Cannabis, as we all well know, ranks among the most highly regulated industries in the world — even more so than pharmaceuticals, tobacco, and alcohol. And California ranks as one of the most regulatory-heavy states in the U.S. Put the two together, and add in the fact that the system has been in flux for many years, and you’ve got a recipe for confusion and chaos. Regulatory compliance and reporting, although complicated, are certainly not impossible in California.
California’s cannabis regulations have been in a constant state of change as regulators and operators work to transition between emergency rules put in place in Dec. 2017 and permanent rules that were instituted at the end of Jan. 2019 when the California Office of Administrative Law (OAL) finally approved rules submitted by three state agencies.
These approved regulations are the culmination of more than two years of hard work by California’s cannabis licensing authorities. Public feedback was invaluable in helping us develop clear regulations for cannabis businesses and ensuring public safety. — BCC Chief, Lori Ajax
A Brief History of California Cannabis Regulations
Proposition 215, which legalized the use of medicinal cannabis in California, was approved by voters in 1996. When the proposition passed most regulation was the responsibility of local governments.
Then in 2015, California enacted three bills that collectively established a comprehensive state regulatory framework for the licensing and enforcement of cultivation, manufacturing, retail sale, transportation, storage, delivery and testing of medicinal cannabis in California. This regulatory scheme is known as the Medical Cannabis Regulation and Safety Act (MCRSA).
Senate Bill 837 built upon the MCRSA framework and added comprehensive environmental safeguards. One such safeguard requires the State Water Resources Control Board, in consultation with the Department of Fish and Wildlife, to adopt principles and guidelines governing the use of water for cannabis cultivation. The goal of the measure is to protect streams and rivers from being polluted by cannabis operations.
In November of 2016, voters approved Proposition 64, the Adult Use of Marijuana Act (AUMA) which allows adults 21 years of age or older to legally grow, possess, and use cannabis for non-medicinal purposes. The measure also set in motion a state-regulated cannabis market.
In June 2017, the California State Legislature passed a budget trailer bill that integrated MCRSA with AUMA to create the Medicinal and Adult‐Use Cannabis Regulation and Safety Act (MAUCRSA), a single regulatory system which governs the medical and adult use cannabis industry in California.
In December 2017, emergency regulations were adopted by the Bureau. The emergency regulations were readopted in June 2018 when the bureau began to issue temporary licenses for retailers, distributors, testing laboratories, microbusinesses, and event organizers.
Proposed permanent regulations were first proposed in July 2018. A 45-day public comment period was initiated in order to obtain feedback from the public and industry stakeholders. After the Bureau announced changes to the proposed regulations, an additional 15-day comment period commenced.
The final draft of proposed regulations was submitted to the California Office of Administrative Law (OAL) on December 3, 2018, and approved on January 1, 2018.
More than 5,000 cannabis operators now hold licenses in California, which boasts the largest cannabis market in the world.
California Cannabis Oversight Regulatory Agencies
Activities related to cannabis cultivation, production, lab testing, distribution, and retail sales fall under the regulatory watch of three state agencies. Collectively, these agencies are essentially responsible for assuring public health and safety.
These are the three state agencies that oversee the cannabis industry in the state:
California Department of Public Health (CDPH) — regulates cannabis manufacturers
California Department of Food and Agriculture (CDFA) — regulates cultivators
Bureau of Cannabis Control (BCC) — regulates distributors, retailers, event organizers, and testing laboratories
California Bureau of Cannabis Control (BCC)
The California Bureau of Cannabis Control (BCC) is responsible for regulating commercial cannabis operations and licensing retailers, distributors, microbusinesses, testing laboratories, and temporary cannabis events.
MAUCRSA — Medicinal and Adult-Use Cannabis Regulation and Safety Act
The general framework for the regulation of commercial medicinal and adult-use cannabis in California was put in place under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which was mandated upon the passage of Prop. 64 which California voters passed in 2016.
The text of MAUCRSA is available on the California Legislative Information website.
California Cannabis Regulations
The “permanent” rules which were put in place effective January 16, 2019, consist of 160 pages of rules developed by all three agencies. As we mentioned, these replaced emergency regulations developed to get the ball rolling on Jan. 1, 2018.
There likely will be further regulatory changes to rules governing California’s marijuana industry, as bills are beginning to pile up at the state capitol in Sacramento on various cannabis business policies.
