California has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we cover who is banning cannabis, who is embracing cannabis (and how), and everyone in between.  For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your California cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on the City of Cotati, an before that, the City of San Luis Obispo, the City of Redding, the City of San Rafael, the City of Hayward, Alameda County, OaklandSan FranciscoSonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Today’s post is on the town of Truckee.

Welcome to the California Cannabis Countdown.

LocationTruckee is an incorporated town in Nevada County. Truckee is about 200 miles northeast of San Francisco and is just a short drive to Lake Tahoe. With its historic (and often bustling) downtown, background views of the Sierra Nevada mountains and proximity to world class ski resorts in the Lake Tahoe area, Truckee has become an attractive tourist destination. If you’re driving during the winter make sure to bring snow chains as you don’t want to veer off the road, get lost, and meat (pun intended) the fate of the Donner Party.

california cannabis marijuana Truckee
Is delivery coming to Truckee?

History with Cannabis: Truckee is known for its open beautiful landscape but no one would ever say it’s a jurisdiction that’s been open to cannabis. Dating back to 2005 the city adopted an interim ordinance prohibiting dispensaries. In 2008 the Community Development Director released a statement that dispensaries were not allowed under Truckee’s Development Code. It was only in 2015, when the California state legislature passed the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act was going to be placed on the 2016 statewide ballot, that Truckee decided to revisit its prohibitionist stance towards cannabis. At this point the Town Council began to earnestly look into the feasibility of regulating cannabis businesses in jurisdiction. To gauge community feedback the Town Council held public workshops in February, March, April, and May of 2017. After those workshops the Council held three public meetings that focused on the following options: 1) continued prohibition; 2) allowing only commercial medicinal access; or 3) allowing medicinal and adult-use access. In the end the Truckee Planning Commission developed Resolution 2018-04 (“Resolution”) that would authorize delivery services.

Proposed Cannabis Laws: The proposed Resolution is by no means a gigantic step for Truckee cannabis businesses, but it’s still a step in the right direction. And a step forward is still better than the status quo of outright prohibition. Here are some of the Resolution’s highlights:

  • Allows for both medical and adult-use delivery services;
  • All other cannabis activities are prohibited (unfortunately);
  • The buffer from schools, day care centers, and youth centers would be 1,000 feet as opposed to the state’s 600 foot requirement;
  • The delivery service shall be in a fixed structure and not open to the public;
  • There are no caps on the number of licenses;
  • A license is only transferable with the approval of the Community Development Director; and
  • The term of license is for perpetuity so long as the licensee is operating in compliance with local and state law.

If you’ve been following the slow rollout of cannabis licenses from California’s state agencies, you know that the biggest impediment to securing a cannabis permit has been local regulations. Would we like to see local jurisdictions reasonably regulate all seed to sale license types? Of course we would, but that doesn’t mean that we won’t encourage smaller locales that decide to take their first step into regulating cannabis. This is especially true when a local jurisdiction is putting in place regulations to provide patients and consumers with access to tested cannabis as opposed to forcing residents to buy from the black market.

Making sure Californians have access to cannabis through delivery services has also faced initial hurdles in 2018, so having smaller locales, like Truckee, authorize cannabis delivery will benefit all legal cannabis operators along the supply chain. A hearing on the Resolution was held two weeks ago, but the Planning Commission continued the matter to the next Commission meeting, which will be held on April 26 at 6pm. We’ve seen how public support (and opposition) can sway undecided local legislators so if you want safe access to cannabis in Truckee, it’s paramount that you show up at the Planning Commission meeting!

marijuana cannabis federal policy
Let’s hope so, when it comes to prohibition.

The election of Donald Trump as president of the United States caught many pundits and prognosticators off guard. President Trump’s victory also instilled a level of uncertainty in America’s burgeoning state-legal cannabis industry. During the presidential campaign, Trump routinely professed his adherence to states’ rights when it comes to cannabis legalization (at least for medical cannabis activities). Once elected, however, President Trump appointed known cannabis prohibitionist Jeff Sessions to be his choice as U.S. Attorney General for the Department of Justice (DOJ) and cannabis operators went from feeling uncertain to outright fear.

