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Welcome to Never...Never Land in California

[The following is a piece which we published on our website that has been syndicated to a number of major channels including CannabisNews.Report, Green Market Report, and NPR] We are sharing it here because of our view that it is incredibly important that people actually understand the background to the situation. The following is a short excerpt of a 4,500-word article. Please note that we do not intend to respond to comments or engage in any debate on the article whatsoever. It is provided solely for information purposes as an accurate summary of facts.

Lessons June 30, 2018 - The news is full of articles about $350 million worth of cannabis being “Destroyed by California” …as if the state

was responsible for the destruction. It’s time that all of us take two steps back and reflect on the reality of what has transpired over the past eighteen months. Our purpose in writing this article is not to be critical of any stakeholder in the California commercial cannabis industry, rather we believe that it is important to be able to review a rigorous outline of “how we got here” before ascribing blame or fault. It should also provide background for what everyone might strive to avoid in the future.

Lessons June 30, 2018
In order to fully understand the significance of today’s events, we need to revisit the history of the legalization of cannabis in California, starting with Proposition 215[1].

Governor Brown signed the Medical Marijuana Regulation and Safety Act into law on October 09, 2015, and it became effective on January 01, 2016. The Act, composed of 3 bills (AB 266, AB 243, and SB 643) established a licensing and regulatory framework for the cultivation, manufacture, transportation, storage, distribution, and sale of medical cannabis in the State of California[2].

Subsequently, California voters passed the Adult Use of Marijuana Act (Proposition 64) in 2016, both acts designated responsibilities for oversight of commercial cannabis to several state agencies[3].

On June 27, 2017, California Governor Jerry Brown signed the cannabis trailer bill (also known as California Senate Bill 94). A trailer bill is a legislation that implements specific changes to the law to enact the state budget. Generally, a separate trailer bill is needed for each major area of budget appropriation, such as transportation, human services, education, revenue, or, in this case, cannabis. These bills typically are negotiated as part of the entire budget package each fiscal year.

In this instance, the cannabis trailer bill effectively merged the two existing cannabis bills—the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act—into one streamlined bill: The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). Having one comprehensive state law will provide for a more unified and efficient regulatory process governing both medicinal and adult-use (recreational) cannabis.

The regulatory agencies were tasked with specific mandates within the new cannabis regulatory scheme. CDFA was charged with the creation of CalCannabis to regulate cultivation activity[4]. BCC was tasked to develop the regulations associated with activities undertaken by Retail[5] [“Dispensaries”] and Distributors[6]. The statute continued to provide guidelines under which BCC would establish the regulatory framework[7]. The framework included a directive for cannabis sold at retail between January 1, 2018, and June 30, 2018, which stated

“Beginning January 1, 2018, a licensee may sell cannabis or cannabis products that have not been tested for a limited and finite time as determined by the bureau. The cannabis or cannabis products must have a label affixed to each package containing the cannabis or cannabis products that clearly states “This product has not been tested as required by the Medicinal and Adult-Use Cannabis Regulation and Safety Act” and must comply with any other requirement as determined by the bureau.”

BCC issued Emergency Regulations in November 2017 which provided The statute contained provisions for Quality Assurance, Inspection and Testing[8] and Packaging and Labeling[9].

Thus, the overarching for the regulatory framework and the transition rules were outlined almost two years ago as of the date of the article. For the sake of brevity, there are numerous other resources wherein the details of the first set of Emergency Regulations[10] can be reviewed. The Emergency Regulations were readopted in May 2018 with some modifications and they can be accessed here.

BCC issued a summary of the transition rules[11] which were to take effect on July 1, 2018, in early June. We published an article entitled Charitable Contributions – Cannabis on June 21, 2018, where we outlined a number of techniques and strategies that retailers could use to avoid the adverse impact of the July 1 transition rules. We were gratified that over forty of our existing clients and new clients availed themselves of planning opportunities we had described

You can find the full article here.

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I’m actually really glad you posted this. This is a topic I was curious about when I first starting hearing about the changes 6 or 8 weeks ago. All I was hearing was how panicked everybody was because they’re weren’t prepared and the millions in lost inventory because of the new regulations (I only know about the child resistant changes and don’t know anything past that).
My first thought in response to the news…why aren’t people packing in child resistant packaging already anyways? If sold as a medicine, it should be treated at such and I don’t see any other prescribed medicine that comes in non-child resistant containers so why should Cannabis be treated different.
If NOT sold as a medicine, then from a moral view and from a PR perspective child resistant packaging should be the only option regardless of legal obligations. And in my opinion about the argument of child resistant packing costing extra money…suck it up buttercups. The extra cost is barely noticeable on the bottom line. This isn’t a fine margin business, the money is there people.
Personal opinion and morals aside, the question still remained for me, when was this announcement made and why are people panicking so much about it? There is just no way the government issued the notice with only a couple of weeks or months time frame.
If I read your post correctly, it would appear that there was almost 2 years worth of notice given. And that seems like a proper time frame to educate the industry and I have no reason to think otherwise.

So moving forward I think the question that needs to be asked is, what went wrong?
Why weren’t people and companies prepared?
Was it a lack of education from the government?
Was is a lack of due diligence by the industry?
What is the ratio of people who were ready, vs those who weren’t and what did they do differently and why?
What lessons can we, as an industry, learn from this?
Are companies in other states planning on following suit regardless of their current obligations in preparation?

I know that here in Canada, one of the issues we have is a lack of education from our governing bodies. We have to ask a lot of questions to a lot of people and 9 times out of 10 you’re still not going to get an answer, because they just don’t know. So we have been forced to do our due diligance to ensure we are compliant. In the last 12 months there have been over 70 amendments added, then changed and then some removed and then reapplied and then removed again. Just keeping up with them has been stressful because our plan as a company changes as those laws change, one of the reason why we have been so strategic in our timing.
So to ensure I have stayed up to date, I have established a regime to check all of my data points on a consistent basis. And before I make any decisions where the law might come into play, I pull out the relative language and double check that there is no way for my government to loophole me out of my plan.
This way, I make sure I am always up to date and I always will be.

What are other people doing here to make sure they are up to date on current and changing regulations?

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