Frequently Used Cannabis Business Entity Filing Forms

Below are common forms that need to be filed with the California Secretary of State to create, change or update your Business Entity. If you do not see the form you are looking for a complete list of forms is available on our bizfile California Portal at bizfile.sos.ca.gov under Forms and Filing Tips.

The forms below are categorized according to business entity type. If you are unsure about which business entity type best fits the needs of your business, you may wish to review our Starting a Business – Entity Types page for a brief overview of the various business structures available. Once you have determined which business structure best fits your needs, you can then review the common forms or samples associated with that entity type in the table below.

Limited Liability Companies
Corporations and Cooperatives
Change from Nonprofit Mutual Benefit Corporation to Stock Corporation
Change from Nonprofit Mutual Benefit Corporation to Limited Liability Company – 2 Steps

Regardless of how you choose to structure your business, before filing, you are encouraged to use the Starting a New Cannabis Business Checklist located at cannabizfile.sos.ca.gov. There are many State and Local requirements for starting a cannabis business in California.

DPH-17-010E Cannabis Manufacturing Licensing

California Code of Regulations, Title 17 Division 1
Chapter 13. Manufactured Cannabis Safety SUBCHAPTER 1. General Provisions and Definitions Article 1. Definitions

§40100. Definitions.

In addition to the definitions in Business and Professions Code section 26001, the following definitions shall govern the construction of this chapter:

“A-license” means a license issued for commercial cannabis activities involving cannabis and cannabis products that are intended for individuals 21 years of age and older and who do not possess physician’s recommendations.

“Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, codified at Business and Professions Code section 26000, et seq.

“Actual yield” means the quantity that is actually produced at any appropriate step of manufacture or packaging of a particular cannabis product.

“Adequate” means that which is necessary to accomplish the intended purpose to ensure cannabis product safety in keeping with good public health practice.

“Adult-use Market” means the products intended for sale at an A-licensed retailer or microbusiness to individuals 21 years of age and older and who do not possess physician’s recommendations.

“Adulterated” or “adulteration” has the meaning stated in section 26131 of the Business and Professions Code.

“Allergen” means a major food allergen including any of the following: (1) Milk, eggs, fish (e.g., bass, flounder, or cod), Crustacean shellfish (e.g., crab, lobster, or shrimp), tree nuts (e.g., almonds, pecans, or walnuts), wheat, peanuts, and soybeans. (2) A food ingredient that contains protein derived from a food specified in (1), except the following: Any highly refined oil derived from a food specified in (1) and any ingredient derived from such highly refined oil.

Page 1 of 97

DPH-17-010E Cannabis Manufacturing Licensing

“Allergen cross-contact” means the unintentional incorporation of a food allergen into a cannabis product.

“Applicant” means the owner that is applying on behalf of the commercial cannabis business for a license to manufacture cannabis products.

“Batch” or “production batch” means either:
(a) An amount of cannabis concentrate or extract produced in one production

cycle using the same extraction methods and standard operating procedures; or
(b) An amount of a type of cannabis product produced in one production cycle

using the same formulation and standard operating.
“Bureau” means the Bureau of Cannabis Control in the Department of Consumer

Affairs.
“Cannabis concentrate” means cannabis that has undergone a process to

concentrate one or more active cannabinoids, thereby increasing the product’s potency. For purposes of this chapter, “cannabis concentrate” includes, but is not limited to, the separated resin obtained from cannabis, whether crude or purified, tinctures, capsules, suppositories, extracts, and vape cartridges.

“Cannabis product” as used in this chapter means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, edible, topical or other product containing cannabis or concentrated cannabis and other ingredients.

“CBD” means the compound cannabidiol.

“Commercial-grade, non-residential door lock” means a lock manufactured for commercial use.

“Component” means any substance or item intended for use in the manufacture of a cannabis product, including those substances or items that are not intended to appear in the final form of the product. Component can include cannabis, cannabis products used as ingredients, other ingredients, and processing aids.

“Contact surface” means any surface that contacts cannabis products and cannabis product components and those surfaces from which drainage, or other transfer, onto the

Page 2 of 97

DPH-17-010E Cannabis Manufacturing Licensing

cannabis product or cannabis product components, occurs during the normal course of operations. Examples of contact surfaces include containers, utensils, tables, equipment, and packaging.

“Department” means the State Department of Public Health.

“Distribution” means the procurement, sale, and transport of cannabis and cannabis products between licensees.

“Edible cannabis product” means a cannabis product intended to be used orally, in whole or in part, for human consumption. For purposes of this chapter, “edible cannabis product” does not include any product otherwise defined as “cannabis concentrate.”

“Environmental pathogen” means a pathogen capable of surviving and persisting within the manufacturing environment such that cannabis products may be contaminated and may result in illness if consumed or used without treatment to significantly minimize the environmental pathogen. Examples of environmental pathogens include Listeria monocytogenes and Salmonella spp. but do not include the spores of pathogenic spore-forming bacteria.

“Extraction” means a process by which cannabinoids are separated from cannabis plant material through chemical or physical means.

“Finished product” means a cannabis product in its final form to be sold at a retail premises.

“Hazard” means any biological, chemical, radiological, or physical agent that has the potential to cause illness or injury.

“Holding” means storage of cannabis or cannabis products and includes activities performed incidental to storage of a cannabis product and activities performed as a practical necessity for the distribution of that cannabis product.

“Informational panel” means any part of the label that is not the primary panel and that contains required labeling information.

“Infusion” means a process by which cannabis, cannabinoids, or cannabis concentrates, are directly incorporated into a product formulation to produce a cannabis product.

Page 3 of 97

DPH-17-010E Cannabis Manufacturing Licensing

“Ingredient” means any substance that is used in the manufacture of a cannabis product and that is intended to be present in the product’s final form.

“In-process material” means any material that is fabricated, compounded, blended, ground, extracted, sifted, sterilized, derived by chemical reaction, or processed in any other way for use in the manufacture of a cannabis product.

“Labeling” means any label or other written, printed, or graphic matter upon a cannabis product, or upon its container or wrapper, or that accompanies any cannabis product.

“Limited-access area” means an area in which cannabis is stored or held and is only accessible to a licensee and authorized personnel.

“M-license” means a license issued for commercial cannabis activity involving medicinal cannabis.

“Manufacturer licensee” or “licensee” means the holder of a manufacturer license issued pursuant to the Act.

“Manufacture” means to compound, blend, extract, infuse, or otherwise make or prepare a cannabis product. The term “manufacture” includes the following processes:

(a) Extraction processes;
(b) Infusion processes;
(c) Packaging or repackaging of cannabis products;
(d) Labeling or relabeling the packages of cannabis products.
The term “manufacture” does not include the following:
(a) The repacking of cannabis products from a bulk shipping container by a

distributor or dispensary where the product’s original packaging and labeling is not otherwise altered.

(b) The placing of cannabis products into opaque packaging at a retail premises for purpose of complying with section 26070.1 of the Act.

(c) The collection of the glandular trichomes that are dislodged from the cannabis plant incident to cultivation activities.

Page 4 of 97

DPH-17-010E Cannabis Manufacturing Licensing

“Manufacturing” or “manufacturing operation” means all aspects of the extraction and/or infusion processes, including processing, preparing, holding, storing, packaging, or labeling of cannabis products. Manufacturing also includes any processing, preparing, holding, or storing of components and ingredients.

“Microorganisms” means yeasts, molds, bacteria, viruses, protozoa, and/or microscopic parasites and includes species that are pathogens. The term “undesirable microorganisms” includes those microorganisms that are pathogens, that subject a cannabis product to decomposition, that indicate that a cannabis product is contaminated with filth, or that otherwise may cause a cannabis product to be adulterated.

“Monitor” means to conduct a planned sequence of observations or measurements to assess whether control measures are operating as intended.

“Nonvolatile solvent” means any solvent used in the extraction process that is not a volatile solvent. For purposes of this chapter, nonvolatile solvents include carbon dioxide and ethanol.

“Package” or “packaging” means any container or wrapper that may be used for enclosing or containing any cannabis products. The term “package” does not include any shipping container or outer wrapping used solely for the transportation of cannabis products in bulk quantity to another licensee or licensed premises.

“Pathogen” means a microorganism that can cause illness or injury.

“Personnel” means any worker engaged in the performance or supervision of operations at a manufacturing facility and includes full-time and part-time employees, temporary employees, contractors, and volunteers. For purposes of training requirements, personnel also includes owner-operators.

“Person” includes any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular.

Page 5 of 97

DPH-17-010E Cannabis Manufacturing Licensing

“Pest” means undesired insect, rodent, nematode (small worm), fungus, bird, vertebrate, invertebrate, weed, virus, bacteria, or other microorganism (except microorganisms on or in humans or animals) injurious to health or the environment.

“Premises” means the designated structure(s) and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity as defined in subdivision (k) of section 26001 of the Business and Professions Code will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee.

“Preventive controls” means those risk-based, reasonably appropriate procedures, practices, and processes that a person knowledgeable about the safe manufacturing, processing, packing, or holding of food would employ to significantly minimize or prevent the hazards identified pursuant to a hazard analysis that are consistent with the current scientific understanding of safe food manufacturing, processing, packing, or holding at the time of the analysis.

“Primary panel” means the part of a label that is most likely to be displayed, presented, shown, or examined under customary conditions of display for retail sale.

“Processing aid” means any substance that is added to a cannabis product during manufacture but is removed in some manner from the cannabis product before it is packaged in its finished form. This includes substances that are converted into constituents normally present in the product, and do not significantly increase the amount of the constituent naturally found in the product. This also includes substances that are added to a product for their technical or functional effect in the processing but are present in the finished product at insignificant levels and do not have any technical or functional effect in that product.

“Product Identity” or “identity of the product” means the generic name of the product type by which it is most commonly known. For edible products, the product identity shall not contain any trademarked identity of a traditional food product or the term “candy” or “candies.”

Page 6 of 97

DPH-17-010E Cannabis Manufacturing Licensing

“Qualified individual” means a person who has the education, training, or experience (or a combination thereof) necessary to manufacture safe cannabis products as appropriate to the individual’s assigned duties. A qualified individual may be, but is not required to be, an employee of the licensee.

“Quality” means that the cannabis product consistently meets the established specifications for identity, cannabinoid concentration, composition, and limits on contaminants, and has been manufactured, packaged, labeled, and held under conditions to prevent adulteration and misbranding.

“Quality control” means a planned and systematic operation or procedure for ensuring the quality of a cannabis product.

“Quality control operation” means a planned and systematic procedure for taking all actions necessary to prevent cannabis product(s) from being adulterated or misbranded.

“Quality control personnel” means any person, persons, or group, designated by the licensee to be responsible for quality control operations.

“Quarantine” means the storage or identification of a product, to prevent distribution or transfer of the product, in a physically separate area clearly identified for such use or through other procedures.

“Raw material” means any unprocessed material in its raw or natural state that is intended to become part of the components of a cannabis product.

“Sanitize” means to adequately treat cleaned surfaces by a process that is effective in destroying vegetative cells of pathogens, and in substantially reducing numbers of other undesirable microorganisms, but without adversely affecting the product or its safety for the consumer.

“Serving” means the designated amount of cannabis product established by the manufacturer to constitute a single unit.

“THC” means the compound tetrahydrocannabinol. For purposes of this chapter, “THC” refers specifically to delta 9-tetrahydrocannabinol.

Page 7 of 97

DPH-17-010E Cannabis Manufacturing Licensing

“Theoretical yield” means the quantity of a particular cannabis product that would be produced at any appropriate step of manufacture or packaging, based upon the quantity of components or packaging to be used, in the absence of any loss or error in actual production.

“Topical cannabis product” means a cannabis product intended to be applied to the skin rather than ingested or inhaled.

“Track and trace system” means the program for reporting the movement of cannabis and cannabis products through the distribution chain established by the Department of Food and Agriculture in accordance with section 26067 of the Act.

“UID” means the unique identification tag for use in the track-and-trace system established by the Department of Food and Agriculture in accordance with section 26067 of the Act.

“Universal symbol” means the symbol developed by the Department pursuant to paragraph (7) of subdivision (c) of section 26130 of the Business and Professions Code to indicate a product contains cannabinoids.

“Validation” means obtaining and evaluating scientific and technical evidence that a control measure, combination of control measures, or quality control procedures as a whole, when properly implemented, is capable of effectively controlling the identified hazard.

“Verification” means the application of methods, procedures, tests, or other evaluations, in addition to monitoring, to determine whether a control measure or combination of control measures is or has been operating as intended and to establish the validity of the quality control procedures.

“Volatile solvent” means any solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures. Examples of volatile solvents include, but are not limited to, butane, hexane, and propane.

Page 8 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26000; 26001; 26013; 26120(c); and 26130, Business and Professions Code. Section 11018.1, Health and Safety Code.

§40101. Applicability

(a) Unless otherwise specified, the requirements of this chapter apply to licensed manufacturers and to the manufacture of cannabis products for either the medicinal-use market or the adult-use market.

(b) Unless otherwise specified by the Department, the requirements of subchapters 3, 4, and 5 shall apply to licensed microbusinesses conducting manufacturing operations.

(c) The requirements of Sections 40200 (security plan), 40205 (video surveillance), 40282 (inventory control) and 40290 (waste management) shall not apply to microbusinesses. Microbusiness shall comply with such regulations established by the Bureau.

Authority: Sections 26013, 26106, and 26130, Business and Professions Code. Reference: Sections 26013; 26050; 26106; and 26130, Business and Professions Code.

§40102. Owners and Financial Interest Holders.

(a) An owner shall mean any of the following:

(1) Any person that has an aggregate ownership interest, other than a security interest, lien, or encumbrance, in a commercial cannabis business of 20 percent or more;

(2) The chief executive officer of a commercial cannabis business;
(3) If a non-profit entity, each member of the Board of Directors;
(4) Any individual that will be participating in the direction, control, or management of

the licensed commercial cannabis business. An owner who is an individual participating Page 9 of 97

DPH-17-010E Cannabis Manufacturing Licensing

in the direction, control, or management of the commercial cannabis business includes any of the following:

(A) Each partner of a commercial cannabis business that is organized as a partnership;

(B) Each member of a limited liability company for a commercial cannabis business that is organized as a limited liability company.

(C) Each officer or director of a commercial cannabis business that is organized as a corporation.

(b) Persons that hold an ownership interest of less than 20 percent in a commercial cannabis business are considered to be financial interest holders for purposes of subsection (d) section 26051.5 of the Business and Professions Code and shall be disclosed on the application for licensure. Such individuals are not required to submit an owner application under Section 40130. A financial interest means an investment into a commercial cannabis business, a loan provided to a commercial cannabis business.

(c) The following persons are not considered to be owners or financial interest holders:

(1) A bank or financial institution whose interest constitutes a loan;

(2) Persons whose only ownership interest in the commercial cannabis business is through an interest in a diversified mutual fund, blind trust, or similar instrument.

(3) Persons whose only financial interest is a security interest, lien, or encumbrance on property that will be used by the commercial cannabis business; and

(4) Individuals who hold a share of stock that is less than 5 percent of the total shares in a publicly traded company.

Authority: Sections 26001; 26012, subdivision (a)(3); and 26013, Business and Professions Code. Reference: Sections 26001; and 26051.5, subdivision (d), Business and Professions Code.

Page 10 of 97

DPH-17-010E Cannabis Manufacturing Licensing

§§40103 – 40114. [Reserved]
Article 2. General Provisions

§40115. License Required.

(a) Every person who manufactures cannabis products shall obtain and maintain a valid manufacturer license from the Department for each separate premises at which cannabis products will be manufactured.

(b) No person shall manufacture cannabis products without a valid license from the Department.

(c) An M-license is required in order to manufacture cannabis products for sale in the medicinal-use market.

(d) An A-license is required in order to manufacture cannabis products for sale in the adult-use market.

(e) Licenses shall not be transferrable.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26053; and 26130, Business and Professions Code.

§40116. Personnel Prohibited from Holding Licenses

(a) A license authorized by the Act and issued by the Department may not be held by, or issued to, any person holding office in, or employed by, any agency of the State of California or any of its political subdivisions when the duties of such person have to do with the enforcement of the Act or any other penal provisions of law of this State prohibiting or regulating the sale, use, possession, transportation, distribution, testing, manufacturing, or cultivation of cannabis goods.

(b) This section applies to, but is not limited to, any persons employed in the State of California Department of Justice as a peace officer, in any district attorney’s office, in any city attorney’s office, in any sheriff’s office, or in any local police department.

Page 11 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) All persons listed in subsection (a) or (b) may not have any ownership interest, directly or indirectly, in any business to be operated or conducted under a cannabis license.

(d) This section does not apply to any person who holds a license in the capacity of executor, administrator, or guardian.

Authority: Sections 26012 and 26130, Business and Professions Code. Reference: Sections 26010 and 26012, Business and Professions Code.

§40117. [Reserved]

§40118. Manufacturing License Categories and Types.

(a) Manufacturing licenses may be issued for either the adult-use market or the medicinal-use market.

(b) The following license types are available from the Department:

(1) “Type 7,” for extractions using volatile solvents as defined by Section 40100. A Type 7 licensee may also:

(A) Conduct extractions using nonvolatile solvents or mechanical methods on the licensed premises provided that the extraction process is noted on the application form and the relevant information is provided to the Department pursuant to subsection (b) of Section 40128.

(B) Conduct infusion operations on the licensed premises, provided that the infusion method is noted on the application form and that the relevant information is provided to the Department pursuant to subsection (b) of Section 40128.

(C) Conduct packaging and labeling of cannabis products on the licensed premises.

(2) “Type 6,” for extractions using mechanical methods or nonvolatile solvents as defined by Section 40100. A Type 6 licensee may also conduct infusion operations and packaging and labeling of cannabis products on the licensed premises provided that the

Page 12 of 97

DPH-17-010E Cannabis Manufacturing Licensing

infusion method is noted on the application form and that the relevant information pursuant to subsection (b) of Section 40128 is provided to the Department.

(3) “Type N,” for manufacturers that produce edible products or topical products using infusion processes, or other types of cannabis products other than extracts or concentrates, but that do not conduct extractions. A Type N licensee may also package and label cannabis products on the licensed premises.

(4) “Type P,” for manufacturers that only package or repackage cannabis products or label or relabel the cannabis product container. Manufacturers that engage in packaging or labeling of cannabis products as part of the manufacturing operation do not need to hold a separate Type P license.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26050, subdivision (a); and 26130, Business and Professions Code.

§§40119-40124. [Reserved]

Page 13 of 97

DPH-17-010E Cannabis Manufacturing Licensing

SUBCHAPTER 2 – MANUFACTURING LICENSES Article 1. Applications for Licensure

§40125. [Reserved]
§40126. TemporaryLicenses

(a) To request a temporary license, an applicant shall submit to the Department the following:

(1) Form CDPH-9041 (10/17), which is hereby incorporated by reference.

(2) A copy of a local license, permit, or other authorization issued by the local jurisdiction indicating that the local jurisdiction acknowledges the operation of the commercial cannabis business at the location specified in the application. Upon receipt of the application, the Department shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid.

