Public comments are due to the California Department of Cannabis Control (DCC) about their comprehensive regulatory proposal by April 19th before 5pm.

To help the industry find alignment across the supply chain, Meadow collaborated with trusted industry lawyers, trade organizations, operators and nonprofits. We appreciate and are thankful for this community coming together to share, learn, and advocate for a better industry for all.

Founded in 2014, Meadow was built from the ground up for California cannabis—the largest cannabis market in the world—with deep expertise and knowledge of the state's regulations, supply chain, and retail environment. Meadow currently processes 20% of all cannabis sales in California, with over a billion dollars processed, 13 million POS transactions, and 3 million delivery orders. Meadow has intentionally focused on California cannabis given the size, scope, and opportunity in the market. We are committed to building a more collaborative, equitable and compassionate industry.

This round of proposed regulatory changes contains many improvements for the California cannabis industry. There are also a number of pain points that have gone unaddressed (or new ones that have been added). For this industry to continue surviving, more drastic changes are needed than those contained in the proposed regulations. For this industry to thrive, much more of the regulatory and tax regime will need reform. This is a (very small) step in that direction and we applaud the positive changes while calling out the work still to be done.

Submit your own public comment

The DCC must receive all comments by Tuesday, April 19, 2022, at 5 p.m. and has provided this template for public comments.

By mail: DCC Legal Affairs Division, 2920 Kilgore Road, Rancho Cordova, CA 95670

By email: publiccomment@cannabis.ca.gov

You are invited to pull from our community-created, open-source comments below to submit your own public comments to the DCC.

Our community-sourced feedback is divided into two sections:

Pain: These are the pain points we’d like to see addressed in regulations.

Gain: These are positive changes in the proposed regulations we’d like to amplify and support.

PAIN

Taxes - While the proposed regulations do not make changes to cannabis taxation, we have to call them out at every available opportunity as the single most detrimental (and counter-productive) element of regulated cannabis. By keeping an extraordinarily complex system of multi-tiered, compounding taxes across the licensed supply chain, the state continues to provide the unlicensed supply chain their biggest competitive advantage. We request the DCC works to expand the definition of “medical cannabis patient” back to the extent (and intent) of Prop 215 in all relevant facets. This should include extending the sales tax exemption to those with a valid medical recommendation from a doctor in good standing. The state should not be taxing medicine prescribed by a physician. The MMIC program has failed in this purpose (only 761 MMICs were issued in the entire state in Q1 of 2022). If a recommendation is sufficient for higher purchase limits, receiving compassion donations, local tax exemptions, etc. it should be sufficient for recognition from the state for sales tax purposes.

15000 - Proposed regulations contain terms that are not always or consistently defined. If a regulation includes a term, defining it increases clarity for licensees and facilitates compliance. Request inclusion of definitions for the following terms: net weight (for example, does this include crutches on a pre-roll?); sales reps (are they considered financial interest holders?); cannabis products, cannabis goods, cannabis material, cannabis substance (essential to have an exact definition of these terms to understand and consistently apply the regulations); person (used inconsistently to refer to entities and individuals - all such uses of this term should be cross-checked and replaced where relevant, e.g. with “individual” when referring to a natural person).

15000.6 - Proposed regulation reinforces prohibition on licensees hiring any employee under 21. In light of the labor shortage, it is increasingly difficult for licensees to stay adequately staffed. Many of these establishments are still medical only and are allowed to serve those 18+ with a medical recommendation. Request to expand the allowable age limit for employment to 18 years of age or older. This could be restricted to medical-only licenses and/or require the employee to hold a valid medical recommendation. Allowing medical cannabis patients to participate in the industry they can already patronize would help reduce the pinch of the labor shortage.

