Affairs, the Department of
Food and Agriculture (CDFA), the State Department of Public Health, and
any other related departments to ensure that there is a safe and viable way to
collect cash payments for taxes and fees related to the regulation of cannabis
activity throughout the state.
c) North Coast Office - Requires that by July 1, 2018, the bureau, in
coordination with the Department of General Services, shall establish an
office to collect fees and taxes in the County of Humboldt, County of
Trinity, or County of Mendocino in order to ensure the safe payment and
collection of cash for licenses and taxes in those counties.
5) Environmental clarifications include:
a) License Conditions - Clarifies that cultivation licenses issued by CDFA shall
include conditions requested by the Department of Fish and Wildlife (DFW)
and the State Water Resources Control Board (SWRCB).
b) Adverse Impacts - Specifies that if DFW or the SWRCB finds that
cultivation is causing significant adverse impacts in a watershed, CDFA
shall not issue new cultivation licenses or increase the total number of plant
identifiers in that watershed.
c) Denial of License – Specifies that licensing entities can deny an application
for a licensure or renewal for failure or inability to meet environmental
requirements.
6) Makes various other changes, including:
a) Advisory Committee - Specifies that the advisory committee members must
include persons who work directly with racially, ethnically, and
economically diverse populations.
b) Appeals Panel Membership - Adds two members to the Cannabis Control
Appeals Panel; one appointee each from the Senate Committee on Rules and
the Speaker of the Assembly. They are in addition to three Governor’s
appointees that are subject to Senate confirmation.
c) Cannabis Cooperatives – Specifies that certain license types may pool their
resources for cannabis farming of no more than four acres total and all
members of the association must be disclosed to the licensing agencies.
Specifically, the cooperatives must include three or more members (that
have not been licensed to operate a cannabis business in another state or
country) and form an association for the purpose of:
SB 94
Page 6
i) The cultivation, marketing, or selling of the cannabis products of its
members.
ii) The growing, harvesting, curing, drying, trimming, packing, grading,
storing, or handling of any product of its members.
iii) The manufacturing, selling, or supplying to its members of machinery,
equipment, or supplies.
d) Organics and Appellations Standards – Requires by 2021, CDFA to develop
a California organic designation for cannabis and include standards,
practices and varietals as part of their appellations program.
e) Non-Storefront Delivery - Specifies that a retailer shall have a licensed
premises which is a physical location, but, that it may be closed to the public
and that they can conduct sales exclusively by delivery.
f) Diversifies Mutual Fund and Blind Trust - Allows “blind” investors to have
financial interest without requiring background checks.
g) Co-Location and the Definition of Premises - Allows for the co-location of
medicinal and adult use cannabis businesses, although, requires that a
licensee obtain separate licenses for each type of business. Codifies the
definition of premises used in recently released draft medicinal cannabis
regulations.
h) Product Testing - Authorizes a licensed cannabis operator with an in-house
(non-licensed) testing laboratory to provide testing of cannabis and cannabis
products obtained from third party cannabis cultivators and manufacturers
prior to those products being sent to a licensed testing laboratory pursuant to
this division for final, presale quality assurance. Requires testing to of
samples to be performed on the final form in which cannabis or cannabis
product will be consumed or used.
i) Temporary Event License - Authorizes the bureau to issue a state temporary
event license at a county fair or district agricultural association, where
people 21 years of age or older could sample cannabis and cannabis
products. Temporary event licenses shall only be issued in local jurisdictions
that authorize such events.
j) State Medical ID Card - Preserves the State Medical Cannabis ID card.
k) Destruction of Product - Specifies individuals engaging in activity without a
license are responsible for the cost of destroying product.
l) Temporary Licenses - Adds section allowing licensing entities to issue
temporary licenses if specific requirements are met (including local
approval, fee), valid for 120 days with a possible 90 extension.
SB 94
Page 7
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: Yes
According to the Senate Budget and Fiscal Review Committee, this bill
appropriates $3 million to the CHP. In addition there are likely additional
regulatory costs to implement various provisions of this bill and offsetting savings
from not having to implement two separate regulatory systems. The net impact of
additional regulatory costs versus savings is unknown.
SUPPORT: (Verified 6/14/17)
None received
OPPOSITION: (Verified 6/14/17)
None received
Prepared by: Joe Stephenshaw / B. & F.R. /
6/15/17 15:35:44
**** END ****
BUREAU OF MARIJUANA CONTROL
PROPOSED TEXT OF REGULATIONS
CALIFORNIA CODE OF REGULATIONS
TITLE 16
DIVISION 42. BUREAU OF MARIJUANA CONTROL
CHAPTER 1. GENERAL PROVISIONS APPLICABLE TO
ALL BUREAU OF MARIJUANA CONTROL
APPLICANTS AND LICENSEES
Article 1. General Provisions
§ 5000. Definitions
For the purposes of this division, the definitions in this section shall govern the construction of
this division unless otherwise indicated.
(a)“Act” means the Medical Cannabis Regulation and Safety Act.
(b)“Address of record” means the permanent address of an individual or organization.
(c)“Bureau” means the Bureau of Marijuana Control, previously named Bureau of Medical
Cannabis Regulation and Bureau of Medical Marijuana Regulation.
(d)“Cannabis waste” means waste that is not hazardous waste, as defined in Public Resources
Code section 40191, that contains cannabis and that has been made unusable and unrecognizable
in the manner prescribed in section 5080 of this division.
(e)“Commercial vehicle” means a vehicle as defined in Vehicle Code section 260.
(f)“Delivery employee” means an individual employed by a licensed dispensary who delivers
medical cannabis goods from the licensed dispensary premises to a medical cannabis patient or
primary caregiver at a physical address.
(g)“Display” means medical cannabis goods that are stored in the licensed dispensary’s retailarea during the hours of operation.
(h)“Display case” means container in the licensed dispensary retail area where medical cannabis
goods are stored and visible to customers.
(i)“Free sample” means any amount of medical cannabis goods provided to a medical cannabis
patient or primary caregiver without cost or payment or exchange of any other thing of value.
(j)“Limited-access area” means an area in which medical cannabis goods are stored or held and
is only accessible to a licensee and his or her employees and contractors.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 1 of 58
Attachment G
(k)“Lot number” or “batch number” means a distinctive group of numbers, letters, or symbols or
any combination of these that is unique to the lot of medical cannabis goods.
(l)“Medical cannabis goods” means medical cannabis, including dried flower, and manufactured
medical cannabis products.
(m)“Medical cannabis patient” is a person whose physician has recommended the use of cannabis to treat a serious illness, including cancer, anorexia, AIDS, chronic pain, spasticity,
glaucoma, arthritis, migraine, or any other illness for which cannabis provides relief.
(n)“Nonvolatile solvent” means any solvent used in the extraction process that is not a volatile
solvent. For purposes of this division, a nonvolatile solvent includes carbon dioxide used for
extraction.
(o)“Operating hours” means the hours within a day during which a licensed dispensary may
allow medical cannabis patients and primary caregivers to enter the dispensary premises and
purchase medical cannabis goods.
(p)“Ownership interest” means an interest held by a person who is an owner as defined in
section 5004 of this division.
(q)“Package” and “Packaging” means any container or wrapper that may be used for enclosing
or containing any medical cannabis goods for final retail sale. “Package” and “packaging” does
not include a shipping container or outer wrapping used solely for the transport of medical
cannabis goods in bulk quantity to a licensee.
(r)“Pest” means undesired insect, rodent, nematode, fungus, bird, vertebrate, invertebrate, weed,
virus, bacteria, or other microorganism that is injurious to human health.
(s) “Pre-roll” means dried cannabis flower rolled in paper prior to retail sale.
(t)“Proprietary private security officer” has the same meaning as that term as defined in
Business and Professions Code section 7574.01.
(u)“Publicly owned land” means any building or real property that is owned by a city, county,
state, federal, or other government entity.
(v)“Purchase” means obtaining medical cannabis goods in exchange for consideration.
(w)“Purchaser” means a person who is engaged in a transaction with a licensee for purposes of
obtaining medical cannabis goods.
(x)“Quarantine” means the storage or identification of medical cannabis goods, to prevent
distribution or transfer of the medical cannabis goods, in a physically separate area clearly
identified for such use.
(y)“Residential area” is an area that is within 600 feet of any single-family or multifamily
residence, other than commercial hotels, motels, and similar establishments for temporary lodging.
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(z)“Retail area” means a building, room, or other area upon the licensed dispensary premises in
which medical cannabis goods are sold or displayed.
(aa) “Security monitoring” means the continuous and uninterrupted attention to potential alarm
signals that can be transmitted from a security alarm system for the purpose of summoning law enforcement.
(bb) “Sell,” “sale,” and “to sell” include any transaction whereby, for any consideration, title to
medical cannabis is transferred from one person to another, and includes the delivery of medical
cannabis goods pursuant to an order placed for the purchase of the same and soliciting or
receiving an order for the same, but does not include the return of medical cannabis goods by a
licensee to the licensee from whom such medical cannabis goods were purchased.
(cc) “Sublet” means to lease or rent all or part of a leased or rented property.
(dd) “Vehicle alarm system” is a device or series of devices installed to discourage theft of the
commercial vehicle or its contents and is intended to summon general attention or to summon
law enforcement as a result of an indication of an attempted breach of the commercial vehicle.
(ee) “Wholesale” means the sale of medical cannabis goods to a distributor for resale to one or more dispensaries.
Authority: Section 19302, 19302.1, 19304, and 19300.5(b), Business and Professions Code.
Reference: Section 19300.5(b), 19302, and 19304, Business and Professions Code.
§ 5001. [RESERVED]
§ 5002. [RESERVED]
Article 2. Applications
§ 5003. [RESERVED]
§ 5004. Owner
(a) For publicly traded companies, “owner” means the chief executive officer or any person or
entity with an aggregate ownership interest of 5 percent or more.
(b) For all businesses other than publicly traded companies, an owner is:
(1) An individual that has an aggregate ownership interest, other than a security interest, lien, or
encumbrance, of 20 percent or more in the commercial cannabis business;
(2) The chief executive officer and all members of the board of directors of an entity when that
entity has an aggregate ownership interest, other than a security interest, lien, or encumbrance, of
20 percent or more in the commercial cannabis business; or
(3) An individual that will be participating in the direction, control, or management of the
licensed commercial cannabis business. For purposes of this section, participating in the
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direction, control, or management of the licensed commercial cannabis business means that the
individual has been delegated discretionary powers to organize, direct, carry on or control the
operations of the licensed commercial cannabis business. Authority to control one or more of the
following functions may be considered evidence that such an individual is participating in the
direction, control, or management of the licensed commercial cannabis business:
(A)To hire or separate employees.
(B) To contract for the purchase or sale of medical cannabis goods.
(C)To make or participate in making policy decisions relative to operations of the licensed
commercial cannabis business.
(c) Individuals that have a community property interest under Family Code section 760 in the
commercial cannabis business but who will not be participating in the direction, control, or
management of the commercial cannabis business as defined under subsection (b)(3) of this
section are not required to submit the information required of owners in the application for
licensure under section 5006, subsection (b)(22) of this division. However, information regarding an individual with a community property interest shall be disclosed by the owner in the
application for licensure pursuant to 5006, subsection (b)(22)(P). If a license in which an
individual has a community property interest is revoked, the individual shall be barred from
holding an interest in the same license type as the license that was revoked for the same period of
time as the owner is barred from obtaining a new license. If a license in which an individual has a community property interest in is denied, the individual shall be barred from holding an interest
in the same license type as the license that was denied for the same period of time as an owner is
barred from obtaining a new license under Business and Professions Code section 486.
(d) A bank or financial institution whose interest constitutes only a loan is not considered to be
an owner.
(e) The following individuals are considered to have a noncontrolling interest in the commercial
cannabis business and are not required to submit the information required of owners in the
application for licensure under section 5006, subsection (b)(22) of this division:
(1) Individuals that own an interest in a commercial cannabis business that is less than 5 percent
for publicly traded companies or less than 20 percent for all other businesses;
(2) Individuals that own an interest of an entity owner under subsection (b)(2) that are not the
chief executive officer nor a member of the board of directors; and
(3) Individuals that own an interest in an entity that owns an interest in a commercial cannabis
business that is less than 20 percent.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference: Section 19300.5(b), Business and Professions Code.
§ 5005. [RESERVED]
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§ 5006. Application Requirements
(a) Applications may be completed online at www.bmcr.ca.gov or by delivering a printed copy
to the bureau.
(b) An application for medical cannabis licensure includes the following:
(1)The name of the applicant. For applicants who are individuals, the applicant shall provide
both the first and last name of the individual. For applicants who are business entities, the
applicant shall provide the legal business name of the applicant.
(2) If applicable, the business trade name (“DBA”) of the applicant.
(3)The license type the applicant is applying for.
(4)For applicants who are individuals, whether the owner is serving or has previously served in
the military. Disclosure of military service is voluntary. An applicant that has served as an active
duty member of the Armed Forces of the United States and was honorably discharged and who
can provide evidence of such honorable discharge shall have his or her application expedited
pursuant to Business and Professions Code section 115.4.
(5)A list of the license types and the license numbers issued from the bureau and all other
medical cannabis licensing authorities that the applicant holds, including the date the license was
issued and the licensing authority that issued the license.
(6)Whether the applicant has been denied a license by the bureau or any other medical cannabis
licensing authority. The applicant shall provide the type of license applied for, the name of the licensing authority that denied the application, and the date of denial.
(7)The physical address of the premises.
(8)The address of record for the applicant.
(9)The telephone number for the premises.
(10)The website address of the applicant’s business if applicable.
(11)The email address for the applicant’s business if applicable.
(12)Contact information for the applicant’s designated primary contact person including the
name, title, address, phone number, and email address of the individual.
(13)Contact information for the designated agent for service of process including the name, title,
address, phone number, and email address of this individual.
(14)The business organizational structure of the applicant, for example partnership or
corporation.
(15)The business-formation documents, which may include but are not limited to articles of
incorporation, operating agreements, partnership agreements, and fictitious business name
statements. The applicant shall also provide all documents filed with the California Secretary of
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State, which may include but are not limited to articles of incorporation, certificates of stock,
articles of organization, certificates of limited partnership, and statements of partnership
authority.
(16)A list of every fictitious business name the applicant is operating under including the address where the business is located.
(17)An applicant that is a foreign corporation shall include in its application the certificate of
qualification issued by the California Secretary of State under Corporations Code section 2105.
