marijuana cannabis Oregon packaging labeling
Don’t worry, your favorite symbol isn’t going anywhere.

Last year, the Oregon Legislature passed Senate Bill 1057, which transferred cannabis labeling authority from the Oregon Health Authority (“OHA”) to the Oregon Liquor Control Commission (“OLCC”). The new rules, which became operational on August 15, 2018, merged the OHA rules with those of the OLCC and further clarified the labeling and packaging regulations. Overall, this is a good thing.

Although the new regulations do not drastically differ from those under the old rules, OLCC licensees (i.e., recreational marijuana producers, processors, wholesalers, and retailers, including those processing and selling hemp products) and OHA registrants (i.e., medical marijuana growers, processors, and retailers) will need to familiarize themselves with these revisions and update their labels to be in compliance by April 1, 2019. At that point, all marijuana items transferred to dispensaries or retail shops will have to be packaged and labelled pursuant to the new rules.

To comply with these new standards, existing licensees will need to resubmit their label and package applications for pre-approval before the April 1, 2019 deadline. Also note that all new label and package applications submitted for pre-approval as of August 15th will be reviewed and evaluated by the OLCC under these rules. Typically, pre-approval takes 2 to 4 weeks but can occasionally last longer.

The most noticeable changes and clarifications to the labeling and packaging rules are as follows:

  • The word “consumer” now excludes “a patient or designated caregiver.”
  • The new rules explicitly provide that they apply to marijuana items and industrial hemp products sold to consumers, patients, or designated primary caregivers. Consequently, the new rules require a clear label of whether the product contains marijuana or hemp. If it contains both, then the label must identify the item as a marijuana item.
  • Marijuana items and industrial hemp products must be packaged in a container that is “resealable and continually child-resistant.”
  • If the product is an industrial hemp commodity or product processed by a licensee, the principal display must include the hemp symbol in place of the marijuana universal symbol.
  • The new rules define “added substances” to mean “any additional component or ingredient added to usable marijuana, cannabinoid concentrate or cannabinoid extract during or after processing that is present in the final product. This includes added flavors, terpenes, and any substances used to change viscosity or consistency of the cannabinoid product.”
  • The new rules no longer provide a distinction for “flag labels.” Instead, the new regulations refer to “small container labels and “tiny container labels,” which have their own requirements.
  • The new rules no longer require test batch numbers on labels.
  • The new rules replaced the font size and font type requirements (at least 8 point Times New Roman, Helvetica, or Arial font) with a provision that the labels display a “legible font that is easy to read and contrasts sufficient with the background and is at least 1/16th of an inch in height based on the uppercase ‘K’.”
  • The new rules rephrased some of the warning requirements to read as follows: “Do not drive a motor vehicle while under the influence of marijuana.” And, “Keep out of reach of children.” (You are no longer required to mention animals.)

Note that while labels must comply with the new rules by April 1, 2019, marijuana items on dispensary or retail shelves that meet old packaging and labeling rules under the OHA will be allowed for sale until December 31, 2019. However, as of January 1, 2020, all marijuana items will have to meet the OLCC packaging and labeling rules and all items with labels that meet the pre-August 15, 2018 rules will be removed from the market.

So, if you are licensed to produce, process or sell marijuana or industrial hemp products in Oregon be sure to review the new rules now to have ample time to update your labels by the April 1, 2019 deadline and avoid any civil penalty, which can go up to $500 per day—Ouch!

california marin county marijuana cannabis

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 San Jose, and before that the City of Cotati, 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 the City of Emeryville and the City of Antioch.

In addition to the above, we have previously written about commercial cannabis regulations in Marin County here, here, and here. Today’s post is an update on those regulations, as requested by one of our faithful readers.

Welcome to the California Cannabis Countdown.

What commercial cannabis activity is allowed in Marin County?

In unincorporated Marin County, medicinal cannabis delivery-only retailers (MCDORe) are allowed pursuant to a licensing ordinance approved on November 14, 2017. These locations must be closed to the public– only delivery is allowed.

How many retailers are allowed?

