California’s Cannabis Advisory Committee held two day-long meetings at the end of September to discuss proposed changes to the state’s cannabis regulations, kicking off with a focus on the wildfires.
The Committee, which met on September 24 and 25, includes stakeholders from the industry, unions, law enforcement, and localities, among others, was formed in 2017 to advise the Bureau of Cannabis Control and other state entities that regulate cannabis,like the Department of Food and Agriculture and the Department of Public Health, on regulation development focused on public health, public safety, and tackling unlicensed cannabis activity.
The world’s largest legal cannabis market is facing unprecedented circumstances amid the coronavirus pandemic and as wildfires ravage the state and threaten cannabis crops. The Medicinal and Adult-Use Cannabis Regulation and Safety Act requires that licensed cannabis entities record any movement of cannabis and cannabis products. But what happens if connectivity is lost due to fires or a utility company shuts off power, as has recently been the case for many California residents? The Cannabis Advisory Committee and members of the public debated whether cannabis goods should be transported when a license holder is experiencing a connectivity outage and, if so, what rules should guide that activity so information is recorded.
The California Cannabis Industry Association, for example, wrote in a public comment that the Committee needs to prepare for the inevitable. “To ensure economic activity is not halted during a technological failure resulting in the loss of connectivity with METRC, licensing authorities should develop a regulation to prepare for this inevitability, in lieu of prohibiting the transportation of consumer goods for the duration of the failure,” the industry group wrote.
The Committee passed a motion to recommend that rules be modified to allow for other methods and timeframes for licensees to record information into METRC, the system that the state uses to track and trace legal cannabis. The goal would be to take into account things like natural disasters, fires, power outages, and technology failure, while still guaranteeing that licensees continue uninterrupted operations.
The conversation then turned away from the fires and toward broader industry concerns. The committee also considered on-site consumption, and whether the state should create rules for such activities, in addition to local requirements. Current state law allows localities to develop these regulations, but the BCC doesn’t currently have its own rules. When brought up for a vote, this motion failed.
The group also weighed whether licensed retailers should be allowed to sell non-cannabis food items and, if so, what rules should be established. Current law does not allow the sale of these goods in cannabis shops.
Jackie Subeck, CEO of Hey Jackpot, a West Hollywood cannabis consumption lounge licensee, wrote in a public comment to the Committee that the rule banning non-cannabis goods has been a “roadblock, bordering on a death knell” for consumption lounges. Subeck said that non-cannabis goods “greatly aid when managing and assisting impaired customers,” especially those that have inadvertently over-consumed. In addition, some cannabis lounges might want to partially operate as restaurants.
Committee member Avis Bulbulyan, CEO of SIVA Enterprises and president of the Los Angeles Cannabis Task Force, said there might be unintended consequences of creating rules for non-cannabis goods. Take a well-known restaurant, for example, and its owner who might decide to get into cannabis.
“They can open up a smoking section that allows for cannabis consumption on-site to anyone over 21. So now that becomes your competition,” Bulbulyan said.
The Committee brought forth a motion to vote, which passed.
Among other topics, the Cannabis Advisory Committee considered whether to develop permanent regulations for curbside delivery, with local approval. During the COVID-19 pandemic, curbside delivery became commonplace, because while cannabis was deemed “essential,” curbside pickup made compliance with other rules, like social distancing, easier. Current law requires that all cannabis sales have to take place “in” a licensed retail shop, though the BCC granted an exemption during the pandemic. This motion failed.
Additionally, the Committee discussed whether the current $5,000 limit on the value of cannabis goods that delivery employees can carry should be changed. On this topic, there are a few concerns, namely the potential for increased diversion. Also, as the Committee noted, “limits on the amount of cannabis goods that can be in the delivery vehicle which have not already been processed prior to leaving the licensed premises should avoid the delivery service from essentially becoming a mobile retailer.”
Delivery company Eaze wrote in a public comment to “urge” the Committee to develop rules that set the ceiling higher, to $10,000 in cannabis goods. Since March 13, Eaze wrote, demand for cannabis delivery has surged “in every region of the state — and especially among seniors and vulnerable Californians.” The Committee passed this motion.
“Under current regulations, 80% of California’s cannabis sales are controlled by unlicensed operators, who do not follow the important labor protections required by cannabis regulations. If the legal market cannot meet consumer demand, illicit enterprises will continue to thumb their noses at policymakers, labor unions, law enforcement, and small business owners,” wrote David Mack, senior vice president of policy and public affairs, for Eaze.
The Committee also considered cottage microbusinesses, though no motion was brought forth. Current law defines a microbusiness as “the cultivation of cannabis on an area less than 10,000 square feet and to act as a licensed distributor, Level 1 manufacturer, and retailer.” The Committee weighed whether to allow, for example, a microbusiness to engage in just one type of activity.
This topic received a handful of written comments, one of which was from the Mendocino County Board of Supervisors in support of the proposed Cottage Microbusiness License. “The transition to a regulated market for Cannabis has been challenging. In Mendocino County, only a subset of cultivators have applied for legal status. This is due largely to the statute interpretations by the BCC, CDFA, CDPH, CDFW and Waterboards,” the Supervisors wrote.
“We feel that the ‘Cottage Microbusiness License’ addresses many of the complaints we have heard from our constituent stakeholders. We understand that large, well-funded enterprises have and will continue to proliferate the newly regulated marketplace. However, we feel that the small operator has been left behind, not only impacting individuals and families, but entire communities and County revenue.”
Zooming out, some public comments were unrelated to agenda items. Flow Kana, for example, wrote some comments “to offer bigger picture feedback on the state of the California cannabis landscape” with the hope that the Committee would take up these topics in the future. One of these comments encouraged California regulators to “take a leadership role” in rules for interstate commerce. This is currently illegal because cannabis remains a Schedule I substance at the federal level.
“If California were able to export to other states, the growth potential would trigger new capital investments, expansion of production lines, and new hiring,” wrote Michael Wheeler, the vice president of policy initiatives for Flow Cannabis Co.
Alfie Crooks contributed reporting.
