Public Safety Power Shutoff Events and California Cannabis Regulations
By Omar Figueroa & Lauren Mendelsohn
October 9, 2019 [Updated 10/25/19]
Utility company Pacific Gas & Electric (PG&E) has announced a Public Safety Power Shutoff Event starting in the early hours of Wednesday, October 9, across many regions of California. It is anticipated that numerous licensed cannabis businesses across the Golden State will lose access to the track and trace system, and may also be unable to comply with other regulatory requirements. (Update – 10/25/19: Two additional PG&E Public Safety Power Shutoff events have been announced during the month of October.)
As a public service to help the nascent California cannabis industry, we have compiled the relevant regulations pertaining to disaster relief, as well as track-and-trace connectivity issues, for each of the three primary cannabis regulatory agencies: the Bureau of Cannabis Control within the Department of Consumer Affairs (which regulates retailers, distributors, microbusinesses, testing laboratories, and event organizers), CalCannabis Cultivation Licensing within the California Department of Food and Agriculture (which regulates cultivators), and the Manufactured Cannabis Safety Branch within the California Department of Public Health (which regulates manufacturers).
Overview
Each of the three regulatory agencies has promulgated regulations that potentially apply when a licensee loses power and/or access to the track-and-trace system. Each set of regulations has provisions pertaining to both disaster relief as well as loss of connectivity to the track-and-trace system. Though similar, these provisions are not identical.
Under the disaster relief provisions, a licensee suffering from sudden and severe power loss may contact the agency that issued the license to request temporary relief from regulatory requirements, as needed (Bureau of Cannabis Control licensees are directed by the regulations to use this form). The licensee also may temporarily move its cannabis goods to an unlicensed location “to prevent loss, theft, or degradation” of the goods, but the licensee must notify the agency in writing within 24 hours and ensure that access to the goods is restricted at the new location, in addition to also requesting temporary relief from regulatory requirements.
Under the track-and-trace rules, licensees should be aware of strict rules prohibiting the transfer of cannabis while access to track-and-trace is lost. For example, the CDFA regulation applicable to cultivators, nurseries, and processors, states: “A licensee shall not transfer cannabis or nonmanufactured cannabis products to a distributor until such time as access to the system is restored and all information is recorded into the track-and-trace system.” §8402(e)(3). Similarly, the CDPH regulation applicable to extractors and other manufacturing licensees states, “A licensee shall not transfer cannabis products to another licensee or receive cannabis or cannabis products from another licensee until such time as access to the track-and-trace system is restored and all information is recorded into the track-and- trace system.” §40513(d). The corresponding BCC regulation states that a licensee “shall not transport, receive, or deliver any cannabis goods until such time as connectivity is restored.” §5050(b). In effect, licensed business who are frozen out of the track-and-trace system are also frozen out of the supply chain. Interestingly, this does not on its face appear to prohibit storefront retailers from conducting storefront sales of cannabis while access is lost, though it does appear to prohibit deliveries (by either delivery-only retailers or storefront retailers allowed to conduct deliveries) until such time as connectivity is restored.
Generally, the regulations require that when connectivity is lost (for whatever reason), licensees are required to keep detailed records and information and promptly update the track-and-trace system after connectivity is restored. For ease of reference, the relevant portions of each set of regulations are below.
Bureau of Cannabis Control
§ 5038. Disaster Relief.
(a) If a licensee is unable to comply with any licensing requirements due to a disaster, the licensee may notify the Bureau of this inability to comply and request relief from the specific licensing requirement.
(b) The Bureau may exercise its discretion to provide temporary relief from specific regulatory requirements in this division and from other licensing requirements when allowed by law.
(c) Temporary relief from specific licensing requirements shall be issued for a reasonable amount of time in order to allow the licensee to recover from the disaster.
(d) The Bureau may require that certain conditions be followed in order for a licensee to receive temporary relief from specific licensing requirements.
(e) A licensee shall not be subject to an enforcement action for a violation of a licensing requirement in which the licensee has received temporary relief.
(f) For the purposes of this section, “disaster” means condition of extreme peril to the safety of persons and property within the state or a county, city and county, or city caused by such conditions as air pollution, fire, flood, storm, tidal wave, epidemic, riot, drought, terrorism, sudden and severe energy shortage, plant or animal infestation or disease, Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or similar public calamity, other than conditions resulting from a labor controversy, for which the Governor has proclaimed a state of emergency in accordance with Government Code sections 8558 and 8625, or for which a local governing body has proclaimed a local emergency in accordance with Government Code sections 8558 and 8630.
(g) A licensed premises that has been vacated by a licensee due to a disaster shall not be deemed to have been abandoned or quit under section 5022 of this division.