(b) A temporary license shall be valid for 120 days from the effective date. No temporary license shall be effective prior to January 1, 2018.

(c) A temporary license may be extended by the Department for additional 90-day periods if the holder of a temporary license submits a complete application for licensure to the Department pursuant to Section 40128 prior to the initial expiration date of the temporary license.

Page 14 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26013, 26050.1, and 26130, Business and Professions Code. Reference: Section 26050.1, Business and Professions Code.

§40127. [Reserved]

§40128. Annual License Application Requirements.

(a) To apply for a manufacturer license from the Department, the applicant shall submit the following on behalf of the commercial cannabis business:

(1) A completed application form as prescribed by the Department, or through online submission, which includes the following information:

(A) Business information specified in Section 40129:
(B) Owner information as specified in Section 40130;
(C) Manufacturing premises and operations information as specified in Section

40131.
(2) The nonrefundable application fee as specified in Section 40150.
(b) The application shall be signed by the applicant under penalty of perjury and

shall include the following attestations:
(1) The applicant is authorized to act on behalf of the commercial cannabis

business;
(2) If the licensed premises has 20 or more employees, the applicant will enter into a

labor peace agreement and will abide by the terms of the agreement as required by Business and Professions Code section 26051.5 (a)(5)(A). A copy of the agreement shall be sent to the Department. If the applicant has not yet entered into a labor peace agreement, a notarized statement indicating the applicant will enter into and abide by the terms of a labor peace agreement shall be sent to the Department;

Page 15 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(3) The commercial cannabis business is operating in compliance with all local ordinances;

(4) The proposed premises is not within a 600-foot radius of the perimeter of a school providing instruction in kindergarten or any grades 1 through 12, or a day care center, or youth center, or that the premises complies with the local ordinance specifying a different radius, as specified in section 26054(b) of the Act.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections, 26012, subdivision (a)(3); 26013; 26050; and 26130, Business and Professions Code.

§40129. Annual License Application Requirements – Business Information

(a) The applicant shall submit the following information for the commercial cannabis business:

(1) The legal business name;

(2) The federal tax identification number. If the commercial cannabis business is a sole proprietorship without a federal tax identification number, the applicant shall submit the social security number of the sole proprietor;

(3) The name(s) under which the business will operate (“Doing Business As”), if applicable;

(4) The business’s mailing address which will serve as the address of record;

(5) The name, title, phone number and email address of the primary contact person for the commercial cannabis business;

(6) The seller’s permit number issued by the California Department of Tax and Fee Administration or notification issued by the California Department of Tax and Fee Administration that the business is not required to have a seller’s permit. If the applicant has not yet received a seller’s permit, the applicant shall attest that the applicant is currently applying for a seller’s permit;

Page 16 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(7) The business structure of the commercial cannabis business as filed with the California Secretary of State (e.g., limited liability company, partnership, corporation). A commercial cannabis business that is a foreign corporation shall include in its application the certificate of qualification issued by the Secretary of State of California;

(8) A list of the owners, as defined in Section 40102;
(9) A list of financial interest holders, as defined in Section 40102.
(10) Proof of having obtained a surety bond in the amount of $5,000, payable to the

State as obligee, to ensure payment of the cost incurred for the destruction of cannabis products necessitated by a violation of the Act or the regulations adopted thereunder. All bonds required under this regulation must be in a form satisfactory to the State, issued by a corporate surety licensed to transact surety business in the State of California.

(11) The license type applied for and whether the application is for medicinal or adult-use manufacturing.

(b) Pursuant to section 26055(e) of the Act, applicants may voluntarily submit a copy of a license, permit, or other authorization to conduct commercial cannabis manufacturing activities issued by the local jurisdiction. Upon receipt of the application, the Department shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections, 26012, subdivision (a)(3); 26013; 26050; and 26130, Business and Professions Code.

§40130. Annual License Application Requirements – Owners.

(a) Each owner shall submit the following information on a form prescribed by the Department or through online submission:

(1) Name;

Page 17 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(2) Title or position held;
(3) Social security number;
(4) Date of birth;
(5) Mailing address;
(6) Contact phone number and email address;
(7) A copy of Department of Justice form BCIA 8016;
(8) Disclosure of any of the following, including dates and a description of the

circumstances:
(A) Any criminal conviction from any jurisdiction. Adjudications by a juvenile court

and infractions do not need to be disclosed; convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must be disclosed;

(B) Any civil proceeding or administrative citation, penalty or license sanction that is substantially related to the qualifications of a manufacturer as identified in Section 40162, subsections (f) and (g), including proceedings, penalties or sanctions against you or against a business entity in which you were an owner or officer;

(C) Any fines or penalties for cultivation or production of a controlled substance on public or private land pursuant to Fish and Game Code section 12025 or 12025.1;

(D) Any sanctions by a licensing authority or a city or county for unlicensed commercial cannabis activity within 3 years preceding the date of the application;

(E) Any suspension or revocation of a cannabis license by a licensing authority or local jurisdiction within 3 years preceding the date of the application.

(b) The owner form shall be signed by the owner under penalty of perjury that the information provided is complete, true, and accurate.

(c) An owner disclosing a criminal conviction or other penalty or sanction pursuant to subdivision (a), paragraphs (8)(A) and (B), shall submit any evidence of rehabilitation for consideration by the Department with the application. A statement of rehabilitation shall be written by the owner and contain all the evidence that the owner would like the Department to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not

Page 18 of 97

DPH-17-010E Cannabis Manufacturing Licensing

limited to, evidence specified in Section 40165, and dated letters of reference from employers, instructors, or counselors that contain valid contact information for the individual providing the reference.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26013; 26050; 26055; and 26130, Business and Professions Code.

§40131. Annual License Application Requirements – Manufacturing Premises and Operations Information

The applicant shall submit the following information regarding the manufacturing premises and operation:

(a) The physical address of the manufacturing premises;

(b) Whether the premises manufactures medicinal-use and/or adult-use cannabis products;

(c) The type of activity conducted at the premises (extraction, infusion, packaging, and/or labeling);

(d) The types of products that will be manufactured, packaged, or labeled.

(e) The name, title and phone number of the on-site individual who manages the operation of the premises;

(f) The name, title and phone number of an alternate contact person for the premises;

(g) The number of employees at the premises;

(h) The anticipated gross annual revenue from products manufactured at the premises. An applicant for an M-license shall submit the anticipated gross annual revenue from the sale of medicinal-use products manufactured at the premises and an applicant for an A-license shall submit the anticipated gross annual revenue from the sale of adult-use products manufactured at the premises;

Page 19 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(i) A premises diagram. The diagram shall be specific enough to enable ready determination of the bounds of the property and the proposed premises to be licensed, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, room, windows, and common or shared entryways. The diagram must show the areas in which all commercial cannabis activities will be conducted. The diagram shall be to scale. If the proposed premises consists of only a portion of a property, the diagram shall be labeled indicating which part of the property is the proposed premises and identifying what the remaining property is used for.

(j) The following information:

(1) A description of inventory control procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40282, or a copy of the standard operating procedure addressing inventory control;

(2) A description of quality control procedures sufficient to demonstrate how the applicant will comply with the all of the applicable requirements specified in Sections 40232-40268 or a copy of the standard operating procedure addressing quality control;

(3) A description of the transportation process to be used by the applicant that is in compliance with state law, or a copy of the standard operating procedure addressing transportation;

(4) A description of security procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40200, or a copy of the standard operating procedure addressing security procedures;

(5) A description of the waste disposal procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40290, or a copy of the standard operating procedure addressing waste management.

(k) A written statement signed by the owner of the property, or the owner’s agent, identifying the physical location of the property and acknowledging and consenting to the manufacture of cannabis products on the property. The name, address and contact phone number for the owner or owner’s agent shall be included.

Page 20 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(l) Any manufacturer submitting operating procedures and protocols to the Department pursuant to the Act and this chapter may claim such information as a trade secret or confidential by clearly identifying such information as “confidential” on the document at the time of submission. Any claim of confidentiality by a manufacturer must be based on the manufacturer’s good faith belief that the information marked as confidential constitutes a trade secret as defined in Civil Code section 3426.1(d), or otherwise exempt from public disclosure under the California Public Records Act in Government Code section 6250 et seq.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections, 26012, subdivision (a)(3); 26013; 26050; and 26130, Business and Professions Code.

§40132. [Reserved for Shared Facility License Application Requirements]

§40133. Limited Waiver of Sovereign Immunity.

(a) Any applicant or licensee that may fall within the scope of sovereign immunity that may be asserted by a federally recognized tribe or other sovereign entity must waive any sovereign immunity defense that the applicant or licensee may have, may be asserted on its behalf, or may otherwise be asserted in any state administrative or judicial enforcement actions against the applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise, under the state laws and regulations governing commercial cannabis activity. The applicant or licensee must submit a written waiver of sovereign immunity to the Department with any license application or renewal, which is valid for the period of the license. The written waiver shall include that the applicant or licensee has the lawful authority to enter into the waiver required by this section, the applicant or licensee hereby waives sovereign immunity, and the applicant or licensee agrees to do all of the following:

Page 21 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(1) Provide documentation to the Department that establishes that the applicant or licensee has the lawful authority to enter into the waiver required by this section;

(2) Conduct all commercial cannabis activity in full compliance with the state laws and regulations governing commercial cannabis activity, including submission to all enforcement provisions thereof;

(3) Allow access as required by state statute or regulation by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any premises or property at which the applicant conducts any commercial cannabis activity, including premises or property where records of commercial cannabis activity are maintained by or for the applicant or licensee;

(4) Provide any and all records, reports, and other documents as may be required under the state laws and regulations governing commercial cannabis activity;

(5) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise specified by state law;

(6) Meet all of the requirements for licensure under the state laws and regulations governing the conduct of commercial cannabis activity, and provide truthful and accurate documentation and other information of the applicant’s qualifications and suitability for licensure as may be requested;

(7) Submit to the personal and subject matter jurisdiction of the California courts to address any matter related to the waiver or the commercial cannabis application, license, or activity, and that all such matters and proceedings shall be governed, construed, and enforced in accordance with California substantive and procedural law, including but not limited to the Medicinal and Adult-Use Cannabis Regulation and Safety Act and the Administrative Procedure Act;

(b) The Department shall not approve an application for a state license if approval of the license would violate the provisions of any local ordinance or regulation adopted in accordance with Business and Professions Code section 26200 that is issued by the county or, if within a city, the city, within which the licensed premises is to be located.

Page 22 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) Any applicant or licensee must immediately notify the Department of any changes that may materially affect the applicant and licensee’s compliance with subdivision (a).

(d) Any failure by an applicant or licensee to comply with the requirements of subdivisions (a) or (c) shall be a basis for denial of an application or renewal or discipline of a licensee.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26001, Business and Professions Code.

§40134. [Reserved]
§40135. Incomplete Applications.

(a) Incomplete applications will not be processed. Applications will only be considered complete if all of the information requested under Sections 40128 to 40131 is included. The Department shall issue a notice to the applicant informing them of any information missing from the application.

(b) If the applicant fails to submit the required information within 180 days from the date of notice, the application shall be deemed abandoned.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26013; 26050; and 26130, Business and Professions Code.

§40136. [Reserved]
§40137. Application Withdrawal.

Page 23 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(a) An applicant may withdraw an application for licensure at any time prior to the issuance or denial of the license. Requests to withdraw an application shall be submitted in writing to the Department or through online submission.

(b) An applicant may reapply at any time subsequent to the withdrawal of an application.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26013; 26050; and 26130, Business and Professions Code.

§40138. [Reserved] §40139. [Reserved]

§§ 40140 – 40149. [Reserved]

Article 2. [Reserved]

Article 3. Fees §40150. Application and License Fees.

Manufacturer application fees and annual license fees shall apply to all manufacturer applicants and licensees, as follows:

(a) A nonrefundable application processing fee of $1,000 for each new application submitted.

(b) The annual license fee, based upon a sliding scale, calculated as follows:

(1) For a licensed premises with an annual gross revenue of up to $100,000 (Tier I), the fee shall be $2,000.

(2) For a licensed premises with annual gross revenue of $100,001 to $500,000 (Tier II), the fee shall be $7,500.

Page 24 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(3) For a licensed premises with annual gross revenue of $500,001 to $1,500,000 (Tier III), the fee shall be $15,000.

(4) For a licensed premises with annual gross revenue of $1,500,001 to $3,000,000 (Tier IV), the fee shall be $25,000.

(5) For a licensed premises with annual gross revenue of $3,000,001 to $5,000,000 (Tier V), the fee shall be $35,000.

(6) For a licensed premises with an annual gross revenue of $5,000,001 to $10,000,000 (Tier VI), the fee shall be $50,000.

(7) For a licensed premises with an annual gross revenue of over $10,000,000 (Tier VII), the fee shall be $75,000.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26013; 26050; 26130; and 26180 Business and Professions Code.

§40153. [Reserved] §40154. [Reserved]

Article 4. Approval or Denial of Application for Licensure

§40155. New License Approval.

(a) The Department shall notify the applicant upon approval of a license application.

(b) The applicant shall pay the applicable license fee specified in Section 40150 within 30 calendars days of notification.

Page 25 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) The license shall become effective on the date the Department receives the applicable license fee in full.

Authority: Sections 26012, subdivision (a)(3); 26013 and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26013; 26053; and 26130, Business and Professions Code.

§40156. Priority License Issuance

(a) Priority in issuance of licenses shall be given to qualified applicants that can demonstrate that the commercial cannabis business was in operation under the Compassionate Use Act as of September 1, 2016.

(A) Local license or permit or other written authorization;
(B) Collective or Cooperative Membership Agreement;
(C) Tax or business forms submitted to the Board of Equalization or Franchise Tax

Board;
(D) Incorporation documents;
(E) Any other verifiable business record adequate to demonstrate the operation of

the business prior to September 1, 2016.
(c) Any qualified applicant identified by the local jurisdiction pursuant to section

26054.2(b) of the Act shall be considered eligible for priority issuance.
(d) The Department may request additional documentation to verify the applicant’s

date of commencement of operations.

Authority: Sections 26012, subdivision (a)(3); 26054.2; and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); 26054.2; and 26130, Business and Professions Code.

Page 26 of 97

(a) The Department may deny an application for a new or renewal license for any reason specified in section 26057 of the Business and Professions Code. Further, the Department may deny a new or renewal license application for the following additional reasons:

(1) The applicant, an owner, or licensee made a material misrepresentation in the application for the license.

(2) An owner of the commercial cannabis business has been convicted of a crime or has committed a violation of law substantially related to the qualifications, functions, or duties of a manufacturer as identified in Section 40162.

(3) The applicant or licensee has been denied a license to engage in commercial cannabis activity by a state licensing authority.

(4) The applicant or licensee has denied the Department access to the premises.

(b) The Department shall deny an application for new or renewal license if the proposed manufacturing operation or premises would violate the applicable local ordinance.

(c) A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere.

(d) Prior to denial of a license based upon paragraph (2) of subsection (a), the Department shall consider any evidence of rehabilitation as provided in Section 40165.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26057, Business and Professions Code.

§40160. [Reserved]

Page 27 of 97

DPH-17-010E Cannabis Manufacturing Licensing

§40157. [Reserved]

§40158. [Reserved]

§40159. Denial of License.

§40161. [Reserved]

§40162. Substantially Related Acts.

For the purpose of denial of a license, a conviction or violation from any jurisdiction that is substantially related to the qualifications, functions, and duties of the business for which the application is made include:

(a) A violent felony conviction, as specified in subdivision (c) of section 667.5 of the Penal Code;

(b) A serious felony conviction, as specified in subdivision (c) of Section 1192.7 of the Penal Code;

(c) A felony conviction involving fraud, deceit, or embezzlement;

(d) A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling any controlled substance to a minor, or offering, furnishing, or selling any controlled substance to a minor; and

(e) A felony conviction for drug trafficking with enhancements pursuant to Health and Safety Code sections 11370.4 or 11379.8.

(f) A violation of section 110620, 110625, 110630, 110760, 110765, 110770, 110775, 111290, 111295, 111300, 111440, 111445, 111450, or 111455 of the Health and Safety Code (Sherman Food, Drug, and Cosmetic Law) that resulted in suspension or revocation of a license, administrative penalty, civil proceeding or criminal conviction.

(g) A violation of the California Food Sanitation Act, Health and Safety Code sections 111950-112130 that resulted in suspension or revocation of a license, administrative penalty, civil proceeding or criminal conviction.

(h) A conviction of section 382 or 383 of the Penal Code.

(i) A violation of law identified in subsections (f) or (g) committed by a business entity in which an owner was an officer or had an ownership interest is considered a violation that is substantially related to the owner’s qualifications for licensure.

Page 28 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013; 26057; and 26130, Business and Professions Code. Reference: Sections 480 et seq.; 26011.5; and 26057, Business and Professions Code.

§40163. [Reserved]

§40164. [Reserved]

§40165. Criteria for Evidence of Rehabilitation.

(a) When evaluating whether a license should be issued or denied when an owner has been convicted of a criminal offense or committed a violation of law that is substantially related to the qualifications, functions, or duties of the business for which the application is made, the Department shall consider the following criteria in its evaluation of evidence of rehabilitation:

(1) The nature and severity of the act or offense, including the actual or potential harm to the public.

(2) The owner’s criminal record as a whole.

(3) Evidence of any act committed subsequent to the act or offense under consideration that could be considered grounds for denial, suspension, or revocation of a manufacturing license.

(4) The time elapsed since commission of the act or offense listed in Section 40162, or in section 26057, subdivision (b)(4) of the Business and Professions Code.

(5) The extent to which the owner has complied with any terms of parole, probation, restitution, or any other sanctions lawfully imposed against the applicant or licensee.

(6) If applicable, evidence of expungement proceedings under Penal Code section 1203.4 or a similar law in another state.

(7) If applicable, a certificate of rehabilitation obtained under Penal Code section 4852.01 or a similar law in another state.

(8) Other evidence of rehabilitation submitted by the owner. Page 29 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013; 26057; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26055; and 26057, Business and Professions Code.
§40166. [Reserved]

§40167. Appeal of License Denial.

(a) Upon denial of an application for a license, the Department shall notify the applicant in writing of the reasons for the denial and the right to a hearing to contest the denial.

(b) The applicant may request a hearing by submitting a written request to the Department within 30 calendar days of service of the notice of denial. The written request for hearing must be postmarked within the 30-day period. If a request is not filed within the 30-day period, the applicant’s right to a hearing is waived.

(c) Upon receipt of the request for hearing, the Department shall commence proceedings in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

Authority: Sections 26013 and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); and 26058, Business and Professions Code.

§40168. [Reserved]

§40169. Notification of Criminal Acts, Civil Judgments, and Revocation of a Local License, Permit, or Other Authorization after Licensure

(a) A licensee shall ensure that the Department is notified in writing of a criminal conviction of any owner, either by mail or electronic mail, within 48 hours of the conviction. The written notification to the Department shall include the date of

Page 30 of 97

DPH-17-010E Cannabis Manufacturing Licensing

conviction, the court docket number, the name of the court in which the licensee was convicted, and the specific offense(s) for which the licensee was convicted.