(18)The applicant shall supply the following financial information:
(A)A list of funds belonging to the commercial cannabis business held in savings, checking, or other accounts maintained by a financial institution. The applicant shall provide for each
account, the financial institution’s name, the financial institution’s address, account type, account
number, and the amount of money in the account.
(B) A list of loans made to the commercial cannabis business. For each loan, the applicant shall
provide the amount of the loan, the date of the loan, term(s) of the loan, security provided for the
loan, and the name, address, and phone number of the lender.
(C)A list of investments made into the commercial cannabis business. For each investment, the
applicant shall provide the amount of the investment, the date of the investment, term(s) of the
investment, and the name, address, and phone number of the investor.
(D)A list of all gifts of any kind given to the applicant for its use in conducting commercial cannabis activity. For each gift the applicant shall provide the value of the gift or description of
the gift, and the name, address, and phone number of the provider of the gift.
(19)The date the applicant began operations pursuant to section 5022 of this division.
(20)The contact information for the local jurisdiction in which the applicant proposes to operate,
including the name of the local licensing authority, the address, and phone number.
(21) A complete list of every individual that has a noncontrolling interest in the commercial
cannabis business as defined in section 5004, subsection (e) of this division.
(22)A complete list of every owner of the applicant as defined in section 5004 of this division.
Each individual named on this list shall submit the following information:
(A)The full name of the owner.
(B)The owner’s title within the applicant entity.
(C) The owner’s date of birth and place of birth.
(D)The owner’s social security number or individual taxpayer identification number.
(E)The owner’s home address.
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(F)The owner’s telephone number. This may include a number for the owner’s home, business,
or mobile telephone.
(G)The owner’s email address.
(H)The date the owner acquired an ownership interest in the applicant entity.
(I)The percentage of the ownership interest held in the applicant entity by the owner.
(J) If applicable, the number of shares in the applicant entity that the owner holds.
(K)Whether the owner has a financial interest in any other licensee under the Act. For purposes
of this section “financial interest” means an investment into a commercial cannabis business, a
loan provided to a commercial cannabis business, or any other equity interest in a commercial
cannabis business.
(L)A copy of the owner’s government-issued identification. Acceptable forms of identification
are a document issued by a federal, state, county, or municipal government that includes the
name, date of birth, physical description, and picture of the person, such as a driver license.
(M)A detailed description of the owner’s convictions. A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere.
Convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must
be disclosed. Juvenile adjudications and traffic infractions under $300 that did not involve
alcohol, dangerous drugs, or controlled substances do not need to be included. For each
conviction, the owner shall provide the following:
(i)The date of conviction.
(ii)Dates of incarceration if applicable.
(iii)Dates of probation if applicable.
(iv)Dates of parole if applicable.
(v)A detailed description of the offense for which the owner was convicted.
(vi)A statement of rehabilitation for each conviction. The statement of rehabilitation is to be
written by the owner and shall contain all evidence that the owner would like the bureau to
consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be
attached to the statement of rehabilitation and may include, but is not limited to, a certificate of
rehabilitation under Penal Code section 4852.01, and dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual
providing the reference.
(N)A copy of the owner’s completed application for electronic fingerprint images submitted to
the Department of Justice.
(O)Attestation to the following statement: Under penalty of perjury, I hereby declare that the information contained within and submitted with the application is complete, true, and accurate. I
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understand that a misrepresentation of fact is cause for rejection of this application, denial of the
license, or revocation of a license issued.
(P)The following information regarding an individual with a community property interest in the
commercial cannabis business under Family Code section 760 shall be provided by the owner:
(i)The full name of the individual.
(ii)The individual’s date of birth and place of birth.
(iii)The individual’s social security number or individual taxpayer identification number.
(iv)The individual’s mailing address.
(v)The individual’s telephone number. This may include a number for the owner’s home,
business, or mobile telephone.
(vi)Whether the individual has a financial interest in any other licensee under the Act. For
purposes of this section “financial interest” means an investment into a commercial cannabis
business, a loan provided to a commercial cannabis business, or any other equity interest in a
commercial cannabis business.
(23)Documentation issued by the local jurisdiction in which the applicant proposes to operate
certifying that the applicant is in compliance with all local ordinances and regulations, or will be
in compliance with all local ordinances and regulations by the time the bureau issues a license.
(24)Evidence that the applicant has the legal right to occupy and use the proposed location that
complies with section 5014 of this division.
(25)For an applicant applying for a dispensary license, the applicant shall provide evidence that
the proposed location is at least a 600-foot radius from a school, as required by section
11362.768 of the Health and Safety Code.
(26)For an applicant with 20 or more employees, the applicant shall attest that the applicant has entered into a labor peace agreement and provide a copy of the agreement.
(27)The applicant shall provide a valid seller’s permit number issued by the California State
Board of Equalization. If the applicant has not yet received a seller’s permit, the applicant shall
attest that the applicant is currently applying for a seller’s permit.
(28)A diagram of the premises as required by section 5012 of this division.
(29)Proof of a bond as required by section 5016 of this division.
(30)For applicants applying for a license to distribute medical cannabis goods, the application
shall include a detailed description of the applicant’s operating procedures including the
following:
(A) Inventory Practices
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(i)A description of the applicant’s practice for receiving shipments of inventory.
(ii)Where the applicant’s inventory will be kept and how records of the inventory will be
maintained.
(iii)The applicant’s practice for performing inventory reconciliation and for ensuring that
inventory records are accurate.
(B) Quality-Assurance Practices
(i)The applicant’s practices for preventing the deterioration of any medical cannabis goods held
by the applicant.
(ii)The applicant’s practices for ensuring that all medical cannabis goods are properly packaged
and labeled prior to retail sale.
(iii)The applicant’s practices for ensuring a licensed testing laboratory samples and analyzes
medical cannabis goods held by the applicant.
(C)Security Practices
(i)The applicant’s practices for allowing individuals access to the premises.
(ii)A description of the applicant’s video surveillance system including camera placement and
practices for the maintenance of video surveillance equipment.
(iii)How the applicant will ensure that all access points to the premises will be secured,
including the use of security personnel.
(iv)A description of the applicant’s security alarm system.
(31)For applicants applying for a license to transport medical cannabis goods, the application
shall include a detailed description of the applicant’s operating procedures including the
following:
(A)The applicant’s practices for taking possession of medical cannabis goods.
(B)The applicant’s practices for holding medical cannabis goods while not in transport.
(C)The applicant’s practices for preventing the deterioration of any medical cannabis goods held
by the applicant.
(D)The applicant’s practices for transport of medical cannabis goods.
(E)Security Practices
(i)The applicant’s practices for allowing individuals access to the premises.
(ii)A description of the applicant’s video surveillance system, including camera placement and
procedures for the maintenance of video surveillance equipment.
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(iii)How the applicant will ensure that all access points to the premises will be secured,
including the use of security personnel.
(iv) A description of the applicant’s alarm system.
(32)For applicants applying for a license to dispense medical cannabis goods, the application shall include a detailed description of the applicant’s operating procedures including the following:
(A)Inventory Practices
(i)A description of the applicant’s practices for receiving shipments of inventory.
(ii)Where the applicant’s inventory will be kept and how records of the inventory will be
maintained.
(iii)The applicant’s practices for performing inventory reconciliation and for ensuring that
inventory records are accurate.
(B) Quality-Assurance Practices
(i)The applicant’s practices for preventing the deterioration of any medical cannabis goods held
by the applicant.
(ii)The applicant’s practices for ensuring that all medical cannabis goods are properly packaged
and labeled prior to sale.
(C) Security Practices
(i)The applicant’s practices for allowing individuals access to the licensed premises.
(ii)A description of the applicant’s video surveillance system including camera placement and
practices for the maintenance of video surveillance equipment.
(iii)How the applicant will ensure that all access points to the premises will be secured,
including the use of security personnel.
(iv)A description of the applicant’s security alarm system.
(33)The waiver of sovereign immunity required by Section 5017 of this division, if applicable.
Authority: Sections 19302, 19302.1, 19304, and 19322(a)(8), Business and Professions Code.
Reference: Section 2105, Corporations Code and Section 19322, Business and Professions Code.
§ 5007. [RESERVED]
§ 5008. Law Enforcement Personnel Not to Hold Licenses
(a) No license authorized by the Act and issued by the bureau shall be held by, or issued to, any
person holding office in, or employed by, any agency of the State of California or any of its
political subdivisions when the duties of such person have to do with the enforcement of the Act
or any other penal provisions of law of this State prohibiting or regulating the sale, use,
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possession, transportation, distribution, testing, manufacturing, or cultivation of medical
cannabis goods.
(b) This section applies to, but is not limited to, any persons employed in the State of California
Department of Justice, in any district attorney's office, in any city attorney’s office, in any sheriff's office, in any local police department, or in the State Department of Consumer Affairs.
(c) This section shall not prohibit the ownership of any licensed commercial cannabis business
by any local law enforcement officer or local reserve law enforcement officer when the licensed
premises are located in a county other than that in which he or she is employed as a law
enforcement officer.
(d) This section applies to any person mentioned herein who has any ownership interest, directly
or indirectly, in any business to be operated or conducted under a medical cannabis license.
(e) This section does not apply to any person who holds a license in the capacity of executor,
administrator, or guardian.
Authority cited: 19302, 19302.1, and 19304, Business and Professions Code, and 19990, Government Code. Reference: Section 19302, 19302.1, and 19304, Business and Professions Code.
§ 5009. [RESERVED]
§ 5010. Premises
(a)Premises means the designated structures and land specified in the application that are in the possession of and used by the applicant or licensee to conduct the commercial cannabis activity.
(b) The premises must be a contiguous area and may only be occupied by one licensee.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19320, and 19323, Business and Professions Code.
§ 5011. [RESERVED]
§ 5012. Premises Diagram
An applicant shall submit to the bureau with his or her application a complete and detailed
diagram of the proposed premises.
(a)The diagram must show the boundaries of the property and the proposed premises to be
licensed, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, windows, doorways, and common or shared entryways. The diagram must show the areas
in which all commercial cannabis activities will take place, including but not limited to, limited-
access areas.
(b)The diagram must be to scale.
(c)The diagram shall not contain any highlighting.
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(d) If the proposed premises consists of only a portion of a property, the diagram must be labeled
indicating which part of the property is the proposed premises and what the remaining property
is used for.
Authority: Sections 19302, 19302.1, 19304, 19320(c), 19322(a)(8), and Business and Professions Code. Reference: Sections 19320(c), Business and Professions Code.
§ 5013. [RESERVED]
§ 5014. Property-Owner Approval
(a) If the applicant is not the landowner of the property upon which the premises is located, the
applicant shall provide to the bureau a document from the landowner that states that the applicant has the right to occupy the property and acknowledging the applicant may use the property for
the commercial cannabis activity for which the applicant is applying for licensure. An applicant
shall also provide a copy of the rental agreement, as applicable.
(b) If the applicant is the landowner of the property on which the premises is located, the
applicant shall provide to the bureau a copy of the title or deed to the property.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19300.5(b), and 19321(b), Business and Professions Code.
§ 5015. [RESERVED]
§ 5016. Bond
An applicant shall provide proof of having obtained a surety bond in the amount of $5,000 payable to the State of California to ensure payment of the cost incurred for the destruction of
medical cannabis goods necessitated by a violation of the Act or the regulations adopted
thereunder. All bonds required under this regulation must be issued by a corporate surety
licensed to transact surety business in the state of California.
Authority: Sections 19302, 19302.1, 19304, 19322, and 19334, Business and Professions Code. Reference: Sections 19322 and 19334, Business and Professions Code.
§ 5017. Waiver of Sovereign Immunity
(a) Any applicant or licensee that may fall within the scope of sovereign immunity that may be
asserted by a federally recognized tribe or other sovereign entity must waive any sovereign
immunity defense that the applicant or licensee may have, may be asserted on its behalf, or may otherwise be asserted in any state administrative or judicial enforcement actions against the
applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise,
under the state laws and regulations governing commercial cannabis activity. The applicant or
licensee must submit a written waiver of sovereign immunity to the bureau with any license
application or renewal, which is valid for the period of the license. The written waiver shall include that the applicant or licensee has the lawful authority to enter into the waiver required by
this section, the applicant or licensee hereby waives sovereign immunity, and the applicant or
licensee agrees to do all of the following:
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(1)Provide documentation to the bureau that establishes that the applicant or licensee has the
lawful authority to enter into the waiver required by this section;
(2)Conduct all commercial cannabis activity in full compliance with the state laws and
regulations governing commercial cannabis activity, including submission to all enforcement
provisions thereof;
(3)Allow access as required by state statute or regulation by persons or entities charged with
duties under the state laws and regulations governing commercial cannabis activity to any
premises or property at which the applicant conducts any commercial cannabis activity,
including premises or property where records of commercial cannabis activity are maintained by
or for the applicant or licensee;
(4)Provide any and all records, reports, and other documents as may be required under the state
laws and regulations governing commercial cannabis activity;
(5)Conduct commercial cannabis activity with other state commercial cannabis licensees only,
unless otherwise specified by state law;
(6)Meet all of the requirements for licensure under the state laws and regulations governing the
conduct of commercial cannabis activity, and provide truthful and accurate documentation and
other information of the applicant’s qualifications and suitability for licensure as may be
requested; and
(7)Submit to the personal and subject matter jurisdiction of the California courts to address any
matter related to the waiver or the commercial cannabis application, license, or activity, and that
all such matters and proceedings shall be governed, construed and enforced in accordance with
California substantive and procedural law, including but not limited to the Medical Cannabis
Regulation and Safety Act and the Administrative Procedure Act.
(b)Any applicant or licensee must immediately notify the bureau of any changes that may
materially affect the applicant or licensee’s compliance with subdivision (a).
(c) Any failure by an applicant or licensee to comply with the requirements of subdivisions (a) or
(b)shall be a basis for denial of an application or renewal or discipline of a licensee.
Authority: Sections 19302, 19302.1, 19304, Business and Professions Code. Reference: Sections
19303, 19304, 19311, 19312, 19322, 19323, and 19324, Business and Professions Code.
§ 5018. Requirements for Continued Operation While Application Pending
All applicants that were in operation prior to January 2, 2018, may continue to operate while
their application is pending if a completed application is received by the bureau no later than
5:00 p.m. Pacific Time on July 2, 2018, and the continuing operations are the same commercial cannabis activity as the license type for which the applicant is applying. If the application for
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licensure is denied, the applicant shall cease all commercial cannabis business operations until a
license is obtained.