(h) Notwithstanding subsection (a) of this section, if a licensee needs to move cannabis goods stored on the licensed premises to another location immediately to prevent loss, theft, or degradation of the cannabis goods from the disaster, the licensee may move the cannabis goods without obtaining prior approval from the Bureau if the following conditions are met:
(1) The cannabis goods are moved to a secure location where access to the cannabis goods can be restricted to the licensee, its employees, and contractors;
(2) The licensee notifies the Bureau in writing, by submitting the Notification and Request Form, BCC-LIC-027 (New 10/18), which is incorporated herein by reference, that the cannabis goods have been moved and that the licensee is requesting relief from complying with specific licensing requirements pursuant to subsection (a) of this section within 24 hours of moving the cannabis goods;
(3) The licensee agrees to grant the Bureau access to the location where the cannabis goods have been moved to for inspection; and
(4) The licensee submits in writing the Notification and Request Form, BCC-LIC-027 (New 10/18), incorporated herein by reference, to the Bureau within 14 calendar days of moving the cannabis goods a request for temporary relief that clearly indicates what statutory and regulatory sections relief is requested from, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time.
Authority: Section 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.
§ 5050. Loss of Connectivity.
(a) If at any point a licensee loses connectivity to the track and trace system for any reason, the licensee shall prepare and maintain comprehensive records detailing all commercial cannabis activities that were conducted during the loss of connectivity.
(b) The licensee shall notify the Bureau immediately for any loss of connectivity, and shall not transport, receive, or deliver any cannabis goods until such time as connectivity is restored. Licensees shall submit such notices on the Notification and Request Form, BCC- LIC-027 (New 10/18), which is incorporated by reference.
(c) Once connectivity has been restored, the licensee shall:
(1) Within three calendar days, enter all commercial cannabis activity that occurred during the loss of connectivity into the track and trace system.
(2) Document the cause for loss of connectivity, and the date and time for when connectivity to the track and trace system was lost and when it was restored.
Authority: Section 26013, Business and Professions Code. Reference: Sections 26067, 26070 and 26160, Business and Professions Code.
CalCannabis Cultivation Licensing
§ 8207. Disaster Relief.
(a) If a licensee is unable to comply with any licensing requirement(s) due to a disaster, the licensee may notify the department of this inability to comply and request relief from the specific licensing requirement(s).
(b) The department may exercise its discretion to provide temporary relief from specific licensing requirements for licensees whose operations have been impacted by a disaster.
(c) Temporary relief from specific licensing requirements shall be issued for a reasonable amount of time as determined by the department in order to allow the licensee to recover from the disaster.
(d) The department may require that certain conditions be followed in order for a licensee to receive temporary relief from specific licensing requirements.
(e) A licensee shall not be subject to enforcement action for a violation of a licensing requirement from which the licensee has received temporary relief.
(f) For the purposes of this section, “disaster” means condition of extreme peril to the safety of persons and property within the state or a county, city and county, or city caused by such conditions such as air pollution, fire, flood, storm, tidal wave, epidemic, riot, drought, terrorism, sudden and severe energy shortage, plant or animal infestation or disease, Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or similar public calamity, other than conditions resulting from a labor controversy, for which the Governor has proclaimed a state of emergency in accordance with Government Code sections 8558 and 8625, or for which a local governing body has proclaimed a local emergency in accordance with Government Code sections 8558 and 8630.
(g) A licensed premises that has been vacated by a licensee due to a disaster shall not be deemed to have been surrendered, abandoned, or quit pursuant to section 8208 of this chapter.
(h) Notwithstanding subsection (a) of this section, if a licensee needs to move cannabis and nonmanufactured cannabis products stored on the premises to another location immediately to prevent loss, theft, or degradation of the cannabis and nonmanufactured cannabis products from the disaster, the licensee may move the cannabis without obtaining prior approval from the department if the following conditions are met:
(1) The cannabis and nonmanufactured cannabis products are moved to a secure location where access to the cannabis is restricted to the licensee, its employees, and contractors;
(2) The licensee notifies the department in writing that the cannabis and nonmanufactured cannabis products have been moved and that the licensee is requesting relief from complying with specific licensing requirements pursuant to subsection (a) of this section within twenty-four (24) hours of moving the cannabis;
(3) The licensee provides the department access to the location where the cannabis and nonmanufactured cannabis products have been moved to for inspection; and
(4) The licensee submits in writing to the department within ten (10) calendar days of moving the cannabis and nonmanufactured cannabis products a request for temporary relief that clearly indicates the statutory and regulatory sections from which relief is requested, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time.
Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26013, Business and Professions Code.
§ 8402. Track-and-Trace System.
Except as provided in section 8405(e) of this chapter, each licensee shall report in the department’s track-and-trace system the disposition of immature and mature plants, nonmanufactured cannabis products on the licensed premises, any transfers associated with commercial cannabis activity between licensees, and any cannabis waste pursuant to this chapter.
(a) The licensee is responsible for the accuracy and completeness of all data and information entered into the track-and- trace system. Data entered into the track-and-trace system is assumed to be accurate and can be used to take enforcement action against the licensee if not corrected.
(b) Each licensee shall use the track-and-trace system for recording all applicable commercial cannabis activities.