It now appears that those fears may have been unfounded. After his confirmation, Sessions didn’t immediately seek to enforce federal laws against marijuana operators (to the pleasant surprise of many in the cannabis industry). The honeymoon lasted until January 4, 2018. Just four days into adult-use cannabis sales being legal in the state of California, Sessions formally rescinded the Cole Memo and the cannabis industry was once again thrown into turmoil. The rescission of the Cole Memo, when added with the Environmental Protection Agency’s refusal to register pesticides on cannabis crops and the Federal Drug Administration’s (FDA) threatened crackdown on medical cannabis claims, painted an ominous picture for the cannabis industry throughout the United States (although some of us were more optimistic).

It’s been over four months since Sessions rescinded the Cole Memo and although he’s rattled his saber on some occasions, the dreaded crackdown has not occurred. For that we may have Russia to thank. Sessions’ self-recusal from the DOJ’s investigation into Russian government meddling in the presidential election has made him persona non grata in the Trump administration — thereby placing his priorities at the very bottom of President’s Trump list.

Rather than a return to federal enforcement actions, we’ve begun to see quite a few positive developments as of late. Last week, President Trump told U.S. Senator Cory Gardner (R-CO) that he was committed to supporting a legislative solution to the tension between state’s that regulate cannabis activities and federal law (which we covered here). This could be a very important development, and let’s hope that this is one issue in which the President doesn’t change his mind.

Besides the commitment that the President made to Senator Gardner, there have been a number of other developments that have given cannabis businesses a reason to be optimistic:

  • The FDA just released a report that a CBD based drug has shown to have positive effect on those that suffer from seizures and epilepsy. This is a big blow to the federal government’s position that the cannabis plant has no medical value.
  • U.S. Senator Mitch McConnell (R-KY) recently introduced a bill in the Senate that would authorize hemp as an agricultural product. Any progress in the federal legalization of hemp will eventually also benefit marijuana legalization.
  • Senators Orrin Hatch (R-UT) and Kamala Harris (D-CA) sent a letter to the DOJ and the Drug Enforcement Agency, calling on them to increase the pace of medical research in cannabis. There have been approximately twenty-five applications submitted to the DEA to produce federally approved research-grade marijuana but none of them have been approved.
  • U.S. Representative  Dana Rohrabacher (R-CA) recently issued a statement that he plans on introducing a stand-alone bill that will respect a state’s right to regulate cannabis and would make the Rohrabacher-Bluemenaur Amendment permanent.

Taken as a whole, these are all encouraging developments– especially considering their bipartisan support. However, this is not the time to rest on our precarious laurels. The November mid-term elections will be on us before we know it and it will be up to all of us to elect officials that are against the government’s draconian war on cannabis. We can’t leave this up to Russia to decide for us, after all.

california alameda marin marijuana
Alameda and Marin Counties are moving ahead, slowly.

Our offices in San Francisco and Los Angeles constantly get calls from entrepreneurs looking to launch or expand their cannabis businesses. By far, one of the most challenging aspects for any attorney advising clients in the cannabis industry is staying up to date on all the developments in the Golden State’s 58 counties and 482 cities. And although it’s a daunting task, we work hard to stay on top o things.

Avid readers of our California Cannabis Countdown series are well aware of the ever-changing cannabis regulatory landscape at the local level. Every week there are a number of Board of Supervisors or City Council hearings throughout the state where cannabis-related rules and ordinances are enacted and amended. We are constantly advising our clients about any changes in the cannabis ordinances of the local jurisdictions of interest.

It’s this constant flux of change at the local legislative level that brings me to today’s topic: an update on the counties of Alameda and Marin. We last covered Alameda here and Marin here.

Let’s start with Alameda County. The County passed its most recent cannabis ordinance last September (with some minor amendments since then). That ordinance created a medical cannabis pilot program that authorized up to three dispensaries, and up to four mixed-light and two indoor cultivation permits. The County’s Cannabis Interdepartmental Work Group (“Work Group”) has taken direction from the Planning Department and has proposed to amend their cannabis ordinance to include the following:

  • Authorize adult-use cannabis activities;
  • Allow for up to five dispensaries;
  • Allow for up to ten cultivation permits (only in the East County);
  • Remove cultivation from a pilot program to a permanent use; and
  • Establish a permit fee structure (the fees are quite significant so if the County is serious about bringing operators into the legal market they will hopefully lower the proposed fees).