15004(a)(3)(G) - Proposed regulation requires disclosing parties engaged in IP or white-labeling agreements as financial interest holder. These arrangements are very common in the cannabis industry and rarely rise to the level of ownership. This regulation will be burdensome to monitor and report for licensees, especially those with multiple such agreements. Request to strike this proposed requirement from 15004 or significantly increase the minimum threshold to qualify for disclosure (for example from 10% to 20%).

15000.7(c) - Proposed regulation requires separating the break room from storage with solid floor to ceiling walls. This change will almost certainly lead to many licensees removing break rooms altogether in order to comply; local building permits for walls are often expensive and very slow. This change will impose another cost on operators and inconvenience to employees, requiring sending them off-premises for lunch or other breaks. Request to strike this requirement and leave break rooms unchanged. An explicit requirement to monitor such spaces with cameras is sufficient. Alternatively, the state can grandfather in existing break rooms and only require solid walls for new licensees going forward.

15041.1(b) - Proposed regulation requires a permanently affixed license number on branded merchandise. This creates new work for licensees and is leading to licensees looking to licensing deals with businesses out of state to produce their merchandise (costing the state business and increasing the environmental load of shipping these products). Request this proposed regulation be removed, or lower the requirement to a sticker or tag customers can remove (non-permanent). This allows customer to know the licensee of the brand when making a purchase but gives them the option to remove the tag at their discretion.

15041.2-7 - Proposed regulations on trade samples are overly strict and inflexible, setting a limit per licensee. Staff and product turnover in the cannabis industry are extremely high, making trade samples an essential route for educating the industry (and so in turn patients and customers) about the products available. Request a trade sample limit on a more relevant basis, such as a percent or unit count per production batch. This can be done for example by allowing the greater of 5% of the batch or 7,500 manufactured products per 2.5 pounds of cannabis. The variety limit in 15041.7(d) of 1 product per month should be scrapped in favor of a volume-only approach (to account for rapid product development).

15407(b) - Proposed regulation details that only retailers with on-site consumption can sell prepackaged food and beverage. Most jurisdictions do not have on-site consumption, meaning this is an arbitrary prohibition against the vast majority of retailers selling safe products like bottled water or gum. Consumer and public safety is not served by denying food, water, hand sanitizer, eyedrops, masks, etc. from being provided by retailers. Request to strike out “that operates a consumption area on the licensed premises in accordance with Business and Professions Code section 26200(g)” and allow any type of retailer to sell prepackaged food and beverages, etc. This should include allowing vending machines in stores with these products. Even a requirement to label every such product with the license number, while cumbersome, would be preferable to a ban.

15411(b) - Proposed regulations vastly expand the burden of administration and record-keeping requirements for compassion programs. These compassion programs already suffer from a lack of resources, and adding on more requirements to the existing system will only discourage retailers from providing compassion, which undermines the goals of the medical cannabis program. Request to scrap this section in its entirety. The crisis of diversion is not happening via compassion programs and it’s counterproductive to restrict these programs (driving low income patients back to the unlicensed market). The state is chasing ghost pennies on this one to the disservice of all who need and benefit from compassion.

15415(d) - Proposed regulation requires delivery drivers to return to the licensed retail premises at the end of their delivery route/shift. Many if not most delivery services only deliver pre-packed orders from the premises, and use digital inventory ledgers, so there is no product or paperwork that needs to be urgently returned to the premises. Request to allow delivery drivers with no cannabis inventory in the vehicle to end their shift without returning to the licensed premises. This will greatly reduce VMT (vehicle miles traveled) and associated emissions and costs. It also increases access across the state by making “one way” delivery more viable into areas closer to the driver’s home that may not license retail (most jurisdictions in the state).

15427(a) - Proposed regulation reduces the allowance for retailer to retailer transfers from “common ownership” to only licenses “held by the same sole proprietor or business entity.” This new regulation is problematic in that many retailers have diverse ownership interests that do not align 100% between licenses, but even if they align 99% will not meet the “same sole proprietor or business entity” requirement. Request to strike this requirement and leave intact retail to retail transfers between licenses with common ownership. All such transfers are required to be recorded in track and trace, so there is no confusion over which license holds and is responsible for inventory.