A maximum of four MCDORe locations are authorized in the C1 (Retail Business), CP (Planned Commercial), AP (Admin and Professional), OP (Planned Office) and IP (Industrial Planned) zoned districts. MCDORe locations must be located at least 600 ft from schools, day care centers, youth centers and playgrounds.

What about delivery?

Delivery of medicinal cannabis into unincorporated Marin County by licensed retailers located outside of unincorporated Marin County is also allowed. All other commercial cannabis activities are prohibited in unincorporated Marin County.

Is Marin County accepting MCDORe license applications?

The deadline for applications was July 12, 2018 and Marin County is not accepting additional MCDORe applications at this time. According to County staff, there may be an opportunity for additional licenses in the future if the program expands. After implementation of MCDORe licensing, Marin County will be evaluating program expansion into other potential licensing regulations.

What about non-medical?

Currently, Marin County does not allow any adult-use commercial cannabis activities, including cultivation, manufacturing, testing, distribution or retail sales. This is unfortunate, because in 2016, 69.6 percent of Marin voters supported Proposition 64. For this to change, citizens and industry should make it known to the County Board of Supervisors that an additional licensing ordinance is needed.

cannabis marijuana L.A. social equity
Looks good. Might get messy.

Phase II cannabis licensing in the City of Los Angeles (for only non-retail activity) kicked off on August 1 at 12 p.m. (and it will conclude on September 13th). To qualify for a City of Los Angeles cannabis license during this timeframe, an applicant must, among other things, be eligible for the City’s cannabis social equity program. This qualification factor has propelled a search for business partners who will make them eligible for Phase II cannabis licensing. Though this momentum is spurring business marriages all over the City many of these “partnerships” are little more than ruses for circumventing the social equity requirements.

It’s not unusual in the cannabis industry to see people rush into half-baked, hasty business marriages for fear that some grand opportunity will pass them by if they don’t. This is why the cannabis litigation lawyersat my firm spend so much time litigating cannabis business ownership disputes. LA’s social equity component has created a new breed of business “relationship” ripe forscamsand potential applicants on both sides of the social equity aisle need to be aware of the tricks being used to game this new system.

The below are some examples of what our Los Angeles cannabis lawyers have been seeing and are likely to see from social equity cannabis business unions in L.A.:

  1. The Tier 1 and Tier 2 Straw Men. To qualify for social equity in Los Angeles you need some combination of “low income” status, a “cannabis conviction,” or having lived in a “disproportionately impacted area” in the City for a certain amount of time. (For a detailed explanation of LA’s social equity qualification requirements go here.) Based on what you can prove as a social equity applicant, your cannabis business will be categorized as a Tier 1 or a Tier 2 business. To be Tier 1, the social equity applicant must have at least 51% of the equity in the cannabis business. To be Tier 2, the social equity applicant must have at least 33.3% of the equity in the cannabis business. Government rules that require sharing equity make even hardened business people nervous about losing voting control and search for ways around this rule. We expect to see Tier 1 and 2 cannabis businesses claim on paper (via operating agreements, bylaws, or subscription agreements) that they have the requisite equity spread while utilizing a “side letter” or a handshake to ensure that the actual social equity applicant has little to no real economic or control rights.
  2. The Incubator Terminator. L.A.’s social equity program has a Tier 3 cannabis business category that does not involve equity sharing. To qualify as a Tier 3, you must provide space, utilities, capital, business assistance, and licensing help to a Tier 1 or 2 business for no less than two years. Los Angeles is a very competitive cannabis market and I would not expect many will want to assist their competition and certainly not for free. This means we are bound to see Tier 3 businesses seek to sabotage their Tier 1 or 2 “roommates” so as to strengthen the competitive landscape for their own business. Oakland has shown what can happen when an incubator drags its feet during the entitlement process to the detriment of the social equity applicant, and unless Los Angeles mandates reporting requirements from Tier 1s and 2s to ensure Tier 3s are actually providing the help required by law, we can expect to see a Tier 3s working for the death of “their” Tier 1s and 2s during the mandatory assistance term.
  3. “Show Me the Money” Tier 1s and 2s. We have already seen Tier 1 and 2s essentially selling their status to multiple parties for a quick pay out without any actual plans to compete in the Los Angeles cannabis market. These sorts of deals go against the purpose of the social equity program, which wasto ensure those most negatively affected by The War on Drugs get a meaningful share of Los Angeles’s legal cannabis market.
  4. Is Your Partner Really a Tier 1 or 2?Many in Los Angeles wrongly believe one cannabis conviction is automatically enough to qualify for Tier 1 or 2 status. If you’re looking to partner with a Tier 1 or 2 be sure to do your due diligence to ensure they actually do meet the required criteria.
  5. Predatory Matchmakers. There aren’t many ways for legitimate Tier 1s and 2s to meet legitimate and willing Tier 3s, and our Los Angeles cannabis lawyers have been seeing more than a few questionable 11th hour brokered deals rushed to finish by the September 13th deadline. Many of  “brokerage” agreements we’ve seen have been inadequate and many deals are going through with little to no due diligence conducted by either party. These agreements are mostly boilerplate forms pulled down from the internet and badly re-purposed for social equity in L.A. Though satisfying L.A.’s requirements to qualify for Phase II is clearly important, you should not forget that these agreements will also serve as your legal foundation for a real business relationship with real obligations and liabilities and it is important thatt your agreement get the details right on things like company financing, leasing, voting, and managing day-to-day operations. Most of the “social equity brokers” putting these deals together care only about getting paid their percentage.
  6. Tier 3 Management Companies. There’s no such thing as a free lunch and many Tier 3s giving space, time, money, and assistance to Tier 1s and 2s will be expecting a lot back in return. We are already hearing of Tier 3s insisting they become management companies to the Tier 1s and 2s they plan to assist. L.A. is planning to address the issue of management companies generally in the City and that means we will likely see regulations aimed at preventing management companies from cannibalizing the opportunities intended for Tier 1s and 2s.

