Explained: BCC Distributor License Inspection Checklist

Distributor License Inspection Sheet

by Gianna Geil, July 8, 2019 (with Omar Figueroa)

In our last blog post, we elaborated on the Bureau of Cannabis Control (BCC) Retail License Inspection Sheet, which is a checklist utilized by the BCC when assessing regulatory compliance by retailers.

This post will provide a summary and explanation of the items on the BCC Distributor License Inspection Sheet. This document was produced in late June of 2019 by the Bureau of Cannabis Control in response to a California Public Records Act request submitted by the Law Offices of Omar Figueroa.

The BCC regulations referenced in the Inspection Sheet are included in our free online reduced-size PDF containing the Combined Final Permanent Regulations. We have also crafted a hardcover book, a carefully curated compendium designed to give readers a deep understanding of the laws governing cannabis and hemp in California, which contains the regulations. 

Overview

Based on the Distributor License Inspection Sheet, BCC inspectors will focus on numerous areas, including security measures, storage, labeling and packaging, testing, record-keeping, tax payments, inventory reconciliation, insurance, bonds, shipping manifests, and transportation requirements.

Security Measures. Distributors must comply with the many of the same security measures required for retailers. This includes ensuring alcohol and tobacco products are not on site, requiring employees to wear name badges, contracting with licensed on-site security services, and maintaining video surveillance systems. (§§ 5300; 5043; 5045; 5044). Additionally, inspectors will look for whether a distributor’s license is posted in an area where it can easily be viewed. (§ 5039). If consumption of cannabis goods is allowed on site, be sure the consumption area is fully compliant with all regulations. Cal. Bus. & Prof. Code § 26200(g). 

Storage requirements. Every batch of cannabis goods must be stored separately and distinctly from all other batches. (§ 5302). Goods should be stored in limited-access areas secured with commercial grade locks. (§ 5042). Note: While the BCC Inspection Sheet cites BPC 26070(j)(3) and CCR 5300-5301 as relevant storage requirements, additional requirements for the storage of cannabis goods are listed in CCR 5042. The omission of these additional storage requirements from the inspection sheet may be an indicator of their relative importance to inspectors, or not. 

Labeling and Packaging. Distributors are responsible for ensuring that each batch of cannabis goods is properly labeled and packaged. (§§ 5301; 5302). Labeling requirements include, but are not limited to, a description of the cannabis goods, the weight of batch, and the date of entry into the storage area. (§ 5302). All packaging should be resealable, tamper-evident, child-resistant and include the unique identifier for tracking the cannabis or cannabis product. (Cal. Bus. & Prof. Code § 26120). Packaging may not imitate any packaging used for goods typically marketed to children, such as cartoons or animal shapes. (Id.)

Testing. Inspectors may ask to view videos of the laboratory sampling process of cannabis batches, which must be recorded for all samplings and saved for 90 days. (§ 5305(c)). Random batch samples may be taken to determine whether products have been tested, properly handled based on laboratory results, and transaction records match track and trace information. (§§ 5306; 5307). Note: the BCC Inspection Sheet references § 5055 in regard to the destruction of cannabis products; however this section was repealed. 

Records. In addition to the record requirements for all BCC licensed businesses, distributors must maintain records on quality assurance reviews and the transportation of goods. (§§ 5037; 5310). Accountings for all laboratory test results should be up to date for any batch that is stored for testing. (§ 5309). Additionally, distributors should keep on hand a record of their CDTFA cannabis tax permit, CDTFA seller’s permit, and receipts showing taxes collected from cultivators, retailers, and manufacturers. Track and trace records should be reconciled with the physical inventory of the distributor at least once every 30 days. (§ 5051). Note: the BCC Inspection Checklist references § 5301 for record requirements; however, § 5310 lists record requirements for distributors, so this seems to be a transposition error.

Insurance and Bonds. Distributors are required to maintain commercial general liability insurance through qualified insurers. (§ 5308). If the distributor is required to possess a bond to ensure payment of the cost for destroying cannabis goods, inspectors may ask for proof of the bond. (§ 5008). 

Shipping and Transportation. Before transporting any cannabis goods, distributors must create a shipping manifest to accompany the goods during transit. (§ 5314). Shipping manifests should be generated through the track and trace program and sent to both the BCC and business that will receive the goods. (§ 5314). All vehicles for transporting cannabis goods are required to have motor carrier permits. (§ 5311(c)). Distributors must submit to the BCC all information on transportation vehicles including ownership, year, make, model, and proof of insurance. (§ 5312(a)). Only employees or security personnel over 21 years of age can transport goods or be in the vehicle during transportation. (§ 5313). Inspectors may verify that cannabis goods are properly stored during transportation. (§ 5311(e)(f)(i)). Note: transportation requirements listed on the BCC Inspection Sheet reference CCR 5313/5314; however, additional requirements are listed in CCR 5311/5312. Again, the omission of these additional storage requirements from the inspection sheet may be an indicator of their relative importance to inspectors, or not.

Conclusion

The Distributor License Inspection Sheet makes clear that distributors preparing for inspections would be wise to verify compliance with respect to numerous issues, including but not limited to: security measures, storage, labeling and packaging, testing, record-keeping, tax payments, inventory reconciliation, insurance, bonds, shipping manifests, and transportation requirements.  Now that the Bureau of Cannabis Control has revealed what inspectors will primarily focus on, as detailed in the Distributor License Inspection Sheet, failing to plan for an inspection is tantamount to planning to fail an inspection. 

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