15705 - Regulation does not allow for labs to transfer test material to other labs for completion in case of emergencies (like equipment failures). This can lead to bottlenecks in testing when a lab faces unexpected issues and is unable to test batches on hand. Request to allow transfer between labs in the event of interruption in service/equipment failure. Oregon regulations (OR 333-064-0110) can serve as a model for subcontracting portions of lab testing when needed.

15713 - Regulation currently allows testing labs to develop their own methods for testing cannabis. This fosters innovation but also leads to massive inconsistencies in testing quality and outcomes. Request to establish a state reference lab to randomly re-test samples to confirm accuracy of COAs. Lab shopping continues to be a major problem in the industry, leading to inflated and inaccurate product information (to the detriment of patients and consumers), and also creating perverse incentives for labs. The state should establish tests and standards to confirm the consistency and accuracy of test results. Alternatively, the state can establish standards for the way products are allowed to be tested (for microbials, potency, etc.).

17221(c) - Proposed regulation requires a weighmaster certificate be sent with every transfer. This is a reduplicative requirement given that all weighing devices in use already have to be weighmaster approved and sealed. Request to use the transfer manifest instead, or reference it on the weighmaster certificate, to avoid the requirement to fill out the same information multiple times for every transfer.

17300(n) - Proposed regulation would prohibit sprays, metered dose inhalers (MDIs), and dry powder inhalers (DPIs). This blanket prohibition on a product class is counter to the goals of California to rely on science to foster an innovative, competitive industry. These product types are safe, have no water activity, and have proven medical efficacy. They are discrete, consistent, easy to dose, reduce the consumption of combustibles, and should be allowed for the benefit of medical cannabis patients. Request to allow these product types. To address safety concerns, regulation should require heightened review rather than ban these products (for example a secondary review process for inhaler devices) and/or provide a list of acceptable ingredients. Look to Colorado for an example of heightened review of such products without a prohibition.

17300(i) - Proposed regulation would prohibit seafood products of any kind. Certain seafood derivatives are used in suspension and encapsulation, meaning this requirement would limit innovation. There is also already such a product on the market, which passed required testing and has been sold and consumed without issue. Request to strike this requirement. It would remove existing products like Potli Shrimp Chips or other such Asian food products that contain seafood products.

15002 - Currently temporary cannabis events have a 3 day limit, which includes all movement of cannabis onto or off of the event premises. For 3 day events, this requires moving cannabis products into and out of the event premises the same day the event is being held. This is a major logistical and security hurdle. Request to allow a load in and/or breakdown period the day before/after an event, or for a designated period of hours that is not included in the calculation of the cannabis event period. Alternatively the regulations could specify the 3 day limit is for the “active” portion of the event (when sales are taking place).

15049 - Proposed regulation allows for the cumulative weighing of batches of cannabis products. This is a helpful change but does not go far enough, as all the plants in the batch are already of the same type and growing methodology. Request to allow a “batch and lot” approach widely used in agriculture instead of the individual tagging of plants. This is currently allowed for clones (which can have 1 plant tag per 100 clones) and should be expanded to mature plants. This would save the state money on unnecessary Metrc tags, vastly reduce the plastic waste of the industry, and provide major time savings for cultivators.

Inability to fallow fields - many cultivators, especially the smallest businesses, face an unprecedented environment of collapsing cannabis prices while simultaneously contending with inflation of their costs and a labor shortage. This is forcing many small growers to make the difficult choice to operate at a loss or abandon their licenses. Request to allow cultivators to fallow their land without forfeiting their license. If it is not cost effective to produce a harvest for a season/year, a cultivator should be able to keep their license. Alternatively, if activity is required to maintain licenses, allow growers to partially use their canopy cap (for example by growing only 5k of a 10k canopy).