(b) A licensee shall ensure that the Department is notified in writing of a civil penalty or judgment rendered against the licensee or any owner in their individual capacity, either by mail or electronic mail, within 48 hours of delivery of the verdict or entry of judgment, whichever is sooner. The written notification to the Department shall include the date of verdict or entry of judgment, the court docket number, the name of the court in which the matter was adjudicated, and a description of the civil penalty or judgement rendered against the licensee.

(c) A licensee shall ensure that the Department is notified in writing of the revocation of a local license, permit, or other authorization, either by mail or electronic mail within 48 hours of receiving notice of the revocation. The written notification shall include the name of the local agency involved, a written explanation of the proceeding or enforcement action, and the specific violation(s) that led to revocation.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Sections 26030, 26031, and 26070, Business and Professions Code.

§§40170 – 40174. [Reserved]

§40175. License Constraints.

Article 5. Licensing

(a) No owner of a manufacturer licensee shall hold or have an ownership interest in a Type 8 license.

(b) A manufacturer licensee shall not manufacture, prepare, package or label any products other than cannabis products at the licensed premises. For purposes of this section, the term “cannabis products” also includes products that do not contain cannabis, but are otherwise identical to the cannabis-containing product, and are intended for use as samples.

Page 31 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) No licensee shall employ an individual under 21 years of age.

(d) An M-licensee shall only conduct commercial cannabis activities with M- licensees.

(e) An A-licensee shall only conduct commercial cannabis activities with A-licensees.

Authority: Section 26130, Business and Professions Code. Reference: 26012, subdivision (a)(3); 26050; and 26140, Business and Professions Code.

§40176. [Reserved]

§40177. Change in Licensed Operations

(a) At any time after issuance of a license and prior to submission of an application to renew the license, a licensee may request to change the manufacturing operations conducted at the licensed premises. To request approval for additional manufacturing operations, the licensee shall submit the following:

(1) The information required under Section 40131;
(2) A non-refundable $1,000 application processing fee to review all documents. (b) Upon approval of the request by the Department, the licensee may begin

conducting the additional operational activity. The existing license shall be amended to reflect the change in operations, but the date of expiration shall not change.

(c) Pursuant to section 26055, subdivision (c) of the Act, the licensee shall also obtain approval from the Department prior to making any other material or substantial changes to the premises.

(d) Licensees that choose to cease operation of any licensed activity shall notify the Department within 10 days of cessation of the activity. License fees shall not be pro- rated or refunded upon cessation of any activity.

Authority: Section 26130, Business and Professions Code. Reference: Section 26012, subdivision (a)(3); and 26050, Business and Professions Code.

Page 32 of 97

§40178. Add or Remove Owner(s).

The licensee shall notify the Department of the addition or deletion of an owner occurring any time between issuance of a license and submission of an application to renew the license within 10 calendar days of the change. The new owner shall submit an owner application to the Department, and submit their fingerprints to the California Department of Justice. The Department shall review the qualifications of the owner in accordance with the Act and these regulations and determine whether the change would constitute grounds for denial of the license. The Department may deny the addition of the owner, or condition the license as appropriate.

Authority: Section 26130, Business and Professions Code. Reference: Section 26012, subdivision (a)(3); and 26050, Business and Professions Code.

§40179. [Reserved]

§40180. License Renewal.

(a) An application for renewal of a manufacturing license shall be submitted to the Department at least 30 calendar days prior to the expiration date of the current license. No renewal application shall be accepted by the Department more than 60 calendar days prior to the expiration date of the current license.

(b) If a complete renewal application is submitted in a timely manner, the licensee may continue to operate until the Department approves or denies the renewal application. For purposes of this section, “timely manner” means postmarked no later than, or submitted through the online database no later than 11:59 pm on, the expiration date of the current license.

(c) After expiration of the license, a licensee shall submit a late fee of $500 to be paid in addition to the required annual renewal fee in order to renew the license.
(d) A licensed manufacturer that does not submit a complete license renewal

application, including fees, to the Department within 30 calendar days after the Page 33 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

expiration of the license shall forfeit their eligibility to apply for a license renewal and, instead, shall be required to submit a new license application.

(e) To apply for a license renewal, the licensee shall submit any changes to their original license information (see Section 40128) on a form prescribed by the Director, or through online submission; the license fee as specified in Section 40150; and shall sign the form under penalty of perjury.

(f) All owners shall also complete the owner form required by Section 40130, include any change in information, and sign the form under penalty of perjury.

(g) Licensees and owners applying for license renewal are not required to submit fingerprints to the Department of Justice if they have previously submitted fingerprints with an application for a cannabis manufacturer license.

Authority: Section 26130, Business and Professions Code. Reference: Section 26012, subdivision (a)(3); 26050; and 26180, Business and Professions Code.

§40181. [Reserved]

§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, in its sole discretion, may provide temporary relief from specific licensing requirement 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 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.

Page 34 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(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 fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes.

(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 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: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§§40183 – 40189. [Reserved]

§§40190 – 40199. [Reserved for Shared Facilities Requirements]

Page 35 of 97

DPH-17-010E Cannabis Manufacturing Licensing

SUBCHAPTER 3. REQUIREMENTS OF OPERATION Article 1. Safety and Security

§40200. Security Plan.

Every applicant and licensee shall develop and implement a security plan. At a minimum, the security plan shall include a description of the security measures to be taken to:

(a) Prevent access to the manufacturing premises by unauthorized personnel and protect the physical safety of employees. This includes, but is not limited to:

(1) Establishing physical barriers to secure perimeter access and all points of entry into a manufacturing premises (such as locking primary entrances with commercial- grade, non-residential door locks, or providing fencing around the grounds, driveway, and any secondary entrances including windows, roofs, or ventilation systems);

(2) Installing a security alarm system to notify and record incident(s) where physical barriers have been breached;

(3) Establishing an identification and sign-in/sign-out procedure for authorized personnel, suppliers, and/or visitors;

(4) Maintaining the premises such that visibility and security monitoring of the premises is possible; and

(5) Establishing procedures for the investigation of suspicious activities.

(b) Prevent against theft or loss of cannabis and cannabis products. This includes but is not limited to:

(1) Establishing an inventory system to track cannabis material and the personnel responsible for processing it throughout the manufacturing process;

(2) Limiting access of personnel within the premises to those areas necessary to complete job duties, and to those time-frames specifically scheduled for completion of job duties;

(3) Supervising tasks or processes with high potential for diversion (including the loading and unloading of cannabis transportation vehicles); and

Page 36 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(4) Providing designated areas in which personnel may store and access personal items.

(c) Secure and back up electronic records in a manner that prevents unauthorized access and that ensures the integrity of the records is maintained.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: 26011.5; 26051.5; 26130; and 26160, Business and Professions Code.

§40201. [Reserved] §40202. [Reserved] §40203. [Reserved] §40204. [Reserved]

§40205. Video Surveillance.

(a) At a minimum, licensed premises shall have a complete digital video surveillance system with a minimum camera resolution of 1280 × 720 pixels. The video surveillance system shall be able to effectively and clearly record images of the area under surveillance.

(b) The video surveillance system shall be capable of supporting remote access by the licensee.

(c) To the extent reasonably possible, all video surveillance cameras shall be installed in a manner that prevents intentional obstruction, tampering with, and/or disabling.

(d) Areas that shall be recorded on the video surveillance system include, but are not limited to, the following:

Page 37 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(1) Areas where cannabis or cannabis products are weighed, packed, stored, quarantined, loaded and/or unloaded for transportation, prepared, or moved within the premises;

(2) Limited-access areas;
(3) Security rooms;
(4) Areas containing surveillance-system storage devices, in which case, at least

one camera shall record the access points to such an area; and
(5) The interior and exterior of all entrances and exits to the premises.
(e) The surveillance system shall record continuously 24 hours per day and at a

minimum of 15 frames per second.
(f) All recording and monitoring equipment shall be located in secure rooms or

areas of the premises in an access-controlled environment.
(g) All surveillance recordings shall be kept on the licensee’s recording device for a

minimum of 90 days.
(h) All video surveillance recordings are subject to inspection by the Department

and shall be copied and sent, or otherwise provided, to the Department upon request. (i) The video recordings shall display the current date and time of recorded events.

Time is to be measured in accordance with the U.S. National Institute Standards and Technology standards. The displayed date and time shall not significantly obstruct the view of recorded images.

Authority: Section 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Sections 26011.5 and 26070, Business and Professions Code.

§§40206 – 40219. [Reserved]

Page 38 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Article 2. Extractions

§40220. Permissible Extractions.

(a) Except as provided in subsection (b), cannabis extraction shall only be conducted using the following methods:

(1) Mechanical extraction.

(2) Chemical extraction using a nonvolatile solvent such as a nonhydrocarbon-based or other solvent such as water, vegetable glycerin, vegetable oils, animal fats, or food- grade glycerin. Nonhydrocarbon-based solvents shall be food grade.

(3) Chemical extraction using a professional closed loop CO2 gas extraction system. (4) Chemical extraction using a volatile solvent, as defined in Section 40100.
(5) Any other method authorized by the Department pursuant to subsection (b).
(b) To request authorization from the Department to conduct cannabis extraction

using a method other than those specified in paragraphs (1) through (4) of subsection (a), the applicant or licensee shall submit a detailed description of the extraction method, including any documentation that validates the method and any safety procedures to be utilized to mitigate any risk to public or worker health and safety.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Sections 26011.5 and 26130 Business and Professions Code.

§40221. [Reserved]
§40222. Volatile Solvent Extractions.

Chemical extractions using volatile solvents shall be subject to the following requirements:

(a) Hydrocarbon-based solvents shall be at least 99 percent purity.

(b) All extractions shall be performed in a closed loop extraction system as described in Section 40225.

Page 39 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) No volatile solvent extraction operations shall occur in an area zoned as residential.

(d) The extraction operation shall be approved by the local fire code official and shall be operated in accordance with all relevant state and local requirements.

Authority: Section 26012, subdivision (a)(3); 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26130, Business and Professions Code.

§40223. Ethanol Extractions

(a) Ethanol used for extractions or for post-extraction processing shall be food- grade.

(b) The extraction operation shall be approved by the local fire code official and shall be operated in accordance with Division of Occupational Health and Safety (Cal/OSHA) standards and any other relevant state and local requirements.

Authority: Section 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26130, Business and Professions Code.

§40224. [Reserved]

§40225. Closed-Loop Extraction System Requirements.

(a) Chemical extractions using CO2 or a volatile solvent shall be conducted in a professional closed loop extraction system. The system shall be commercially manufactured and bear a permanently affixed and visible serial number. The system shall be certified by a California-licensed engineer that the system was commercially manufactured, safe for its intended use, and built to codes of recognized and generally accepted good engineering practices, such as:

Page 40 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(1) The American Society of Mechanical Engineers (ASME);
(2) American National Standards Institute (ANSI);
(3) Underwriters Laboratories (UL); or
(4) The American Society for Testing and Materials (ASTM).
The certification document must contain the signature and stamp of a California-

licensed professional engineer and the serial number of the extraction unit being certified.

(b) Professional closed loop systems, other equipment used, the extraction operation, and facilities must be approved for use by the local fire code official and meet any required fire, safety, and building code requirements specified in:

(1) National Fire Protection Association (NFPA) standards;
(2) International Building Code (IBC);
(3) International Fire Code (IFC); and
(4) Other applicable standards including all applicable fire, safety, and building

codes related to the processing, handling and storage of the applicable solvent or gas.

Authority: Section 26130, Business and Professions Code. Reference: Section 26012, subdivision (a)(3); 26050; and 26180, Business and Professions Code.

§§40226 – 40229. [Reserved]
Article 3. Good Manufacturing Practices

§40230. [Reserved]

§40231. [Reserved]

§40232. Requirements for Personnel.

The licensee shall establish and implement written procedures to ensure the following for all personnel:

Page 41 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(a) Disease control. Any individual who by medical examination or supervisory observation is shown to have, or appears to have, an illness, open lesion (such as boils, sores, or infected wounds), or any other source of microbial contamination presenting a reasonable threat of contamination to cannabis products, contact surfaces, or packaging materials, shall be excluded from any related manufacturing operations until their health condition is corrected. Open lesions, boils, and/or infected wounds shall be adequately covered (e.g., by an impermeable cover). Personnel shall be instructed to report such health conditions to their supervisors.

(b) Cleanliness. All individuals working in direct contact with cannabis products, cannabis product-contact surfaces, and cannabis product-packaging materials shall conform to hygienic practices to the extent necessary to protect against allergen cross- contact and contamination of cannabis products while on duty. The methods for maintaining cleanliness include:

(1) Wearing appropriate outer garments to protect against allergen cross-contact and contamination of cannabis products, contact surfaces, and/or packaging materials;

(2) Maintaining adequate personal cleanliness;

(3) Washing hands thoroughly in an adequate hand-washing facility before starting work, after each absence from the work station, and at any time when the hands may have become soiled or contaminated, and sanitizing hands if necessary to protect against contamination with undesirable microorganisms;

(4) Removing all unsecured jewelry and other objects that might fall into cannabis products, equipment, or containers, and removing hand jewelry that cannot be adequately sanitized during periods in which cannabis products are manipulated by hand. If such hand jewelry cannot be removed, it may be covered by material which can be maintained in an intact, clean, and sanitary condition and which effectively protects against the contamination by these objects of the cannabis products, cannabis product- contact surfaces, or cannabis product-packaging materials.

(5) Maintaining any gloves, if they are used in cannabis product handling in an intact, clean, and sanitary condition.

Page 42 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(6) Where appropriate wearing hair nets, headbands, caps, beard covers, or other hair restraints in an effective manner.

(7) Storing clothing or other personal belongings in areas separate from those where cannabis products are exposed or where equipment or utensils are washed.

(8) Confining the following activities to areas separate from those where cannabis products may be exposed or where equipment or utensils are washed: eating food, chewing gum, drinking beverages, and/or using tobacco.

(9) Taking any other necessary precautions to protect against allergen cross-contact and against contamination of cannabis products, cannabis product-contact surfaces, or cannabis product-packaging materials by microorganisms or foreign substances (including perspiration, hair, cosmetics, tobacco, chemicals, and medicines applied to the skin).

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40233. [Reserved]

§40234. Grounds.

The licensee shall establish and implement written procedures to ensure that the grounds of the premises controlled by the licensee are kept in a condition that prevents the contamination of components and cannabis products. The methods for adequate maintenance of the grounds shall include at minimum:

(a) The proper storage of equipment, removal of litter and waste, and cutting of weeds or grass within the immediate vicinity of the cannabis manufacturing facility so that the premises shall not constitute an attractant, breeding place, or harborage for pests.

Page 43 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(b) The proper maintenance of roads, yards, and parking lots so that these areas shall not constitute a source of contamination in areas where cannabis products are handled or transported.

(c) The provision of adequate draining areas in order to prevent contamination by seepage, foot-borne filth, or the breeding of pests due to unsanitary conditions.

(d) The provision and maintenance of waste treatment systems so as to prevent contamination in areas where cannabis products may be exposed to such a system’s waste or waste by-products.

(e) If the grounds of the cannabis manufacturing facility are bordered by grounds outside the licensee’s control that are not maintained in the manner described in subsections (a) through (d) of this section, inspection, extermination, and other reasonable care shall be exercised within the cannabis manufacturing facility in order to eliminate any pests, dirt, and/or filth that pose a source of cannabis product contamination.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40235. [Reserved]

§40236. Facility Construction and Design.

At minimum, a suitable cannabis manufacturing facility shall:
(a) Provide adequate space for such placement of equipment and storage of

materials as is necessary for maintenance, sanitary operations, and the production of safe cannabis products.

(b) Permit the taking of adequate precautions to reduce the potential for allergen cross-contact and for contamination of cannabis products, cannabis product-contact

Page 44 of 97

DPH-17-010E Cannabis Manufacturing Licensing

surfaces, or cannabis product-packaging materials by microorganisms, chemicals, filth, and other extraneous material.

(c) Permit the taking of adequate precautions to protect product ingredients in installed outdoor bulk vessels by any effective means, including:

(1) Using protective coverings.

(2) Controlling areas over and around the vessels in order to eliminate harborages for pests.

(3) Checking such vessels on a regular basis for pests and pest infestation.

(d) Be constructed in such a manner that floors, walls, and ceilings may be adequately cleaned and kept clean and in good repair.

(e) Be constructed in such a manner that drip or condensate from fixtures, ducts and pipes does not contaminate cannabis products, cannabis product-contact surfaces, or cannabis product-packaging materials.

(f) Be constructed in such a manner so as to provide adequately wide and unobstructed aisles or working spaces between equipment and walls that permit employees to both perform their duties and protect against the contamination of cannabis products, cannabis product-contact surfaces, or cannabis product-packaging materials via clothing or personal contact.

(g) Provide adequate lighting in hand-washing areas, dressing and locker rooms, and toilet facilities, in all areas where components or cannabis products are examined, manufactured, processed, packed, or held, and in all areas where equipment or utensils are cleaned.

(h) Provide shatter-resistant light bulbs, fixtures, skylights, and/or other shatter- resistant glass fixtures in all areas where glass breakage may result in the contamination of exposed cannabis, components or products at any step of preparation.

(i) Provide adequate ventilation or control equipment to minimize dust, odors and vapors (including steam and noxious fumes) in areas where they may cause allergen cross-contact or contamination of cannabis products; and locate and operate fans and other air-blowing equipment in a manner that minimizes the potential for allergen cross-

Page 45 of 97

DPH-17-010E Cannabis Manufacturing Licensing

contact and contamination of cannabis products, cannabis product-packaging materials, and cannabis product-contact surfaces.

(j) Provide, where necessary, adequate screening or other protection against pests.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40237. [Reserved]

§40238. Sanitary Operations.

The licensee shall establish and implement written sanitary operation procedures to ensure the following:

(a) Buildings, fixtures, and other physical facilities on the premises are maintained in a clean and sanitary condition and are kept in good repair so as to prevent cannabis products from becoming adulterated.

(b) The cleaning and sanitization of utensils and equipment is conducted in a manner that protects against allergen cross-contact and contamination of cannabis products or product components, cannabis product-contact surfaces, or cannabis product-packaging materials.

(c) Cleaning compounds and sanitizing agents used in cleaning and sanitizing procedures are free from undesirable microorganisms and are safe and adequate under their conditions of use. Only the following toxic materials shall be used or stored in a manufacturing facility where cannabis products are process or exposed:

(1) Those required to maintain clean and sanitary conditions;
(2) Those necessary for facility and equipment maintenance and operation; and (3) Those necessary for use in the cannabis manufacturing facility’s operations. (d) Toxic cleaning compounds, sanitizing agents, and pesticide chemicals are

identified, held, and stored in a manner that protects against contamination of product Page 46 of 97

DPH-17-010E Cannabis Manufacturing Licensing

components, cannabis products, cannabis product-contact surfaces, or cannabis product-packaging materials.