Authority: Sections 19304 and 19321, 19322, Business and Professions Code. Reference:
Sections 19321 and 19322, Business and Professions Code.
§ 5019. [RESERVED]
§ 5020. Priority Review
Priority review of the application shall be given to applicants that were in operation and in good
standing with the local jurisdiction by January 1, 2016, and whose business ownership or premises are currently the same as they were on January 1, 2016. Priority applications shall be
processed for review in the order in which they are received.
Authority: Section 19302, 19302.1, 19304, and 19321(b), Business and Professions Code.
Reference: Section 19321(b), Business and Professions Code.
§ 5021. [RESERVED]
§ 5022. Date Operation Began
(a) For the purposes of sections 5018 and 5020 of this division, the date on which an applicant
was in operation is the date an applicant began actively conducting the same commercial
cannabis activity as the license type for which the applicant is applying.
(b)For purposes of this section, “actively conducting” means engaging in the transportation, distribution, testing, or sale of medical cannabis goods as authorized by the local jurisdiction.
(c)The date an applicant began actively conducting the commercial cannabis activity shall be
provided by the applicant. The applicant shall attest to the date under the penalty of perjury and
shall provide evidence of the date operations began by submitting a dated copy of any of the
following:
(1)Articles of incorporation;
(2)Certificate of stock;
(3) Articles of organization;
(4)Certificate of limited partnership;
(5)Statement of partnership authority;
(6) Tax form;
(7) Local license, permit, or other written authorization;
(8)Receipts; or
(9)Any other business record.
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Authority: Section 19304 and 19321(b), Business and Professions Code. Reference: Sections
19320(b) and 19321(b), Business and Professions Code.
§ 5023. [RESERVED]
§ 5024. Good Standing
For purposes of sections 5018 and 5020 of this division, good standing shall be evidenced by a
document issued or signed by the local jurisdiction that contains the following:
(a)Name of the applicant;
(b)Address of the premises to be licensed;
(c) License type that the applicant is applying to the bureau for;
(d)Name of the local jurisdiction;
(e) Name of the local jurisdiction office that issued the license, permit, or other authorization for
the applicant to conduct commercial cannabis activity in the jurisdiction as required by Business
and Professions Code section 19320;
(f)Name and contact information for the person authorized by the local jurisdiction to sign on its
behalf;
(g)Signature of the person authorized to sign on behalf of the local jurisdiction; and
(h) A statement to the effect of: “The above named party has been issued a license, permit, or
other authorization from this jurisdiction to conduct commercial cannabis activity. The above
named party began operation and was in good standing in this jurisdiction on or before January 1, 2016.”
Authority: Section 19304, 19320 and 19321(b), Business and Professions Code. Reference:
Section 19321(b), Business and Professions Code.
§ 5025. [RESERVED]
§ 5026. Additional Information
The bureau may request additional information and documents from the applicant. The bureau
will provide the applicant a deadline for submittal of additional information. The bureau will
consider the complexity of the information requested and the ease with which the information
can be obtained and transmitted to the bureau by the applicant in determining the deadline.
Authority: Sections 19302, 19302.1, 19304, and 19322(a)(4), Business and Professions Code. Reference: Sections 19302 and 19322, Business and Professions Code.
§ 5027. [RESERVED]
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§ 5028. Incomplete Applications
(a) If the bureau determines that the application is incomplete, the bureau shall provide notice to
the applicant in accordance with Business and Professions Code section 124.
(b)An applicant has one year from the date of the notice in subsection (a) to correct all deficiencies. If the applicant fails to correct the deficiencies within the one-year period, the application shall be considered abandoned under Business and Professions Code section 142.
(c)An applicant may reapply at any time following an abandoned application.
(d)The bureau will not refund application fees for an incomplete application.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 124, 142, and 19322 Business and Professions Code.
§ 5029. [RESERVED]
§ 5030. Withdrawal of Application
(a)An applicant may withdraw an application at any time prior to the bureau’s issuance of a
license or denial of a license.
(b)Requests to withdraw an application must be submitted to the bureau in writing, dated, and
signed by the applicant.
(c) In accordance with Business and Professions Code section 118, withdrawal of an application
shall not, unless the bureau has consented in writing to such withdrawal, deprive the bureau of its
authority to institute or continue a proceeding against the applicant for the denial of the license upon any ground provided by law or to enter an order denying the license upon any such ground.
(d)The bureau will not refund application fees for a withdrawn application.
(e)An applicant may reapply at any time following the withdrawal of an application.
Authority: Sections 19302, 19302.1, 19304, and 19322, Business and Professions Code.
Reference: Sections 118 and 19322, Business and Professions Code.
Article 3. General Licensing
§ 5031. [RESERVED]
§ 5032. Substantially Related Offenses
(a) For the purpose of denial of a license, convictions that are substantially related to the
qualifications, functions, or duties of the business for which the application is made include:
(1) A violent felony conviction, as specified in subdivision (c) of Section 667.5 of the Penal
Code.
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(2) A serious felony conviction, as specified in subdivision (c) of Section 1192.7 of the Penal
Code.
(3)A felony conviction involving fraud, deceit, or embezzlement.
(4) A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling, any controlled substance to a minor; or selling, offering to sell, furnishing, offering to furnish, administering, or giving any controlled substance
to a minor.
(5)A felony conviction for drug trafficking with enhancements pursuant to Health and Safety
Code sections 11370.4 or 11379.8.
(b)Except as provided in subparagraphs (4) and (5) of paragraph (a) and notwithstanding
Chapter 2 (commencing with Section 480) or Division 1.5, a prior conviction, where the
sentence, including any term of probation, incarceration, or supervised release, is completed, for
possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled
substance is not considered substantially related, and shall not be the sole ground for denial of a license. Conviction for any controlled substance felony subsequent to licensure shall be grounds
for revocation of a license or denial of the renewal of a license.
Authority: Sections 19302, 19302.1, 19304, and 19323(b)(4), Business and Professions Code.
Reference: Sections 19302.1 and 19323(b)(4), Business and Professions Code.
§ 5033. Criteria for Rehabilitation
(a) When evaluating whether an applicant who has been convicted of a criminal offense that is
substantially related to the qualifications, functions, or duties of the business for which the
application is made should be issued a license, the bureau shall consider the following criteria of
rehabilitation:
(1)The nature and severity of the act or offense;
(2)Whether the person has a felony conviction based on possession or use of cannabis or
cannabis products that would not be a felony if the person was convicted of the offense on the
date of the person’s application;
(3)The applicant’s criminal record as a whole;
(4)Evidence of any act committed subsequent to the act or offense under consideration that could be considered grounds for denial, suspension, or revocation of a commercial cannabis
activity license;
(5)The time that has elapsed since commission of the act or offense;
(6)The extent to which the applicant has complied with any terms of parole, probation,
restitution, or any other sanctions lawfully imposed against the applicant;
(7) If applicable, evidence of dismissal under Penal Code section 1203.4 or another state’s
similar law;
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(8) If applicable, a certificate of rehabilitation obtained under Penal Code section 4852.01 or
another state’s similar law; and
(9)Other evidence of rehabilitation submitted by the applicant.
(b) If an applicant has been denied a license based on a conviction, the applicant may request a hearing pursuant to Business and Professions Code section 19324 to determine if the applicant should be issued a license.
Authority: Sections 19302, 19302.1, 19304, and 19323(b)(4), Business and Professions Code.
Reference: Sections 19302.1 and 19323(b)(4), Business and Professions Code.
§ 5034. [RESERVED]
§ 5035. [RESERVED]
§ 5036. Additional Grounds for Denial of a License
In addition to the reasons for denial in Business and Professions Code section 19323, a license
may be denied for the following reasons:
(a)The applicant’s premises does not fully comply with standards set in regulation.
(b)The applicant’s premises is substantially different from the diagram of the premises
submitted by the applicant, in that the size, layout, location of a common entryways, doorways,
or passage ways, means of public entry or exit, or limited-access areas within the licensed
premises are not the same.
(c) The applicant denied the bureau access to the premises.
(d)The applicant made a material misrepresentation on the application.
(e)The applicant failed to correct the deficiencies within the application in accordance with
section 5028 of this division.
(f) The applicant has been denied a license, permit, or other authorization to engage in
commercial cannabis activity by a state or local licensing authority.
Authority: Sections 19302, 19302.1, 19304, and 19323, Business and Professions Code.
Reference: Sections 19302.1, 19322, and 19323, Business and Professions Code.
§ 5037. [RESERVED]
§ 5038. [RESERVED]
§ 5039. Notification of Change
(a) Every licensee shall notify the bureau in writing within 10 calendar days of any change to any
item listed in the application. The notification shall be signed by an owner as defined in section
5004 of this division.
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(b) If at the time of licensure a licensee employed less than 20 employees and later employs 20
or more employees, the licensee shall provide to the bureau a document attesting that the licensee
has entered into a labor peace agreement and a copy of the agreement within 180 days of
employing 20 or more employees.
(c) Licenses are not transferable. A change to the business organizational structure or ownership
requires a new application under section 5006 of this division and the initial license fees.
Authority: Section 19302, 19302.1, and 19304 Business and Professions Code. Reference:
Section 136, 19300.5(b) and 19322, Business and Professions Code.
§ 5040. [RESERVED]
§ 5041. [RESERVED]
§ 5042. Renewal of License
(a) To renew a license, a completed license renewal form and renewal license fee shall be
received by the bureau from the licensee no earlier than 60 calendar days before the expiration of
the license, and no later than 5:00 p.m. Pacific Time on the last business day before the expiration of the license. Failure to receive a notice for license renewal does not relieve a
licensee of the obligation to renew all licenses as required.
(b) In the event the license is not renewed prior to the expiration date, the licensee must cease all
commercial medical cannabis operations.
(c)The license renewal form shall contain the following:
(1)The name of the licensee. For licensees who are individuals, the applicant shall provide both
the first and last name of the individual. For licensees who are business entities, the licensee shall
provide the legal business name of the applicant.
(2)The license number and expiration date.
(3)The licensee’s address of record and premises address.
(4)An attestation that all information provided to the bureau in the original application under
section 5006 of this division or subsequent notification under section 5039 of this division, is
accurate and current.
Authority: Section 19302, 19302.1, 19304, 19321, and 19322, Business and Professions Code.
Reference: Sections 19321 and 19322, Business and Professions Code.
§ 5043. [RESERVED]
§ 5044. [RESERVED]
§ 5045. Surrender of License
(a)Every licensee who surrenders, abandons, or quits the licensed premises, or who closes the
licensed premises for a period exceeding 30 consecutive calendar days, shall, within 30 calendar
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 19 of 58
days after closing, surrendering, quitting, or abandoning the licensed premises, surrender the
license certificate or license certificates to the bureau. The bureau may seize the license
certificate or certificates of a licensee who fails to comply with the surrender provisions of this
section and may proceed to revoke the license or licenses.
(b)The bureau may cancel the license or licenses of a licensee upon request by the licensee.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302 and 19322, Business and Professions Code.
§ 5046. [RESERVED]
§ 5047. [RESERVED]
§ 5048. Physical Modification of Premises
(a)A licensee shall not make a physical change, alteration, or modification of the licensed
premises that materially or substantially alters the licensed premises or the use of the licensed
premises from the premises diagram originally filed with the license application without the prior
written approval of the bureau. A licensee whose premises is to be materially or substantially changed, modified, or altered is responsible for filing a request for premises modification with
the bureau.
(b)Material or substantial changes, alterations, or modifications requiring approval include, but
are not limited to, the removal, creation, or relocation of a common entryway, doorway, passage,
or a means of public entry or exit, when such common entryway, doorway, or passage alters or changes limited-access areas within the licensed premises.
(c)A licensee shall request approval of a physical change, alteration, or modification in writing,
and the request shall include:
(1)A new premises diagram that conforms to requirements in section 5012 of this division; and
(2)A nonrefundable fee.
(d)A licensee shall provide additional documentation requested by the bureau to evaluate the
licensee’s request.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1 and 19320, Business and Professions Code.
§ 5049. [RESERVED]
§ 5050. Track and Trace Requirements
(a)A licensee shall create and maintain an active account within the track and trace system prior
to buying, selling, or transporting, any medical cannabis goods under a license issued by the
bureau.
(b)A licensee shall designate one individual within the organization as the licensee’s designated track and trace administrator.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 20 of 58
(1) The designated track and trace administrator may authorize additional licensee
representatives to obtain track and trace system administrator accounts.
(2) Each licensee representative who obtains access to the track and trace system on behalf of the
licensee, shall obtain his or her own unique track and trace system administrator log-on and password.
(3) Licensee representatives shall only log into the track and trace system and submit information
to the track and trace system using a log-on that has been assigned to that licensee representative.
(4) A licensee shall maintain a complete and accurate list of all track and trace system
administrators for each licensed premises. This list shall be provided to the bureau upon request.
(c)A licensee shall ensure that only authorized individuals are able to access the track and trace
system on behalf of the licensee.
(d)A licensee shall accurately record all transactions involving the physical movement or
destruction of medical cannabis goods in the track and trace system.
(1)A licensed transporter shall record transactions into the track and trace system pursuant to
Chapter 3 of this division.
(2)A licensed distributor shall record transactions into the track and trace system pursuant to
Chapter 2 of this division.
(3) A licensed dispensary shall record transactions into the track and trace system pursuant to
Chapter 4 of this division.
(4) A licensed testing laboratory shall record transactions into the track and trace system
pursuant to Chapter 5 of this division.
(e)All transactions must be entered into the track and trace system no later than the end of the
day that the transaction occurred.
(f) If, for any reason, a licensee is not able to access the track and trace system, the licensee shall create and maintain records detailing all transactions that would have been entered into the track
and trace system. Upon the restoration of access to the track and trace system, all transactions
that occurred while access to the track and trace system was not available shall be accurately
entered into the track and trace system.
(g) Licensees shall only enter accurate information into the track and trace system and shall correct any known errors in the information entered into the track and trace system by the
licensee immediately upon discovery.
Authority: Sections 19302, 19302.1, 19304, and 19335, Business and Professions Code.
Reference: Section 19335, Business and Professions Code.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 21 of 58
Article 4. Enforcement
§ 5051. Licensee’s Responsibility for Acts of Employees and Agents
In construing and enforcing the provisions of the Act and the regulations in this division, the act,
omission, or failure of an agent, officer, or other person acting for or employed by a licensee, within the scope of his or her employment or office, shall in every case be deemed the act, omission, or failure of the licensee.