GAIN

15002(c)(22) - Proposed regulation allows for the use of a single surety bond for companies holding multiple licenses rather than requiring one surety bond per license. We support this simplifying, cost-saving measure.

15003 - Proposed regulation further defines ownership and related restrictions. We support this clarifying change.

15004(a)(3) - Proposed regulation on financial interest holders now details a threshold of 10% of profits or 20% of ownership. This is a great clarifying addition and helps applicants know who has to be named as a financial interest holder.

15006 - Proposed regulation eliminates the requirement to use only black and white on submitted premise diagrams, permits use of color granting increased flexibility. We support this change as it will make it easier for both license applicants and regulators to create and understand premise diagrams.

15034 - Proposed regulation significantly simplifies the calculation of significant discrepancy in inventory. We support this change.

15048.2 - Proposed regulation details that Metrc plant and package tags can be discarded after they are no longer required for use. Given the space and administrative requirements of storing tags indefinitely, we support this change.

15049.1 - Proposed regulation allows for the measurement and report of the wet weight on a harvest batch basis instead of requiring the individual weight of each plant. This is a major time saver for cultivators and we support this change.

15049(e) and 15052.1(b) - Proposed regulations add details on the partial rejection of transfers. We support this clarifying detail.

15301(e) Proposed regulation allows for distribution cross-docking. Section clarifies scenarios where distributors can send products down to another facility, and from there transfer to the final retailer from that storage facility. This is a huge win for logistical efficiency in a state the size of California.

15306(c) - Proposed regulation would allow for the use of electronic COAs instead of the requirement for a printed hard copy. This is a huge win for reducing paper waste and the administrative burden of cannabis licensees. We support this change.

15402 - Proposed regulation extends the allowance for curbside pickup, which was initially introduced as an emergency response to the Covid-19 pandemic. This increases the efficiency and accessibility of retailers and we support anything that expands access and helps licensed retailers compete with the convenience of the unlicensed, unregulated market.

15407 - Proposed regulation allows licensed retailers with consumption lounges to serve pre-packed food and drink. We support this helpful change, but suggest it can be extended further to all retailers (strike requirement to operate a consumption area). This section also allows the sale of branded merchandise from any licensee (not just the retailer’s branded merchandise), which we support (with the suggestion to strike “only” from 15407(a)).

15481 - Proposed regulation clarifies and expands the regulations around cannabis goods carried during delivery. While we support this expansion in the strongest terms, we also request consideration for expanding the limit beyond $10,000 (with some concentrates retailing around $100/g retail, a vehicle could still be limited to carrying under 100 grams of product, which is an inefficient use of vehicle space and energy).

15603.1 - Proposed regulation provides clarity on the display of products by non-retailers at events, including accessories and branded merchandise. Events are a crucial channel for non-retailers to introduce their products to patients and customers. We strongly support this change.

15709 - Proposed regulations provide clarification on the requirements for transportation vehicles for lab samples. We support this clarifying change.

15726(h) - Proposed regulation allows a process to correct minor errors on COAs. This is a great commonsense change and we support it.

17300 - Proposed regulation would remove the prohibition on the use of caffeine as an additive. We support this change, which will bolster innovation and benefit consumers.

17410 - Proposed regulation permits the universal symbol to be printed in either black or white with a contrasting background, rather than just black. This ensures customers are able to clearly see the symbol regardless of the colors or branding used by licensees. We support this change.

17411(6) - Proposed regulation removes the requirement for opaque packaging for beverages. We support this change, which will allow customers to clearly see the product they are purchasing in advance.

17412 - Proposed regulation further defines requirements around child-resistant packaging. We support the clarity provided by this section.

Review the full proposed cannabis regulations:

Are there additional changes you think we should advocate for?

Send us what else you think we should include in our public comments to the DCC before 4/19/22: events@getmeadow.com

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