The Board of Supervisors will meet this Wednesday to discuss these amendments as well as determine whether the County should allow for manufacturing, distribution, and testing. The County has also expressed an interest in the recently released emergency regulations by the Department of Public Health in regard to Type S manufacturing licenses, which we covered here. If you’d like to see Alameda expand the types of cannabis activities it is willing to authorize, showing up is paramount.

As for Marin County, it is still moving at a deliberate pace– some might call it too deliberate. After the County rejected all applications for medical dispensaries, its cannabis ordinance was amended to only authorize medical delivery-only services: Adult-use cannabis activities are still some ways away in Marin County. The County hopes to begin accepting applications this month but that might be overly ambitious. Marin’s delivery-only ordinance only authorizes up to four delivery licenses and applications will be graded on a 100 point scale: Business plan (20 points), operating plan (50 points), and public benefits plan (30 points). Today at 2 p.m., the Board of Supervisors will hold a briefing to discuss the following items:

  • The medicinal cannabis license application;
  • The license application submittal guide (which provides guidance on what to include in your business, operating, and public benefits plan);
  • The owner submittal form;
  • The owner submittal form guide; and
  • The financial information form.

Although these are steps in the right direction, both Marin and Alameda can still make more progress. At the very least both counties should be open to testing laboratories and non-volatile manufacturing. Marin, with nearly 70% of its residents voting in favor of the Adult-Use of Marijuana Act (Prop 64), needs to stop dragging its feet when it comes to allowing adult-use. The slow and restrictive pace of cannabis legislation at the local level is one of the biggest impediments to cannabis operators entering the regulated market. Let’s applaud Marin and Alameda for making progress, but let’s also reach out to our local officials to let them know they can also do better. There are two great opportunities to let them know in person this week.

marijuana trademark canada
Some U.S. companies are looking north for trademark protection

With U.S. federal trademarks being impossible to obtain for cannabis goods and services that violate the Controlled Substances Act, my trademark clients are beginning to ask questions about their options for international trademark protection. Canada, having legalized cannabis and being our closest neighbor, is usually one of the first countries my clients are interested in.

According to a recent piece written by a group of Canadian attorneys at Torys LLP, the number of trademark filings covering cannabis-related goods and services in Canada has increased dramatically since talk of cannabis legalization began.

Canada has made some big changes to its Trademarks Act that will likely be implemented early next year, and these changes will make it much easier to register trademarks. In particular, Canada will remove the requirement that a trademark be “used” prior to registration issuing. In the U.S., an applicant can file a trademark application prior to making use of their mark in commerce if they have a bona fide intent to do so (this is called an “intent to use” application), but in order for a registration to actually issue, the applicant will need to submit a “Statement of Use” to the USPTO within six months from the date the Trademark Office gives a “Notice of Allowance.” One of the policy reasons for this “use” requirement in the U.S. is to prevent trademark “squatting,” where individuals register marks without any intent to use them in order to either prevent others from making use of the marks, or to extract payment from those wishing to do so.

It is indisputable that by removing the “use” requirement for trademark registration, Canada will be opening the doors to “trademark trolls” and “squatters.” According to the Torys attorneys, there are nearly 2,000 trademarks listed on the Canadian trademarks register with goods or services containing the words “cannabis” or “marijuana.” More than half of those applications were filed since January 2017 (apparently, as of five years ago, fewer than 100 such applications had been filed, making for a 1,900 percent increase in cannabis-related Canadian trademark applications). This rush to file for trademark protection makes sense, where companies will be forced to either register their marks, or risk losing them to third parties or squatters.

But given how relatively straightforward it is to obtain a trademark for cannabis goods or services in Canada, there are many restrictions placed on how those cannabis trademarks can be used via the proposed cannabis regulatory framework. For example, cannabis trademarks may not be used to promote cannabis goods:

  • In a manner that appeals to children;
  • By means of a testimonial or endorsement;
  • By depicting a person, character or animal, whether real or fictional;
  • By presenting the product or brand elements in a manner that evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk, or daring;
  • By using information that is false, misleading or deceptive, or that is likely to create an erroneous impression about the product’s characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks;
  • By using or displaying a brand element or names of persons authorized to produce, sell or distribute cannabis in connection with the sponsorship of a person, entity, event, activity or facility, or on a facility used for sports, or a cultural event or activity; and
  • By communicating information about price and distribution (except at point of sale).