Authority: Sections 19302, 19302.1, 19304, 19311, and 19312, Business and Professions Code.
Reference: Sections 19300, 19300.5, 19302.1, 19311, and 19312, Business and Professions
Code.
§ 5052. [RESERVED]
§ 5053. [RESERVED]
§ 5054. Additional Grounds for Disciplinary Action
In addition to the provisions of Business and Professions Code section 19311, grounds for
disciplinary action include the following:
(a)The licensee’s premises is substantially different from the premises diagram submitted to the bureau, or from any change, alteration, or modification approved by the bureau.
(b)The licensee denied the bureau access to the premises for inspection.
(c)The licensee impeded an investigation by the bureau, law enforcement, or any other licensing
authority.
Authority: Sections 19302, 19302.1, 19304, and 19311, Business and Professions Code.
Reference: Section 19307, 19311, 19302.1, 19322, 19327, and 19360, Business and Professions
Code.
§ 5055. [RESERVED]
Article 5. Records and Reporting
§ 5056. Record Retention
(a)Each licensee shall keep and maintain the following records for at least seven years:
(1)Financial records including, but not limited to, bank statements, sales invoices, receipts, tax
records, and all records required by the California State Board of Equalization under Title 18 California Code of Regulations section 1968.
(2)Personnel records, including each employee’s full name, social security, or individual tax
payer identification number, date of beginning employment, and date of termination of
employment if applicable.
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(3)Training records, including but not limited to the content of the training provided and the
names of the employees that received the training.
(4) Contracts with other licensees regarding commercial cannabis activity.
(5) Permits, licenses, and other local authorizations to conduct the licensee’s commercial
cannabis activity.
(6) Security records.
(b)The bureau may make any examination of the books and records of any licensee as it deems
necessary to perform its duties under the Act.
(c)Records shall be kept in a manner that allows the records to be produced for the bureau at the
licensed premises in either hard copy or electronic form, whichever the bureau requests.
(d)A licensee may contract with a third party to provide custodial or management services of the
records. Such a contract shall not relieve the licensee of his or her responsibilities under this
section.
Authority: Sections 19302, 19302.1, 19304, and 19327, Business and Professions Code. Reference: Section 19327, Business and Professions Code and Section 1968, California Code of
Regulations, Title 18.
§ 5057. [RESERVED]
§ 5058. Significant Discrepancy in Inventory
A significant discrepancy in inventory of medical cannabis goods means a difference of at least $1,000 of medical cannabis goods within a 7-day period or at least $2,000 of medical cannabis
goods in a 30-day period.
Authority: Sections 19302, 19302.1, 19304, and 19334, Business and Professions Code.
Reference: Section 19334, Business and Professions Code.
§ 5059. [RESERVED]
§ 5060. Notification of Criminal Acts, Civil Judgments, and Revocation of a Local License, Permit, or Other Authorization After Licensure
(a)A licensee shall ensure that the bureau is notified in writing of a criminal conviction, either
by mail or electronic mail, within 48 hours of the conviction.
(b)A licensee shall ensure that the bureau is notified in writing of a civil penalty or judgment rendered against the licensee, either by mail or electronic mail, within 48 hours of delivery of the
verdict or entry of judgment, whichever is sooner.
(c)A licensee shall ensure that the bureau is notified in writing of the revocation of a local
license, permit, or other authorization, either by mail or electronic mail within 48 hours of
receiving notice of the revocation.
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Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19320, 19323, and 19360, Business and Professions Code.
§ 5061. [RESERVED]
§ 5062. Notification of Diversion, Theft, Loss, or Criminal Activity Pertaining to Medical
cannabis goods
Licensees shall notify the bureau and law enforcement authorities, within 24 hours, of theft or
loss of medical cannabis goods.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19334, Business and Professions Code.
Article 6. Security
§ 5063. [RESERVED]
§ 5064. Access to Limited-Access Areas
Licensees shall ensure that any person on the licensed premises, except for employees and contractors of the licensee, are escorted at all times by the licensee or at least one employee of
the licensee when in the limited-access areas of the premises.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19322, 19334, Business and Professions Code.
§ 5065. [RESERVED]
§ 5066. Licensee Employee Badge Requirement
All agents, officers, or other persons acting for or employed by a licensee shall display a
laminated identification badge issued by the licensee. The identification badge shall, at a
minimum, include the licensee’s “doing business as” name and license number, the employee’s
first and last name, and a color photograph of the employee that shows the full front of the employee’s face and that is at least 2 inches by 2 inches in size.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19304, 19322, 19334 Business and Professions Code.
§ 5067. [RESERVED]
§ 5068. Video Surveillance System
(a)At a minimum, a licensed premises shall have a complete digital video surveillance system
with a minimum camera resolution of 1280 × 1024 pixels.
(b)The surveillance-system storage device or the cameras shall be transmission control protocol/
TCP/capable of being accessed through the internet.
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(c)All areas recorded by the video surveillance system shall at all times have adequate lighting
to allow the surveillance cameras to effectively record images.
(d)Cameras must be immobile and in a permanent location. Cameras shall be placed in a
location that allows the camera to clearly record activity occurring within 20 feet of all points of entry and exit on the licensed premises, and allows for the clear and certain identification of any
person and activities in all areas required to be filmed under subsection (e).
(e)Areas that shall be recorded on the video surveillance system include, but are not limited to,
the following:
(1)Areas where medical cannabis goods are weighed, packed, stored, quarantined, loaded and
unloaded for transportation, prepared, or moved within the premises;
(2)Areas where cannabis is destroyed;
(3)Limited-access areas;
(4) Security rooms;
(5)Areas storing a surveillance-system storage device with at least one camera recording the access points to the secured surveillance recording area; and
(6) Entrances and exits to the premises, which shall be recorded from both indoor and outdoor
vantage points.
(f)Dispensaries shall also record on the video surveillance system point-of-sale areas and areas
where medical cannabis goods are displayed for sale. At each point of sale location, camera placement must allow for the recording of the facial features of any person purchasing or selling
medical cannabis goods, or any person in the retail area, with sufficient clarity to determine
identity.
(g)Cameras shall record continuously 24 hours per day and at a minimum of 20 frames per
second.
(h)The physical media or storage device on which surveillance recordings are stored must be
secured in a manner to protect the recording from tampering or theft.
(i) Surveillance recordings shall be kept for a minimum of 30 days.
(j)Videos are subject to inspection by a bureau employee and shall be copied and sent to or
otherwise provided to the bureau, upon request.
(k)Recorded images shall clearly and accurately display the time and date. Time is to be
measured in accordance with the United States National Institute Standards and Technology
standards.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19332 and 19334, Business and Professions Code.
§ 5069. [RESERVED]
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§ 5070. Security Personnel
A licensee shall hire or contract for security personnel to provide security services for the
licensed premises. All security personnel hired or contracted for by the licensee shall comply
with Chapters 11.4 and 11.5 of Division 3 of the Business and Professions Code.
Authority: Sections 19302, 19302.1, 19304, 19322(b)(6), and 19334, Business and Professions Code. Reference: Sections 19322(b)(6) and 19334, Business and Professions Code.
§ 5071. [RESERVED]
§ 5072. Locks
A licensee shall ensure that the limited-access areas described in section 5151 of this division can be securely locked using commercial-grade, nonresidential door locks. A licensee shall also use commercial-grade, nonresidential locks on all points of entry and exit to the premises.
Authority: Sections 19302, 19302.1, 19304, 19322, and 19334, Business and Professions Code.
Reference: Section 19302, 19322, and 19334, Business and Professions Code.
§ 5073. [RESERVED]
§ 5074. Alarm System
(a) A licensee shall maintain an alarm system as defined in Business and Professions Code
section 7590.1(n).
(b) A licensee shall ensure a licensed alarm company operator or one or more of its registered
alarm agents installs, maintains, monitors, and responds to the alarm system.
(c)Upon request, a licensee shall make available to the bureau all information related to the
alarm system, monitoring, and alarm activity.
Authority: Sections 19302, 19302.1, 19304, and 19322(b)(6), Business and Professions Code.
Reference: Sections 19322(b)(6), and 19334, Business and Professions Code.
§ 5075. [RESERVED]
Article 7. Returns and Destruction of Product
§ 5076. Returns Between Licensees
(a) If a licensee discovers that a manufactured medical cannabis good that was purchased from
another licensee is defective, the purchasing licensee may return the medical cannabis good to the selling licensee only in exchange for a non-defective version of the same medical cannabis
good.
(b) Except as provided in subsection (a) of this section, a licensee may not return medical
cannabis goods purchased from another licensee.
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Authority: Sections 19304 and 19334, Business and Professions Code. Reference: Section
19334, Business and Professions Code.
§ 5077. [RESERVED]
§ 5078. [RESERVED]
§ 5079. [RESERVED]
§ 5080. Cannabis-Waste Management
(a)A licensee may not sell cannabis waste.
(b)A licensee shall manage all waste that is hazardous waste, as defined in Public Resources
code section 40141, in compliance with all applicable hazardous-waste statutes and regulations.
(c)A licensee shall not dispose of medical cannabis goods or cannabis waste in an unsecured
waste receptacle, whether in the control of the licensee or not.
(d) Medical cannabis goods that a licensee intends to render into cannabis waste shall be held in
quarantine for a minimum of 72 hours. A licensee shall affix to each batch one or more
documents with batch information and weight. At no time during the quarantine period may the
medical cannabis goods be handled, moved, or rendered into cannabis waste. The medical
cannabis goods are subject to inspection by the bureau.
(e)A licensee shall make medical cannabis goods into cannabis waste by rendering the medical
cannabis goods unusable and unrecognizable. The licensee shall render the medical cannabis
goods into cannabis waste before removing the cannabis waste from the licensed premises. A
licensee shall render the medical cannabis goods into cannabis waste by grinding and
incorporating the medical cannabis goods with other ground material so that the resulting
mixture is at least 50% non-cannabis material by volume. A licensee shall render medical
cannabis goods into cannabis waste and track that cannabis waste one batch at a time and shall
not comingle different batches into cannabis waste.
(f)The licensee shall render the medical cannabis goods into cannabis waste on camera in the
manner required by section 5068 of this division.
(g) Medical cannabis goods that a licensee deposits at a compostable materials handling
operation or facility or at an in-vessel digestion operation or facility may be rendered cannabis
waste by incorporating any nonhazardous compostable material, as defined in Title 14 of the
California Code of Regulations at section 17852(a)(11), that a compostable materials handling
operation or facility or in-vessel digestion operation or facility may lawfully accept.
(h)After a licensee renders the medical cannabis goods into cannabis waste, a licensee shall do
one of the following with the cannabis waste:
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(1)Dispose of the cannabis waste at a manned and fully permitted solid waste landfill;
(2)Deposit the cannabis waste at a manned compostable materials handling operation or a
manned and fully permitted compostable materials handling facility; or
(3)Deposit the cannabis waste at a manned in-vessel digestion operation or and a manned and
fully permitted in-vessel digestion facility.
(i) In addition to all other tracking requirements set forth in section 5050 (General) of this
division, a licensee shall use the track and trace system and on-site documents to ensure the
cannabis-waste materials are identified, weighed, and tracked while on the licensed premises and
when disposed of or deposited in accordance with subsection (h).
(j)A licensee shall enter the date and time that the medical cannabis goods were rendered into
cannabis waste and the weight of the resulting cannabis waste into the track and trace system.
(k)A licensee shall maintain accurate and comprehensive records regarding cannabis waste
material that account for, reconcile, and evidence all activity related to the generation and
disposal or deposition of cannabis waste. A licensee shall obtain a record from the solid waste
facility or operation evidencing the acceptance of the cannabis waste material at the facility or
operation. The record must contain the name and address of the operation or facility, the date, the
volume or weight of the cannabis waste accepted, and the name and signature of the person
manning the facility or operation who accepts the cannabis waste. These documents are records
subject to inspection by the bureau and shall be kept in compliance with section 5114 of this
division.
(l)A licensee shall enter the date and time of the disposal or deposition of the cannabis waste at a
solid waste facility into the track and trace system.
Authority: Sections 19302.1, 19304, and 19345, Business and Professions Code. Reference:
Sections 19345, Business and Professions Code.
§ 5081. [RESERVED]
CHAPTER 2. DISTRIBUTORS
Article 1. Activities
§ 5082. Distributor Taking Title Before Manufacturing
A distributor may take title to and possession of medical cannabis after harvest but prior to
manufacturing. A distributor may sell the medical cannabis to a manufacturer or enter into a contract with a manufacturer for manufacturing the medical cannabis into medical cannabis
products.
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Authority: 19302, 19302.1, 19304, and 19326, Business and Professions Code. Reference:
Section 19300.5(p) and (q) and 19326, Business and Professions Code.
§ 5083. [RESERVED]
§ 5084. No Consignment
Once medical cannabis goods are received by a dispensary, a distributor shall not maintain title
after transfer of the medical cannabis goods to the dispensary.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19300.5(p), 19300.5(q), and 19326, Business and Professions Code.
§ 5085. [RESERVED]
§ 5086. Distributor-to-Distributor Sales
A distributor licensee may sell medical cannabis goods to another distributor licensee.
Authority: Sections 19302, 19302.1 and 19304, Business and Professions Code. Reference:
Sections 19300.5(p), 19300.5(q), and 19326, Business and Professions Code.
§ 5087. [RESERVED]
§ 5088. Distributor as Destroyer
A distributor may destroy medical cannabis goods on the distributor’s licensed premises, in the
manner required by section 5080 of this division, for another licensee. The distributor shall enter
the destruction occurrence into the track and trace system.
Authority: Sections 19302, 19302.1 and 19304, Business and Professions Code. Reference:
Sections 19300.5(p), 19300.5(q), and 19326, Business and Professions Code.
§ 5089. [RESERVED]
§ 5090. Storage
(a)A distributor shall ensure that all medical cannabis goods batches are stored separately and
distinctly from other medical cannabis goods batches on the distributor’s premises.
(b)A distributor shall ensure a label with the following information is physically attached to
each container of each batch:
(1)The manufacturer or cultivator’s name and license number;
(2)The date of entry into the distributor’s storage area;
(3)The unique identifiers and batch number associated with the batch;
(4)A description of the medical cannabis goods with enough detail to easily identify the batch;
and
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 29 of 58
(5) The weight of or quantity of units in the batch.
(c)A distributor shall store medical cannabis goods in a building designed to permit control of
temperature and humidity and shall prevent the entry of environmental contaminants such as
smoke and dust. The area in which medical cannabis goods are stored shall not be exposed to direct sunlight. A distributor may not store medical cannabis goods outdoors.