(e) Effective measures are taken to exclude pests from the cannabis manufacturing facility in all areas where cannabis components and/or products may be at risk of contamination by pests. The use of pesticides to control pests in the cannabis manufacturing facility is permitted only under precautions and restrictions that protect against the contamination of cannabis products, cannabis product-contact surfaces, and cannabis product-packaging materials.

(f) All cannabis product-contact surfaces including utensils and equipment are cleaned as frequently as necessary to protect against allergen cross-contact and contamination of cannabis products.

(g) Cannabis product-contact surfaces used for manufacturing, processing, packing or holding low-moisture cannabis products shall be maintained in a clean, dry, and sanitary condition before use. When such surfaces are wet-cleaned, they shall, when necessary, be sanitized and thoroughly dried before subsequent use.

(h) When cleaning is necessary to protect against allergen cross-contact or the introduction of microorganisms into cannabis products during wet processing, all cannabis product-contact surfaces shall be cleaned and sanitized before use and after any interruption during which cannabis product-contact surfaces may have become contaminated. Where equipment and utensils are used in a continuous production operation, their surfaces shall be cleaned and sanitized as necessary.

(i) Single-service articles (such as utensils intended for one-time use, paper cups, and paper towels) are stored, handled, and disposed of in a manner that protects against allergen cross-contact and contamination of cannabis product, cannabis product-contact surfaces, or cannabis product-packaging materials.

(j) The non-cannabis product-contact surfaces of equipment used in the cannabis manufacturing facility are cleaned in a manner and as frequently as necessary to protect against allergen cross-contact and contamination of cannabis products, cannabis product-contact surfaces, and cannabis product-packaging materials.

Page 47 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(k) Cleaned and sanitized portable equipment with cannabis product-contact surfaces and utensils are stored in a location and manner that protects cannabis product-contact surfaces from allergen cross-contact and contamination.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40239. [Reserved]

§40240. Sanitary Facilities and Controls.

The facility shall be equipped with adequate sanitary accommodations as follows:

(a) Water supply. The water supply shall be adequate for the operations intended and derived from an adequate source. Any water that contacts cannabis products, cannabis product-contact surfaces, or cannabis product-packaging materials shall be safe and of adequate sanitary quality. Running water at a suitable temperature, and under pressure as needed, shall be provided in all areas where required for the processing of cannabis products, for the cleaning of equipment, utensils, and cannabis product-packaging materials, and/or for employee sanitary facilities.

(b) Plumbing. Plumbing systems shall be of adequate size and design and shall be adequately installed and maintained in order to:

(1) Carry adequate quantities of water to required locations throughout the manufacturing facility.

(2) Properly convey sewage and liquid disposable waste from the facility.

(3) Avoid the creation of unsanitary conditions and/or contamination to cannabis products, water supplies, equipment, or utensils.

(4) Provide adequate floor drainage in all areas where floors are subject to flooding- type cleaning or where normal operations release or discharge water or other liquid waste on the floor.

Page 48 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(5) Provide that there is not backflow from, or cross-connection between, piping systems that discharge waste water or sewage, and piping systems that carry water for cannabis products or cannabis product manufacturing.

(c) Sewage disposal. Sewage shall be disposed of into an adequate sewerage system or through other adequate means.

(d) Toilet facilities. Each manufacturing facility shall provide employees with adequate, readily accessible toilet facilities. Toilet facilities shall be kept clean and shall not pose a potential source of contamination of cannabis products, cannabis product- contact surfaces, or cannabis product-packaging materials.

(e) Hand-washing facilities. Each manufacturing facility shall provide hand-washing facilities designed to ensure that an employee’s hands do not pose a source of contamination to cannabis products, cannabis product-contact surfaces, or cannabis product-packaging materials. Hand-washing facilities shall be adequate, convenient, and furnish running water of at least 100° F (30° C).

(f) Rubbish disposal. Rubbish shall be conveyed, stored, and disposed of so as to minimize the development of odor, minimize the potential that waste will attract, harbor, or otherwise contribute to the breeding of pests, and protect against the contamination of cannabis products, cannabis product-contact surfaces, cannabis product-packaging materials, water supplies, and ground surfaces.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40241. [Reserved]

§40242. Equipment and Utensils.

(a) All cannabis manufacturing equipment and utensils used in manufacturing cannabis products shall be so designed and of such material and workmanship as to be

Page 49 of 97

DPH-17-010E Cannabis Manufacturing Licensing

adequately cleanable, and shall be adequately maintained to protect against allergen cross-contact and contamination.

(b) Equipment and utensils shall be designed, constructed, and used appropriately to avoid the adulteration of cannabis products with lubricants, fuel, metal fragments, contaminated water, or any other contaminants.

(c) Equipment shall be installed so as to facilitate the cleaning and maintenance of the equipment and of adjacent spaces.

(d) Cannabis product-contact surfaces shall be corrosion-resistant when in contact with cannabis products.

(e) Cannabis product-contact surfaces shall be made of nontoxic materials, designed to withstand the environment of their intended use, and, if applicable, cleaning compounds, sanitizing agents, and cleaning procedures.

(f) Cannabis product-contact surfaces shall be maintained to protect cannabis products from allergen cross-contact and from contamination by any source, including prohibited additives.

(g) Seams on cannabis product-contact surfaces shall be smoothly bonded or maintained so as to minimize accumulation of particles, dirt, and organic matter and thus minimize the opportunity for growth of microorganisms and allergen cross-contact.

(h) Equipment in areas where cannabis products are manufactured and that do not come into contact with cannabis products shall be constructed so that they may be kept in a clean and sanitary condition.

(i) Holding, conveying, and manufacturing systems, including gravimetric, pneumatic, closed, and automated systems, shall be of a design and construction that enables them to be maintained in an appropriate clean and sanitary condition.

(j) Each freezer and cold storage compartment used to store and hold cannabis products, ingredients, or components capable of supporting growth of microorganisms shall be fitted with an indicating thermometer, temperature-measuring device, or temperature-recording device so installed as to show the temperature accurately within the compartment.

Page 50 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(k) Instruments and controls used for measuring, regulating, or recording temperatures, pH, acidity, water activity, or other conditions that control or prevent the growth of undesirable microorganisms in cannabis products, ingredients, or components shall be accurate and precise and adequately maintained and calibrated, and be provided in an adequate number for their designated use(s).

(l) Compressed air or other gases mechanically introduced into cannabis products or used to clean cannabis product-contact surfaces or equipment shall be treated in such a way that cannabis products shall not be contaminated with prohibited additives.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§§40243 – 40249. [Reserved]

Article 4. Production and Process Controls §40250. General Provisions.

(a) Appropriate quality control operations shall be employed to ensure that cannabis products are suitable for human consumption or use, and that cannabis product- packaging materials are safe and suitable.

(b) Overall sanitation of the premises shall be under the supervision of one or more competent individuals assigned responsibility for this function.

(c) Adequate precautions shall be taken to ensure that production procedures do not contribute to allergen cross-contact and to contamination from any source.

(d) Chemical, microbial, or extraneous-material testing procedures shall be used where necessary to identify sanitation failures or possible allergen cross-contact and cannabis product contamination.

Page 51 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(e) Any cannabis product that has become contaminated to the extent that it is adulterated shall be rejected, or if appropriate, treated or processed to eliminate the contamination, as determined by a qualified individual.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40251. [Reserved]

§40252. Quality of Raw Materials and Ingredients.

The licensee shall establish and implement written policies and procedures to ensure the quality of raw materials and ingredients as follows:

(a) Raw materials and other ingredients shall be inspected, segregated, or otherwise handled as necessary to ensure that they are clean and suitable for processing into cannabis products, and shall be stored under conditions that protect against allergen cross-contact and contamination, and in such a way as to minimize deterioration.

(b) Raw materials must be washed or cleaned as necessary to remove soils and other contaminates. Water used for washing, rinsing, or conveying cannabis product ingredients must be safe and of adequate sanitary quality.

(c) Raw materials and other ingredients shall not contain levels of microorganisms that render the cannabis product injurious to human health, or shall be pasteurized or otherwise treated during manufacturing so that they no longer contains levels of microorganisms that would cause the cannabis product to be adulterated.

(d) Raw materials and other ingredients susceptible to contamination with aflatoxin or other natural toxins, pests, or extraneous material shall not exceed generally acceptable limits set by the U.S. Food and Drug Administration for aflatoxins, other natural toxins, pest contamination, undesirable microorganisms, or extraneous materials

Page 52 of 97

DPH-17-010E Cannabis Manufacturing Licensing

for those materials or ingredients, before these raw materials or other ingredients are incorporated into finished cannabis products.

(e) Raw materials and other ingredients shall be held in bulk, or in containers designed and constructed so as to protect against allergen cross-contact or contamination, and shall be held at such temperature and relative humidity and in such a manner as to prevent the cannabis products from becoming adulterated.

(f) Frozen raw materials and other ingredients shall be kept frozen. If thawing is required prior to use, it shall be done in a manner that prevents the raw materials and other ingredients from becoming adulterated.

(g) Raw materials and other ingredients that are food allergens shall be identified and held in a manner that prevents cross-contact with other raw materials or ingredients.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40253. [Reserved]

§40254. Manufacturing Operations.

The licensee shall establish and implement written manufacturing operation procedures to ensure the following:

(a) All cannabis product manufacturing shall be conducted under such conditions and controls as are necessary to minimize the potential for the growth of microorganisms, allergen cross-contact, contamination of cannabis products, and deterioration of cannabis products.

(b) Cannabis products capable of supporting the rapid growth of undesirable microorganisms shall be held at temperatures that prevent the cannabis product from becoming adulterated during manufacturing, processing, packing and holding.

Page 53 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) Measures such as sterilizing, irradiating, pasteurizing, cooking, freezing, refrigerating, controlling pH, or controlling water activity that are undertaken to destroy or prevent the growth of undesirable microorganisms shall be adequate under the conditions of manufacture, handling, and transfer to prevent the cannabis product from being adulterated. For purposes of this chapter, “water activity” (aw) is a measure of the free moisture in a manufactured cannabis product and is the quotient of the water vapor pressure of the substance divided by the vapor pressure of pure water at the same temperature.

(d) Work-in-process shall be handled in a manner that protects against allergen cross-contact, contamination, and growth of microorganisms.

(e) Effective measures shall be taken to protect finished cannabis products from allergen cross-contact and from contamination by raw materials, other ingredients, rejected components, or refuse. When raw materials, other ingredients, or refuse are unprotected, they shall not be handled simultaneously in a receiving, loading or shipping area if such handling could result in allergen cross-contact or contaminated cannabis products. Cannabis products transported by conveyer shall be protected against allergen cross-contact and against contamination as necessary.

(f) Equipment, containers, and utensils used to convey, hold, or store raw materials and other ingredients, work-in-process, or other cannabis products shall be constructed, handled, and maintained during manufacturing, processing, packing, and holding in a manner that protects against allergen cross-contact and contamination.

(g) Adequate measures shall be taken to protect against the inclusion of metal or other extraneous material in cannabis products.

(h) Adulterated cannabis products, raw materials, or other ingredients shall be either:

(1) Disposed of in a manner that protects against the contamination of other cannabis products or ingredients; or

(2) Reprocessed, if appropriate, using a method that has been proven to be effective and subsequently reexamined and found to be unadulterated.

Page 54 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(i) Steps such as washing, peeling, trimming, cutting, sorting and inspecting, mashing, dewatering, cooling, shredding, extruding, drying, whipping, defatting, and forming shall be performed so as to protect cannabis products against allergen cross- contact and contamination. Cannabis products shall be protected from contaminants that may drip, drain, or be drawn into the cannabis product.

(j) When required in the preparation of cannabis products capable of supporting microbial growth, heat blanching shall be effected by heating the cannabis product to the required temperature, holding that temperature for the required amount of time, and then either rapidly cooling the cannabis product or passing it to subsequent manufacturing without delay. Growth and contamination by thermophilic microorganisms in blanchers shall be minimized by the use of adequate operating temperatures and by periodic cleaning and sanitization as necessary.

(k) Batters, breading, sauces, gravies, dressings, dipping solutions, and other similar preparations that are held and used repeatedly over time shall be treated or maintained in such a manner that they are protected against allergen cross-contact and contamination, and in a manner that minimizes the potential growth of undesirable organisms.

(l) Filling, assembling, packaging, and related operations shall be performed in such a way that the cannabis product is protected against allergen cross-contact, contamination and growth of undesirable microorganisms.

(m) Cannabis products that principally rely on the control of water activity (aw) for preventing the growth of undesirable microorganisms (such as dry mixes, nuts, intermediate moisture cannabis products, and dehydrated cannabis products) shall be processed and maintained at a safe moisture level. For purposes of this section “safe moisture level” is a level of moisture low enough to prevent the growth of undesirable microorganisms in the finished product under the intended conditions of manufacturing. The safe moisture level for an edible cannabis product is related to its aw. An aw will be considered safe for a manufactured cannabis product if adequate data is available to

Page 55 of 97

DPH-17-010E Cannabis Manufacturing Licensing

demonstrate that at or below the given aw the manufactured cannabis product will not support the growth of undesirable microorganisms.

(n) When ice is used in contact with cannabis products, the ice shall be made from water that is safe and of adequate sanitary quality, and shall be used only if it has been manufactured in accordance with current good manufacturing practices established by the U.S. Food and Drug Administration.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40255. [Reserved]

§40256. Hazard Analysis.

The licensee shall conduct and prepare a written hazard analysis to identify or and evaluate known or reasonably foreseeable hazards for each type of cannabis product produced at their facility in order to determine whether there exist any hazards requiring a preventive control. The hazard analysis shall include:

(a) The identification of potential hazards, including:
(1) Biological hazards, including microbiological hazards;
(2) Chemical hazards, including radiological hazards, pesticide(s) contamination,

solvent or other residue, natural toxins, decomposition, unapproved additives, or food allergens; and/or

(3) Physical hazards, such as stone, glass, metal fragments, hair or insects.

(b) The evaluation of the hazards identified in order to assess the severity of any illness or injury that may occur as a result of a given hazard, and the probability that the hazard will occur in the absence of preventive controls.

(c)The hazard evaluation shall consider the effect of the following on the safety of the finished cannabis product for the intended consumer:

Page 56 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(1) The sanitation conditions of the manufacturing premises;
(2) The product formulation;
(3) The design, function and condition of the manufacturing facility and its

equipment;
(4) The raw material, ingredients and other components used in a given cannabis

product;
(5) Product transportation and transfer practices;
(6) The manufacturing and processing procedures;
(7) The packaging and labeling activities;
(8) The storage of components and/or the finished cannabis product;
(9) The intended or reasonably foreseeable use of the finished cannabis product; (10) Any other relevant factors.

Authority: Sections 26012, subdivision (a)(3); 26013, and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40257. [Reserved]

§40258. Preventive Controls.

Upon completion of the hazard analysis, the licensee shall identify and implement written preventive controls to provide assurance to the Department that any hazards requiring a preventative control will be significantly minimized or prevented such that the manufactured cannabis product is not adulterated or misbranded. The preventive controls shall include the following components:

(a) The identification of critical control points. The points, steps or procedures in a given process in which control can be applied, and as a result, a hazard can be prevented, eliminated, or reduced to acceptable levels.

Page 57 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(b) The establishment of critical limits for each critical control point. The maximum or minimum value to which a physical, biological, or chemical hazard must be controlled in order to prevent, eliminate, or reduce to an acceptable level the occurrence of an identified hazard. For example: the establishment of specific limits on temperature, humidity, or pH.

(c) The establishment and implementation of monitoring procedures in order to use monitoring results to adjust a given process and maintain control. This shall include specifying the frequency and documentation requirements for monitoring.

(d) The establishment and implementation of corrective actions to be taken when monitoring indicates there is a deviation from an established critical limit. This shall include procedures for ensuring:

(1) Appropriate action is taken to identify and correct a problem that has occurred with implementation of a preventative control;

(2) Appropriate action is taken, when necessary, to reduce the likelihood that a problem will recur;

(3) All affected material(s) or product(s) are evaluated for safety;

(4) All affected material(s) or product(s) are prevented from entering into commerce if the safety or quality of that material(s) or product(s) cannot be verified.

(e) The establishment and implementation of record keeping procedures to document hazard analyses and control plans, identify the person responsible for each step, and identify the corrective actions that were taken upon of the discovery of a deviation. These records shall be subject to verification and records review by the Department.

(f) The establishment and implementation of verification procedures in order to validate that preventative controls are consistently implemented and are effective in minimizing or preventing identified hazards; that monitoring activities are being conducted as required; and that appropriate decisions about corrective actions are being made.

Page 58 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013, and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40259. [Reserved]

§40260. Equipment and Machinery Qualification.

(a) The licensee shall establish and implement written procedures to ensure that each piece of equipment and machinery is suitable for its intended use prior to operation. These procedures include, but are not limited to:

(1) Procedures for validating that all equipment and machinery has design specifications, operating procedures, and performance characteristics appropriate for its intended use by the licensee.

(2) Procedures for validating that all equipment and machinery are built and installed in compliance with design specification, not limited to: built as designed with proper materials, capacity, and functions, and properly connected and calibrated.

(3) Procedures for validating that all equipment and machinery perform in accordance with quality requirements in all anticipated operating ranges using the licensee’s standard operating procedures. Operating ranges shall be shown to be capable of being held as long as would be necessary during routine production.

(4) The establishment of a schedule for routine re-verification of all equipment and machinery.

(b) The licensee shall maintain verification records for all equipment and machinery, which contain at minimum:

(1) Documentation of successful verification of each piece of equipment and machinery, dated and signed by the person conducting the verification.

(2) Documentation of successful re-verifications of each piece of equipment and machinery upon any modification to the equipment or machinery, intended use, or standard operating procedure.

Page 59 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(3) A log detailing and documenting the verification and re-verification of all equipment and machinery in operation on the licensed premises.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40261. [Reserved]

§40262. Master Manufacturing Protocol.

The licensee shall establish and follow a written master manufacturing protocol for each unique formulation of cannabis product manufactured, and for each batch size, to ensure uniformity in finished batches and across all batches produced.

(a) The master manufacturing protocol shall:

(1) Identify specifications for the points, steps, or stages in the manufacturing process where control is necessary to ensure the quality of the cannabis product and that the cannabis product is packaged and labeled as specified in the master manufacturing protocol; and

(2) Establish controls and procedures to ensure that each batch of cannabis product manufactured meets the specifications identified in accordance with subsection (a)(1) of this section.