Los Angeles’s cannabis social equity program is a complicated undertaking and if just a handful of Tier 1 and Tier 2 cannabis businesses thrive in Los Angeles that will constitute a significant victory for the cannabis industry as a whole.

 

california cannabis marijuana landlord
…In a good way, for cannabis landlords.

Almost two years after the passage of Proposition 64, the 2016 California voter initiative to legalize and regulate medicinal and adult-use cannabis, California has begun to finalize its regulations that will govern the largest cannabis market in the country, though that effort has not been without some hiccups and bumps in the road. But, things are coming along and we anticipate that, as in other states that legalized cannabis like Washington and Oregon, after an initial period of turbulence, the rules will be solidified, prices will clam down, and there will be at least some measure of market stability going forward, notwithstanding those localities that decide to sit this one out. In the meantime, how are marijuana landlords faring in the midst of these industry growing pains? As it turns out, quite well. Here are a few examples.

Availability of insurance. Landlord insurance is essential in any tenancy. It protects the landlord against liability for injuries and property damage that occurs on the leased premises, and it covers losses to the building such as fire or burglary. Just months ago, California approved the first lessor’s risk policy for cannabis landlords to be written by a traditional state-admitted carrier. That may not sound like a big deal, but it really is: admitted carriers are held to high standards, and for the California Department of Insurance to agree to allow (and therefore essentially underwrite) such policies to be issued despite the subject activities being federally illegal is encouraging for the industry. The state also recently approved a business owners policy for cannabis operators, which is good for tenants.

Mainstream investor acceptance. One does not have to look to Canada to see mainstream investment success for U.S. cannabis companies. Real estate investment trusts (REITs) are highly regulated investment vehicles that can also be subject to federal scrutiny. In the U.S., only a handful of publicly listed REITs include properties leased to cannabis tenants, and now one of the country’s preeminent financial publications is openly recommending investment in a cannabis REIT, on the premise that businesses that lease to cannabis tenants “don’t actually ‘touch the plant’ which makes it a safer bet for long-term investors.” With the proviso that the CSA doesn’t necessarily agree with that assessment, this is one of many watershed moments in the normalization of commercial cannabis, with due respect to the republican former Speaker of the House becoming a board member of a cannabis investment fund.