(d)Employee breakrooms, eating areas, changing facilities, and bathrooms shall be completely
separated from the storage areas.
(e)A distributor shall store harvest batches and edible cannabis products that require
refrigeration at 35 to 42 degrees Fahrenheit. In addition, a distributor shall store harvest batches
in a darkened area with no more than 60% humidity.
Authority: Sections 19302, 19302.1, 19304, and 19334, Business and Professions Code.
Reference: Sections 19300.5, and 19334, Business and Professions Code.
§ 5091. [RESERVED]
§ 5092. Storage Only
A distributor may provide medical cannabis goods storage only services to a cultivator,
manufacturer, transporter, or other distributor, unrelated to the quality assurance and laboratory
testing processes.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19326 and 19334, Business and Professions Code.
§ 5093. [RESERVED]
§ 5094. Packaging and Labeling
(a)A distributor may package and label medical cannabis in the form of dried flower on behalf
of a cultivator or another distributor or while holding title.
(b) A distributor may re-package and re-label medical cannabis in the form of dried flower on
behalf of a cultivator or another distributor or while holding title.
(c)A distributor may have another licensee or nonlicensee package and label on the distributor’s
premises. The distributor is responsible for compliance with applicable medical cannabis
packaging and labeling laws including but not limited to Business and Professions Code section
19347 and Division 8 of Title 3 of the California Code of Regulations.
(d)A distributor shall not package, re-package, label, or re-label manufactured medical cannabis
goods.
Authority: Sections 19300.5(j), 19302, 19302.1, 19304, 19326, and 19334, Business and
Professions Code. Reference: Sections 19326 and 19334, Business and Professions Code.
§ 5095. [RESERVED]
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 30 of 58
§ 5096. Non-Medical-Cannabis Distribution Activities
A distributor may not store or distribute non-medical-cannabis goods on or from the premises
licensed for distribution of medical cannabis goods.
Authority: Sections 19302, 19302.1, 19304, and 19334, Business and Professions Code.
Reference: Section 19300.5(p) and 19334, Business and Professions Code.
Article 2. Testing and Quality Assurance
§ 5097. [RESERVED]
§ 5098. Laboratory-Testing Logistics
(a)After taking physical possession of a medical cannabis batch, the distributor shall contact a
licensed testing laboratory and arrange for one of the following to occur:
(1)A laboratory agent to come to the distributor’s licensed premises to select a random sample
for laboratory testing; or
(2)The distributor to transport the entire batch to the laboratory, and a laboratory agent to select
a random sample at the laboratory.
(b)The distributor shall observe the laboratory agent select the random samples as defined in
Chapter 5 of this division. For harvest batches, the distributor shall ensure that samples be taken
from batches that do not exceed 10 pounds. The sampling shall occur on video with the batch
number stated at the beginning of the video and a visible time and date indication on the video recording footage.
(c)After the sample has been selected, both the distributor and the laboratory agent shall sign
and date a document, attesting to the sample selection having occurred, as required by Chapter 5
of this division.
Authority: Sections 19302, 19302.1, 19304, 19326, and 19342, Business and Professions Code.
Reference: Sections 19326 and 19342, Business and Professions Code.
§ 5099. [RESERVED]
§ 5100. Testing Sample
A distributor shall be physically present to observe the laboratory agent obtain samples of
medical cannabis goods for testing. A distributor shall not assist the laboratory agent nor touch the medical cannabis goods or the sampling equipment while the laboratory agent is obtaining
the samples.
Authority: Sections 19302, 19302.1, 19304, 19326, 19334, and 19342, Business and Professions
Code. Reference: Sections 19326, 19334, and 19342, Business and Professions Code.
§ 5101. [RESERVED]
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§ 5102. Laboratory Testing Results
(a)A sample “passes” a laboratory test when the sample meets specifications in Chapter 5 of this
division.
(b)When a batch from a manufactured or harvest batch passes, the medical cannabis goods may
be transported to one or more dispensaries.
(c)A sample “fails” a laboratory test when it does not meet specifications of Chapter 5 of this
division.
(d) If a failed sample was collected from a manufactured cannabis batch, the distributor storing
the batch shall destroy the batch. A distributor shall destroy the batch in accordance with section 5080 of this division and shall do so on camera as required by section 5068 of this division.
(e) If a failed sample was collected from a harvest batch and the harvest batch could be
processed by a manufacturer without the resulting production batch causing harm to medical
cannabis patients, as determined under Chapter 5 of this division, a distributor may, under his or
her transporter license, transport the harvest batch or arrange for transportation of the harvest
batch to a manufacturer.
(f) If a failed sample was collected from a harvest batch and the harvest batch cannot be
processed into a production batch that is safe for medical cannabis patients, the distributor or
another licensee shall destroy the batch. A distributor shall destroy the batch in accordance with
section 5080 of this division and shall do so on camera as required by section 5068 of this
division.
(g)A distributor shall not transport nor arrange for the transportation of a batch that failed a
laboratory testing to a cultivator, manufacturer, or other licensee unless authorized to do so by
this section.
Authority: Sections 19302, 19302.1, 19304, 19342, 19343, 19344, and 19345, Business and Professions Code. Reference: Sections 19342, 19343, 19344, and 19345, Business and
Professions Code.
§ 5103. [RESERVED]
§ 5104. Quality-Assurance Review
When a distributor receives a certification of analysis stating that the sample meets specifications required by law, the distributor shall ensure the following before transport to one or more
dispensaries:
(a)The certificate of analysis the distributor received from the testing laboratory is the certificate
of analysis that corresponds to the batch;
(b)The label on the medical cannabis goods is consistent with the certificate of analysis regarding cannabinoid content and contaminants required to be listed by law;
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 32 of 58
(c)The packaging complies with applicable packaging laws including, but not limited to,
Business and Professions Code section 19347;
(d)The packaging is tamper evident. “Tamper evident” means a one-time-use seal is affixed to
the opening of the package, allowing a person to recognize whether or not the package has been opened;
(e)The weight or count of the medical cannabis batch comports with that in the track and trace
system. A distributor shall use scales as required by the Act; and
(f)All events up to this point have been entered into the track and trace system.
Authority: Sections 19302, 19302.1, 19304, 19326, and 19334, Business and Professions Code. Reference: Sections 19326 and 19334, Business and Professions Code.
Article 3. Other Requirements
§ 5105. [RESERVED]
§ 5106. Grace Period for Testing and Labeling
A licensee is not required to have his or her medical cannabis goods tested or to follow the
labeling requirements in these regulations until 180 days after licensure, or December 31, 2018,
whichever is sooner.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19334, Business and Professions Code.
§ 5107. [RESERVED]
§ 5108. Insurance Requirements
(a)A distributor shall provide evidence of insurance coverage required under this section. An
applicant for a distributor license shall provide the bureau with a certificate of insurance that
shows the kinds of insurance and minimum amounts have been secured as required by this section. Failure to provide proof of insurance, as required, will result in denial of a license.
(b)A distributor licensee shall at all times carry and maintain commercial general liability
insurance and commercial umbrella insurance for bodily injury and property damage arising out
of licensed activities. This insurance shall cover such claims as may be caused by any act,
omission, or negligence of the licensee or its officers, agents, representatives, assigns, or servants. The insurance shall also cover bodily injury, including disease, illness, and death;
property damage associated with the licensee’s premises or operations; and personal injury. The
limits of liability insurance shall not be less than one million dollars.
(c)A distributor licensee shall maintain the insurance required in subsection (b) from an
insurance company authorized to do business in California by the Secretary of State.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 33 of 58
(d)A distributor licensee shall notify the bureau in writing within 10 calendar days of a lapse in
insurance.
Authority: Sections 19302, 19302.1, 19304, and 19322, Business and Professions Code.
Reference: Section 19322 and 19334, Business and Professions Code.
§ 5109. [RESERVED]
§ 5110. Employee Requirements
(a)A distributor shall not hire an employee or volunteer if the person works or volunteers for
another licensee unless the other licensee is a distributor or transporter.
(b)A distributor licensee shall ensure his or her employees do not have a financial interest as defined in section 5006 subsection (b)(22)(K) of this division in another medical cannabis license. A distributor licensee shall have a document for each employee in which the employee
signs and attests to not having a financial interest in another medical cannabis license unless
allowed under subsection (a).
Authority: Sections 19302, 19302.1, 19304, 19322, and 19334, Business and Professions Code.
Reference: Sections 19322 and 19334, Business and Professions Code.
§ 5111. [RESERVED]
§ 5112. Inventory Reconciliation
(a)A distributor shall reconcile all inventories of medical cannabis goods a minimum of once per
week.
(b)A distributor shall keep an inventory log, containing the following information for each
batch:
(1)Where the batch originated and license number of the cultivator or the manufacturer;
(2)The date of physical transfer to the distributor;
(3)The time the batch arrived at the premises;
(4)The unique identifiers for the batch;
(5)The total weight or amount of the batch;
(6)Where on the premises the batch is kept;
(7)The storage conditions the batch is held in;
(8)The best-by, sell-by, or expiration date of the batch, if any;
(9)Shipping manifests and bills of lading;
(10)A copy of the service or sale contract pertaining to the batch; and
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(11)Warehouse receipts.
(c) If a distributor finds a discrepancy between the inventory of stock and the inventory log or
track and trace system that is outside of normal weight loss caused by moisture loss, the
distributor shall commence a full audit of the batch in which the discrepancy was found. The distributor shall notify the bureau within 24 hours if, after the audit, there is a significant
discrepancy in inventory.
(d) If a distributor finds evidence of theft or diversion, the licensee shall immediately report the
theft or diversion to the bureau.
Authority: Sections 19302, 19302.1, 19304, and 19334, Business and Professions Code.
Reference: Sections 19327, and 19334, Business and Professions Code.
§ 5113. [RESERVED]
§ 5114. Records
(a) In addition to those records required by section 5056 of this division, a distributor shall
maintain the following records:
(1)Records relating to branding and packaging and labeling;
(2)Current inventory log;
(3)Transportation bills of lading and shipping manifests;
(4) Quality-assurance records;
(5)Records relating to destruction of medical cannabis goods;
(6)Video that is required under section 5068 of this division;
(7) Laboratory-testing records;
(8) Inventory records; and
(9) Warehouse receipts.
Authority: Sections 19302, 19304, and 19327, Business and Professions Code. Reference: Section 19327, Business and Professions Code.
§ 5115. [RESERVED]
§ 5116. Track and Trace Requirements
A distributor shall enter the following events into the track and trace system:
(a)Receipt of medical cannabis goods from cultivator, manufacturer, or distributor.
(1)Enter the following information:
(A)Cultivator’s, manufacturer’s, or distributor’s name and license number;
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 35 of 58
(B) Name of licensee who transported the medical cannabis goods and license number;
(C) Type of medical cannabis goods received;
(D)Amount received, by weight or count;
(E) Best-by, sell-by, or expiration date of the batch;
(F)Party who holds title to the medical cannabis goods;
(G)The date of receipt of the medical cannabis goods;
(H) The unique identifiers associated with the medical cannabis goods; and
(I)Other information required elsewhere by law.
(b)Sample taken by testing laboratory.
(1)Enter the following information:
(A)The testing laboratory’s name and license number;
(B) The name of the laboratory agent or agents who obtained the samples;
(C)The weights of the samples obtained;
(D)The date the samples were obtained; and
(E) Other information required elsewhere by law.
(c)Sale to dispensary.
(1) If a distributor purchases medical cannabis goods, the distributor shall enter the following
information:
(A)Name of dispensary licensee with whom the distributor contracted for sale and the dispensary’s license number;
(B)The date of the contract for sale;
(C)The type of medical cannabis goods contracted for sale;
(D)The amount of medical cannabis goods contracted for sale, by weight or count;
(E)The date title passed to the dispensary; and
(F) Other information required elsewhere by law.
(d)Transportation to dispensary.
(1) If the distributor uses his or her transporter license to transport the medical cannabis to a
dispensary, the distributor shall enter the following information:
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 36 of 58
(A)Transporter name and license number;
(B) Driver’s name and driver’s license number;
(C)Amount of medical cannabis goods transported, by weight or count;
(D)Vehicle license plate number used for transportation;
(E)Date of transport; and
(F)Other information required elsewhere by law, including for transporters.
(e)Destruction.
(f) Laboratory-test results.
Authority: Sections 19302, 19302.1, 19304, and 19335, Business and Professions Code.
Reference: Section 19335, Business and Professions Code.
§ 5117. [RESERVED]
CHAPTER 3. TRANSPORTERS
§ 5118. Medical Cannabis Transporter
Only a person licensed by the bureau as a transporter may transport medical cannabis goods
between licensees, unless that person is exempt from holding a transporter license pursuant to
Business and Professions Code section 19319.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19300.5(j), 19326(a), and 19334(b), Business and Professions Code.
§ 5119. [RESERVED]
§ 5120. [RESERVED]
§ 5121. [RESERVED]
§ 5122. Transporter May Not Hold Title to Medical Cannabis Goods
A transporter shall not hold title under its transporter license to medical cannabis goods it is transporting. However, a licensed transporter may hold legal title to medical cannabis goods if
the transporter holds title to the medical cannabis goods under another medical cannabis license.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19300.5 and 19328, Business and Professions Code.
§ 5123. [RESERVED]
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§ 5124. Transport Requirements
The following requirements apply when transporting medical cannabis goods:
(a)Transportation by means of aircraft, watercraft, drones, rail, human powered vehicles, and
unmanned vehicles is prohibited.
(b)Medical cannabis goods may only be transported inside of a commercial vehicle or trailer and
may not be visible or identifiable from outside of the commercial vehicle or trailer.
(c)Medical cannabis goods shall be locked in a box that is secured to the inside of the
commercial vehicle or trailer.
(d)While left unattended, the commercial vehicle and trailer shall be locked and secured.
(e)A transporter shall not leave a commercial vehicle containing medical cannabis goods
unattended or parked overnight in a residential area.
(f)At a minimum, a transporter shall have a vehicle alarm system on all transport vehicles.
Motion detectors, pressure switches, duress, panic, and hold-up alarms may also be used.
(g)Packages or containers containing medical cannabis goods may not be tampered with during
transport.
(h) A transporter shall only travel between licensees shipping or receiving medical cannabis
goods and its own licensed premises when engaged in the transportation of medical cannabis
goods. The transporter may transport multiple shipments of medical cannabis goods at once in
accordance with applicable laws. A transporter may not transport non-medical cannabis goods
with medical cannabis goods.