(b) The master manufacturing protocol shall include:

(1) The name and intended cannabinoid(s) concentration per serving of the cannabis product to be manufactured, and the strength, concentration, weight, or measure of each ingredient for each batch size;

(2) A complete list of components to be used;
(3) An accurate statement of the weight or measure of each component to be used; (4) The identity and weight or measure of each ingredient that will be declared on

the ingredients list of the cannabis product;
Page 60 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(5) A statement of theoretical yield of a manufactured cannabis product expected at each point, step, or stage of the manufacturing process where control is needed to ensure the quality of the cannabis product, and the expected yield of the finished product, including the maximum and minimum percentages of theoretical yield beyond which a deviation investigation of a batch is necessary and material review is conducted and disposition decision is made;

(6) A description of packaging and a representative label, or a cross-reference to the physical location of the actual or representative label;

(7) Written instructions, including the following:

(A) Specifications for each point, step, or stage in the manufacturing process where control is necessary to ensure the quality of the cannabis product and that the cannabis product is packaged and labeled as specified in the master manufacturing record;

(B) Procedures for product and/or batch sampling and a cross-reference to procedures for tests or examinations of products and/or batches;

(C) Specific actions necessary to perform and validate points, steps, or stages in the manufacturing process where control is necessary to ensure the quality of the cannabis product and that the cannabis product is packaged and labeled as specified in the master manufacturing record.

(D) Special notations and precautions to be followed; and
(E) Corrective action plans for use when a specification is not met.
(8) The master manufacturing protocol for any given product may include the ability

to adjust the amount or weight of cannabinoid-containing ingredients in order to account for the variability of cannabinoid content in harvest batches.

(c) Nothing in this chapter requires disclosure of the master manufacturing protocol to any person other than the individuals conducting activities that utilize the protocol or to the Department and its inspectors and agents, or other law enforcement agencies. The licensee may consider the master manufacturing protocol subject to trade secret protection.

Page 61 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40263. [Reserved]

§40264. Batch Production Record.

(a) The licensee shall prepare a written batch production record every time a batch of a cannabis product is manufactured. The batch production record shall accurately follow the appropriate master manufacturing protocol, and each step of the protocol shall be performed in the production of the batch.

(b) The batch production record shall document complete information relating to the production and control of each batch, including all of the following details:

(1) The UID, and if used, the batch or lot number, of the finished batch of cannabis product and the UIDs of all cannabis products used in the batch.

(2) The identity of equipment and processing lines used in producing the batch;

(3) The date and time of the maintenance, cleaning, and sanitizing of the equipment and processing lines used in producing the batch, or a cross-reference to records, such as individual equipment logs, where this information is retained;

(4) The identification number assigned to each component (or, when applicable, to a cannabis product received from a supplier for packaging or labeling as a cannabis product), packaging, and label used;

(5) The identity and weight or measure of each component used;

(6) A statement of the actual yield and a statement of the percentage of theoretical yield at appropriate phases of processing;

(7) The actual results obtained during any monitoring operation;

(8) The results of any testing or examination performed during the batch production, or a cross-reference to such results; and

Page 62 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(9) Documentation, at the time of performance, of the manufacture of the batch, including:

(A) The date on which each step of the master manufacturing protocol was performed; and

(B) The initials of the persons performing each step, including:

(i) The initials of the person responsible for weighing or measuring each component used in the batch;

(ii) The initials of the person responsible for verifying the weight or measure of each component used in the batch;

(iii) The initials of the person responsible for adding the component to the batch; and

(iv) The initials of the person responsible for verifying the addition of components to the batch.

(10) Documentation, at the time of performance, of packaging and labeling operations, including:

(A) An actual or representative label, or a cross-reference to the physical location of the actual or representative label specified in the master manufacturing record;

(B) The expected number of packaging and labels to be used, the actual quantity of the packaging and labels used, and, when label reconciliation is required, reconciliation of any discrepancies between issuance and use of labels; and

(C) The results of any tests or examinations conducted on packaged and labeled cannabis products (including repackaged or relabeled cannabis products), or a cross- reference to the physical location of such results.

(11) Documentation at the time of performance that quality control personnel: (A) Reviewed the batch production record;
(B) Reviewed all required monitoring operation(s) required by this article;
(C) Reviewed the results of all tests and examinations, including tests and

examinations conducted on components, in-process materials, finished batches of cannabis product, and packaged and labeled cannabis products;

(D) Either approved and released–or rejected–the batch for distribution; and Page 63 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(E) Either approved and released–or rejected– the finished cannabis product, including any repackaged or relabeled cannabis product.

(12) Documentation at the time of performance of any required material review and disposition decision.

(c) The batch production record shall:

(1) Contain the actual values and observations obtained during monitoring and, as appropriate, during verification activities;

(2) Be accurate, indelible, and legible;
(3) Be created concurrently with performance of the activity documented;
(4) Be as detailed as necessary to provide history of work performed; and:
(A) Include information adequate to identify any associated manufacturing facility

(e.g., the name, license number, and when necessary, the location of the facility);
(B) Include the date and, when appropriate, the time of the activity documented;
(C) Include the signature or initials of the person performing the activity; and
(D) Include the identity of the product, the UID, and the lot number or batch identifier,

if any.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40265. [Reserved]

§40266. Product Complaints.

The licensee shall establish and implement written procedures to ensure that:

(a) A qualified individual shall review and investigate all product complaints to determine whether such complaints involve a possible failure of a cannabis product to meet any of its specifications;

Page 64 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(b) Quality control personnel shall review and approve decisions determining whether to investigate a product complaint and shall review and approve the findings and follow up action(s) of any investigation performed;

(c) Pursuant to subdivisions (a) and (b) in this section, any review and/or investigative activities by qualified individuals and quality control personnel shall extend to all relevant batches and records.

(d) Quality control personnel shall maintain written records for every product complaint and subsequent investigation, if any. The records shall include:

(1) The name and description of the cannabis product;
(2) The batch number or UID of the cannabis product, if available;
(3) The date the complaint was received and the name, address, and/or telephone

number of the complainant, if available;
(4) The nature of the complaint including, if known, how the product was used; (5) The reply to the complainant, if any; and
(6) Any findings of the investigation and/or follow-up action taken when an

investigation is performed.
(e) For purposes of this section, “product complaint” means any communication that

contains any allegation, written, electronic, or oral, expressing concern, for any reason, with the quality of a cannabis product that could be related to the manufacturing practices. Examples of product complaints may include but are not limited to: foul odor, off taste, illness or injury, disintegration time, color variation, foreign material in a cannabis product container, improper packaging, mislabeling, cannabis products that contain incorrect concentration of cannabinoids, or cannabis products contain a wrong ingredient, or any form of contaminant.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

Page 65 of 97

§40267. [Reserved]

§40268. Recalls.

A licensee shall establish and implement written procedures for recalling cannabis products manufactured by the licensee that are determined to be misbranded or adulterated. These procedures shall include:

(a) Factors which necessitate a recall;
(b) Personnel responsible for implementing the recall procedures; and
(c) Notification protocols, including:
(1) A mechanism to notify all customers that have, or could have, obtained the

product, including communication and outreach via media, as necessary and appropriate;

(2) A mechanism to notify any licensees that supplied or received the recalled product;

(3) Instructions to the general public and/or other licensees for the return and/or destruction of recalled product.

(d) Procedures for the collection and destruction of any recalled product. Such procedures shall meet the following requirements:

(1) All recalled products that are intended to be destroyed shall be quarantined for a minimum of 72 hours. The licensee shall affix to the recalled products any bills of lading, shipping manifests, or other similar documents with product information and weight, and shall notify the Department of the quarantine. The product held in quarantine shall be subject to auditing by the Department.

(2) Following the quarantine period, the licensee shall render the recalled cannabis product unusable and unrecognizable in accordance with Section 40290, and do so on video surveillance in accordance with Section 40205. Except as provided in subparagraph (A), recalled cannabis product that has been rendered unusable and unrecognizable is considered cannabis waste and shall be disposed of in accordance with Section 40290, cannabis waste management.

Page 66 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

(3) A licensee shall dispose of chemical, dangerous, or hazardous waste in a manner consistent with federal, state, and local laws. This requirement shall include but is not limited to recalled products containing or consisting of pesticide or other agricultural chemicals, certain solvents or other chemicals used in the production of manufactured cannabis batches, and cannabis soaked in a flammable solvent for the purpose of producing manufactured cannabis batches.

(4) A licensee shall not dispose of recalled product in an unsecured area or waste receptacle that is not in the possession and/or control of the licensee.

(e) In addition to the tracking requirements set forth in Section 40512, a licensee shall use the track-and-trace database and on-site documentation to ensure that recalled cannabis products intended for destruction are identified, weighed, and tracked while on the licensed premises and when disposed of in accordance with this section. For recalled cannabis products, the licensee shall enter the following details into the track and trace database: the weight of the product, reason for destruction, and the date the quarantine period will begin.

(f) The licensee shall notify the Department of any recall within 24 hours.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§40269. [Reserved]

Article 5. Special Processing Requirements §40270. Juice Processing.

(a) Requirements of this section shall apply to manufacturers of cannabis-infused juice to be sold as either 100% juice or to be used as an ingredient in other products. The requirements of this section do not apply to manufacturers of infused beverages

Page 67 of 97

DPH-17-010E Cannabis Manufacturing Licensing

that use non-infused juice as an ingredient, provided that the juice was produced in accordance with United States Food and Drug Administration regulations.

(b) Manufacturers of juice shall include in the hazard analysis required pursuant to Section 40256, and in the process controls required pursuant to Section 40258, controls that will consistently produce, at minimum, a 5 log reduction in the pertinent microorganism. For purposes of this section, “pertinent microorganism” is the most resistant microorganism of public health significance that is likely to occur in the juice.

(c) A juice manufacturer that relies on treatments that do not come into direct contact with all parts of the juice to achieve the requirements of subsection (a) shall analyze the finished product for biotype I Escherichia coli in accordance with 21 CFR, section 120.25.

Authority: Section 26012, subdivision (a)(3); 26013, and 26130, Business and Professions Code. Reference: Sections 26001; 26011.5; and 26131, Business and Professions Code.

§40271. [Reserved]

§40272. Dried Meat Processing.

Manufacturing of cannabis-infused dried meat products shall be conducted in accordance with the United States Department of Agriculture FSIS Compliance Guideline for Meat and Poultry Jerky Produced by Small and Very Small Establishments: 2014 Compliance Guideline. Meat for processing into dried meat products shall be acquired from a commercially-available source.

Authority: Section 26012, subdivision (a)(3); 26011.5, 26013, and 26130, Business and Professions Code. Reference: Sections 26001; 26011.5; and 26131, Business and Professions Code.

Page 68 of 97

§40273. [Reserved] §40274. [Reserved]

Article 6. Other Responsibilities §40275. Standard Operating Procedures.

A licensee shall establish and maintain written standard operating procedures that are easily accessible to onsite personnel. The standard operating procedures shall, at minimum, include the following:

(a) Any policies or procedures developed in accordance with the security plan required by Section 40200 to which personnel must adhere;

(b) Emergency response procedures;

(c) Policies and procedures developed in accordance with Article 3 of this subchapter (Good Manufacturing Practices);

(d) Policies and procedures developed in accordance with Article 4 of this subchapter (Production and Process Control);

(e) Procedures for complying with the track-and-trace requirements established in Article 2 of subchapter 5;

(f) Inventory control procedures in compliance with Section 40282; and (g) Waste management procedures in compliance with Section 40290.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); 26053, 26130; and 26160, Business and Professions Code.

§40276. [Reserved]

Page 69 of 97

DPH-17-010E Cannabis Manufacturing Licensing

§40277. Weights and Measures

(a) Weighing devices used by a licensee shall be approved, tested, and sealed in accordance with the requirements in Chapter 5 (commencing with Section 12500) of Division 5 of the Business and Professions Code, and registered with the county sealer consistent with Chapter 2 (commencing with 12240) of Division 5 of the Business and Professions Code. Approved and registered devices shall be used whenever:

1. (1)  Cannabis or cannabis product is bought or sold by weight or count;
2. (2)  Cannabis or cannabis product is packaged for sale by weight or count;
3. (3)  Cannabis or cannabis product is weighed or counted for entry into the track-

and-trace system; and
(4) The weighing device is used for commercial purposes as defined in section

12500 of Business and Professions Code.
(b) For the purposes of this chapter, count means the numerical count of the

individual cannabis product units.
(c) For bulk shipments of cannabis and cannabis products, a licensee shall be

licensed as a weighmaster, and a certificate issued by a licensed weighmaster, shall be consistent with the requirements in Chapter 7 (commencing with section 12700) of Division 5 of Business and Professions Code.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Section 26060, subdivision (b), Business and Professions Code.

§40278. [Reserved]

§40279. [Reserved]

§40280. Training Program.

(a) The licensee shall implement a training program to ensure that all personnel present at the premises are provided information and training that, at minimum, covers the following topics:

Page 70 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

(1) Within 30 days of the start of employment:
(A) Health and safety hazards;
(B) Hazards presented by all solvents or chemicals used at the licensed premises as

described in the material safety data sheet for each solvent or chemical; (C) Emergency procedures;
(D) Security procedures;
(E) Record keeping requirements; and

(F) Training requirements.
(2) Prior to independently engaging in any cannabis manufacturing process:
(A) An overview of the process and standard operating procedure(s);
(B) Quality control procedures;
(C) Hazard analysis and control procedures as appropriate;
(D) Proper and safe usage of equipment or machinery;
(E) Safe work practices applicable to an employee’s job tasks, including appropriate

use of any necessary safety or sanitary equipment;
(F) Cleaning and maintenance requirements;
(G) Emergency operations, including shutdown; and
(H) Any additional information reasonably related to an employee’s job duties.
(3) Additionally, a licensee that produces edible cannabis products shall ensure that

all personnel who prepare, handle, or package edible products successfully complete a California food handler certificate course from an entity accredited by the American National Standards Institute (ANSI) within 90 days of commencing employment at the premises and again every three years during employment. For licensees in operation pursuant to Section 40126, applicable personnel shall complete the ANSI-accredited food handler course no later than 90 days after the effective date of the annual license. The licensee shall obtain documentation evidencing the fulfillment of this requirement.

(4) The licensee shall ensure that all personnel receive annual refresher training to cover, at minimum, the topics listed in this section. This annual refresher training must be completed within 12 months of the previous training completion date.

Page 71 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(b) The licensee shall maintain a record which contains at minimum:

(1) A list of all personnel at the premises, including at minimum, name and job duties of each.

(2) Documentation of training topics and dates of training completion for all personnel.

(3) Training topics and dates of refresher training completion for all personnel.

(4) The signature of the individual personnel and the licensee verifying receipt and understanding of each training or refresher training completed by the personnel.

(5) Any official documentation attesting to the successful completion of required training by personnel.

(c) The licensee may assign responsibility for the training of individual personnel to supervisory personnel. Assigned supervisory personnel must have the education, training, or experience (or a combination thereof) necessary to ensure the production of clean and safe cannabis products by all personnel. The designated training personnel shall sign and date a document on an annual basis attesting that he or she has received and understands all information and training provided in the training program. This documentation shall be maintained as part of the record requirements.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); 26130; and 26160, Business and Professions Code.

§40281. [Reserved]

§40282. Inventory Control – Cannabis and Cannabis Products.

(a) A licensee shall establish and implement a written inventory control plan capable of tracking the location and disposition of all cannabis and cannabis products at the licensed premises.

Page 72 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(b) A licensee shall reconcile the on-hand inventory of cannabis and cannabis products at the licensed premises with the records in the track-and-trace database least once every thirty (30) calendar days. Reconciliation shall be performed by one person and independently verified by a second person.

(c) If a licensee finds a discrepancy between the inventory and the track-and-trace database, the licensee shall conduct an audit.

(d) The licensee shall notify the Department within 24 hours if an audit reveals a discrepancy that is not within five percent of the documented inventory.

(e) If a licensee finds evidence of suspected theft or diversion, the licensee shall immediately report the suspected theft or diversion to the Department.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); 26130; and 26160, Business and Professions Code.

§40283. [Reserved] §40284. [Reserved] §40285. [Reserved] §40286. [Reserved] §40287. [Reserved] §40288. [Reserved] §40289. [Reserved]

Page 73 of 97

§40290. Waste Management.

(a) A licensee shall dispose of all waste in accordance with applicable state and local laws and regulations. It is the responsibility of the licensee to properly evaluate waste to determine if it should be designated a hazardous waste under section 40141 of the Public Resources Code.

(b) A licensee shall dispose of any waste that contains cannabis in any form in a secured waste receptacle or secured area on the licensed premises. For the purposes of this section, “secured waste receptacle” or “secured area” means that physical access to the receptacle or area is restricted to the licensee, employees of the licensee or by the local agency or local agency franchised or permitted private waste hauler only. Public access to the designated receptacle or area shall be strictly prohibited.

(c) No cannabis product shall be disposed of in its packaging, and all cannabis products shall be made unrecognizable and unusable prior to disposal.

(d) Waste containing cannabis or cannabis products shall be entered into the track- and-trace system as required under Section 40512.

(e) If a local agency, a local agency franchiser, or permitted private waste hauler is being used to collect and process cannabis waste, a licensee shall do all of the following:

(1) Provide the Department with the name of the entity hauling the waste;

(2) Obtain documentation from the entity hauling the waste that indicates the date and time of each collection of cannabis waste at the licensed premises; and

(3) Obtain a copy of the certified weight ticket, or other documentation prepared by the entity hauling the waste confirming receipt of the cannabis waste at one, or more, of the following solid waste facilities:

(A) A manned fully permitted solid waste landfill or transformation facility;
(B) A manned fully permitted composting facility or manned composting operation;

(C) A manned fully permitted in-vessel digestion facility or manned in-vessel digestion operation; or

Page 74 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

(D) A manned fully permitted transfer/processing facility or manned transfer/processing operation.

(f) If a licensee is self-hauling cannabis waste to one, or more, of the solid waste facilities in subsection (e)(3) of this section, a licensee shall obtain for each delivery of cannabis waste by the licensee a copy of a certified weight ticket or receipt documenting delivery from the solid waste facility. Only the licensee or its employees may transport self-hauled cannabis waste.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code.

§40291. [Reserved]

§40292. Consent to Sample Collection.

A manufacturer licensee that transfers possession but not title of cannabis products to a licensed distributor shall allow the Bureau, upon the Bureau’s request, to collect samples for purposes of conducting oversight of licensed testing laboratories.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code.

§§40293 – 40298. [Reserved]

Page 75 of 97

DPH-17-010E Cannabis Manufacturing Licensing

SUBCHAPTER 4. PRODUCTS Article 1. Cannabis Product Standards

§40299. Applicability.

The requirements of this subchapter shall apply to cannabis products manufactured on or after January 1, 2018.

Authority: Sections 26012, 26013, and 26130 of the Business and Professions Code. Reference: Section 26130 of the Business and Professions Code.

§40300. Prohibited Products.

The following types of products shall not be sold as edible cannabis products:

(a) Alcoholic beverages, as defined in section 23004 of the Business and Professions Code. For purposes of this section, “alcoholic beverage” does not include tinctures.

(b) Any product containing any non-cannabinoid additive that would increase potency, toxicity, or addictive potential, or that would create an unsafe combination with other psychoactive substances. Prohibited additives include, but are not limited to, nicotine and caffeine. This prohibition shall not apply to products containing naturally- occurring caffeine, such as coffee, tea, or chocolate.

