• MMRSA Regulation Update- SB 837
  • August 4, 2016 | Author: Lance Rogers
  • Law Firm: Greenspoon Marder - San Diego Office
  • ON JUNE 27, 2016, The California Legislature passed SB 837 amending the Medical Marijuana Regulation and Safety Act (“MMRSA”). The law was approved by the Governor and became effective immediately. It includes some major changes for the medical cannabis industry in the state. This article will highlight some of those major changes to California’s new regulated cannabis industry. For more information please contact our office to discuss how these changes will affect your business moving forward.

    GENERAL TERMS AND PROVISIONS
    • The bill changes the name of the Medical Marijuana Regulation and Safety Act to the “Medical Cannabis Regulation and Safety Act.” The Bureau of Medical Marijuana Regulation is now changed to the “Bureau of Medical Cannabis Regulation.”
    • A person submitting an application for a state license shall also provide proof of a bond to cover the costs of destruction of medical cannabis or medical cannabis products if necessitated by a violation of licensing requirements.1
    • Authorizes the Board of Equalization, for purposes of taxation and regulation, to have access to the Department of Food and Agriculture’s track and trace electronic database.
    • The Department of Public Health (DPH) may issue a citation which may contain an order of abatement and an order to pay administrative fines to any licensee in violation of this chapter or regulation. In no event shall the fine exceed $5,000.
    • The licensee may request a hearing to contest any finding of violation within 30 days of date of issuance. Payment of any fine does not constitute an admission of violation. Failure to pay the fine will result in the full amount of the fine being added to the fee for renewal of a license.
    PACKAGING - MISBRANDED AND ADULTERATED PRODUCTS
    • DPH may order a manufacturer immediately cease distribution and recall medical cannabis products if they determine that “the manufacture, distribution, or sale of the medical cannabis product creates or poses an immediate and serious threat to human life or health.” 1
    • Makes it unlawful for any person to manufacture, sell, deliver, hold or offer for sale a medical cannabis product that is misbranded or adulterated. If DPH has probable cause to believe that a product is misbranded or adulterated, they shall affix “a tag or other appropriate marking to the product.”
    • Upon a finding by an administrative law judge that the product is adulterated, misbranded, or whose sale is in violation of this chapter, the product may be ordered to be destroyed at the expense of the claimant or owner.
      • “Misbranded” is defined as any of the following:
        • Manufactured, packed, or held in this state in a manufacturing site not duly licensed as provided in this chapter;
        • It’s labeling is false or misleading in any particular;
        • It’s labeling or packaging does not conform to the requirements of Section 19347 or any other labeling or packaging requirement established pursuant to this chapter.1
      • “Adulterated” is defined as any of the following:
        • It has been produced, prepared, packed, or held under insanitary conditions in which it may have become contaminated with filth or in which it may have been rendered injurious.
        • It consists in whole or in part of any filthy, putrid, or decomposed substance.
        • It bears or contains any poisonous or deleterious substance that may render it injurious to users under the conditions of use suggested in the labeling or under conditions as are customary or usual.
        • It bears or contains a substance that is restricted or limited under this chapter or regulations promulgated pursuant to this chapter and the level of substance in the product exceeds the limits specified pursuant to this chapter or in regulation.
        • Its concentrations differ from, or its purity or quality is below, that which it is represented to possess.
        • The methods, facilities, or controls used for its manufacture, packing, or holding do not conform to or are not operated or administered in conformity with practices established by regulations adopted under this chapter to ensure that the medical cannabis product meets the requirements of this chapter as to safety and has the concentrations it purports to have and meets the quality and purity characteristics that it purports or is represented to possess.
        • Its container is composed, in whole or in part, of any poisonous or deleterious substance that may render the contents injurious to health.
        • It is an edible cannabis product and any substance has been mixed or packed with it after testing by a testing laboratory so as to reduce its quality or concentration or if any substance has been substituted, wholly or in part, for the edible cannabis product.1
    CHANGES TO LICENSE LIMITATIONS
    • Clarifies that a medical cannabis business acting in compliance with state and local laws on or before January 1, 2018, may continue its operations until its application is approved or denied by the licensing authority so long as a state license application is submitted by the licensing authority’s deadline.
    • The Type 10A “Special dispensary status” license is now named “Producing dispensary.” The Type 10A license allows up to three retail sites, but now each dispensary must be individually licensed.
    • A Cultivator is not required to send medical cannabis to a Distributor (Type 11 license) if the medical cannabis is to be used, sold, or otherwise distributed by a manufacturer for further manufacturing.1
    • Type 11 (Distributor) licensees must still hold a Type 12 (Transporter) license, and shall not hold any other type of state license.
    • Type 12 licensees (Transporter) may hold a Type 11 (Distributor) state license.1
    • All Cultivators and Manufacturers may now hold a Type 12 Transporter license.1
    • If issued a Type 12 license cultivators and manufacturers must comply as follows:
      • Cultivators shall only transport medical cannabis from a cultivation site to a Manufacturer or a Distributor.
      • Manufacturers shall only transport medical cannabis and medical cannabis as follows:
        • Between a cultivation site & manufacturing site.
        • Between a manufacturing site and a manufacturing site.
        • Between a manufacturing site and a Distributor.
    CHANGES TO PRIORITY LICENSING
    • Licensees may only hold up to two license categories. However, a licensee is not subject to this limitation if:
      • A jurisdiction adopted a local ordinance prior to July 1, 2015 requiring qualified businesses to cultivate, manufacture, and dispense medical cannabis products.
      • The business was cultivating, manufacturing, and dispensing medical cannabis on January 1, 2016 and has continuously done so since that date. Previously, this provision stated the date as July 1, 2015.
      • All cultivation or manufacturing is not required to be conducted within the bounds of a local jurisdiction, but the activity must have commenced prior to January 1, 2016 and has been in compliance with all applicable local ordinances. Previously, this provision stated the date as July 1, 2015.
    CHANGES TO AGRICULTURAL PROVISIONS
    • Creates a variety of new rules for water use by cultivators. Applicants for indoor or outdoor cultivation licenses shall identify the source of their water supply including whether the water is supplied by a retail water supplier, diversion, or groundwater extraction.
    • Cultivation applicants must include in their applications one of the following:
      • A copy of a registration, permit or license that covers the diversion;
      • A copy of a statement of water diversion and use, filed with the State Water Resources Control Board before July 1, 2017;
      • A copy of a pending application for a permit to appropriate water, filed with the State Water Resources Control Board before July 1, 2017;
      • Documentation, submitted to the State Water Resources Control Board before July 1, 2017, establishing that the diversion is subject to subdivision (a), (c), (d) or (e) of Section 5101 of the Water Code;
      • Documentation, submitted to the State Water Resources Control Board before July 1, 2017, establishing that the diversion is authorized under a riparian right and that no diversion occurred after January 1, 2010, and before January 1, 2017.
    • The Department of Food and Agriculture shall require cultivation licenses to comply with the applicable principles, guidelines and requirements established under the Water Code.
    • A cultivation license shall identify any relevant mitigation requirements that are identified as part of its approval of the final environmental documentation for the cannabis cultivation licensing program as requirements that should be included in a license for cultivation.
    • Cultivation licenses shall not be effective until the licensee has complied with Section 1602 of the Fish and Game Code or receives written verification from the Department of Fish and Wildlife that a streambed alteration agreement is not required.
    • Exempts cannabis seeds from the California Seed Law. As a result, cannabis seeds that are sold will not be subject to certain labeling requirements applicable to other agricultural seed producers.
    • Excludes a cannabis manufacturer, infusing butter with cannabis, from having to be licensed as a milk product plant.