With the exception of the fourth point, which could be construed as somewhat vague and certainly subjective, many of these restrictions on advertising and labeling are contained in the various state cannabis regulatory regimes here in the U.S., so these limitations should come as no surprise to cannabis business owners.

For cannabis business owners in the U.S., it may make strategic sense to consult with a trademark attorney with experience filing cannabis-related applications to consider filing for trademark protection in Canada. Successful brands will be those that think globally, not nationally.

sonoma california cannabis
Will Sonoma stay green?

In 1996 Californians voted for the Compassionate Use Act (aka Prop 215), but more than twenty years later Californians are still fighting for their cannabis rights. One of the biggest misconceptions out there is that the entire state of California is open to cannabis businesses. Our San Francisco and Los Angeles offices field calls from new clients every week looking to start a cannabis business but on many occasions, I have to crush their business plans before they can even get started. It’s not that their business plan isn’t sound, it’s that their business is prohibited in the city or county where they wish to operate.

These bans exist because the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) explicitly authorizes local jurisdictions to regulate (or outright prohibit) as they see fit. This authority granted to local jurisdictions is just one of the reasons why commercial cannabis licensing has gotten off to a rocky start. After I tell the client that they can’t operate in Butte County, for example, the next question I usually get is “where can I operate?” If you’re a reader of our California Cannabis Countdown series, you’ll know that cannabis friendly jurisdictions do exist, but whether these locales will always remain open to cannabis is another question. There’s an unfortunate trend occurring throughout the state where local jurisdictions are passing laws authorizing commercial cannabis activities only to later change their minds. This brings me to Sonoma County.

Sonoma County would fall into the category of a cannabis friendly jurisdiction, as the County authorizes all seed to sale license types (for medical cannabis businesses anyway). However, recent events have put the County’s cannabis friendly tag in serious peril. There have been a number of high profile robberies (one of which was sadly fatal) of alleged cultivation grow houses, and cannabis opponents have been highlighting these robberies to press the County to make restrictive changes to its cannabis ordinance. The fact that the perpetrators were from out of state and came with the specific goal of targeting grow houses is also being used to further stoke fears. What the prohibitionists are not mentioning is that the houses that were targeted were not legally licensed cultivators, but instead were selected because they were suspected of being illegal grow houses. Licensed operators have security plans and security protocols, whereas illegal operators do not. This push to restrict cannabis activities in Sonoma is misguided as it will strengthen the black market and thereby increase crime. This small but vocal group of cannabis opponents have approached the Board of Supervisors and requested that the County:

  • Freeze issuing any cannabis permits until the County’s ordinance is amended;
  • Authorize only indoor cultivation, and ban all outdoor cultivation;
  • Restrict cultivation to only industrial zoned areas;
  • Place a cap on the number of cultivation permits based on the amount of cannabis necessary to supply only County residents;
  • Disband the Cannabis Advisory Group; and
  • Make these changes retroactive to apply to existing permit applicants.

If this vocal group of opponents is able to persuade the County’s Board of Supervisors to change the County’s cannabis ordinance to include these restrictive changes, the effect on operators who have spent extensive time and capital to abide by the law will be disastrous. Only those that have never been interested in complying will have benefited.

We’ve spoken at length about the importance of showing up to your local hearings and public support is needed now in Sonoma County now more than ever. We don’t want Sonoma to end up like Calaveras County. The Board of Supervisors are meeting this Tuesday at 1:30pm and the Sonoma County Growers Alliance is requesting that supporters come dressed in green. I hope to see you there wearing your St. Patrick’s Day best.

california marijuana public consumption
Coming to a California locale near you?

As more cities begin to allow for and regulate commercial cannabis businesses, the State of California is seeing an influx of cannabis tourism. We’ve written before about the touchy relationships governments have with the idea of “cannabis lounges” (see here and here) and often questioned who will lead us in regards to cannabis tourism (our bets have often been on California).

Consumption of cannabis in public is illegal in the State of California, and many hotels and Air B&B’s do not allow smoking or “drug use” in their guest rooms. Nonetheless, MAUCRSA allows local jurisdictions to authorize the on-site consumption of cannabis by state-licensed retailers and/or microbusinesses, which gives tourists at least one legal way to consume. Specifically, so long as your city or county okays it, retailers and microbusinesses can have on-site consumption if: (1) access to the area where cannabis consumption is allowed is restricted to persons 21 years of age and older, (2) cannabis consumption is not visible from any public place or nonage-restricted area, and (3) the sale or consumption of alcohol or tobacco is not allowed on the premises. However, most local governments have explicitly prohibited “cannabis lounges” and on-site consumption by licensees (including the City of Los Angeles). Some cities, however, are capitalizing on the tourism potential in The Golden State. We have compiled a list of notable locales below.