(c) Any cannabis product that must be held at or below 41 degrees Fahrenheit to keep it safe for human consumption, including, but not limited to, cream or custard-filled pies; pies or pastries which consist in whole or in part of milk or milk products, eggs, or synthetic fillings; or meat-filled pies or pastries. This prohibition shall not apply to juices or beverages that need to be held below 41 degrees Fahrenheit if the juice or beverage was processed in accordance with Section 40270;

(d) Any low-acid cannabis product with a finished equilibrium pH greater than 4.6 and water activity greater than 0.85, packed in a hermetically sealed container in a reduced oxygen package (e.g. vacuum packed);

Page 76 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(e) Any juice that is not shelf-stable or that is not processed in accordance with Section 40270;

(f) Dairy products of any kind, as prohibited by subdivision (t) of section 26001 of the Business and Professions Code, except that butter purchased from a licensed milk products plant or retail location may be subsequently infused with cannabis and sold as a cannabis product;

(g) Meat products other than dried meat products prepared in accordance with Section 40272;

(h) Seafood products of any kind;

(i) Any product that is manufactured by application of cannabinoid concentrate or extract to commercially available candy or snack food items without further processing of the product.

(j) Any cannabis product that the Department determines is attractive to children;

(k) Any cannabis product that the Department determines is easily confused with commercially available foods without cannabis.

(l) Any cannabis product in the shape of a human being, either realistic or caricature, animal, insect, or fruit.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26011.5; and 26131, Business and Professions Code; Section 37104, Food and Agricultural Code.

§40301. [Reserved] §40302. [Reserved] §40303. [Reserved] §40304. [Reserved]

Page 77 of 97

§40305. Requirements for Edible Products

(a) Edible products shall not contain more than ten (10) milligrams of THC per serving.

(b) Edible cannabis products shall not contain more than one hundred (100) milligrams of THC per package.

(c) Except for cannabis, cannabis concentrate, or terpenes, no product ingredient or component shall be used in the manufacture of an edible cannabis product unless that ingredient or component is permitted by the United States Food and Drug Administration for use in food or food manufacturing.

(d) Edible products that consist of more than a single serving shall either be:
(1) Scored, delineated, or otherwise marked to indicate one serving, or
(2) Packaged in a manner such that a single serving is readily identifiable.
(e) Each serving of an edible cannabis product in a multi-serving package shall be

homogenized to contain the same concentration of THC, within the variance established by the Bureau through regulation.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130 Business and Professions Code. Reference: Sections 26001; 26011.5; 26012, subdivision (a)(3); and 26130, Business and Professions Code.

§40306. Requirements for Topical Cannabis Products, Concentrates, and Other Cannabis Products

(a) A cannabis product that is not an edible product and that is manufactured for the adult-use market shall not contain more than 1,000 mg of THC per package.

(b) A cannabis product that is not an edible product and that is manufactured for the medicinal market shall not contain more than 2,000 mg of THC per package.

(c) Topical cannabis products shall only contain ingredients permitted for cosmetic manufacturing in accordance with Title 21, Code of Federal Regulations, Part 700, subpart B (section 700.11 et seq.).

Page 78 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130 Business and Professions Code. Reference: Sections 26001 and 26011.5, Business and Professions Code.

§40307. [Reserved] §40308. [Reserved] §40309. [Reserved]

§40310. Failed Product Batches.

(a) No finished cannabis product shall exceed the level of contaminants identified in Business and Professions Code section 26100 or set by the Bureau pursuant thereto. Any cannabis product batch that fails a laboratory testing requirement required by section 26100 of the Act is adulterated and may be embargoed pursuant to section 26133 of the Act.

(b) Any cannabis product batch that fails quality assurance review required pursuant to section 26100 of the Act is misbranded and may be embargoed pursuant to section 26133 of the Act.

(c) Failed product batches shall be destroyed unless remediation or reprocessing is approved by the Department.

(d) Remediation or reprocessing of failed product batches or the use of harvest batches that have failed any laboratory test shall comply with any requirements and procedures established by the Bureau through regulation, in addition to the requirements of this chapter.

(e) Edible products that fail laboratory testing requirements shall not be remediated or reprocessed and shall be destroyed. If any edible product that has failed laboratory testing is remediated, reprocessed, or otherwise mixed with another batch of cannabis

Page 79 of 97

DPH-17-010E Cannabis Manufacturing Licensing

product, such action shall render the final cannabis product adulterated, regardless of the defect level of the final cannabis product.

(f) Notwithstanding subsection (e), a cannabis product that is determined through laboratory testing to be labeled with an incorrect amount of THC per package or per serving may be relabeled with the correct information in accordance with a corrective action plan approved by the Department, provided that the THC limits under Sections 40305 and 40306 are met.

(g) Prior to any remediation or reprocessing of a failed product batch or the use of a failed harvest batch, the licensee shall submit a corrective action plan to the Department to include, at minimum, a description of how the product or harvest batch will be remediated such that the product or any product produced therefrom will meet all laboratory testing and quality assurance requirements. A failed product or harvest batch shall not be remediated or reprocessed by a licensee unless the Department has approved the licensee’s corrective action plan. Remediation or reprocessing of edible products shall not be approved.

(h) Any remediation or reprocessing of a product batch that has failed laboratory testing or quality assurance review or the use of a failed harvest batch by a licensee shall be documented in the manufacturing records. All remediated product batches and products produced therefrom shall be tested and undergo quality assurance review in accordance with the requirements established by the Bureau prior to retail sale.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26012, subdivision (a)(3); and 26131, Business and Professions Code.

§§40311 – 40399. [Reserved]

Page 80 of 97

DPH-17-010E Cannabis Manufacturing Licensing

SUBCHAPTER 5. LABELING AND PACKAGING REQUIREMENTS Article 1. General Provisions

§40400. Applicability.

(a) The requirements in this subchapter shall apply to finished cannabis products and shall not apply to cannabis or cannabis products that are transferred between licensees for purpose of further processing or packaging.

(b) Except as otherwise provided in Section 40601, the requirements of this subchapter shall apply to any cannabis product manufactured on or after January 1, 2018.

Authority: Section 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Section 26130; Business and Professions Code.

§40401. Release to Distributor as Finished Product.

Prior to release of a product to a distributor, a licensee shall ensure that the product is in finished form and is labeled and packaged in its final form for sale.

Authority: Section 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5 and 26130, Business and Professions Code.

§40402. [Reserved]

Article 2. Labeling Requirements

§40403. General Provisions.

(a) Any information required to be listed on a label shall be written in English.

(b) A label shall be unobstructed and conspicuous so that it can be read by the consumer.

Page 81 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(c) All required label information shall be located on the outside container or wrapper of the finished product to be sold at a retailer.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26012, subdivision (a)(3); 26120; 26121, Business and Professions Code.

§40404. [Reserved]

§40405. Primary Panel Labeling Requirements: All Products.

(a) The label for a cannabis product shall include a primary panel that includes the following information:

(1) The identity of the product in a text size reasonably related to the most prominent printed matter on the panel;

(2) The universal symbol as prescribed in Section 40412;
(3) The net weight or volume of the contents of the package;
(4) The THC content and CBD content for the package in its entirety, expressed in

milligrams per package;
(b) The primary panel text must be in type size no less than 6 point font and be in

relation to the size of the primary panel and container.
(c) Nothing in this section prohibits the inclusion of additional information on the

primary panel. The content of other cannabinoids or terpenes may be included if such information is verified by the certificate of analysis issued by a licensed testing laboratory.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26012, subdivision (a)(3); 26120; 26121, Business and Professions Code.

Page 82 of 97

DPH-17-010E Cannabis Manufacturing Licensing

§40406. Additional Primary Panel Labeling Requirements: Edible Products

In addition to the requirements of Section 40405, the primary panel of an edible cannabis product shall include the following information:

(a) The words “cannabis-infused” immediately above the identity of the product in bold type and a text size larger than the text size used for the identity of the product.

(b) The THC content and CBD content per serving, expressed in milligrams per serving.

Authority: Sections 26012, subdivision (a), paragraph (3); 26013; 26120; and 26130, Business and Professions Code. Reference: Section 26120, Business and Professions Code.

§40407. [Reserved]

§40408. Informational Panel Labeling Requirements.

(a) The label for a cannabis product shall include an informational panel that includes the following:

(1) The licensed manufacturer and its contact number or website address; (2) The date of the cannabis product’s manufacture;
(3) The following statement: “GOVERNMENT WARNING: THIS PRODUCT

CONTAINS CANNABIS, A SCHEDULE I CONTROLLED SUBSTANCE. KEEP OUT OF REACH OF CHILDREN AND ANIMALS. CANNABIS PRODUCTS MAY ONLY BE POSSESSED OR CONSUMED BY PERSONS 21 YEARS OF AGE OR OLDER UNLESS THE PERSON IS A QUALIFIED PATIENT. THE INTOXICATING EFFECTS OF CANNABIS PRODUCTS MAY BE DELAYED UP TO TWO HOURS. CANNABIS USE WHILE PREGNANT OR BREASTFEEDING MAY BE HARMFUL. CONSUMPTION OF CANNABIS PRODUCTS IMPAIRS YOUR ABILITY TO DRIVE AND OPERATE MACHINERY. PLEASE USE EXTREME CAUTION.

Page 83 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(4) If the cannabis product is intended for sale in the medicinal-use market, the statement “For Medicinal Use Only;”

(5) A list of all product ingredients in descending order of predominance by weight or volume;

(6) If an edible product that contains an ingredient, flavoring, coloring, or an incidental additive that bears or contains a major food allergen, the word “contains,” followed by a list of the applicable major food allergens;

(7) If an edible product, the names of any artificial food colorings contained in the product;

(8) If an edible product, the amount, in grams, of sodium, sugar, carbohydrates, and total fat per serving;

(9) Instructions for use, such as the method of consumption or application, and any preparation necessary prior to use;

(10) The product expiration date, “use by” date, or “best by” date, if any; and (11) The UID and, if used, the batch number.
(b) The informational panel text shall be in a type size of no less than 6 point font

and in relation to the size of the primary panel and container, unless there is insufficient area on the container available to print all the required information in a type size of no less than 6 point font. In such a case, the label shall include the warning statements required by paragraph (3) in a type size of no less than 6 point font, and the product shall be accompanied by a supplemental labeling that includes all of the information required by this section. The text of the supplemental labeling shall be no less than 8 point font.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26001; 26012, subdivision (a)(3); 26120; 26121, Business and Professions Code.

§40409. [Reserved]

Page 84 of 97

§40410. Labeling Restrictions.

The label shall not contain any of the following:

(a) Claims that the cannabis product was produced from cannabis grown in a California county when the cannabis was not grown there.

(b) The name of a California county unless the cannabis used in the product was grown there.

(c) Content that is or designed to be attractive to individuals under the age of 21, including but not limited to:

(1) Cartoons;

(2) Any likeness to images, characters, or phrases that are popularly used to advertise to children;

(3) Any imitation of candy packaging or labeling; or
(4) The terms “candy” or “candies.”
(d) Any information that is false or misleading.
(e) Any health-related statement that is untrue or misleading. Any health-related

statement must be supported by the totality of publicly available scientific evidence (including evidence from well-designed studies conducted in a manner which is consistent with generally recognized scientific procedures and principles), and for which there is significant scientific agreement, among experts qualified by scientific training and experience to evaluate such claims.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Section 26001; 26012, subdivision (a)(3); 26062.5; 26120, 26121, Business and Professions Code.

§40411. Statement of Potential Effects

Pursuant to section 26130(c) of the Act, a cannabis product may include information on the potential effects of the cannabis product if the manufacturer has substantiation that the information is truthful and not misleading. Such information may be located on

Page 85 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

the informational panel of the label or as an insert included in the product package. For purposes of this section, “potential effect” includes any physiological effect common to or expected from the particular cannabis strain, but excludes any claim of health benefits.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26130, Business and Professions Code.

§40412. Universal Symbol.

The primary panel of a cannabis product shall be marked, stamped, or otherwise imprinted with the universal symbol.

(a) The symbol shall replicate the following in form and color:

(b) The symbol shall be no smaller in size than half (.5) inch by half (.5) inch and shall be printed legibly and conspicuously.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Section 26001; 26012, subdivision (a)(3); 26120; and 26121, Business and Professions Code.

§40413. [Reserved] §40414. [Reserved]

Page 86 of 97

§40415. Packaging.

DPH-17-010E Cannabis Manufacturing Licensing

Article 3. Packaging

A package used to contain a cannabis product shall adhere to the following requirements:

(a) The package shall protect the product from contamination and shall not expose the product to any toxic or harmful substance.

(b) The package shall be tamper-evident, which means that the product shall be packaged in packaging that is sealed so that the contents cannot be opened without obvious destruction of the seal.

(c) The package shall be child-resistant, which means the package shall be designed or constructed to be significantly difficult for children under five years of age to open or otherwise obtain access to the product contained therein within a reasonable time, and shall not be difficult for normal adults to open or obtain access to the product contained therein. A package shall be deemed child-resistant if it satisfies the standard for “special packaging” as set forth in the Poison Prevention Packaging Act of 1970 Regulations (16 C.F.R. §1700.1(b)(4)).

(d) The package shall not imitate any package used for products typically marketed to children.

(e) If the product is an edible product, the package shall be opaque.

(f) If the package contains more than one serving of cannabis product, the package shall be re-sealable so that child-resistance is maintained throughout the life of the package.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Section 26001; 26012, subdivision (a)(3); 26120; and 26121, Business and Professions Code.

§§40416 – 40499. [Reserved]

Page 87 of 97

DPH-17-010E Cannabis Manufacturing Licensing

SUBCHAPTER 6. COMPLIANCE Article 1. Records

§40500. Record Keeping Requirements.

(a) The licensee shall have the following documents available on the premises at all times and shall make the documents available to the Department and any enforcement agency upon request:

(1) The valid state license issued by the Department;
(2) Any other valid license issued by a state cannabis licensing agency;
(3) The valid license, permit, or other approval issued by the local jurisdiction; (4) The premises diagram;
(5) The current standard operating procedures as defined in Section 40275;
(6) Shipping manifests;
(7) Employee records, including evidence of employee qualifications and training

procedures and logs; and
(8) Any other record or documentation required to be kept pursuant to this Chapter

or the Act.
(b) The records required pursuant to subsection (a) shall be maintained in a manner

immediately accessible on the premises to the Department and any enforcement agencies upon request for a period of two (2) years, except that outdated standard operating procedures shall not be accessible to onsite employees. After two (2) years, records may be maintained by the licensee in an alternate manner, provided that the records can be made available to the Department or enforcement agency no later than 48 hours following a request and that the records are retained for a period of 7 years in total.

(c) All documentation shall be maintained in English.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); and 26160, Business and Professions Code.

Page 88 of 97

§§40501-40509. [Reserved]

Article 2. Track-and-Trace System §40510. Track-and-Trace System General Requirements

(a) A licensee shall enter all commercial cannabis activities into the track-and-trace system within 24 hours of occurrence.

(c) If a licensee has not registered for training pursuant to subsection (a), the licensee shall register for training within five (5) business days of notification from the Department that the license has been approved.

(d) A licensee shall designate at least one owner to be the track-and-trace system account manager. The track-and-trace system account manager shall have the following responsibilities:

(1) Designate authorized track-and-trace system users and require designated users to be trained in the proper and lawful use of the track-and-trace system before the designated user can access the system;

(2) Maintain an accurate and complete list of all track-and-trace system account managers and users and update the list immediately upon any change;

(3) Ensure that each track-and-trace account manager and user has a unique log- on, consisting of a username and password, which shall not be shared with or used by any other person;

(4) Cancel any track-and-trace system account manager or user from a track-and- trace system account if the individual is no longer a licensee representative;

(5) Obtain UID tags from the Department of Food and Agriculture, or its designee, and ensure that a sufficient supply of UIDs is available at all times;

Page 89 of 97

DPH-17-010E Cannabis Manufacturing Licensing

DPH-17-010E Cannabis Manufacturing Licensing

(6) Ensure that all inventory is tagged and entered in the track-and-trace system as required by Section 40512 or track-and-trace system requirements.

(7) Correct any information that is entered into the track-and-trace system in error within three (3) business days of discovery of the error;

(8) Monitor all notifications from the track-and-trace system and resolve all issues identified in the notification. The notification shall not be dismissed by an account manager until the issue(s) identified in the notification has been resolved.

(e) No person shall intentionally misrepresent or falsify information entered into the track-and-trace system. The track-and-trace system shall be the system of record. The licensee is responsible for the accuracy and completeness of all data and information entered into the track-and-trace system. Information entered into the track-and-trace system shall be assumed to be accurate and may be used to take enforcement action against the licensee if not corrected.

(f) The licensee is responsible for all actions that a track-and-trace system account manager or user acting as a licensee representative takes while logged into the track- and-trace system or otherwise conducting commercial cannabis activities.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26067; and 26160, Business and Professions Code

§40511. [Reserved]

§40512. Track-and-Trace System Reporting Requirements.

(a) A system account manager or user shall record all of the following activities in the track-and-trace system within 24 hours of the activity:

(1) Receipt of cannabis material.

(2) The transfer to or receipt of cannabis products for further manufacturing from another licensed manufacturer.

Page 90 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(3) All changes in the disposition of cannabis or cannabis products. A change in disposition includes, but is not limited to:

(A) Processing of the cannabis or further processing of the cannabis product; (B) Packaging cannabis products.
(4) Transfer of cannabis products to a distributor.
(5) Any other activity required by the track-and-trace system to be captured.
(b) The following information shall be recorded for each activity entered into the

track-and-trace system:
(1) The licensed entity from which the cannabis material or product is received,

including that entity’s license number, and the licensed entity to which the cannabis product is transferred, including that entity’s license number.

(2) The name and license number of the distributor that transported the cannabis material or cannabis product.

(3) The type of cannabis material or cannabis product received, processed, manufactured, or transferred.

(4) The weight or count of the cannabis material or cannabis product received, processed, packaged, or transferred.

(5) The date of receipt, processing, packaging, or transfer.
(6) The unique identifier assigned to the cannabis material or cannabis product. (7) Any other information required by other applicable licensing authorities.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26067; and 26160, 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.

Page 91 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(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 and when it was restored and the cause for each loss of access.

(d) A licensee shall not transfer 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, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26067; and 26160, Business and Professions Code

§40514. [Reserved]

§40515. Track-and-Trace System – Temporary Licenses

(a) A licensee operating under a temporary license issued pursuant to Section 40126 is not required to record commercial cannabis activity in the track-and-trace system as otherwise required by this article. Temporary licensees shall track all commercial cannabis activities on a paper sales receipt or invoice that includes the following information:

(1) Name, address, and license number of the seller;
(2) Name, address, and license number of the purchaser,
(3) Date of sale or transfer;
(4) Description or type of cannabis or cannabis product;
(5) Weight or quantity of cannabis or cannabis product sold or transferred; (6) Cost to the purchaser of the cannabis or cannabis product.
(b) After issuance of an annual license, the licensee may continue to conduct

commercial cannabis activities with temporary licensees in accordance with subsection Page 92 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(a). Any commercial cannabis activity conducted between annual license holders shall be recorded in the track-and-trace system.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26067; 26160; and 26161 Business and Professions Code

§40516. [Reserved]

§40517. Track-and-Trace System – UID Tag Order

(a) A licensee shall order UID tags within five (5) business days of receiving access to the track-and-trace system. The receipt of the UID tags by the licensee shall be recorded with the track-and-trace system within three (3) business days of receipt.

