California’s Cannabis Regulations for Retailers, Distributors, and Testing Labs

Here’s an overview of the BCC’s regulations for each type of licensee. For the general regulations that apply to all licensees, see our post from last week. For the full text of the regulations, see here.

Distributors

You may package, label, and distribute cannabis goods or accessories, branded merchandise, or promotional materials. You may also provide storage services for other licensees but only for goods that are already packaged as they will be sold.

Upon receiving a batch, you must arrange for a licensed laboratory to test it. If it passes then you may package, label, and ship the batch to either a retailer or another distributor. The packaging must be tamper-evident and, beginning next year, child-resistant, too. You can’t actually ship it by watercraft, however, unless it’s for Catalina Island. Nor can you ship it by rail, aircraft, or unmanned or human-powered vehicle. You also can’t transport anything besides the pot or related accessories, merchandise, or materials. And your drivers can’t deviate from their routes except for necessary rest, fuel, or repair.

You must be able to account for your inventory at all times. Are you storing it for another licensee? Waiting for the testing lab to take a sample? Whatever it is, you must be able to keep good records and produce them upon request. Before transporting anything, you must generate a shipping manifest for the Bureau and the receiving licensee. If you’re the receiving licensee, you must check the batch against the manifest.

Finally, you must carry commercial general liability insurance of at least $1 million per loss and $2 million total. If your policy lapses, you must notify the state within fourteen days.

Retailers

There are some basic rules. You can’t open your doors before 6am or keep them open past 10pm. You can’t sell someone more than 28.5 grams per day (or 8 grams of concentrate). The pot must have come from a licensed distributor and undergone laboratory testing, and you must be able to account for it at all times. You must not sell through unlicensed brokers or third parties. And you can’t do the packaging or labeling yourself, so you must sell pot that is packaged as it will be sold.

The regulations provide for non-storefront retailers to do business by delivery. Your vehicles must bear a dedicated GPS device that locates the car and tracks where it goes, and you must maintain the logs for at least ninety days. Your drivers must log their stops, too, and maintain a ledger of the inventory they carry. As with distributors, they may not deviate from their routes except for necessary rest, fuel, or repair, or because road conditions are unsafe or impracticable.

You can contract with a software platform to facilitate sales and delivery, but you can’t outsource the actual delivery. You must deliver the goods, not the service provider, and you may not share profits or give it a portion or percentage of your sales. You also can’t commingle your marketing or advertising. Your customers should know whom they’re dealing with, including your legal business name and license number.

Microbusinesses

These licenses apply if you engage in at least three of the following four activities on the same licensed premises: cultivation, manufacturing, distribution, and retail sale. If so, you’ve gotta wall off the cultivation and manufacturing from the distribution and retail areas. Your application must include all the information required for each activity, and you must comply with all the rules for each kind of license. Plus, there are additional rules that apply to cultivation and manufacturing.

Cannabis Events

To put on a cannabis event, you must apply for an event-organizer license first. Once you have that, you can apply for a temporary-event license that allows for on-site sales and consumption. The event can’t run for more than four consecutive days, and you can’t allow booze or tobacco. You must apply at least sixty days beforehand and submit details and diagrams for approval.

Testing Laboratories

These highly-technical regulations describe the rules for a lab’s licensing, sampling, testing, reporting, quality control, employee qualifications, and record retention. Among other things, you must adopt a chain-of-custody protocol to ensure accurate records for the handling and storage of samples.

You are required to test each sample for nine things: cannabinoids, terpenoids, foreign material, heavy metals, microbial impurities, mycotoxins, moisture content, residual solvents, and residual pesticides.

For each test, you must upload a certificate of analysis to the track-and-trace system and email a copy to the Bureau directly.