On November 16, 2017, the California Bureau of Cannabis Control published emergency regulations governing both the medical and the adult-use cannabis industries in California. Below are the highlights of the emergency regulations and how they may impact distributors of cannabis products.

This post is the fourth in a series of entries on the Duane Morris Cannabis Industry blog that will provide an analysis of the new California emergency regulations. If you have any questions about the regulations, please contact Jennifer Briggs Fisher in our San Francisco office or Justin Santarosa in our Los Angeles office.

Authorized Activities

The emergency regulations authorize distributors to engage in the following activities:

  1. Provide “storage-only” (unrelated to quality assurance or laboratory testing) services to a licensed cultivator, manufacturer, microbusiness, nonprofit or another distributor.
  2. Package, re-package, label and re-label cannabis for retail sale.
  3. Package, re-package, label and re-label manufactured cannabis – but only if the distributor also holds a manufacturing license and is packaging and labeling its own products.

Testing Requirements

Distributors are required to contact a testing laboratory and arrange for testing after taking physical possession of a cannabis goods batch. Distributors are then required to select a batch size in compliance with the regulations; physically observe and record video footage of the sampling by the testing lab employee; and sign and date the chain of custody form.

If a sample “fails” a lab test but can be remediated, a distributor can transport the batch back to the cultivator or manufacturer for remediation.

If a sample “passes” a lab test, the distributor must obtain a certificate of analysis from the testing lab. Packaging and labeling of the corresponding batch must be consistent with the certificate of analysis. All events up to this point must be entered in the track and trace system.

Transport Requirements

Cannabis goods may only be transported by someone with a distributor license and must be transported in a vehicle or trailer.

For security purposes, the cannabis good cannot be visible from outside of the vehicle and must be kept in a locked container that is secured to the vehicle or trailer. The container cannot be opened or tampered with during transport. Vehicles or trailers containing cannabis goods cannot be left unattended or parked overnight in residential areas.

Distributors may transport both medicinal and adult-use cannabis goods in the same vehicle, but the two types of goods must be clearly marked, secured and separated from each other. Non-cannabis goods can never be transported with cannabis goods.

A shipping manifest must be generated through the track and trace system and must identify the licensees who are shipping, transporting and receiving the shipment.

Transport Only Licenses

A distributor may elect to become a Transport Only Distributor. Under this specific license, a distributor can transport cannabis goods between licensees, but cannot perform any other functions of a distributor, including testing, packaging or labeling. Transport Only licensees do not hold title to cannabis goods. They also cannot transport cannabis goods to retailers, unless they are transporting immature plants and seeds from a licensed nursery to a licensed retailer.