(c) Pursuant to section 8109 of this chapter, each licensee shall identify an owner in the licensee’s organization to be the licensee’s track-and-trace system account manager. The licensee’s designated track-and-trace system account manager shall be responsible for all the following:
(1) Complete track-and-trace system training provided by the department. If the designated account manager did not complete the track-and-trace system training prior to the licensee receiving his or her annual license, the designated account manager will be required to register for the track-and-trace system training provided by the department within five (5) calendar days of license issuance;
(2) Designate track-and-trace system users, as needed, and require the users to be trained in the proper and lawful use of the track-and-trace system before the users are permitted to access the track-and-trace system;
(3) Maintain an accurate and complete list of all track-and-trace system users and update the list immediately when changes occur;
(4) Within three (3) calendar days, cancel the access rights of any track-and-trace user from the licensee’s track-and-trace system account if that individual is no longer authorized to use the licensee’s track-and-trace system account;
(5) Correct any data that is entered into the track-and-trace system in error within three (3) calendar days of discovery of the error; and
(6) Notify the department immediately for any loss of access that exceeds three (3) calendar days.
(d) The licensee is responsible for all access and use of the licensee’s track-and-trace system account.
(e) If a licensee loses access to the track-and-trace system for any reason, the licensee shall prepare and maintain comprehensive records detailing all required inventory tracking activities conducted during the loss of access.
(1) Once access to the track-and-trace system is restored, all inventory tracking activities that occurred during the loss of access shall be entered into the track-and-trace system within three (3) calendar days.
(2) A licensee shall document the date and time when access to the track-and-trace system was lost, when it was restored, and the cause for each loss of access.
(3) A licensee shall not transfer cannabis or nonmanufactured cannabis products to a distributor until such time as access to the system is restored and all information is recorded into the track-and-trace system.
Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26067, 26069, and 26160, Business and Professions Code.
Manufactured Cannabis Safety Branch
§40182. Disaster Relief.
(a) If a licensee is unable to comply with any licensing requirement due to a disaster, the licensee may notify the Department of this inability to comply and request relief from the specific licensing requirement.
(b) The Department may exercise its discretion to provide temporary relief from specific regulatory requirements in this chapter and from other licensing requirements when allowed by law.
(c) Temporary relief from specific licensing requirements shall be issued for a reasonable amount of time in order to allow the licensee to recover from the disaster.
(d) The Department may require that certain conditions be followed in order for a licensee to receive temporary relief from specific licensing requirements.
(e) A licensee shall not be subject to an enforcement action for a violation of a licensing requirement in which the licensee has received temporary relief.
(f) For purposes of this section, “disaster” means condition of extreme peril to the safety of persons and property within the state or a county, city and county, or city caused by such conditions such as air pollution, fire, flood, storm, tidal wave, epidemic, riot, drought, terrorism, sudden and severe energy shortage, plant or animal infestation or disease, Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or similar public calamity, other than conditions resulting from a labor controversy, for which the Governor has proclaimed a state of emergency in accordance with Government Code sections 8558 and 8625, or for which a local governing body has proclaimed a local emergency in accordance with Government Code sections 8558 and 8630.
(g) Notwithstanding subsection (a) of this section, if a licensee needs to move cannabis or cannabis products stored on the premises to another location immediately to prevent loss, theft, or degradation of the cannabis or cannabis products from the disaster, the licensee may move the cannabis or cannabis products without obtaining prior approval from the Department if the following conditions are met:
(1) The cannabis or cannabis products are moved to a secure location where access to the cannabis or cannabis products can be restricted to the licensees, its employees, and its contractors;
(2) The licensee notifies the Department in writing that the cannabis or cannabis products have been moved and that the licensee is requesting relief from complying with the specific licensing requirements pursuant to subsection (a) of this section within 24 hours of moving the cannabis or cannabis products;
(3) The licensee agrees to grant the Department access to the location where the cannabis or cannabis products have been moved;
(4) The licensee submits in writing to the Department within 10 days of moving the cannabis or cannabis products, a request for temporary relief that clearly indicates what regulatory sections relief is requested from, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time.
Authority: Sections 26012, 26013 and 26130, Business and Professions Code. Reference: Section 26012, Business and Professions Code.
§40513. Track-and-Trace System – Loss of Access.
(a) If a licensee loses access to the track-and-trace system for any reason, the licensee shall prepare and maintain comprehensive records detailing all required inventory tracking activities conducted during the loss of access.
(b) Upon restoration of access to the track-and-trace system, all inventory tracking activities that occurred during the loss of access shall be entered into the track-and- trace system within three (3) business days.
(c) A licensee shall document the date and time when access to the track-and-trace system was lost, when it was restored, and the cause for each loss of access.
(d) A licensee shall not transfer cannabis products to another licensee or receive cannabis or cannabis products from another licensee until such time as access to the track-and-trace system is restored and all information is recorded into the track-and- trace system.
Authority: Sections 26012, 26013 and 26130, Business and Professions Code. Reference: Sections 26067 and 26160, Business and Professions Code
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