(b) Any licensee in operation at the time access to the track-and-trace system is granted shall input all inventory into the track-and-trace system no later than 30 days after receipt of the UID tags.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26067; 26160; and 26161, Business and Professions Code

§§40518-40524. [Reserved]

Article 3. Advertising and Marketing § 40525. Advertising and Marketing

(a) A licensee shall ensure that all advertising and marketing of its cannabis products meet the requirements of Chapter 15 (commencing with section 26150) of the Act. Any health-related statement shall also meet the requirements of section 40410.

Page 93 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(b) A licensee shall accurately and legibly include its name and license number on all advertising and marketing for its products.

(c) A licensee shall maintain records and documentation to establish that its advertising and marketing meet the requirements of Chapter 15 (commencing with section 26150) of the Act. The records shall be maintained in accordance with section 26160 of the Act and Section 40500 of this chapter.

Authority: Sections 26012, subdivision (a)(3); and 26130, Business and Professions Code. Reference: Section 26150, Business and Professions Code.

§§40526-40549. [Reserved]

§40550. Inspections.

Article 4. Inspections

(a) The Department and its inspectors or agents may conduct an on-site inspection prior to issuing a new or renewal license.

Page 94 of 97

DPH-17-010E Cannabis Manufacturing Licensing

(e) The Department may make analyses or examinations of any sample obtained. If an analysis is made of a sample, a copy of the results of the analysis shall be promptly furnished to the licensee by the Department.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26012, subdivision (a)(3); 26130; 26131; 26132; 26133; 26134; 26135; and 26160, Business and Professions Code.

§§40551-40599. [Reserved]

Page 95 of 97

DPH-17-010E Cannabis Manufacturing Licensing

SUBCHAPTER 7. TRANSITIONAL PERIOD §40600. License Designations

Notwithstanding any other provision, until July 1, 2018, licensees may conduct commercial cannabis activities with any other licensee, regardless of the A or M designation on the license.

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Section 26050, Business and Professions Code.

§40601. Packaging and Labeling

Any cannabis product that is in possession of a manufacturer prior to January 1, 2018, and that does not meet all applicable requirements of Subchapter 5 may enter into the commercial cannabis market provided that all of the following conditions are met:

(a) The cannabis product is packaged in child-resistant packaging that meets the requirements of subsection (c) of Section 40415. A secondary package that is child- resistant shall be sufficient to meet the requirements of this subsection.

(b) The cannabis product contains the government warning required pursuant to paragraph (3) of subsection (a) of Section 40408. A sticker with the required statement that is placed on the outside of the package or secondary package shall be sufficient to meet the requirements of this subsection.

(c) The cannabis product meets the applicable THC limits under Sections 40305 or 40306.

(d) The cannabis product contains the amount of THC and, if applicable, CBD per serving and per package. A sticker with the THC and CBD amount that is placed on the outside of the package or secondary package shall be sufficient to meet the requirements of this subsection.

Page 96 of 97

DPH-17-010E Cannabis Manufacturing Licensing

Authority: Sections 26012, subdivision (a)(3); 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26050; 26120; and 26130, Business and Professions Code.

Page 97 of 97

California Department of Public Health

Manufactured Cannabis Safety Branch

Temporary License Application: Cannabis Manufacturing

The California Department of Public Health (CDPH) is one of three state cannabis-licensing authorities. CDPH, through its Manufactured Cannabis Safety Branch (MCSB) is responsible for licensing and regulating commercial cannabis manufacturers. Any person or entity wishing to manufacture cannabis products must be licensed with MCSB.

A temporary license is a conditional license that allows a business to engage in commercial cannabis activity. Once issued, this license will be valid for 120 days and may be extended for additional periods of 90 days, at MCSB’s discretion, if the business has submitted a complete annual license application.

Completion of this application does not grant rights or impose obligations. Please reference the statutes and regulations for all licensing requirements.

Application Instructions:

Complete one form for each premises in which you will be conducting commercial cannabis manufacturing.

Please type or write legibly.
Submit the completed application and attachments via mail or email to:

California Department of Public Health Manufactured Cannabis Safety Branch PO Box 997377, MS-7377 Sacramento, CA 95899-7377 [email protected]

If you have any questions, please visit our website, www.cdph.ca.gov/mcsb, or contact us at [email protected].

www.cdph.ca.gov/mcsb www.cannabis.ca.gov [email protected]

Temporary License Application – Cannabis Manufacturing

SECTION A – LICENSE TYPE (Check all that apply) ☐ Medicinal (M) ☐ Adult-Use (A) SECTION B – APPLICANT INFORMATION

First Name MI

Title Phone Number SECTION C – BUSINESS INFORMATION

Legal Business Name (as registered with the CA Secretary of State)

Mailing Address City SECTION D – PREMISES INFORMATION

Physical Address of Manufacturing Premises City
SECTION E – OPERATIONAL ACTIVITIES (Check all that apply for the premises listed in Section D)

CDPH-9041 (10/17)

Last Name
Email Address

Trade Name (DBA)
State Zip

Federal EIN

County

State Zip County

ProductTypes M A Activities M A

SECTION F – LOCAL AUTHORIZATION

Local Issuing Authority Local Office Phone Number SECTION G – LOCAL AUTHORIZATION ATTACHMENT

Extraction Methods

M A

Local Office Email Address

☐ A copy of a valid license, permit or other authorization issued by the local jurisdiction that enables the applicant to conduct commercial cannabis activity at the premises listed in Section D.

SECTION H – DECLARATIONS AND SIGNATURE

I declare under penalty that:

• The information contained within and attached to this application is complete, true and accurate. I understand a misrepresentation

  of fact is cause for rejection of this application, denial of license or revocation of an issued license.

• I understand that the temporary license is a conditional license that authorizes my business to engage in the commercial cannabis

  activity described in the application.

• I understand that refusal by the licensing authority to issue or extend a temporary license shall not entitle the business to a hearing

  or appeal of the decision.

• I understand that the issuance of a temporary license does not obligate the Department to issue a non-temporary license, nor does it

  create a vested right to either an extension of the temporary license or to the granting of an non-temporary license.

• I understand that I am responsible for knowing and complying with all state laws and regulations governing medicinal and adult-use

  cannabis manufacturing pursuant to MAUCRSA and all other applicable laws and regulations, upon issuance of my temporary license. I understand that I am responsible for compliance with subsequent updates to cannabis manufacturing laws and regulations.

  Signature Print Name Date

  California Department of Public Health

  Manufactured Cannabis Safety Branch

TEXT OF PROPOSED REGULATIONS

TABLE OF CONTENTS

EMERGENCY REGULATIONS FOR CANNABIS CULTIVATION
Article 1. Definitions …………………………………………………………………………………………………………………………………………………1

§ 8000. Definitions. ………………………………………………………………………………………………………………………………………………. 1 Article 2. Applications. ……………………………………………………………………………………………………………………………………………… 3 § 8100. Temporary Licenses. ………………………………………………………………………………………………………………………………….3 § 8101. Annual License Application Fees………………………………………………………………………………………………………………….4 § 8102. Annual License Application Requirements. ………………………………………………………………………………………………….. 5 § 8103. Owners and Financial Interests Holders. ……………………………………………………………………………………………………. 10 § 8104. Legal Right to Occupy……………………………………………………………………………………………………………………………….11 § 8105. Property Diagram…………………………………………………………………………………………………………………………………….11 § 8106. Cultivation Plan Requirements. …………………………………………………………………………………………………………………12 § 8107. Supplemental Water Source Information……………………………………………………………………………………………………13 § 8108. Cannabis Waste Management…………………………………………………………………………………………………………………..15 § 8109. Applicant Track and Trace Training Requirement…………………………………………………………………………………………17 § 8110. Proof of Local License, Permit, or Other Authorization…………………………………………………………………………………17 § 8111. Priority Application Review……………………………………………………………………………………………………………………….17 § 8112. Annual License Application Review for Completeness. ………………………………………………………………………………… 18 § 8113. Substantially Related Offenses Review……………………………………………………………………………………………………….18 § 8114. Withdrawal of Application. ………………………………………………………………………………………………………………………. 19 § 8115. Notification and Grounds for Denial of a License. ……………………………………………………………………………………….. 20 Article 3: Cultivation License Fees and Requirements………………………………………………………………………………………………….20 § 8200. Annual License Fees. ……………………………………………………………………………………………………………………………….. 20 § 8201. Cultivation License Types………………………………………………………………………………………………………………………….21 § 8202. General License Requirements. ………………………………………………………………………………………………………………… 22 § 8203. Renewal of License…………………………………………………………………………………………………………………………………..22 § 8204. Notification of License Information Change. ………………………………………………………………………………………………. 23 § 8205. Physical Modification of Premises. ……………………………………………………………………………………………………………. 24 § 8206. Death or Incapacity of a Licensee. …………………………………………………………………………………………………………….. 24 § 8207. Disaster Relief. ………………………………………………………………………………………………………………………………………..25 § 8208. Surrender of License. ………………………………………………………………………………………………………………………………. 26 § 8209. Medium Cultivation License Limits. …………………………………………………………………………………………………………… 26 § 8210. Sample Collection by the Bureau……………………………………………………………………………………………………………….27 § 8211. Prohibition of Product Returns. ………………………………………………………………………………………………………………… 27 § 8212. Packaging and Labeling of Cannabis and Nonmanufactured Cannabis Products………………………………………………27 § 8213. Requirements for Weighing Devices and Weighmasters. ……………………………………………………………………………..27 § 8214. Transition Period……………………………………………………………………………………………………………………………………..28

TEXT OF PROPOSED REGULATIONS

§ 8215. Personnel Prohibited from Holding Licenses. ……………………………………………………………………………………………… 28

§ 8216. License Issuance in an Impacted Watershed. ……………………………………………………………………………………………… 29 Article 4. Cultivation Site Requirements…………………………………………………………………………………………………………………….29 § 8300. Cultivation Requirements for Specialty Cottage, Specialty, Small, and Medium Licenses………………………………….29 § 8301. Seed Production Requirements for Nurseries. ……………………………………………………………………………………………. 29 § 8302. Research and Development Requirements for Nurseries. ……………………………………………………………………………. 29 § 8303. Cultivation Requirements for Processor Licenses…………………………………………………………………………………………30 § 8304. General Environmental Protection Measures. …………………………………………………………………………………………….30 § 8305. Renewable Energy Requirements………………………………………………………………………………………………………………31 § 8306 Generator Requirements. …………………………………………………………………………………………………………………………. 32 § 8307 Pesticide Use Requirements. ……………………………………………………………………………………………………………………..32 Article 5. Records and Reporting ……………………………………………………………………………………………………………………………… 33 § 8400. Record Retention. …………………………………………………………………………………………………………………………………… 33 § 8401. Sales Invoice or Receipt Requirements……………………………………………………………………………………………………….34 § 8402. Track-and-Trace System……………………………………………………………………………………………………………………………35 § 8403. Track-and-Trace System Unique Identifiers (UID). ……………………………………………………………………………………….36 § 8404. Track-and-Trace System User Requirements……………………………………………………………………………………………….38 § 8405. Track-and-Trace System Reporting Requirements. ……………………………………………………………………………………… 38 § 8406. Track-and-Trace System Inventory Requirements………………………………………………………………………………………..40

§ 8407. Track-and-Trace System Requirements for Product in Licensee Possession at the Time of Annual License Issuance. ………………………………………………………………………………………………………………………………………………………………………… 40

§ 8408. Inventory Audits………………………………………………………………………………………………………………………………………41

§ 8409. Notification of Diversion, Theft, Loss, or Criminal Activity. …………………………………………………………………………… 41 Article 6. Inspections, Investigations and Audits ………………………………………………………………………………………………………… 41 § 8500. Inspections, Investigations and Audits Applicability……………………………………………………………………………………..41 § 8501. Inspections, Investigations and Audits. ………………………………………………………………………………………………………41 Article 7. Enforcement ……………………………………………………………………………………………………………………………………………. 42 § 8600. Enforcement Applicability…………………………………………………………………………………………………………………………42 § 8601. Administrative Actions……………………………………………………………………………………………………………………………..42 § 8602. Notice of Violation. …………………………………………………………………………………………………………………………………. 59 § 8603. Administrative Hold Procedure………………………………………………………………………………………………………………….59 § 8604. Informal Administrative Hearings. …………………………………………………………………………………………………………….. 60 § 8605. Informal Hearing Schedule and Notification………………………………………………………………………………………………..61 § 8606. Conduct of Informal Hearings. ………………………………………………………………………………………………………………….. 61 § 8607. Licensing Actions……………………………………………………………………………………………………………………………………..62 § 8608. Formal Administrative Hearings. ……………………………………………………………………………………………………………….62

TEXT OF PROPOSED REGULATIONS

Original proposed additions are indicated by underline.

CALIFORNIA CODE OF REGULATIONS TITLE 3. FOOD AND AGRICULTURE DIVISION 8. CANNABIS CULTIVATION CHAPTER 1. CANNABIS CULTIVATION PROGRAM

Article 1. Definitions

§ 8000. Definitions.
The following definitions, in addition to those stated in Section 26001 of Business and Professions Code, apply to this Chapter.

(a)

(b) (c) (d)

(e)

“Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, Business and Professions Code Section 26000, et seq.
“Applicant” means an owner of the applicant entity applying for a state license pursuant to this division.

“Applicant entity” means the entity applying for a state cannabis cultivation license.
“Batch” or “harvest batch” means a specifically identified quantity of dried flower or trim, leaves, and other cannabis plant matter that is uniform in strain, harvested in whole, or in part, at the same time, and, if applicable, cultivated using the same pesticides and other agricultural chemicals.
“Bureau” means the Bureau of Cannabis Control within the Department of Consumer affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation.

(f) “Canopy” means the designated area(s) at a licensed premises, except nurseries, that will contain mature plants at any point in time.

(1) (2)

Canopy shall be calculated in square feet and measured using clearly identifiable boundaries of all area(s) that will contain mature plants at any point in time, including all of the space(s) within the boundaries;

Canopy may be noncontiguous but each unique area included in the total canopy calculation shall be separated by an identifiable boundary which include, but are not limited to: interior walls, shelves, greenhouse walls, hoop house walls, garden benches, hedgerows, fencing, garden beds, or garden plots; and
If mature plants are being cultivated using a shelving system, the surface area of each level shall be included in the total canopy calculation.

(3)
(g) “Commercial cannabis activity” includes the cultivation, possession, manufacture, distribution, processing, storing,

Page 1 of 62

TEXT OF PROPOSED REGULATIONS

laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products as provided

for this Chapter.
(h) “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of

cannabis.
(i) “Cultivation site” means a location where commercial cannabis is planted, grown, harvested, dried, cured, graded, or

trimmed, or that does all or any combination of those activities.
(j) “Department” means the California Department of Food and Agriculture.
(k) “Dried flower” means all dead cannabis that has been harvested, dried, cured, or otherwise processed, excluding leaves

and stems.
(l) “Flowering” means that a cannabis plant has formed a mass of pistils measuring greater than one half inch wide at its

widest point.
(m) “Immature plant” or “immature” means a cannabis plant that is not flowering.

(n) (o)

(p) (q) (r) (s)

(t) (u)

(v)

“Indoor cultivation” means the cultivation of cannabis within a permanent structure using exclusively artificial light or within any type of structure using artificial light at a rate above twenty-five watts per square foot.
“Kief” means the resinous trichomes of cannabis that may accumulate in containers or be sifted from loose, dry cannabis flower with a mesh screen or sieve.

“Licensee” means any person holding a license pursuant to this Chapter.

“Lot” means a batch, or a specifically identified portion of a batch. “Mature plant” means a cannabis plant that is flowering.

“Mixed-light cultivation” means the cultivation of mature cannabis in a greenhouse, hoop-house, glasshouse, conservatory, hothouse, or other similar structure using light deprivation and/or one of the artificial lighting models described below:

1. (1)  “Mixed-light Tier 1” the use of artificial light at a rate of six watts per square foot or less;
2. (2)  “Mixed-light Tier 2” the use of artificial light at a rate above six and below or equal to twenty-five watts per square foot.

“Nonmanufactured cannabis product” means flower, shake, kief, leaf, and pre-rolls.
“Nursery” means a licensee that produces only clones, immature plants, seeds, and other agricultural products used specifically for the propagation and cultivation of cannabis.
“Outdoor cultivation” means the cultivation of mature cannabis without the use of artificial lighting in the canopy area at any point in time. Artificial lighting is permissible only to maintain immature plants.

(w) “Pest” means any of the following that is, or is liable to become, dangerous or detrimental to the agricultural or nonagricultural environment of the state:
(1) Any insect, predatory animal, rodent, nematode or weed; and

Page 2 of 62

TEXT OF PROPOSED REGULATIONS

(2) Any form of terrestrial, aquatic, or aerial plant or animal virus, fungus, bacteria, or other microorganism (except viruses, fungi, bacteria, or other microorganisms on or in living man or other living animals).

(x) “Premises” means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee.

(y) “Pre-roll” means nonmanufactured cannabis product(s) rolled in paper.
(z) “Process”, ”Processing” and “Processes” means all activities associated with drying, curing, grading, trimming, storing,

packaging, and labeling of nonmanufactured cannabis products.
(aa) “Track-and-trace system” means the state approved system used to track commercial cannabis activity and movement. (ab) “Unique identifier” or “UID” means an alphanumeric code or designation used for reference to a specific plant on a

licensed premises and any cannabis or cannabis product derived or manufactured from that plant.
(ac) “Watts per square foot” means the sum of the maximum wattage of all lights identified in the designated canopy

area(s) in the cultivation plan divided by the sum of the dimensions in square feet of designated canopy area(s) identified in the cultivation plan.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26001, Business and Professions Code; and Section 12754.5, Food and Agricultural Code.

Article 2. Applications.

§ 8100. Temporary Licenses.
A temporary license is a conditional license that authorizes the licensee to engage in commercial cannabis activity as would be permitted under the privileges of an annual license of the same type. A temporary licensee shall follow all applicable statutes and regulations as would be required if the licensee held an annual license of the same type.
(a) Temporary license applications shall be completed and submitted online at calcannabis.cdfa.ca.gov or mailed to the

department at P.O. Box 942871, Sacramento, CA 94271.
(b) An application for a temporary cultivation license shall include the following:

(1) The license type, pursuant to section 8201 of this Chapter, for which the applicant is applying and whether the application is for an M-license or A-license;

(2) If the applicant has already submitted an application for annual licensure, the application number;
(3) The legal business name of the applicant entity;
(4) The full legal name, mailing address, phone number, email address, and affiliation of the designated responsible

party who shall:
(A) Be an owner with legal authority to bind the applicant entity;

Page 3 of 62

TEXT OF PROPOSED REGULATIONS

(B) Serve as agent for service of process; and

(C) Serve as primary contact for the application.