Emergence of renewed federal enforcement priorities. Since the rescinding of the Cole Memo at the beginning of 2018, it has slowly emerged that federal cannabis enforcement priorities in California will be aimed at aligning with the state’s own enforcement priorities, as well as traditional federal prerogatives such as protecting federal lands and preventing organized crime. Notably, these articulated enforcement priorities have not included any mention of pursuing landlords of commercial cannabis tenants that are in compliance with state laws.

Advancement of tenancy-friendly state legislation. Recently, the state legislature has advanced a proposed law encouraging shared tenancy resources and tenant cost savings, e.g. bathrooms, break rooms, locker rooms, hallways, or loading docks. This is obviously an encouraging development for tenants, especially in places like the Bay Area where commercial space is at a premium. But it is also good news for landlords, who can market their properties to multiple tenants, rather than try to lease larger multi-unit spaces to a single tenant because of the inability to share common areas.

As long as cannabis remains federally illegal there will always be a measure of uncertainty and risk involved in commercial cannabis leasing for both landlord and tenant. But the trend lines do seem to be pointing towards normalization, which in turn points to decreased risk. Only time will tell.

For more on California cannabis leasing, check out the following:

california cbd epidiolex

At the end of June, we wrote about the FDA’s approval of GW Pharmaceutical’s drug Epidiolex (containing cannabidiol), an oral solution for treatment of seizures. On July 9, 2018, California Jerry Brown signed legislation approving Epidiolex for use under California law.

California, like many states, has its own version of the Controlled Substances Act. Similar to federal law, the California CSA classifies controlled substances into five schedules, the most restrictive being Schedule I and the least restrictive being Schedule V. Under existing California law, cannabidiol (CBD) is Schedule I because it is a compound contained in cannabis, also a Schedule I drug.

Under Assembly Bill 710, the California Legislature made the following findings:

The Legislature finds and declares that both children and adults with epilepsy are in desperate need of new treatment options and that cannabidiol has shown potential as an effective treatment option. If federal laws prohibiting the prescription of medications composed of cannabidiol are repealed or if an exception from the general prohibition is enacted permitting the prescription of drugs composed of cannabidiol, patients should have rapid access to this treatment option. The availability of this new prescription medication is intended to augment, not to restrict or otherwise amend, other cannabinoid treatment modalities including, but not limited to, industrial hemp products and derivatives containing cannabidiol, currently available under state law.

Section 3 of A.B. 710 then adds statutory language that harmonizes federal and California state law on cannabidiol:

if cannabidiol is excluded from Schedule I of the federal Controlled Substances Act and placed on a schedule of the act other than Schedule I, or if a product composed of cannabidiol is approved by the federal Food and Drug Administration and either placed on a schedule of the act other than Schedule I, or exempted from one or more provisions of the act, so as to permit a physician, pharmacist, or other authorized healing arts licensee acting within his or her scope of practice, to prescribe, furnish, or dispense that product, the physician, pharmacist, or other authorized healing arts licensee who prescribes, furnishes, or dispenses that product in accordance with federal law shall be deemed to be in compliance with state law governing those acts.

Essentially, this language provides that once CBD can legally be prescribed under federal law, any authorized health care professional who complies with federal law will be deemed to comply with California state law. A.B. 710 goes on to provide that this harmonization does not apply to a CBD-containing product that is made or derived from industrial hemp, as regulated by existing California law.

Finally, the Legislature provides that “in order to ensure that patients are able to obtain access to a new treatment modality as soon as federal law makes it available,” A.B. 710 is an “urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect.”

The story of A.B. 710 shows that federalism concerns will continue to arise even once cannabis is federally legal. Because the states are permitted to pass their own controlled substances acts and food and drug statutes, it is possible that federal legalization will not lead to universal availability, just as the repeal of prohibition did not prevent localities from opting out. But we expect that similar laws harmonizing state and federal policy on CBD will be forthcoming, at least in states where cannabis is legal for medical use.

oregon cannabis employment sick leave
Tell sick employees to stay home! And don’t skirt pay laws.

Oregon was one of the first west coast states to require employers to provide sick leave to employees. Oregon law requires cannabis business (as well as all other businesses) to provide at least 40 hours of protected sick leave a year to its employees. The law is still relatively new and therefore there have been few reported violations. However, on July 3, 2018 Oregon Bureau of Labor and Industries (BOLI) issued sanctions against Lioness Holdings, LLC DBA Tan Republic for violation of the sick leave laws. The BOLI order gives us an idea of what kind of penalties we can expect against businesses that fail to comply with the law.