(i)Transport vehicles and all licensed premises are subject to inspection by the bureau.
Commercial vehicles used to transport medical cannabis goods may be inspected by the bureau
at any licensed premises or during transport.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference: Section 19334, Business and Professions Code.
§ 5125. [RESERVED]
§ 5126. Additional Transport Vehicle Application Requirements
(a) With the general licensing application, an applicant for a transporter license shall provide the
following information to the bureau:
(1)Proof of ownership or a valid lease for any and all commercial vehicles that will be used to
transport medical cannabis goods;
(2)The year, make, model, license plate number, and numerical Vehicle Identification Number
(VIN) for any and all commercial vehicles that will be used to transport medical cannabis goods;
and
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(3)Proof of insurance in the amount of $1,000,000 for any and all commercial vehicles being
used to transport medical cannabis goods.
(b)The licensee shall provide the bureau with the information required by this section in writing
for any new commercial vehicle that will be used to transport medical cannabis goods prior to using the commercial vehicle to transport medical cannabis goods.
(c)The licensee shall provide the bureau with any changes to the information required by this
section in writing within 30 calendar days.
Authority: Sections 19302, 19302.1, 19304, and 19334(b), Business and Professions Code.
Reference: Section 19334(b), Business and Professions Code.
§ 5127. [RESERVED]
§ 5128. Transport Personnel Requirements
(a)No person under the age of 21 years old shall be in a commercial vehicle transporting
medical cannabis goods; and
(b) Only a licensed transporter or an employee of the licensee shall be in a vehicle while transporting medical cannabis goods.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19334 and 19337, Business and Professions Code.
§ 5129. [RESERVED]
§ 5130. Transporter Storage of Medical Cannabis Goods
A transporter may store medical cannabis goods on his or her licensed premises for no longer
than 72 hours.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19300.5(am) and 19300.5(an), Business and Professions Code.
§ 5131. [RESERVED]
§ 5132. Storage
(a)A transporter shall ensure all medical cannabis batches are stored separately and distinctly
from other medical cannabis batches on the transporter’s premises.
(b)A transporter shall ensure a label with the following information is physically attached to
each container of each batch:
(1)The manufacturer or transporter’s name and license number;
(2)The date of entry into the transporter’s storage area;
(3)The unique identifiers and batch number associated with the batch;
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 39 of 58
(4)Description of product with enough detail to easily identify the batch; and
(5)Weight of or quantity of units in the batch.
(c)A transporter shall store medical cannabis goods in a building designed to permit control of
temperature and humidity and shall prevent the entry of environmental contaminants such as smoke and dust. The area in which medical cannabis goods are stored shall not be exposed to direct sunlight. A transporter may not store medical cannabis goods outdoors.
(d)Employee break rooms, changing facilities, and bathrooms shall be completely separated
from the storage areas.
(e)A transporter shall store harvest batches and edible cannabis products that require refrigeration at 35 to 42 degrees Fahrenheit. In addition, a transporter shall store harvest batches
in a darkened area with no more than 60% humidity.
Authority: Sections 19302, 19302.1, 19304, and 19334, Business and Professions Code.
Reference: Sections 19300.5, and 19334, Business and Professions Code.
§ 5133. [RESERVED]
§ 5134. [RESERVED]
§ 5135. [RESERVED]
§ 5136. Notification of Shipment
Before transporting any medical cannabis goods, the transporting licensee shall complete an
electronic shipping manifest and transmit it to the bureau and the licensee receiving the shipment.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19335, and 19337, Business and Professions Code.
§ 5137. [RESERVED]
§ 5138. Shipping Manifest
The shipping manifest shall contain the following information:
(a)The name of the licensee;
(b)The names of authorized drivers;
(c)The type and quantity or amount of medical cannabis goods being transported;
(d)The unique identifiers issued by the Department of Food and Agriculture pursuant to Health
and Safety Code section 11362.777;
(e)The quantity and weight or amount of medical cannabis goods being transported;
(f)The time and location of departure;
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 40 of 58
(g)The time and location of expected arrival; and
(h)The make, model, and license plate number of the commercial vehicle.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19327, and 19337, Business and Professions Code.
§ 5139. [RESERVED]
§ 5140. Records
In addition to those records required by section 5056 of this division, a transporter shall maintain
the following records:
(a)Commercial vehicle maintenance and ownership records; and
(b) All shipping manifests for completed transports and for medical cannabis goods in transit.
Authority: Section 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19327, and 19337, Business and Professions Code.
§ 5141. [RESERVED]
§ 5142. Transporter Track and Trace Requirements
A transporter shall enter the following information into the track and trace system:
(a)Name and license number of the transporter;
(b)Date the transporter receives the medical cannabis goods from licensee for transport;
(c)Amount transported, by weight or count;
(d)Date the transporter delivers the medical cannabis goods to the licensee;
(e)The unique identifiers associated with the medical cannabis goods transferred;
(f)Spoilage or fouling of the medical cannabis goods;
(g)Any event resulting in exposure or compromise of the medical cannabis goods; and
(h)Other information required elsewhere by law.
Authority: Sections 19302, 19302.1, 19304, 19335, and 19337, Business and Professions Code. Reference: Sections 19335 and 19337, Business and Professions Code.
§ 5143. [RESERVED]
§ 5144. [RESERVED]
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CHAPTER 4. DISPENSARIES
Article 1. Premises
§ 5145. Subletting of Premises
A licensed dispensary shall not sublet any portion of the licensed premises of the dispensary.
Authority: Sections 19302, 19302.1, 19303, and 19304, Business and Professions Code. Reference: Section 19302, Business and Professions Code.
§ 5146. [RESERVED]
§ 5147. [RESERVED]
§ 5148. Access to Dispensary Premises
(a)Except as stated in subsection (b), access to the licensed premises shall be limited to individuals who are at least 18 years old and have a bona fide business reason for entering the
premises.
(b)An individual younger than 18 years of age may enter the premises to purchase medical
cannabis goods only if the individual is a medical cannabis patient. Any medical cannabis patient younger than 18 years old shall be accompanied by his or her parent, legal guardian, or primary caregiver.
Authority: Sections 19302, 19302.1, 19303, 19304, and 19332, Business and Professions Code.
Reference: Sections 19332, and 19334, Business and Professions Code.
§ 5149. [RESERVED]
§ 5150. [RESERVED]
§ 5151. Limited-Access Areas
(a)A licensed dispensary shall only permit authorized individuals to enter the dispensary
limited-access areas.
(b)Authorized individuals include individuals employed by the licensed dispensary as well as any outside vendors, contractors, or other individuals who have a bona fide business reason for
entering the dispensary limited-access area.
(c)An individual who is not an authorized individual for purposes of entering the dispensary
limited-access areas shall not enter the dispensary limited-access area at any time for any reason.
(d)An individual in the dispensary limited-access area who is not employed by the licensed
dispensary shall be escorted by individuals employed by the licensee at all times within the
dispensary limited-access area.
(e)An individual who enters the dispensary limited-access areas shall be at least 21 years of age.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 42 of 58
(f)The licensed dispensary shall maintain a log of all authorized individuals who are not
employees of the dispensary that enter the dispensary limited-access area. These logs shall be
made available to the bureau upon request.
(g)A licensed dispensary shall not receive consideration or compensation for permitting an individual to enter the dispensary limited-access area.
Authority: Sections 19302, 19302.1, 19303, 19304, and 19334, Business and Professions Code.
Reference: Section 19334 Business and Professions Code.
§ 5152. [RESERVED]
§ 5153. [RESERVED]
Article 2. Retail Sales
§ 5154. Retail Area
(a) Individuals shall only be granted access to the area to purchase medical cannabis goods after
the licensee has identified the individual as a medical cannabis patient or a primary caregiver. Prior to identifying an individual as a medical cannabis patient or a primary caregiver, a licensed dispensary shall verify that the individual has the following:
(1)A valid physician recommendation for medical cannabis in compliance with Health and
Safety Code sections 11362.5 et seq.
(2)A valid proof of identification. Acceptable forms of identification include the following:
(A)A document issued by a federal, state, county, or municipal government, or a political
subdivision or agency thereof, including, but not limited to, a valid motor vehicle operator's
license, that contains the name, date of birth, physical description, and picture of the person; or
(B) A valid identification card issued to a member of the Armed Forces that includes a date of
birth and a picture of the person; or
(C)A valid passport issued by the United States or by a foreign government.
(3) In the case of a primary caregiver, valid written documentation containing the signature and
the printed name of the medical cannabis patient designating the individual as a primary
caregiver for a medical cannabis patient.
(b)The licensee or its employees shall be physically present in the retail area at all times when
there are individuals who are not employees of the licensed dispensary in the retail area.
Authority: Sections 19302, 19302.1, 19303, and 19304, Business and Professions Code.
Reference: Sections 19302.1, 19303, and 19304, 19323, and 19324, Business and Professions
Code.
§ 5155. [RESERVED]
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§ 5156. [RESERVED]
§ 5157. Hours of Operation
(a)A licensed dispensary may only sell medical cannabis goods during the hours of 6:00 a.m.
Pacific Time to 9:00 p.m. Pacific Time.
(b)At any time the licensed dispensary is not open for retail sales, the licensee shall ensure the
following:
(1)The premises shall be securely locked with commercial-grade, non-residential door locks;
(2)The premises shall be equipped with an active alarm system;
(3)When closed for retail business, all medical cannabis goods shall be stored in a locked safe or
vault on the licensed premises; and
(4)Only authorized employees and contractors of the licensee shall be allowed to enter the
premises after hours.
Authority: Sections 19302, 19302.1, 19303, and 19304, Business and Professions Code.
Reference: Sections 19332, 19303, and 19334, Business and Professions Code
§ 5158. [RESERVED]
§ 5159. [RESERVED]
§ 5160. Dispensary Customers
(a)A licensed dispensary shall only sell medical cannabis goods to medical cannabis patients or
the primary caregivers of medical cannabis patients.
(b)A licensed dispensary shall verify the identity of a medical cannabis patient or primary
caregiver as required by section 5154 of this division.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19302.1, 19323, 19324, Business and Professions Code.
§ 5161. [RESERVED]
§ 5162. [RESERVED]
§ 5163. Medical Cannabis Goods Display
(a)The display of medical cannabis goods for sale shall only occur in the retail area during the
operating hours of the licensed dispensary.
(b)The licensee shall not display any medical cannabis goods in areas outside of the retail area. The licensed dispensary shall not display medical cannabis goods in a place where it is visible
from outside the licensed premises.
(c)Medical cannabis goods on display shall not be readily accessible to the customers.
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(d)The amount of medical cannabis goods that are displayed shall not exceed the average
amount of medical cannabis goods the licensed dispensary sells during an average one day
period. The remainder of the licensee’s inventory of medical cannabis goods shall be stored in
accordance with section 5214 of this division.
(e)Medical cannabis goods may be removed from their packaging and placed in containers to
allow for customer inspection. The containers shall not be readily accessible to customers
without assistance of dispensary personnel. A container must be provided to the customer by the
licensee or employee, who shall remain with the customer at all times that the container is being
inspected by the customer.
(f)Medical cannabis goods removed from their packaging for display shall not be sold, shall not be consumed, and shall be destroyed pursuant to section 5080 of this division when the medical
cannabis goods are no longer used for display.
Authority: Sections 19302, 19302.1, 19303, 19304, and 19334, Business and Professions Code.
Reference: Sections 19303, and 19334, Business and Professions Code.
§ 5164. [RESERVED]
§ 5165. [RESERVED]
§ 5166. Medical Cannabis Goods for Sale
(a)A licensed dispensary shall not make any medical cannabis goods available for sale or
delivery to a medical cannabis patient or primary caregiver unless:
(1)The medical cannabis goods were received from a licensed distributor and delivered to the
dispensary by a licensed transporter; and
(2)The licensed dispensary has verified that the medical cannabis goods have not exceeded their
expiration or sell-by date if one is provided.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference: Sections 19326, 19347.5, 19347.6, and 19347, Business and Professions Code.
§ 5167. [RESERVED]
§ 5168. [RESERVED]
§ 5169. [RESERVED]
§ 5170. [RESERVED]
§ 5171. [RESERVED]
§ 5172. Daily Limits
(a)A licensee shall not sell more than eight ounces of medical cannabis in a single day to a
single medical cannabis patient.
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(b)A licensee shall not sell more than eight ounces of medical cannabis in a single day to a
primary caregiver for each medical cannabis patient that the primary caregiver is authorized to
purchase for.
(c) If a medical cannabis patient or primary caregiver has a physician’s recommendation that eight ounces of medical cannabis in a single day does not meet the medical cannabis patient’s
medical needs, the medical cannabis patient or primary caregiver may purchase an amount of
medical cannabis consistent with the patient’s needs as recommended by a physician.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, and 19303, Business and Professions Code; Section 11362.77, Health and
Safety Code.
§ 5173. [RESERVED]
§ 5174. [RESERVED]
§ 5175. Medical Cannabis Goods Returned by Medical Cannabis Patients or Primary
Caregivers
(a) For the purposes of this section, a medical cannabis patient or primary caregiver return means
a return of medical cannabis goods that were purchased from a dispensary back to the dispensary
the medical cannabis goods were purchased from.
(b) A licensed dispensary may accept patient or primary caregiver returns of medical cannabis
goods that were previously sold to the medical cannabis patient or primary caregiver returning the medical cannabis goods. A primary caregiver may return medical cannabis goods sold to a
patient for whom he or she provides care.
(c)A licensed dispensary shall not resell medical cannabis goods that have been returned.
(d)A licensed dispensary shall treat any medical cannabis goods abandoned on the dispensary
premises as a patient return.
(e)A licensed dispensary shall destroy all medical cannabis goods that have been returned to a
dispensary by a medical cannabis patient or primary caregiver, in accordance with section 5080
of this division.
Authority: Sections 19302, 19302.1, 19304, and 19347.6, Business and Professions Code.
Reference: Section 19302.1, Business and Professions Code.
§ 5176. [RESERVED]
§ 5177. [RESERVED]
§ 5178. Customer Samples
(a)A licensed dispensary shall not provide free samples of medical cannabis goods to any
person.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 46 of 58
(b)A licensed dispensary shall not allow representatives of other companies or organizations to
provide free samples of medical cannabis goods to individuals on the licensed dispensary
premises.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference: Section 19303, Business and Professions Code.