The City of West Hollywood is the only city in the Los Angeles area that allows for on-site consumption. The City plans to permit eight (8) on-site consumption businesses for smoking, vaping, and ingesting, and it will also allow 8 on-site consumption businesses for edible ingestion only. The window for submission for on-site consumption applications (and for other commercial cannabis businesses) is expected during the month of May, so we may see on-site consumption up and running for the busy summer months. Los Angeles, which is an area already known for tourism, will see a lot of its cannabis tourism go to the City of West Hollywood.

San Francisco has been California’s leader when it comes to the cannabis lounge concept (and cannabis businesses in general). San Francisco’s regulations outright permit retailers and microbusinesses to allow customers to engage in on-site consumption. Unlike other cities that have placed strict limits on consumption lounges or outright banned them, San Francisco is fully embracing the cannabis lounge model.

The City of Oakland allows medical and adult-use cannabis dispensaries the opportunity to apply for and “obtain a secondary on-site consumption permit in order for cannabis to be consumed on the premises of the dispensary.” See Oakland Municipal Code §5.80.025. The City has not disclosed any limits as to how many on-site consumption permits may be issued, but the City has thus far only allowed eight dispensary permits and, as a result, there won’t be more than eight on-site consumption permits available (because only retailers and microbusinesses are allowed to undertake on-site consumption under state law).

The City of Alameda will only issue two dispensary/retailer permits. The City’s ordinance allows those retailers to have on-site use or consumption of cannabis or cannabis products in interior areas of the licensed premises. The City has made it relatively easy for those granted a dispensary/retail permit to also capitalize on on-site consumption.

Palm Springs has expanded its cannabis regulations to allow for cannabis consumer lounges. “Cannabis Lounge Facility” permits are available in the City, and those holding the proper permits may additionally sell medical and adult-use cannabis and cannabis products. With festival activities fast-approaching in the desert cities, many tourists will flock to the Palm Springs area looking to partake under California’s new cannabis laws. Palm Springs will likely see a high demand in cannabis and cannabis products from tourists looking to consume during festival time.

Other California cities that have explored the idea of cannabis lounges are Cathedral City and South Lake Tahoe, but nothing official has happened in either city as of yet. Over time, as legalized cannabis becomes more normalized (and socialized) in the state, California will likely see an increase in cities that allow cannabis lounges. For now though, on-site consumption is a rare occurrence and a political hot potato. And for the few on-site consumption lounges that exist, we expect nothing but success and increased tourism.

marijuana cannabis FDA
Can GW Pharma get there with Epidiolex?

In previous posts we’ve discussed the process for FDA approval of cannabis drugs. Today’s topic is GW Pharmaceuticals, a British biotech company focusing on prescription cannabinoid medicines, including developing and commercializing pharmaceutical products which address clear unmet needs.

GW Pharmaceuticals was founded in the UK in 1998 by two British biotech entrepreneurs, Dr. Geoffrey Guy and Dr. Brian Whittle. The Company is well known to many in the cannabis industry, because it was able to obtain UK licensing for broad pharmaceutical research and development into cannabis and its active compounds, including delivery methods other than smoking.

One of GW Pharmaceuticals’ first products was Sativex, an oral mucosal spray containing the cannabinoids CBD and THC, indicated as a treatment for spasticity due to multiple sclerosis. Sativex is available by prescription in the UK, EU, Canada, New Zealand and Israel. It is not approved in the United States.

GW Pharmaceuticals is now focusing on FDA approval of its liquid formulation of pure plant-derived CBD, called Epidiolex. Conditions for which Epidiolex is initially being tested are severe epilepsy syndromes including Dravet syndrome, Lennox-Gastaut syndrome, Tuberous Sclerosis Complex, and Infantile Spasms. GW Pharmaceuticals has obtained Orphan Drug and Fast Track designations from the FDA for research on Dravet syndrome. Phase 3 trials for efficacy and monitoring of adverse reactions have already shown positive effects in reducing certain seizure types from patients taking Epidiolex.