Tan Republic’s employee handbook required employees to find coverage for their duties in the event of illness and to obtain a physician’s note. Sarah Levin, an employee of Tan Republic, requested to use her sick leave in mid-October. She was unable to find coverage for her shift and her manager requested she appear as scheduled for work. She did so and her illness progressed. The next day Ms. Levin again requested sick leave accommodations. Her manager requested she provide a physician’s note the same day.  Ms. Levin was unable to do so and the same day her employer emailed her informing her that she was suspended for 30 days due to misuse of paid time, insubordination, and lack of professionalism. Ms. Levin could not afford a 30 day suspension and did not return to Tan Republic after she received the email.

The Oregon sick leave law forbids employers from requiring employees to search for or find a replacement worker as a condition of the employee’s use of accrued sick time. BOLI easily determined Tan Republic violated the Oregon sick leave law by requiring employees to find coverage.

BOLI also determined Tan Republic took adverse employment action against Ms. Levin for her use of protected sick leave. BOLI determined Ms. Levin’s suspension was related to her request for sick leave rather than actual merit based misuse of paid time or insubordination.

Most significantly, BOLI linked Oregon sick leave law with Oregon retaliation laws. BOLI determined Ms. Levin was constructively discharged. Constructive discharge occurs when employment conditions are so awful an employee has no choice but to end the employment relationship. Here, BOLI determined Tan Republic should have reasonably known that Ms. Levin would end her employment relationship with them when they suspended her for thirty days. BOLI treated this as retaliation for Ms. Levin’s lawful use of sick leave. The constructive discharge finding is significant because BOLI used it to increase damages awarded to Ms. Levin. In total based on violations of Oregon sick leave laws and Oregon’s anti-retaliation laws BOLI awarded Ms. Levin $20,000 plus interest, payable by Tan Republic. Of note, BOLI did not break down the award based on the amount related to the violation of the Oregon sick leave law versus violation of the anti-retaliation laws. Regardless of the breakdown, this case is important going forward. Employers have been warned: comply with sick leave or face big penalties.

There is an easy yet important lesson to be learned from the Tan Republic case: it is much cheaper to allow your employees to take leave in accordance with Oregon sick leave laws rather than face a $20,000 bill plus attorney fees. As we have discussed in the past, employee handbooks are a necessity for every cannabis business. If yours has not been updated recently or does not contain a sick leave policy, now is the time to update.

california product recall marijuana cannabis

Now that the MAUCRSA transition period is over and full cannabis testing is in the works, we can fully expect California marijuana companies to start engaging in recalls of certain products for a variety of reasons. In fact, a voluntary recall has already been initiated by The Bloom Brand where an impermissible pesticide (Myclobutanil) was present in one of its product batches that made it to retailers. Recalls like this are going to continue to increase, and we have to applaud The Bloom Brand for being conservative when it comes to consumer protection. Hopefully, other companies will follow suit and not try to cut corners where the resulting consequence is undoubtedly litigation, reputational disaster, and even dissolution if not fixed and fixed immediately.

So, what do you do in California if you find yourself inching up towards a recall?

First, you start with the readopted emergency regulations, which lay the field for what has to go down in the event of a recall. The California Department of Public Health-Manufactured Cannabis Safety Branch oversees licensing and enforcement for all manufacturers, and recall protocol is found at section 40268 of the emergency regulations. CDPH is the only agency right now with recall protocol codified in the emergency rules. Specifically, as a condition of licensure, you have to have a recall plan in place. That plan has to include:

(a) Factors which necessitate a recall;
(b) Personnel responsible for implementing the recall procedures; and
(c) Notification protocols, including: (1) A mechanism to notify all customers that have, or could have, obtained the product, including communication and outreach via media, as necessary and appropriate; (2) A mechanism to notify any licensees that supplied or received the recalled product; (3) Instructions to the general public and/or other licensees for the return and/or destruction of recalled product.