§ 5179. [RESERVED]
§ 5180. [RESERVED]
§ 5181. Packaging and Labeling
(a)A dispensary shall not accept from a distributor medical cannabis goods that are not packaged
as they will be sold at final sale, in compliance with this division.
(b)A dispensary shall not purchase dried flower that is not already packaged for final sale, in
compliance with this division.
(c) A dispensary shall not package or label medical cannabis goods.
Authority: Sections 19300.5(j), 19302, 19304, and 19326, Business and Professions Code.
Reference: Sections 19302 and 19326, Business and Professions Code.
§ 5182. [RESERVED]
§ 5183. [RESERVED]
§ 5184. Exit Packaging
(a)Medical cannabis goods purchased by a customer shall not leave the licensed dispensary
premises unless they are placed in an exit package.
(b)An exit package shall meet all of the following requirements:
(1)The package shall be designed or constructed to be significantly difficult for children under
five years of age to open and not difficult for adults to use properly, as defined by 16 C.F.R.
1700.20.
(2)The package shall be opaque so that the medical cannabis goods cannot be seen from outside
the packaging.
(3)For any medical cannabis goods that are intended for more than a single use, the package
shall have the ability to be resealed.
(4)The package shall be labeled properly pursuant to the Act and this division.
(c)This section does not apply to medical cannabis goods that are sold in packages that are
child-resistant pursuant to the Act and this division.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19303, Business and Professions Code.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 47 of 58
§ 5185. [RESERVED]
Article 3. Delivery
§ 5186. [RESERVED]
§ 5187. Delivery
(a)All deliveries of medical cannabis goods must be performed by a delivery employee of a
licensed dispensary.
(b)Each delivery employee of a licensed dispensary shall be at least 21 years of age.
(c)A licensed dispensary shall not use the services of an independent contractor or courier service to deliver medical cannabis goods.
(d)All deliveries of medical cannabis goods shall be made in person. A delivery of medical
cannabis goods shall not be made through the use of an unmanned vehicle.
(e) A delivery employee begins the process of delivering when the delivery employee leaves the
dispensary premises with the medical cannabis goods for delivery. The process of delivering ends when the delivery employee returns to the licensed dispensary premises after delivering the
medical cannabis goods to the medical cannabis patients or primary caregivers.
(f)A delivery employee of a licensed dispensary shall, during deliveries, carry a copy of the
dispensary’s current license, the employee’s government-issued identification, and an employer
provided badge containing a picture and the name of the delivery employee.
(g)A licensed dispensary shall maintain an accurate list of the dispensary’s delivery employees.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, 19303, 19334, and 19340, Business and Professions Code.
§ 5188. [RESERVED]
§ 5189. [RESERVED]
§ 5190. Delivery to Physical Address
(a)A licensed dispensary may only deliver medical cannabis goods to a physical address in
California.
(b)A licensed dispensary delivery employee shall not leave the state of California while
possessing medical cannabis goods.
(c)A licensed dispensary shall not deliver medical cannabis goods to an address located on
publicly owned land or any address on land or in a building leased by a public agency.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, 19303, 19334, and 19340, Business and Professions Code.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 48 of 58
§ 5191. [RESERVED]
§ 5192. [RESERVED]
§ 5193. Methods of Delivery
(a)A delivery employee of a licensed dispensary, carrying medical cannabis goods for delivery, shall only travel in an enclosed motor vehicle operated by the delivery employee or another
delivery employee of the licensee.
(b)While carrying medical cannabis goods for delivery, a delivery employee of a licensed
dispensary shall ensure the medical cannabis goods are not visible to the public.
(c)A delivery employee of a licensed dispensary shall not leave medical cannabis goods in an unattended motor vehicle unless the motor vehicle is equipped with an active vehicle alarm system.
(d)A vehicle used for the delivery of medical cannabis goods shall be outfitted with a dedicated
Global Positioning System (GPS) device for identifying the geographic location of the delivery
vehicle. A dedicated GPS device does not include a phone or tablet. The device shall be either permanently or temporarily affixed to the delivery vehicle and shall remain active and inside of
the delivery vehicle at all times during delivery. At all times, the licensed dispensary shall be
able to identify the geographic location of all delivery vehicles that are making deliveries for the
dispensary and shall provide that information to bureau upon request.
(e)Upon request, a licensed dispensary shall provide the bureau with information regarding any motor vehicles used for the delivery of medical cannabis goods, including the vehicle’s make,
model, color, Vehicle Identification Number, and license plate number.
(f)Any motor vehicle used by a licensed dispensary to deliver medical cannabis goods is subject
to inspection by the bureau. Vehicles used to deliver medical cannabis goods may be stopped and
inspected by the bureau at any licensed premises or during delivery.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, 19303, 19334, and 19340, Business and Professions Code.
§ 5194. [RESERVED]
§ 5195. [RESERVED]
§ 5196. Delivery Hours of Operation
A licensed dispensary shall only deliver medical cannabis goods to medical cannabis patients
and primary caregivers during the hours of 6:00 a.m. and 9:00 p.m. Pacific Time.
Authority: Sections 19302, 19302.1(d), and 19304, Business and Professions Code. Reference:
Sections 19302.1(d), 19303, 19334(a)(1), 19340, Business and Professions Code.
§ 5197. [RESERVED]
§ 5198. [RESERVED]
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 49 of 58
§5199. Medical Cannabis Goods Carried During Delivery
While making deliveries, a delivery employee of a licensed dispensary shall not carry medical
cannabis goods in excess of $3,000 at any time. This value shall be determined using the retail
price of all medical cannabis goods carried by the delivery employee.
Authority: Sections 19302, and 19304, Business and Professions Code. Reference: Sections 19302.1, 19303, 19334, and 19340, Business and Professions Code.
§ 5200. [RESERVED]
§ 5201. [RESERVED]
§ 5202. Medical Cannabis Consumption During Delivery
Delivery employees of a licensed dispensary shall not consume medical cannabis goods while
delivering medical cannabis goods to medical cannabis patients or primary caregivers.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, 19303, 19334, and 19340, Business and Professions Code.
§ 5203. [RESERVED]
§ 5204. [RESERVED]
§ 5205. Delivery Request Receipt
A licensed dispensary shall prepare a delivery request receipt for each delivery of medical
cannabis goods.
(a)The delivery request receipt shall contain the following:
(1)The name and address of the licensed dispensary.
(2)The name of the delivery employee of the licensed dispensary who delivered the order.
(3)The name of the licensed dispensary employee who prepared the order for delivery.
(4) A patient identification number for the medical cannabis patient who is requesting the
delivery. Upon request from the bureau, a licensed dispensary shall provide the name of the medical cannabis patient associated with the patient identification number listed on the delivery
request receipt.
(5)The date and time the delivery request was made.
(6)The delivery address.
(7)A detailed description of all medical cannabis goods requested for delivery. The description shall include the weight, volume, or any other accurate measure of the amount of any medical
cannabis goods requested.
(8)The total amount paid for the delivery, including any taxes and fees.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 50 of 58
(9)Upon delivery, the date and time the delivery was made, and the signature of the medical
cannabis patient or primary caregiver who received the delivery.
(b)At the time of the delivery, the delivery employee of the licensed dispensary shall provide the medical cannabis patient, or primary caregiver, who placed the order a copy of the delivery
request receipt. The delivery employee shall retain a signed copy of the delivery request receipt
for the dispensary’s records.
(c)The delivery request receipt shall comply with state and federal law regarding the protection
of confidential medical information.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference: Sections 19302.1, 19303, 19327, 19334, and 19340, Business and Professions Code.
§ 5206. [RESERVED]
§ 5207. [RESERVED]
§ 5208. Delivery Route
While making deliveries of medical cannabis goods, a delivery employee of a licensed
dispensary shall only travel from the licensed dispensary premises to the delivery address; from
one delivery address to another delivery address; or from a delivery address back to the licensed
dispensary premises. A delivery employee of a licensed dispensary shall not deviate from the
delivery path described in this section, except for necessary rest, fuel, or vehicle repair stops, or
because road conditions make continued use of the route unsafe, impossible, or impracticable.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, 19303, 19334, and 19340, Business and Professions Code.
§ 5209. [RESERVED]
Article 4. Producing Dispensary
§ 5210. [RESERVED]
§ 5211. Producing Dispensary License
(a)To obtain a Type-10A producing dispensary license, a licensee shall either:
(1)Hold at least one Type-10 dispensary license; or
(2)Concurrently apply for at least one Type-10 dispensary license.
(b)A licensee holding a Type-10A producing dispensary license shall designate a licensed Type
10 dispensary facility held by the licensee to concurrently hold both a Type-10 dispensary
license and the Type-10A producing dispensary license.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 51 of 58
(c)A licensee shall hold a separate Type-10 dispensary license for each dispensary facility he or
she operates.
(d)A licensee who holds a Type-10A producing dispensary license shall not hold licenses for
more than three Type-10 dispensary facilities.
(e)A licensee who holds a Type-10A producing dispensary license may apply for licenses in other license categories as allowed under Business and Professions Code section 19328(a).
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19328 and 19334, Business and Professions Code.
§ 5212. [RESERVED]
Article 5. Inventory and Records
§ 5213. [RESERVED]
§ 5214. Storage of Inventory
(a) A dispensary shall store medical cannabis goods in a building designed to permit control of temperature and humidity and shall prevent the entry of environmental contaminants such as
smoke and dust. The area in which medical cannabis goods are stored shall not be exposed to
direct sunlight. A dispensary may not store medical cannabis goods outdoors.
(b)Employee break rooms, changing facilities, and bathrooms shall be completely separated
from the storage areas.
(c) A dispensary shall store harvest batches and edible cannabis products that require
refrigeration at 35 to 42 degrees Fahrenheit. In addition, a dispensary shall store harvest batches
in a darkened area with no more than 60% humidity.
Authority: Sections 19302, 19302.1, 19304, and 19334, Business and Professions Code.
Reference: Sections 19300.5, and 19334, Business and Professions Code.
§ 5215. [RESERVED]
§ 5216. [RESERVED]
§ 5217. Receiving Shipments of Inventory
(a)A licensed dispensary shall only receive a shipment of medical cannabis goods from a
licensed transporter.
(b)A licensed dispensary shall only accept shipments of medical cannabis goods between the
hours of 6:00 a.m. Pacific Time to 9:00 p.m. Pacific Time.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 52 of 58
(c)During business hours, any shipment of medical cannabis goods accepted by the licensed
dispensary shall not enter the premises through an entrance that is available for use by the public
to enter or exit the premises.
(d)Upon accepting a shipment of medical cannabis goods from a licensed transporter, the licensed dispensary shall immediately place the products in a secured and locked room, safe, or
vault in a manner as to prevent diversion, theft, and loss.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, 19303, 19326, 19327, and 19334, Business and Professions Code.
§ 5218. [RESERVED]
§ 5219. [RESERVED]
§ 5220. Inventory Documentation
A licensed dispensary shall maintain an accurate record of its inventory. A licensed dispensary
shall provide the bureau with a record of its current inventory upon request. The licensed
dispensary shall keep a record of the following information for all medical cannabis goods the
licensed dispensary has in its inventory:
(a)A description of each item in the licensed dispensary’s inventory. This description will be
such that the medical cannabis goods can easily be identified;
(b)An accurate measurement of the quantity of the item;
(c)The date and time the product was received by the licensed dispensary;
(d)The sell-by or expiration date on any medical cannabis goods, if any;
(e)The name and license number of the licensed transporter that delivered the medical cannabis
goods;
(f)The name and license number of the licensed distributor that provided the medical cannabis
goods to the licensed dispensary; and
(g)The price the licensed dispensary payed for the medical cannabis goods, including taxes,
delivery costs, or any other costs.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1, and 19327, Business and Professions Code.
§ 5221. [RESERVED]
§ 5222. [RESERVED]
§ 5223. Inventory Reconciliation
(a)A licensed dispensary shall perform a reconciliation of its inventory at least once every seven
days.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 53 of 58
(b)A licensed dispensary shall verify that the dispensary’s physical inventory matches the
licensed dispensary’s records pertaining to inventory.
(c)The result of inventory reconciliation shall be retained in the dispensary’s records and shall
be made available to the bureau upon request.
(d) If a licensed dispensary identifies any evidence of theft, diversion, or loss, the licensed dispensary shall notify the bureau and law enforcement pursuant to section 5235 of this division.
(e) If a significant discrepancy is discovered between a licensed dispensary’s physical inventory
and the licensed dispensary’s inventory records, the licensed dispensary shall notify the bureau
and law enforcement pursuant to section 5235 of this division.
(f) For the purpose of this section, a significant discrepancy in inventory means a difference of at
least $1,000 of product within a seven day period or at least $2,000 of product in a 30-day
period. The price paid by the dispensary to acquire the product is the value to be used in this
assessment.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Sections 19302.1(d), and 19327, Business and Professions Code.
§ 5224. [RESERVED]
§ 5225. [RESERVED]
§ 5226. Record of Sales
(a)A licensed dispensary shall maintain an accurate record of every sale made to a medical
cannabis patient or primary caregiver.
(b)A record of a sale shall contain the following information:
(1)The name of the licensed dispensary employee who processed the sale;
(2) The name of the medical cannabis patient or primary caregiver who made the purchase;
(3)The date and time of the transaction;
(4)A list of all of the medical cannabis goods purchased, including the quantity purchased; and
(5)The total amount paid for the sale including the individual prices paid for each medical
cannabis good purchased and any amounts paid for taxes.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19327, Business and Professions Code.
§ 5227. [RESERVED]
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 54 of 58
Article 6. Other Requirements
§ 5228. [RESERVED]
§ 5229. Grace Period for Compliance
Up to 180 days after the date of licensure or December 31, 2018, whichever is sooner, a dispensary may sell its inventory of untested medical cannabis goods if the dispensary places a
label on each package it sells with the date of purchase and the following statement: “This
product has not been tested under the Medical Cannabis Regulation and Safety Act.” During the
time period allowed by this section, a dispensary may package and sell medical cannabis goods
that have not been packaged by a cultivator or distributor before it is transported to the
dispensary as required by this division.
Authority: Sections 19302, 19302.1, and 19304, Business and Professions Code. Reference:
Section 19334 Business and Professions Code.
§ 5230. [RESERVED]
§ 5231. [RESERVED]
§ 5232. Dispensary Track and Trace Requirements
A dispensary shall enter the following events into the track and trace system:
(a)Receipt of medical cannabis goods from a distributor or transporter;
(1)Enter the following information:
(A)Distributor’s name and license number;
(B) Name of licensee who transported the medical cannabis goods and license number;
(C)Type of medical cannabis goods received;
(D)Amount received, by weight or count;
(E) Best-by, sell-by, or expiration date, if any, of each product received;
(F)The date of receipt of medical cannabis goods;
(G)The unique identifiers associated with the medical cannabis goods received; and
(H) Other information required elsewhere by law.