Also, the state’s new governor, Gavin Newsom, could propose major changes depending on how he approaches regulating the marijuana trade.
Below are links to both the currentcurrently regulations as well as the emergency regulations which are no longer in effect:
An ongoing record of changes to California cannabis regulations can be found here.
The protection of the public is of the highest priority for the Bureau of the BCC. In keeping with its mandate to protect the public, the Bureau has developed guidelines intended to promote consistency in disciplinary orders.
The guidelines are intended for agencies involved in the disciplinary process such as Administrative Law Judges, Deputy Attorneys General, Bureau licensees and their legal counsel, and other interested parties.
Here’s what the BCC has to say about this document:
The Bureau requests that the suggested disciplinary orders contained in these guidelines be levied consistently and appropriately, based on the nature and seriousness of the violation(s) confirmed in an administrative action. The Bureau recognizes that mitigating or aggravating circumstances, in addition to other factors, may necessitate departure from these recommended orders and terms of probation… These guidelines do not apply to other alternatives available to the Bureau, such as administrative citations and fines, except in cases where an Accusation has been filed for failure to pay an assessed administrative fine and/or comply with an order of abatement issued by the Bureau.
The disciplinary guidelines can be found here:
NOTE: These guidelines are subject to revision.
California BCC Online Licensing System
The BCC website allows license applicants to easily apply for a commercial cannabis license, submit payments, and track the status of your application.
California BCC Applications/Forms
California BCC Educational Material
News and Updates
The Bureau of Cannabis Control Media Room section of the website provides the latest news and updates to licensees, stakeholders, and consumers.
Licensee & Consumer Information
This section of the BCC website provides state licensing requirements for each individual license type, application forms, licensed cannabis businesses, and public health information.
Licensing Fact Sheets
California’s Track and Trace System
On Jan. 15, 2019 the BCC launched a new tracking system which runs on a software platform known as METRC (Marijuana Enforcement Tracking Reporting Compliance). Ten other U.S. states also run their cannabis programs on METRC.
Penalties For Noncompliance
In determining whether revocation, suspension, probation, fine, or a combination is to be imposed in a given case, the BCC considers the following factors:
Nature and severity of the act(s), violations, offenses, or crime(s) under consideration.
Actual or potential harm to the public.
Actual or potential harm to any consumer.
Prior disciplinary and/or administrative record.
The number and/or the variety of current violations.
Rehabilitation evidence, including but not limited to, a statement of rehabilitation containing any evidence that demonstrates fitness for licensure, or a certificate of rehabilitation under Penal Code section 4852.01.
In case of a criminal conviction, compliance with conditions of the sentence and/or court-ordered probation.
Overall criminal record.
Time passed since the act(s) or offense(s) occurred.
If applicable, evidence of expungement proceedings pursuant to Penal Code Section 1203.4.
Whether the conviction is a felony conviction based on possession or use of cannabis goods that would not be a felony if the person was convicted during the time of licensure.
California Code of Regulations Disciplinary Order Guidelines:
Tier 1 Minimum — revocation stayed, 5 to 15-day suspension, a fine (as determined by the “Fine Formula” below), or a combination of a suspension and fine.
Tier 1 Maximum — revocation Tier 1 discipline is recommended for: violations which are potentially harmful Violations of the following codes are representative of this category:
Violation Description Authority Failure to Pay Appropriate Fees
Failure to Cancel, Destroy, or Surrender License B&P
Failure to Comply with Business Modifications Requirements and Notice
Use of Cannabis Diffuser or Vaporizer on Licensed Premises
Unauthorized Modification of Licensed Premises B&P
Prohibited Distribution or Sale of Cannabis Goods Designated “For Medical Use Only”
Unauthorized Storage of Inventory
Failure to Maintain Records
California Cannabis Testing Requirements
All cannabis harvested on or after December 31, 2018, and all cannabis products manufactured on or after December 31, 2018, are subject to phase three testing. Any cannabis goods harvested or manufactured prior to December 31, 2018, can be sold if they meet the applicable phase one or phase two testing requirements.
Testing Laboratory Fact Sheets
For additional information on cannabis regulations, or to subscribe to email alerts to hear about updates as they become available, please visit the Bureau’s website at http://www.bcc.ca.gov/. For information on all three state licensing authorities, please visit the state’s California Cannabis Portal at https://cannabis.ca.gov/.