Procedures for the collection and destruction of any recalled product also have to meet the following requirements:

(1) All recalled products that are intended to be destroyed must be quarantined for a minimum of 72 hours. The licensee must also affix to the recalled products any bills of lading, shipping manifests, or other similar documents with product information and weight; and

(2) Following the quarantine period, the licensee has to render all recalled cannabis product unusable and unrecognizable and dispose of it in accordance with the rules and law, and that destruction has to take place on video surveillance.

And there are additional waste, destruction, disposal, track and trace and reporting requirements for the recalled product.

MAUCRSA itself empowers CDPH to mandate a recall when:

“the [CDPH] has evidence that a cannabis product is adulterated or misbranded, the department shall notify the manufacturer. [CDPH] may order a manufacturer to immediately cease distribution of a cannabis product and recall the product if [CDPH] determines both of the following: (1) The manufacture, distribution, or sale of the cannabis product creates or poses an immediate and serious threat to human life or health.(2) Other procedures available to [CDPH] to remedy or prevent the occurrence of the situation would result in an unreasonable delay.”

“A peace officer,” including any peace officers from the Bureau of Cannabis Control or CDPH, can also seize product under recall “by any licensing authority” pursuant to MAUCRSA. However, at this point, California’s actual cannabis recall standards are paltry and they’re mostly on a voluntarily basis, which is downright scary given some of the operators in the field.

Every single licensee should, for its own sake and liability mitigation, have concrete standards for recall procedures where products liability means strict liability for everyone in the chain who passed on the dangerous or defective product. Here are some tips of what should go into any reliable recall plan:

1. Create an overall recall strategy that’s going to actually work for the company dependent upon resources and manpower.

2. As part of your recall plan, create definitions and standards for classes of recall and the depth and scope of any given recall. If your state or local laws do not provide basic recall standards for marijuana businesses, check out the FDA’s website under Guidance for Industry: Product Recalls, Including Removals and Corrections.

3. Appoint a recall committee within your company, to be led by experienced personnel capable of evaluating and investigating product complaints to determine if a recall is warranted. This also entails your developing a product complaint form that will be utilized by customers. It is better to learn about product problems early.

4. Develop a complaint receipt and evaluation method to ensure that your product complaint processing and investigations are logical, efficient, and comprehensive. There are few things worse than receiving product safety complaints and then ignoring them until the situation is out of control.

5. Truly ponder what your product complaint investigation will entail. What facts should the recall committee be seeking to determine if a complaint is valid or if a recall is warranted. What should your recall look like, as based on the facts and circumstances and the threat the product poses to consumers and vendors.

6. Create a distribution list so that your recall committee can quickly and easily identify all affected products and product lots for disposition and potentially destruction. The distribution list should also include the names of all affected consumers and vendors, their contact information, and the dates on which the products were sold to them or consumed by them, and it should also include any side effects, injuries, or illnesses resulting from product use. Time is of the essence here.

EXAMPLE: My law firm had a regional food client that inadvertently failed to issue a recall notice to one of many supermarket chains to which it sold its food. This supermarket chain was so angry about having been kept out of the loop that it refused ever to purchase our client’s product again. Then other supermarket chains learned of our client’s mistake and they too ceased all of their purchasing. Needless to say, our client company no longer exists. Don’t let this sort of thing happen to you.

7. Institute a method of stock recovery so all tainted product in inventory is effectively quarantined from sale and distribution.

8. Generate your recall notice and be very careful with your wording in how you alert vendors and consumers to the recall. You want to effectively communicate that a product has been affected and how to deal with that, but you also want to minimize whatever liability your product problems may create for the company. On a case by case basis, consideration should also be given to drafting a press release to help the company’s PR. Regular readers know that we seldom state that attorney help is required, but for this, attorney assistance is absolutely required!

9. Make sure to as quickly as possible (preferably in advance) to alert your outside advisors (your lawyers, your insurance broker, etc.) regarding your recall.

10. Set out in your recall plan your options for product disposition. Will you destroy a product? Cleanse and then repurpose it? Lay out your options in your plan now so that you are not scrambling to try to figure out your possible options later, when you have no time to do so.

11. Record everything you do. Document every effort you make and record all your communications with consumers and vendors. If there is a legal action later, you will want to be able to show the court that you took all reasonable steps to ensure consumer safety.

