What To Know About California’s Emergency Cannabis Regulations - Wealthy Venture Capitalist

What To Know About California’s Emergency Cannabis Regulations

As California inches closer to the launch of its legal cannabis market with sales expected to begin by January 1, law makers have been burning the midnight oil to ensure key legislations are passed to regulate the industry.

Last month state regulators announced a package of emergency rules that would help guide this transition.

Top among the list of key takeaways from the new regulations was the introduction of product limits. For consumers or medical patients, the state decided to limit the serving size of edibles to 10mg of THC with no more than 100mg allowed in a single product package.

Although such regulation is consistent with other states that have legalized marijuana use, it is important to note that most allow for greater amounts of THC in products for the medical market. Furthermore, the regulations limit the shape of edibles and prohibit the use of human-like, animals, insects or fruit shapes in order to prevent them from appealing to children.

For non-edible cannabis products intended for adult use, they may contain up to 100mg of THC in each package, medical products can contain twice as much while use in perishable products other than beverages is also prohibited.

Secondly, the regulations impose limits on the amount of cannabis a consumer or medical patient can purchase from a single retailer in a single day. For adult use, customers can buy 28.5 grams of non-concentrated cannabis, eight grams of concentrate and six immature plants while medical patients will have higher limits. Gifts and product giveaways won’t be allowed for recreational use but will however be allowed for medical patients.

When it comes to retail, stores will only be allowed to operate between 6 a.m. and 10 p.m. with deliveries restricted to being made only by a delivery employee of a licensed retailer. It will be illegal to make deliveries on bikes as the new regulations require this to be done in an enclosed vehicle only.

Retail stores and medical dispensaries will need be a minimum of 600 feet from a K-12 school, daycare center or youth center in existence when the license is issued. Any form of window displays is forbidden and any interior displays should not be visible to the outside public.

The emergency regulations also require that cannabis products be tested to measure: cannabinoids, foreign materials, heavy metals, microbial impurities, mycotoxins, moisture content and water activity, residual solvents and processing chemicals and terpenoids.

Edibles will also be tested to make sure that concentrations of THC and CBD have been spread evenly across servings in a product package and only after meeting state standards can they proceed to be sold. However, if they don’t, the products can be additionally ‘processed for remediation’ and tested again but if they fail for a second time, the entire batch is to be destroyed.

Initially, samples will be tested only for potency and contaminants that pose a high public health risk but the testing standards have been designed to become stricter over the first year of legal sales. By the end of 2018, there will be testing for contaminants that pose even minor health risks.

Temporary licenses will be issued to qualifying businesses on Jan 1 which will allow operators to engage in commercial cannabis activities for 120 days after which it may be extended. According to Lori Ajax, the state’s chief cannabis regulator, “the state is being very flexible on the kind of authorization needed for one to get the temporary license.”

This authorization basically means being in possession of a valid permit issued by the jurisdiction where the business operates. The regulator says that once the applicant provides proof of authorization, the state officials will contact local jurisdiction to verify the information and will wait at least 10 days before issuing the license.

Interestingly, even if the applicant doesn’t provide authorization state officials will still contact local jurisdiction and if they don’t get a response, they will issue a license to the applicant as they will assume them to be compliant. And the best thing is that the license is absolutely free.

But the biggest surprise in the new regulations was that the state would be licensing cannabis farms of unlimited size. To understand why this is such a big deal, Proposition 64 which was approved by 57 percent of state voters last year promised small and medium growers that they would not face competition from giant marijuana ‘mega farms’ for five years.

The initial idea was that starting in Jan 1 next year, growers could apply for ‘Type 3’ licenses which are capped at one acre and not until 2023 could growers apply for ‘Type 5’ licenses that allow for an unlimited grow size.

According to observers, it’s pretty clear who the interested parties are. “There are clear winners here,” said Hezekiah Allen executive director of California’s Growers Association which strongly supports a size cap. “This type of policy making leads one to suspect involvement from a high-price-tag influencer.”

Ultimately, this undermines part of the pitch that was used to sell voters on marijuana legalization.  Although its reported that regulators appeared to be sticking to this initial plan, when the emergency regulations were released no such caps were included.

Apparently, one explanation being put forward is that the California Department of Food and Agriculture was the target of an expensive and lengthy lobbying campaign on behalf of large scale marijuana growers.

For longtime growers already struggling with low crop prices, the prospect of unlimited grow operations is disastrous. CEO Michael Steinmentz of FlowKana, a county based craft cannabis brand that sources its product from local farmers who cultivate small crops, notes that small farmers in the Emerald Triangle are panicked.

“We’re definitely strong supporters of the cap,” Steinmetz said, “but to be honest, I don’t think the policy would have ever stopped people from doing large grows. They’ve always had a loophole.”

In summary, while the emergency regulations haven’t met the expectations of the small growers in the state, we believe that they serve as a vital starting point and will play an important role in advancing the broader marijuana industry as a whole.


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