As part of its rulemaking process, FDA’s Peripheral and Central Nervous System Drugs Advisory Committee will hold a public meeting on April 19, 2018 to consider the New Drug Application (“NDA”) submitted by GW for Epidiolex. This will include oral presentations from the public, and will be webcast. We encourage any aspiring FDA applicants in the CBD space to watch the presentations.

GW Pharmaceuticals has also recently received Notices of Allowance for five new Epidiolex patent applications that will be listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”) if the NDA for Epidiolex is approved. These patent claims cover methods of treatment of treatment-resistant epilepsy with CBD oil, sometimes in combination with other compounds.

Besides Epidiolex and Sativex, GW Pharmaceuticals continues research and development on cannabidivarin, known as CBDV. Currently, Phase 2 trials for efficacy and side effects are underway for CBDV as a treatment for epilepsy, and Phase 1 trials for safety and dosage are underway using CBDV for autism spectrum disorders. Also in GW Pharmaceuticals’ R & D pipeline are Phase 1 and 2 cannabinoid studies for neonatal hypoxic-ischemic encephalopathy, glioblastoma, and schizophrenia.

Without a doubt, GW is in the vanguard of cannabis biotech companies. It now employs over 500 researchers, who have conducted over 50 Phase 2 and 3 clinical trials on cannabis-based compounds. GW has shown that it can develop and acquire regulatory approval for a cannabis pharmaceutical (Sativex) outside of the U.S., and develop a commercial market for this product.

GW Pharmaceuticals has also had great success so far with the FDA, taking its Epidiolex drug from Investigational New Drug Application to New Drug Application in less than four years. Interestingly, GW Pharmaceuticals has stated that if and when the FDA approves the NDA, it will seek to have it categorized as a Schedule IV drug under the Controlled Substances Act. Schedule IV is defined as drugs with a low potential for abuse and low risk of dependence. Currently, the lowest schedule designation of a cannabis drug is for Marinol, which is Schedule III. (A synthetic THC drug, Syndros, was recently moved to Schedule II).

Regardless of how Epidiolex might be scheduled, its potential approval by the FDA would be a major step forward for cannabis pharmaceuticals. Be sure to tune in on April 18 for further developments.

california cannabis labeling
It’s not optional for California packaging and labeling.

California is just starting to get its cannabis packaging and labeling regulations right under MAUCRSA.  As part of this multi-part series on these regulations, I covered transition period product packaging and labeling in a previous post, and I analyzed the packaging and labeling for “New Products” in another post. Today’s post will cover Proposition 65 labeling issues for California’s cannabis businesses. Note that MAUCRSA makes no specific mention of Prop. 65 compliance, so marijuana business owners are on their own in identifying whether or not they must adhere to that law.

The Safe Drinking Water and Toxic Enforcement Act of 1986 (a/k/a Prop. 65), requires theOffice of Environmental Health Hazard Assessment (OEHHA) to publish a list of chemicals known to cause cancer, birth defects or other types of reproductive harm. The list now includes more than 850 chemicals. Given this fact, there is hardly a manufacturing business in California that won’t find itself subject to Prop 65 warning requirements at some point.

Prop. 65 requires businesses to provide their customers with notice of these chemicals when present in the products they purchase, in their homes or workplaces, or that are released into the environment. The ultimate intent is to allow consumers to make informed decisions with respect to chemical exposure (though there have been allegations of abusive lawsuits against businesses by “bounty hunters” almost from the outset of the passage of Prop. 65).

Effective June 19, 2009, marijuana smoke was added to the Prop. 65 list of chemicals known to cause cancer. The Carcinogen Identification Committee of the Office of Environmental Health Hazard Assessment  “determined that marijuana smoke was clearly shown, through scientifically valid testing according to generally accepted principles, to cause cancer.” And back in 2015, a “citizen enforcer” served the first five 60-day notices on medical cannabis dispensaries around the state.

As MAUCRSA licensing and regulation steadily comes online, you can bet that we will see a smattering of Prop. 65 attacks on cannabis business owners who fail to properly label their products. So, what do you need to look out for as a cannabis business? The first thing is to realize that, yes, Prop. 65 likely applies to you where any of the products you’re selling may contain Prop. 65 chemicals above safe harbor levels that warrant the mandated labeling warnings: Prop. 65 applies to everyone in the chain of distribution, not just retailers. Also, just because your products do not contain “marijuana smoke” doesn’t mean you don’t have to adjust your label: If your products contain any of the other ~849 chemicals, you have to disclose accordingly under Prop. 65. For example, any carcinogens or toxins that go into any oil inserted into a vapor pen cartridge are likely going to warrant a Prop. 65 warning.