In addition to formulating a solid and reliable recall plan, you also might want to consider conducting a mock recall to ensure your recall systems will work when the real deal occurs. Compliance audits can also be a big help in shoring up loose ends on a recall.

In the world of cannabis product recall, especially in California, licensees need to be very proactive in order to protect themselves. Relying on the state’s thin recall standards isn’t likely enough to protect licensees against an overwhelming liability exposure.

wine cannabis marijuana california

Our own Hilary Bricken will have the great pleasure of speaking at the 2nd annual North Coast Wine & Weed Symposium (presented by the Wine Industry Network) on Thursday, August 2, in Santa Rosa. While the Symposium will focus on a variety of topics covering the cross section of the wine and cannabis industries, Hilary’s panel will specifically cover “Rules, Regulations, and Policy Updates” in regards to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) and its corresponding readopted emergency rules and the current proposed permanent rules.

The breakdown of Hilary’s panel is as follows:

The rules & regulations around cannabis continue to evolve at a rapid pace and can be drastically different from one county, or town, to the next. This session, with Hezekiah Allen, Executive Director of Cal Growers Association, Hilary Bricken, Partner, Harris Bricken, and Erin Carlstrom, Senior Counsel of Dickenson, Peatman and Fogarty, will provide an update and overview of the latest changes in regulations at the state level and local level, along with any expected changes to take place in the upcoming year.

We expect a lively and interesting discussion at this symposium: Although the wine and cannabis industries don’t always get along, these two industries have a lot more in common than you might think, and knowing the current status of California’s cannabis rules and laws as well as ongoing policy debates surrounding MAUCRSA, will no doubt have an impact on both industries.

For all your questions about wine and cannabis, as well as specifics regarding the regulatory challenges under MAUCRSA, we sincerely hope you can make it to the Wine & Weed Symposium!

In the past year, we have seen a remarkable uptick in individuals and businesses pursuing Oregon industrial hemp production, processing and sale. This accelerated interest has coincided with the CBD craze, and fortunately, Oregon has been working steadily to build out its hemp program over the past year or two. Today’s blog post answers some questions commonly fielded by our Oregon cannabis lawyers, and summarizes the state of the state with regard to hemp.

What is the latest, as far as program rules?

The rules have undergone steady revision for a few years now. The most recent changes are shown in the Oregon Department of Agriculture’s (“ODA”) proposed rule changes, which should take effect very soon. These updates will stem from bills passed by the legislature earlier this year, which we wrote about back in March. A few of the biggest pending changes include the requirement that industrial hemp and seed can only be transferred to another ODA registrant or qualifying Oregon Liquor Control Commission (OLCC) licensee (in accordance with certain OLCC rules), and that any hemp sold to a consumer has to be tested by an OLCC licensed lab.

How easy is it to get a hemp handler’s permit?

It’s not quite as easy as it used to be, but it’s not bad, and it’s still faster and cheaper than getting an OLCC license. In our office, we have paralegals process these applications, and both grower and handler registrations often issue in a month or less when the client is organized.

Who can ODA permittees sell to, in the OLCC system?

ODA handlers can only sell to OLCC processors with a current OLCC endorsement to receive ODA hemp. Those processors can then move the industrial hemp products along the supply chain, to OLCC wholesalers and retailers.

I’m an ODA hemp handler. How do I get an OLCC hemp certificate?

You can’t right now. OLCC stopped accepting applications for the certificates back in April. Once the ODA proposed rule changes are final (hopefully very soon), OLCC should start issuing these applications once again. As to OLCC processors, those entities can still apply for hemp endorsements to add to their licenses.

Once I get an OLCC hemp certificate, how do those sales work?

You will have recordkeeping requirements for all hemp and related products transferred into the OLCC system. This means you will have to log information in the METRC Cannabis Tracking System, like OLCC licensees. Note that hemp products in METRC are not subject to tax, unless they are later mixed with marijuana. Note also that once you transfer hemp to an OLCC processor, it has to stay in the OLCC system. This means you cannot take it back and sell it outside of METRC.

Can I legally ship Oregon industrial hemp to other states?

