Highlights from DCC’s Proposed Consolidated Emergency Regulations

By Lauren Mendelsohn

September 10, 2021

 

  

As we discussed in our previous blog post here, California’s Department of Cannabis Control (DCC) announced proposed emergency regulations with the goal of combining the requirements from the three previous sets of regulations into one unified set. The proposal is lengthy, with 391 pages of text in the proposed emergency regulations packet (and the packet only contains regulatory sections that the DCC is proposing to add, delete, or amend), a disciplinary guidelines document of 35 pages, and a 197 page notice of proposed emergency regulations.

This blog post will take a look at some of the more notable aspects of the DCC’s latest proposal. (Please note that this is far from a comprehensive list.)

“Owners” and  “Financial  Interest Holders”

The DCC is proposing to modify the definition of “owner” for all license types to be the following, which would expand this classification to include trustees, general managers, and individuals with authority to execute contracts on behalf of the licensee (proposed §15003):

Similarly, the DCC is proposing to modify the definition of “financial interest holder” for all license types, modifying the requirement to disclose individual owners who qualify as financial interest holders in a privately held company, specifying that brand owners who contract with a licensee to produce cannabis goods under the brand owner’s brand name would be deemed financial interest holders, and modifying the  threshold for passive shareholders to be disclosed (proposed §15004):

 

Changes of Ownership

The DCC is proposing to adopt the following rule regarding ownership changes, which reflects the approach that the Bureau of Cannabis Control had taken previously, allowing a licensee to continue operations while the ownership change is under review as long as at least one existing owner remains on the license (proposed §§15023(c),(d)):

 

Provisional Licenses

The proposed emergency regulations reflect newly-enacted state law which changed the requirements  and sunset dates related to provisional licensing (proposed §§15001, 15001.1, 15001.2, 15001.3, 15001.4). These proposed sections are rather lengthy, so we will not copy them here, but you can refer to them in the rulemaking document.

Proposed Section 15001 contains general information related to provisional licensing, proposed Section 15001.1 discusses the requirements for a provisional license to be issued, proposed Section 15001.2 is about provisional license renewals, proposed Section 15001.3 is about notice of provisional licensing review, and proposed Section 15001.4 is about suspension of provisional licenses.

Although there have been calls for the DCC to allow appeals of provisional license denials, the DCC is proposing to stick with the current approach which does not provide for appeal rights for provisional licenses (proposed §15001).

 

Branded Merchandise

The DCC is proposing some changes to the rules around branded merchandise, including adding the requirement that a licensee’s license number be permanently affixed to the merchandise and eliminating the pre-approval requirement for non-listed items of branded merchandise  (proposed §15041.1):

Additionally, the DCC is proposing to allow licensees to sell branded merchandise from other licensees, not just their own branded merchandise, which had been the BCC’s position most recently (proposed §15407):

 

Trade Samples

The DCC  is proposing to adopt the following rules about trade samples, following the recent passage of Assembly Bill 141 which created statutory authority for this by adding Section 26153.1 to the Business and Professions Code (proposed §§15041.2, 15041.3, 15041.4, 15041.5, 15041.6, 15041.7):

 

 

 

 

 

 

Disaster Relief

The three sets of existing cannabis regulations differ on the amount of time allotted to inform the licensing agency about moving cannabis goods off the premises due to a disaster — cultivators and  manufacturers are given 10 days to do this while other licensees get 14 days.  The proposed emergency regulations would adopt the 14-day rule for all licensees (proposed §15038):

 

Conclusion

This is just a small sampling of the noteworthy changes being proposed. For more information, visit the Department of Cannabis Control’s website. A five (5) day public comment window will open up once the DCC submits the proposed emergency regulations to the Office of Administrative Law, which should take place in the next week. Since these are emergency regulations, the DCC will eventually have to go through the regular rule-making process to adopt permanent cannabis regulations, and that process will have a much longer notice-and-comment period.

 

Update (9/15/21): DCC gave notice today that the proposed emergency regulations have been filed with OAL and the 5-day public comment period has begun. Thus, comments must be submitted by Monday, September 20. To submit a comment, send your comment to both OAL and DCC by mail or email:

Stay tuned for our blog for further coverage of this topic.

 

This information is  provided as a public educational service and is not intended as legal advice. For specific questions about cannabis or hemp laws in California, please contact the Law Offices of Omar Figueroa at 707-829-0215 or info@omarfigueroa.com.