There have also been updates to Prop. 65, the latest of which passed in 2016 and will be fully effective on August 30, 2018 of this year. These updates to the law affect how you must label your products to secure the safe harbor. The typical warning that’s out there right now in the cannabis community is some iteration of:

WARNING: This product contains a chemical known to the State of California to cause cancer.

With the new laws coming into play on August 30, the foregoing will no longer be good enough. Instead, unless you meet one of the few exceptions (one of which is that your product was manufactured prior to August 30, 2018 and contains the September 2008 safe harbor warnings), you’ll need to follow the new regulations. One of the most important changes with the new regulations is that you now need to actually identify at least one triggering chemical depending on the type of harm caused by that chemical. Specifically, OEHHA mandates that:

If, for example, there are five possible chemical exposures from a given product, and all five chemicals are listed only as carcinogens, then the business would only be required to name one of those five chemicals in the warning. . . If there are exposures to both carcinogens and reproductive toxicants, a business would be required to name one of the chemicals that is a carcinogen and one of the chemicals that is a reproductive toxicant, but the business could choose to identify more chemicals in the warning.

In turn, your new Prop. 65 warning labels will look like one of the following:

For carcinogens: “This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause cancer. For more information go to www.P65Warnings.ca.gov.”

For  reproductive toxicants: “This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.”

For exposures to both listed carcinogens and reproductive toxicants: “This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause cancer, and [name of one or more chemicals], which is [are] known to the State of California to cause birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.”
For exposures to a chemical that is listed as both a carcinogen and a reproductive toxicant: “This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause cancer and birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.”
If you’re starting to worry, you can also use a short-form label under certain circumstances. Finally, the look of the label has also changed with the new regulations:

“A symbol consisting of a black exclamation point in a yellow equilateral triangle with a bold black outline. Where the sign, label or shelf tag for the product is not printed using the color yellow, the symbol may be printed in black and white. The symbol shall be placed to the left of the text of the warning, in a size no smaller than the height of the word ‘WARNING'”.

You can download the symbol here.

There are a slew of other mandates under Prop. 65, but the bottom line is that if you fail to comply with this law, you’re going to be facing costly legal challenges and/or settlements, none of which will have to do with your MAUCRSA compliance. So double check your labels now to ensure that you’re prepared and in compliance for August 30, 2018.

When the California Bureau of Cannabis Control (BCC) first released its proposed medical cannabis regulations under the Medical Cannabis Regulation and Safety Act (MCRSA) last April it created license types for laboratories, retailers, distributors, and transporters. Most people were surprised (and worried) when they found out that the MCRSA did not create a license type for cannabis delivery-only services. Under the MCRSA, only storefront medical retailers could deliver to a qualified patient or primary caregiver. Just like that, delivery services were about to be locked out of America’s biggest cannabis market.

As you can imagine the BCC and state legislators were inundated with calls to their offices as well as comments at public hearings about the glaring omission of delivery licensure. Whether the BCC was going to rectify this mistake became moot upon the withdrawal of their emergency regulations. The regulations were withdrawn when the state legislature passed the Medical and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) – which merged the MCRSA and the Adult-Use of Marijuana Act (AUMA) under one regulatory regime. We covered that here.

When the BCC issued their emergency regulations under MAUCRSA it was clear that the Bureau learned its lesson: This time, the BCC included a license type for delivery-only services. For delivery services that were previously a part of a collective or cooperative, this inclusion in the new regulations was a much-needed lifeline. However, since the BCC started issuing temporary licenses in January it hasn’t exactly been a smooth road for delivery services. Delivery services have been facing the same major obstacle that all other cannabis businesses are dealing with: local jurisdictions.

marijuana delivery california
Delivery is not guaranteed.