Oregon does not restrict such sales, but the state does not create a safe harbor from federal law, either. In fact, the new rules will provide that no one participating in the Oregon hemp program is immune from federal law enforcement, even if they are not shipping hemp interstate. So what does federal law say about shipping industrial hemp and CBD interstate? It’s complicated.

Can I apply for an ODA permit on the same tax lot as my OLCC marijuana production? 

Yes, you can. But OLCC is going to require an approved “control plan” describing how the two production facilities will be separated, and ensuring that no industrial hemp winds up on the OLCC premises.

Can I get a bank account?

Yes. Maps Credit Union has announced it will begin servicing both plant-touching and ancillary hemp businesses on August 1. There may be other options in the pipeline as well.

Where can I find more information on all of this?

Aside from checking this blog, the best place to go are the relevant portions of the ODA and OLCC websites. Unlike OLCC, the ODA hasn’t done a great job of aggregating information in FAQ format or issuing bulletins, so you may have to actually read through the administrative rules (fun!), or call ODA itself with questions.

novato california marijuana cannabis
Local policy may be influenced by nearby metropolitan choices.

Do you live in a jurisdiction where commercial cannabis activities are prohibited? Under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), local jurisdictions in California are free to decide whether they will regulate or prohibit commercial cannabis activities. As we have covered before, the City of Novato, located in the northern part of Marin County, currently falls in the prohibition camp.

Novato passed a moratorium banning all commercial cannabis activities except for two pre-existing laboratories. There is also a carve-out in the moratorium for medical cannabis deliveries from operators licensed outside of Novato. The City’s moratorium is scheduled to expire in November, leaving the City with two options: Either continue the prohibition, or decide to regulate and license the industry.

Last week I attended two meetings sponsored by the City and HdL Companies (a company that partners with local agencies to develop cannabis policies) that discussed the future of cannabis licensing in Novato. With reports that only one in three California cities authorize any type of cannabis businesses, it’s important for cannabis supporters to actively engage with local regulators when cannabis policies are on the legislative agenda. The cannabis meetings in Novato presented an inside look in how a small a city, in close proximity to metropolises with cannabis friendly policies (Novato is less than thirty minutes from San Francisco and Oakland if the traffic Gods are shining upon you), approaches the future of cannabis activities in their town. Here is some insight from the meetings:

  • There were a number of dispensary operators from nearby jurisdictions, all with different viewpoints on what Novato’s cannabis ordinance should look like, but there was unanimous consent on one particular point: A medical-only storefront retailer will not thrive with adult-use jurisdictions nearby (San Francisco, Oakland, Santa Rosa, Sebastopol, and Vallejo just to name a few). Medical-only dispensaries will lose tourists and curious customers willing to try cannabis for the first time to their adult-use competitors.
  • The double-edged sword of commercial property values. If your town has a large number of decrepit and vacant buildings, then commercial cannabis businesses can be instrumental in revitalizing those neighborhoods. On the other hand, since landlords can extract a significant amount more in rent from cannabis businesses, long-time local businesses may see their rents increase or their leases not renewed. This problem is exacerbated if a city enacts restrictive zoning regulations, thereby further limiting where a cannabis business can operate.
  • There was a lot of support for an ordinance that includes a social equity component. Should a cannabis ordinance give priority to owners from disadvantaged groups? Should there be a requirement that a certain percentage of employees be local residents? For further context on social equity programs, we covered what Los Angeles is doing here, and what San Francisco and Oakland are doing, here.
  • Educating and informing the public is paramount to turning a prohibitionist jurisdiction green. Misinformation and scare tactics run rampant at many public hearings (see our coverage on Sonoma County, here), so cannabis supporters must be prepared to correct the record.

Right now, it’s too early in the process to tell which way Novato will go with its cannabis policy. The City is holding two more public meetings in August: One on August 8th and the other on August 16th (both will be from 6pm-8pm at City Hall). If Novato residents want to see the City lift its cannabis prohibition, they will need to study up and prepare their talking points: The first two meetings were cannabis friendly but trust me, there will be opposition. But most importantly, cannabis supporters must continue to show up and vocalize their support! Mark your August calendar, Novato.