(b)Sale of medical cannabis goods to a medical cannabis patient or primary caregiver;
(1)Enter the following information:
(A)The name of the licensed dispensary employee who processed the sale;
(B) The name or a patient identification number of the medical cannabis patient or primary
caregiver who made the purchase;
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 55 of 58
(C)The date and time of the transaction;
(D)A list of all of the medical cannabis goods purchased, including a description of the quantity
purchased;
(E)The unique identifiers associated with the medical cannabis goods sold; and
(F) Other information required elsewhere by law.
(c)Return of medical cannabis goods from a medical cannabis patient or primary caregiver;
(1)If a dispensary accepts a return of medical cannabis goods from a medical cannabis patient or
a primary caregiver, the dispensary shall enter the following information:
(A)The name of the licensed dispensary employee who processed the return;
(B)The name or a patient identification number of the medical cannabis patient or primary
caregiver who made the purchase;
(C)The date and time of the transaction;
(D)A list of all of the medical cannabis goods returned, including a description of the quantity
purchased;
(E) The unique identifiers associated with the medical cannabis goods; and
(F) Other information required elsewhere by law.
(d)Return of medical cannabis goods to a distributor;
(1)Enter the following information:
(A)Distributor’s name and license number;
(B) Name of licensee who transported the medical cannabis goods and license number;
(C)Type of medical cannabis goods returned;
(D)Amount received, by weight or count;
(E) Best-by, sell-by, or expiration date, if any, of each medical cannabis good returned;
(F)The date of the return of medical cannabis goods;
(G)The unique identifiers associated with the medical cannabis goods returned; and
(H) Other information required elsewhere by law.
(e)Destruction of medical cannabis goods;
(1)Enter the following information:
(A)The name of the licensed dispensary employee who performed the destruction;
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 56 of 58
(B)The date and time of the destruction;
(C)A list of all of medical cannabis goods destroyed, including a description of the quantity
destroyed;
(D)The unique identifiers associated with the medical cannabis goods destroyed; and
(E) Other information required elsewhere by law.
(f)Transfer of medical cannabis goods to a distributor for destruction;
(1)Enter the following information:
(A)Distributor’s name and license number;
(B) Name of licensee who transported the medical cannabis goods and license number;
(C)Type of medical cannabis goods transferred;
(D)Amount transferred, by weight or count;
(E)The date of the transfer of medical cannabis goods;
(F) The unique identifiers associated with the medical cannabis goods transferred; and
(G) Other information required elsewhere by law.
Authority: Sections 19302, 19302.1, 19304, 19335, 19337, Business and Professions Code.
Reference: Sections 19335 and 19337, Business and Professions Code.
§ 5233. [RESERVED]
§ 5234. [RESERVED]
§ 5235. Law Enforcement Notification
(a)A licensed dispensary shall notify law enforcement and the bureau within 24 hours of
discovery of any of the following situations:
(1)The licensed dispensary discovers a significant discrepancy as defined in section 5223 of this
division in its inventory.
(2)The licensed dispensary becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity pertaining to the operation of the dispensary.
(3)The licensed dispensary becomes aware of or has reason to suspect diversion, theft, loss, or
any other criminal activity by an agent or employee of the dispensary pertaining to the operation
of the dispensary.
(4)The licensed dispensary becomes aware of or has reason to suspect the loss or unauthorized alteration of records related to medical cannabis goods, registered medical cannabis patients or
primary caregivers, or dispensary employees or agents.
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 57 of 58
(5) The licensed dispensary becomes aware of or has reason to suspect any other breach of
security.
Authority: Sections 19302, 19302.1, 19303, 19304, and 19334, Business and Professions Code.
Reference: Sections 19302.1, 19303, and 19334(b), Business and Professions Code.
§ 5236. [RESERVED]
Bureau of Marijuana Control, Medical Cannabis Regulation Proposed Text Page 58 of 58
Proposed Background Check Standards
The following standards are proposed to be adopted as part of the Medicinal
Cannabis Retailer Permit rules.
For the purpose of the background review, a conviction means a plea or verdict of
guilty or a conviction following a plea of nolo contendere (“No Contest”).
An applicant shall be fingerprinted and undergo a background check by the Santa
Monica Police Department who will provide the results of the findings to the
Director of Planning and Community Development or designee.
The city may deny, suspend, or revoke a permit for any of the following:
1. Any person associated with the application has made one or more false or
misleading statements, or omissions on the application or during the
application process.
2. Fails to provide information required by the City.
3. The applicant, owner, or licensee has been convicted of an offense that is
substantially related to the qualifications, functions, or duties of the business
or profession for which the application is made.
4. In determining which offenses are substantially related to the qualifications,
functions, or duties of the business or profession for which the application is
made, the licensing authority shall include, but not be limited to, the following:
a. A violent felony conviction, as specified in subdivision (c) of Section
667.5 of the Penal Code.
b. A serious felony conviction, as specified in subdivision (c) of Section
1192.7 of the Penal Code.
c. A felony conviction involving fraud, deceit, or embezzlement.
d. A felony conviction for hiring, employing, or using a minor in
transporting, carrying, selling, giving away, preparing for sale, or
peddling, any controlled substance to a minor; or selling, offering to sell,
furnishing, offering to furnish, administering, or giving any controlled
substance to a minor.
Attachment H
e. A felony conviction for drug trafficking with enhancements pursuant to
Section 11370.4 or 11379.8 of the Health and Safety Code.
5. The applicant, or any of its officers, directors, or owners, has been subject to
fines, penalties, or otherwise been sanctioned for cultivation or production of
a controlled substance on public or private lands pursuant to Section 12025 or
12025.1 of the Fish and Game Code.
6. The applicant, or any of its officers, directors, or owners, has been sanctioned
by a licensing authority or a city, county, or city and county for unauthorized
commercial cannabis activities, has had a license suspended or revoked under
this division in the three years immediately preceding the date the application
is filed with the licensing authority.
7. Failing to obtain and maintain a valid seller’s permit required pursuant to Part
1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation
Code.
In consultation with the Police Department and City Attorney, if the Director of
Planning and Community Development or designee, determines that the
applicant, owner, or licensee is otherwise suitable to be issued a license, and
granting the license would not compromise public safety, the Director of Planning
and Community Development or designee may conduct a thorough review of the
nature of any crime, conviction, circumstances, and evidence of rehabilitation of
the applicant or owner, and may evaluate the suitability of the applicant, owner,
or licensee to be issued a permit based on the evidence found through the
review.
[end]
Presents Cannabis 101
Hosted by the Ocean Park Associa
Item 7-A
10/10/17
2 of 2 Item 7-A
10/10/17
Cannabis Regulations
October 10, 2017
Item 7-A
•March 7, 2017 Study Session
–Create a Regulatory Permit and Selection Process
–Prohibit Non-Medicinal Cannabis Business Activities
•Council Defined this as Temporary to Allow for Public Process
–Consider Options for Light Manufacturing
–Amend SMMC to Address Changes in State Law
•June 27, 2017 SB 94 “MAUCRSA” Adopted
–Consolidated Medicinal & Non-Medicinal Regulations
–Clarified Some Regulations (e.g. Open Container)
–Authorized Retail Sales via Deliver Only (no store front)
•State Draft Regulations –November 2018 (est.)
•State Licenses -January 1, 2018
Introduction
•Align with Comprehensive State Regulations
–Repeal sub-sections I, K, and L of Section 9.31.185 of the SMMC
•I. Staffing and Securing (State Law and Local Operational Regulations)
•K. Patron Notification / On Site Posting (State Law)
•L. Prohibited Activities / No alcohol or tobacco sales (State Law)
–Re-Alignment, not Reduction
•Definitions
–Replace “Medical Marijuana Dispensary” with “Medicinal Cannabis
Retailer”
–Update Industry, Limited Classification
•Allows for Medicinal Cannabis Light Manufacturing
•Prohibits Non-Medicinal Commercial Activities
–Provides Time to Initiate Public Process
Interim Zoning Ordinance
Statewide Regulations –Overview
Medicinal and Non-Medicinal
•Personal Cultivation and Use
•Commercial Activities
–Retail Sales
–Distribution
–Te sting
–Cultivation
–Manufacturing
•Commercial On-Site Consumption
•Special Event Permits for On-Site Sale & Use at Temporary Events
Complete
Local Control
Local Regulation
Authorized
To night’s Discussion
Medicinal and Non-Medicinal
•Personal Cultivation and Use
•Distribution
•Te sting
•On-Site Consumption
•Special Event Permits for On-Site Sale & Use
•Retail Sales
–Only 2
– 2,500 sq ft
–Within a Limited Zone
–Distancing
•Commercial Cultivation
– 375 sq ft (15%)
–Only by City Authorized Retailer within the Retail Location
•Manufacturing
–Light Manufacturing, No Volatile Solvents
–Assembly Only, No Extractions
–Office Campus Zone (with CUP)
–Industrial Conservation Zone
Medicinal Cannabis
Retail Sales and Cultivation
Medicinal Cannabis Retail Zones
Prohibited within
600 Feet of a:
•Child Care Center
•Early Education Center
•Day Care Center
•Park
•School
•Library
•Social Services Center
•Other Medicinal Cannabis
Retailer
Challenges
•Limited Space Options
•“Surge” Lease Costs
Medicinal Cannabis Retail Sales
Operational Approval Phases
1.Operational Review
–Selection Process
–Land Use Process
2.Compliance Review
3.Permit Issuance
Medicinal Cannabis Retail Sales
Phase 1: Operational Review
•Selection Process
–Request for Applications
–Defined Application Period
–Objective Standards with Ratings
–Evaluation Committee Rankings
–Selection Decision Made by Director of Planning or Designee
–Preliminary Selection Letter Issued
–Appeal Period
–List Expiration
•Land Use Process
–Identify Location
–Conditional Use Permit Process
–Other Entitlement Processes (e.g ARB, Landmarks)
Medicinal Cannabis Retail Sales
Phase 2: Compliance Review
(Overlap with Entitlement Period)
•State Licensing
–Bureau of Cannabis Control (BCC)
•Retailers (M-Type 10)
–Department of Food and Agriculture (DFA)
•Specialty Indoor, Small, <500 sq. ft. (M-Type 1A)
•Te nant Improvement/Build Out
–Standard Development Review Process
•B&S
•Fire
•Water Resources
•Santa Monica Business License Application Submittal
–Fees
–State Permit Verification
•Other State or County Permits (e.g. Health Dept., Board of Equalization)
Medicinal Cannabis Retail Sales
Phase 3: Permit Issuance
•Pre-Permit Issuance Compliance Inspection
•Permit and Business License Issuance
Medicinal Cannabis
Light Manufacturing
Medicinal Cannabis Light Manufacturing
Proposed IZO
•Light Manufacturing
•No Volatile Solvents / Extractions
–Vo latile Solvents (e.g. Butane)
–Concentrates (e.g. Oils, Shatter, Budder/Wax)
•Assembly Only
Medicinal Cannabis Light Manufacturing
Updated Definition to Existing Classification
Industry, Limited
•Light industrial activities producing minimal impacts on
adjacent properties. Includes light manufacturing, such as
packaging of foods for off-site consumption (e.g. wholesale
bakery, frozen foods)
•Added: “medicinal cannabis, and medicinal cannabis
products for off-site use or consumption using nonvolatile
solvents, or no solvents”
Medicinal Cannabis Light Manufacturing
Utilizing Existing Zones
•Office Campus
–Provides for office and advanced technology uses, scientific research, and administration, and limited manufacturing of related products which require large expanses of floor area.
–CUP Required
–Uses must be conducted within an enclosed building or an open enclosure screened from public view. In order to approve a CUP, a finding that proposed uses are compatible with abutting residential neighborhoods is required.
•Industrial Conservation
–Intended to preserve space for small-scale industrial and manufacturing businesses
16Medicinal Light
Manufacturing
Proposed:
•Office Campus (OC)
•Industrial Cons. (IC)
Medicinal Light Manufacturing
Permit Issuance
•Regulatory Permit and Business License
–Zoning Conformance Review
•State Licensing
–Department of Public Health
•Manufacture 1 -Non Volatile or No Solvents (M-Type 6)
•Te nant Improvement/Build Out
–Standard Development Review Process
•B&S
•Fire
•Water Resources
Operating Permit Fees
Cost recovery Fee
$99.58 Administrative Processing
$361.88 Two Hour Compliance Inspection
Proposed Annual Permit Fees
Annual Medicinal Cannabis Retailer Permit $1,822.10
Annual Medicinal Cannabis Light Manufacturing Permit $ 99.58
New Medicinal Cannabis Retailer Permits-Prorated
July –September (4 Inspections)$1,822.10
October –December (3 Inspections)$1,391.47
January –March (2 Inspections) $ 960.84
April –June (1 Inspection)$ 530.21
Business License Taxes
•Current
–Retailers and Manufactures
•Tax Group I
•$75 on the first $60,000
•$1.25 per $1,000 (.125%)
•Evaluate
–Community Impacts
–Increased Demands on Law Enforcement
–Public Health Education –Yo uth, Tourism
–Needed Funding, Resources, Programs
•Consider
–Ballot Initiative
–New Cannabis Classification(s) and Rates
Next Steps
•Extend IZO Within 60 Days of IZO’s Effective Date
•Draft Administrative Regulations
•Initiate Request for Application and Establish a Review Committee
•Provide State with Copy City’s Cannabis Ordinance Regulations and Contact Person
•Train Staff
•Evaluate Track and Trace Technologies with State, Identify Implementation Needs
•Initiate Public Process
–Consider Commercial Cannabis Adult Non-Medicinal Use Activities
–Consider Other Medicinal Commercial Use Activities
–Consider Commercial On-Site Consumption
•Evaluate Necessity for Additional Fees or Taxes to Fund Enforcement, Compliance, and Education Programs (e.g. Tourism and Youth)
•Return to Planning Commission and Council with Recommended Changes to the Zoning Ordinance
Questions?
Cannabis Regulations
October 10, 2017
Item 7-A
-Public Health
-Education
-To urism
Forms of Butane Hash Oils (BHO)
Shatter Oil
Budder/Wax
REFERENCE:
RESOLUTION NO. 11080
(CCS)