In order to be eligible to receive a commercial cannabis license from the state, you must first obtain a cannabis permit from your local city or county. As readers of our California Cannabis Countdown series are well aware, each of the state’s 482 cities and 58 counties have their own regulations. For delivery services, this dual licensing structure can cause a number of impediments to both obtaining a license and then operating a successful cannabis business. First and foremost, a local jurisdiction can enact an outright ban on all commercial cannabis activities, including delivery. In other instances, local jurisdictions are either only authorizing storefront retailers to conduct deliveries or only allowing deliveries within their borders by local permit holders. All these obstacles, when combined, limit competition and choice and thereby ultimately harm the consumer. This is especially true of qualified patients that live in prohibitionist jurisdictions or aren’t able to drive themselves to the nearest dispensary.

It is under this backdrop that State Senator Ricardo Lara (Senate District 33) introduced Senate Bill 1302 (SB 1302). The goal of SB 1302 is pretty simple: make sure every Californian that wants access to cannabis does in fact have access to cannabis (for many Californians growing their own isn’t a feasible option). The pertinent provision of SB 1302 is found in Section 26090(e):

“A local jurisdiction shall not prevent delivery of cannabis or cannabis products on public roads, or to an address that is located within the jurisdictional boundaries of the local jurisdiction, by a licensee who is acting in compliance with this division and who is acting in compliance with a license, permit, or other authorization obtained from another local jurisdiction, pursuant to the authority granted by that other local jurisdiction under Section 26200.”

SB 1302 is off to a slow start as it has yet to pickup any co-sponsors and has currently been referred to the Senate Governance and Finance Committee. Now would be a good time to let the Committee members know that you support SB 1302 and that they should too: You can find the Committee members here. SB 1302 would ensure that a licensed delivery service can provide cannabis anywhere in the state to a qualified patient, primary caregiver, or adult aged twenty-one and over. Although this would seem like a given after a majority of Californians voted for the AUMA, in practice the delivery option is far from reality. In that respect all SB 1302 is seeking to accomplish is to bring the spirit of the AUMA into practical effect. Let’s hope (and call your legislators!) it succeeds.

california marijuana cannabis

Tomorrow and Friday, at the DoubleTree Suites by Hilton Hotel in Santa Monica, Hilary Bricken will be chairing a CLE on California Cannabis Laws and Rules, with a specific focus on SoCal’s cannabis business and regulatory scene. The event will be produced by The Seminar Group. You can see a copy of the agenda here.

In addition to our own Jim Hunt, Julie Hamill, and Alison Malsbury, some of the featured speakers include:

Lori Ajax, Chief of the Bureau of Cannabis Control, was appointed by Governor Brown in February 2016. Prior to her appointment, she served as Chief Deputy Director at the Department of Alcoholic Beverage Control where she spent 22 years working her way up the ranks, starting at the investigator trainee level.

Fiona Ma, CPA, Board Member, California State Board of Equalization (BOE), District 2, represents 23 counties and nearly ten million Californians in her District. As one of the few Certified Public Accountants to serve on the BOE, she is a strong voice for businesses and taxpayers – taking the lead in clearing the haze around the cannabis industry by holding informative stakeholder meetings discussing key issues.

Cat Packer was appointed by City of Los Angeles Mayor, Eric Garcetti, in August 2017 as the first Executive Director of the Los Angeles Department of Cannabis Regulation. The Department of Cannabis Regulation is a newly-established city entity tasked with cannabis policy implementation and licensing commercial cannabis activity within the City.

Avis Bulbulyan is the CEO of SIVA Enterprises, a full-service cannabis business development and consulting firm that provides state licensing, management, venture opportunities, product and brand development, and insurance to entrepreneurs across the United States. He oversees corporate direction, business development and strategy, facilitating company activity in consulting, alliances and channels, marketing, investments and operations.

This seminar will cover topics directly relevant to California’s medical and recreational cannabis laws and regulations under the Medicinal and Adult-Use Cannabis Regulation and Safety Act and California cannabis businesses, including state and local licensing and approval structures, various local laws and land use issues and concerns, including in the City of Los Angeles, cannabis investment in California, intellectual property and patent registration and policing, a banking update, California hemp laws and regulation, emerging areas in cannabis commercial litigation, various real estate issues around commercial leases and property purchases for cannabis uses, taxes and the treatment of cannabis income under IRC 280E, California cannabis water rights and licensing requirements, and a boots on the ground perspective from actual cannabis operators in the State of California.

For a $100 discounted entry into this two-day seminar, call The Seminar Group at 800-574-4852 and specify code FAC100 – or register online here and enter that code where specified.

Hope to see you there!