5. (5)  The physical address of the premises;
6. (6)  A copy of a valid license, permit, or other authorization, issued by a local jurisdiction, that enables the applicant

   entity to conduct commercial cannabis activity at the location requested for the temporary license. For the purposes of this section, “other authorizations” shall include, at a minimum, a written statement or reference that clearly indicates the local jurisdiction intended to grant permission to the applicant entity to conduct commercial cannabis activity at the premises.

(c) When the applicant provides a license, permit, or other authorization from the local jurisdiction where the licensed premises will be or is located, the department will notify the contact person identified pursuant to Section 26055 of Business and Professions Code. If the local jurisdiction does not respond to the department’s notification within ten (10) calendar days, the department may issue a temporary license to the applicant.

4. (d)  A temporary license issued pursuant to this Chapter shall be valid for one-hundred twenty (120) days from the effective date. No temporary license shall be effective prior to January 1, 2018.
5. (e)  A temporary license may be extended for additional ninety (90) day periods if a complete application for licensure has been submitted to the department pursuant to section 8102 of this Chapter.

(f) A temporary license does not obligate the department to issue an annual license nor does the temporary license create a vested right in the holder to either an extension of the temporary license or to the granting of a subsequent annual license.

7. (g)  Temporary applications and licenses are exempt from fees.
8. (h)  This section shall remain in effect until January 1, 2019.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26050.1 and 26055, Business and Professions Code.

§ 8101. Annual License Application Fees.

The following are the nonrefundable application fees for the specified annual license type and shall be paid by the applicant at the time the complete application is submitted to the department:

1. (a)  Specialty Cottage Outdoor $135
2. (b)  SpecialtyCottageIndoor $205
3. (c)  Specialty Cottage Mixed-Light Tier 1 $340
4. (d)  Specialty Cottage Mixed-Light Tier 2 $580

Page 4 of 62

5. (e)  Specialty Outdoor
6. (f)  Specialty Indoor
7. (g)  Specialty Mixed-Light Tier 1
8. (h)  Specialty Mixed-Light Tier 2
9. (i)  Small Outdoor
10. (j)  Small Indoor
11. (k)  Small Mixed-Light Tier 1
12. (l)  Small Mixed-Light Tier 2
13. (m)  Medium Outdoor
14. (n)  Medium Indoor
15. (o)  Medium Mixed-Light Tier 1
16. (p)  Medium Mixed-Light Tier 2
17. (q)  Nursery
18. (r)  Processor

$270 $2,170 $655 $1,125 $535 $3,935 $1,310 $2,250 $1,555 $8,655 $2,885 $4,945 $520 $1,040

TEXT OF PROPOSED REGULATIONS

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8102. Annual License Application Requirements.
Applications for a cultivation license shall be completed and submitted online at calcannabis.cdfa.ca.gov or by mailing a hard copy with the required payment to the department at P.O. Box 942872, Sacramento, CA 94271-2872, pursuant to section 8101 of this Chapter. Applications shall include the following, if applicable:

1. (a)  The legal business name of the applicant entity.
2. (b)  The license type, pursuant to in section 8201 of this Chapter, for which the applicant is applying and whether the

   application is for an M-license or A-license;

3. (c)  A list of all the types, including the license numbers of valid licenses, from the department and other cannabis licensing

   authorities that the applicant already holds;

4. (d)  The physical address of the premises;
5. (e)  The mailing address of the applicant;
6. (f)  A designated responsible party, who shall also be an owner, with legal authority to bind the applicant entity, and serves

   as agent for service of process and primary contact for the application. The following information shall be provided for the designated responsible party: full legal name, title, mailing address, primary contact phone number, email address, and a copy of the owner’s government-issued identification. Acceptable forms of identification are a document issued

Page 5 of 62

TEXT OF PROPOSED REGULATIONS

by a federal, state, county, or municipal government, including, but not limited to, a driver’s license, that contains the

name, date of birth, physical description, and picture of the individual;
(g) A complete list of every owner of the applicant entity pursuant to section 8103 of this Chapter. Each individual owner

named shall submit the following information:

1. (1)  Full legal name;
2. (2)  Title within the applicant entity;
3. (3)  Date of birth;
4. (4)  Social security number or individual taxpayer identification number;
5. (5)  Home address;
6. (6)  Primary phone number;
7. (7)  Email address;
8. (8)  Date ownership interest in the applicant entity was acquired;
9. (9)  Percentage of the ownership interest held in the applicant entity by the owner;

(10) A list of all the valid licenses, including license type(s) and license number(s), from the department and other

cannabis licensing authorities that the owner is listed as either an owner or financial interest holder;
(11) A copy of their government-issued identification. Acceptable forms of identification are a document issued by a

federal, state, county, or municipal government, including that includes the name, date of birth, physical

description, and picture of the person, such as a driver’s license.
(12) If applicable, a detailed description of criminal convictions. A conviction within the meaning of this section means a

plea or verdict of guilty or a conviction following a plea of nolo contendere. Convictions dismissed under Section 1203.4 of Penal Code or equivalent non-California law shall be disclosed. Juvenile adjudications and traffic infractions do not need to be included. For each conviction, all of the following shall be provided:

1. (A)  The date of conviction;
2. (B)  Dates of incarceration if applicable;
3. (C)  Dates of probation if applicable;
4. (D)  Dates of parole if applicable;
5. (E)  A detailed description of the offense for which the owner was convicted; and
6. (F)  A statement of rehabilitation for each conviction. The statement of rehabilitation is to be written by the owner

   and may contain evidence that the owner would like the department to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, a certificate of rehabilitation under Section 4852.01 of Penal Code, dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual providing the reference.

Page 6 of 62

TEXT OF PROPOSED REGULATIONS

(13) A copy of their completed application for electronic fingerprint images submitted to the Department of Justice.

8. (h)  A complete list of financial interest holders pursuant to section 8103 of this Chapter, including the following information

   for:
   (1) Individuals: full legal name, tax identification number (social security number, ITIN, or NIN), government

   identification number, and type of government identification; and
   (2) Business entities: legal business name and employer identification number.

9. (i)  Copies of all documents filed with the California Secretary of State which may include, but are not limited to: articles of incorporation, operating agreement, partnership agreement, fictitious business name statement, certificate of stock, articles of organization, certificate of limited partnership, and statement of partnership authority. If an applicant is a foreign corporation, a certificate of qualification issued by the California Secretary of State pursuant to Section 2105 of Corporations Code;
10. (j)  A valid seller’s permit number issued by the California Department of Tax and Fee Administration, or confirmation from the California Department of Tax and Fee Administration that a seller’s permit is not needed. If the applicant entity has not yet received a seller’s permit, the applicant entity shall attest that they are currently applying for a seller’s permit;
11. (k)  For applicants that are a cannabis cooperative as defined by Division 10, Chapter 22 of Business and Professions Code, identification of all members;
12. (l)  Evidence that the applicant entity has the legal right to occupy and use the proposed location pursuant to section 8104 of this Chapter;
13. (m)  Evidence of having obtained a surety bond in the amount of not less than $5,000, payable to the department. The bond shall be issued by a corporate surety licensed to transact surety business in the State of California;

(n) Evidence of enrollment with the applicable Regional Water Quality Control Board or State Water Resources Control Board for water quality protection programs or written verification from the appropriate Board that enrollment is not necessary;

15. (o)  Evidence that the applicant has conducted a hazardous materials record search of the EnviroStor database for the proposed premises. If hazardous sites were encountered, the applicant shall provide documentation of protocols implemented to protect employee health and safety;
16. (p)  Evidence of exemption from, or compliance with Division 13 of the Public Resources Code: California Environmental Quality Act (CEQA). The evidence provided shall be one of the following:
    1. (1)  A copy of the applicant’s license, permit, or other authorization from the local jurisdiction if the local jurisdiction has

       adopted an ordinance, rule, or regulation pursuant to Section 26055(h) of Business and Professions Code that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity.

    2. (2)  A copy of the Notice of Determination or Notice of Exemption and a copy of the CEQA document, or reference to Page 7 of 62

TEXT OF PROPOSED REGULATIONS

where it can be located electronically, if the applicant does not wish to provide a copy of the license, permit, or other authorization provided by the local jurisdiction or if the local jurisdiction has not adopted an ordinance, rule, or regulation pursuant to Section 26055(h) of Business and Professions Code that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity.

(3) If an applicant does not have the evidence specified in subsections (1) or (2) of this section, or if the local jurisdiction did not prepare a CEQA document, the applicant will be responsible for the preparation of an environmental document in compliance with CEQA that can be approved or certified by the department, unless the department specifies otherwise.

17. (q)  For indoor and mixed light license types, identification of all power sources for cultivation activities, including but not limited to: illumination, heating, cooling, and ventilation;
18. (r)  A property diagram pursuant to section 8105 of this Chapter;
19. (s)  A proposed cultivation plan pursuant to section 8106 of this Chapter;
20. (t)  Identification of all of the water sources used for cultivation activities and the applicable supplemental information for

    each source pursuant to section 8107 of this Chapter:

    1. (1)  A retail water supplier;
    2. (2)  A groundwater well;
    3. (3)  A rainwater catchment system;
    4. (4)  A diversion from a surface waterbody or an underground stream flowing in a known and definite channel;
21. (u)  A copy of any final lake or streambed alteration agreement issued by the California Department of Fish and Wildlife,

    pursuant to Sections 1602 and 1617 of Fish and Game Code, or written verification from the California Department of

    Fish and Wildlife that a lake and streambed alteration agreement is not required;

22. (v)  An attestation that the proposed location is at least a six-hundred (600) foot radius from a school providing instruction

    in kindergarten or any grades one (1) through twelve (12), day care center, or youth center that is in existence at the time the application is submitted, or that the premises complies with a local ordinance specifying a different radius. The distance shall be measured in the same manner as provided in subdivision (c) of Section 11362.768 of Health and Safety Code unless otherwise provided by law;

(w) An attestation that they will enter into, or have already entered into, and will abide by the terms of a labor peace agreement if the applicant entity will have twenty (20) or more employees on payroll at any one time;

24. (x)  An attestation that the applicant entity is an “agricultural employer” as defined by the Alatorre-Zenovich-Dunlap- Berman Agricultural Labor Relations Act of 1975; Part 3.5 (commencing with Section 1140) Div. 2 Labor Code;
25. (y)  An attestation that the local fire department has been notified of the cultivation site if the applicant entity is an indoor license type;

(z)

Page 8 of 62

TEXT OF PROPOSED REGULATIONS

(1) Any applicant that may fall within the scope of sovereign immunity that may be asserted by a federally recognizable tribe or other sovereign entity shall waive any sovereign immunity defense that the applicant may have, may be asserted on its behalf, or may otherwise be asserted in any state or local administrative or judicial enforcement actions against the applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise, under the state laws and regulations governing commercial cannabis activity; and provide documentation as may be requested that establishes that the applicant has the lawful authority to enter into the waiver described above, and has effectively done so. The limited waiver of sovereign immunity shall meet the requirements of the following:

(A) The written limited waiver shall include that the applicant or licensee has the lawful authority to enter into the waiver required by this section, the applicant or licensee hereby waives sovereign immunity, and the applicant or licensee agrees to do all of the following:

1. (i)  Provide documentation to the department that establishes that the applicant or licensee has the lawful

   authority to enter into the waiver required by this section;

2. (ii)  Conduct all commercial cannabis activity in full compliance with the state laws and regulations governing

   commercial cannabis activity, including submission to all enforcement provisions thereof;

3. (iii)  Allow access as required by statute or regulation by persons or entities charged with duties under the state

   laws and regulations governing commercial cannabis activity to any premises or property at which the applicant conducts any commercial cannabis activity, including premises or property where records of commercial cannabis activity are maintained by or for the applicant or licensee;

(iv) Provide any and all records, reports, and other documents as may be required under the state laws and regulations governing commercial cannabis activity;

(v) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise specified by state law;

(vi) Meet all of the requirements for licensure under the state laws and regulations governing the conduct of commercial cannabis activity, and provide truthful and accurate documentation and other information of the applicant’s qualifications and suitability for licensure as may be requested;

(vii) Submit to the personal and subject matter jurisdiction of the California courts to address any matter related to the waiver or commercial cannabis application, license, or activity, and that all such matters and proceedings shall be governed, construed and enforced in accordance with California substantive and procedural law, including but not limited to the Act;

2. (B)  Any applicant or licensee shall immediately notify the department of any changes that may materially affect the applicant and licensee’s compliance with subdivision (1).
3. (C)  Any failure by an applicant or licensee to comply with the requirements of subdivisions (1) and (2) shall be a basis for denial of an application or renewal or discipline of a licensee.

Page 9 of 62

TEXT OF PROPOSED REGULATIONS

(2) The department shall not approve an application for a state license if approval of the license would violate the provisions of any local ordinance or regulation adopted in accordance with Section 26200 of Business and Professions Code that is issued by the county or, if within a city, the city, within which the licensed premise is to be located.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26051.5, 26054, 26055, 26060.1, 26066, Business and Professions Code.

§ 8103. Owners and Financial Interests Holders. (a) “Owner” means any of the following:

1. (1)  A person with an aggregate ownership interest of twenty (20) percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, encumbrance.
2. (2)  The chief executive officer of a nonprofit or other entity.
3. (3)  A member of the board of directors of a nonprofit.
4. (4)  An individual who will be participating in the direction, control, or management of the person applying for a license.

2. (2)  A member of a limited liability company of a commercial cannabis business that is organized as a limited liability company;
3. (3)  An officer or director of a commercial cannabis business that is organized as a corporation.

1. (1)  A bank or financial institution whose interest constitutes a loan;
2. (2)  Persons whose only financial interest in the commercial cannabis business is through an interest in a diversified

   mutual fund, blind trust, or similar instrument;

3. (3)  Persons whose only financial interest is a security, lien, or encumbrance on property that will be used by the

   commercial cannabis business; and

4. (4)  Persons who hold a share of stock that is less than five (5) percent of the total shares in a publicly traded company.

Page 10 of 62

TEXT OF PROPOSED REGULATIONS

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26001 and 26051, Business and Professions Code.

§ 8104. Legal Right to Occupy.
(a) If the applicant is the owner of the property on which the premises is located, the applicant shall provide to the department a copy of the title or deed to the property.
(b) If the applicant is not the owner of the property upon which the premises is located, the applicant shall provide the

following to the department:
(1) A document from the property owner or property owner’s agent where the commercial cannabis activity will occur

that states the applicant has the right to occupy the property and acknowledges that the applicant may use the

property for commercial cannabis cultivation;
(2) The property owner’s mailing address and phone number; and
(3) A copy of the lease or rental agreement, or other contractual documentation.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26051.5, Business and Professions Code.

§ 8105. Property Diagram.
A property diagram shall be submitted with each application and shall contain the following:

1. (a)  Boundaries of the property and the proposed premises wherein the license privileges will be exercised with sufficient

   detail to enable ready determination of the bounds of the premises showing all perimeter dimensions, entrances, and

   exits to both the property and premises;

2. (b)  If the proposed premises consists of only a portion of a property, the diagram shall be labeled indicating which part of

   the property is the proposed premises and what the remaining property is used for.

3. (c)  All roads and water crossings on the property;
4. (d)  If the applicant is proposing to use a diversion from a waterbody, groundwater well, or rain catchment system as a

   water source for cultivation, include the following locations on the property diagram with locations also provided as coordinates in either latitude and longitude or the California Coordinate System:
   (1) Sources of water used, including the location of waterbody diversion(s), pump location(s), and distribution system;

   and
   (2) Location, type, and capacity of each storage unit to be used for cultivation.

5. (e)  The assessor’s parcel number(s);

(f) The diagram shall be to scale; and

Page 11 of 62

TEXT OF PROPOSED REGULATIONS (g) The diagram shall not contain any highlighting.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26051.5, and 26060, Business and Professions Code.

§ 8106. Cultivation Plan Requirements.

(a) The (1)

cultivation plan for Specialty Cottage, Specialty, Small and Medium licenses shall include all of the following:
A detailed premises diagram showing all boundaries and dimensions in feet of the following proposed areas to scale:

(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
For indoor and mixed-light license type applications, a lighting diagram with the following information shall be included:

Canopy area(s) (which shall contain mature plants, at any point in time) including aggregate square footage; Area(s) outside of the canopy where only immature plants shall be maintained, if applicable;
Designated pesticide and other agricultural chemical storage area(s);
Designated processing area(s) if the licensee will process on site;

Designated packaging area(s) if the licensee will package products on site; Designated composting area(s) if the licensee will compost cannabis waste on site;

Designated secured area(s) for cannabis waste if different than subsection (F) above; Designated area(s) for harvested cannabis storage; and

(2)

(3)

(4) (b) The

(A) Location of all lights in the canopy area(s); and
(B) Maximum wattage, or wattage equivalent, of each light.
A pest management plan which shall include, but not be limited to, the following:
(A) Product name and active ingredient(s) of all pesticides to be applied to cannabis during any stage of plant

growth; and
(B) Integrated pest management protocols including chemical, biological and cultural methods the applicant

anticipates using to control or prevent the introduction of pests on the cultivation site.
A cannabis waste management plan meeting the requirements of section 8108 of this Chapter. cultivation plan for nursery licenses shall include the following information:

(1) A detailed premises diagram showing all boundaries and dimensions, in feet, of the following proposed areas: (A) Area(s) which shall contain only immature plants;
(B) Designated research and development area(s) which may contain mature plants;
(C) Designated seed production area(s) which may contain mature plants;

(D) Designated pesticide and other agricultural chemical storage area(s);

Page 12 of 62

TEXT OF PROPOSED REGULATIONS

(E) Designated composting area(s) if the licensee will compost cannabis waste on site; and

(F) Designated secured area(s) for cannabis waste if different than subsection (E) above.

2. (2)  A pest management plan which shall include, but not be limited to, the following:
   1. (A)  Product name and active ingredient(s) of all pesticides to be applied to cannabis during any stage of plant growth; and
   2. (B)  Integrated pest management protocols including chemical, biological and cultural methods the applicant anticipates using to control or prevent the introduction of pests on the cultivation site.
3. (3)  A cannabis waste management plan pursuant to section 8108 of this Chapter.

(c) The cultivation plan for processor licenses shall include a detailed premises diagram showing all boundaries and

dimensions, in feet, of the following proposed areas:

1. (1)  Designated processing area(s);
2. (2)  Designated packaging area(s), if the licensee will package and label products on site;
3. (3)  Designated composting area(s) if the licensee will compost cannabis waste on site;
4. (4)  Designated secured area(s) for cannabis waste if different than subsection (3) above; and;
5. (5)  Designated area(s) for harvested cannabis storage;
6. (6)  A cannabis waste management plan pursuant to section 8108 of this Chapter.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26051.5, 26060, and 26060.1, Business and Professions Code.

§ 8107. Supplemental Water Source Information.
The following information shall be provided for each water source identified by the applicant: (a) Retail water supply sources:

(1) If the water source is a retail supplier, such as a municipal provider, as defined in Section 13575 of Water Code, identify the retail water supplier.

(2) If the water source is a small retail supplier, such as a delivery service, and is subject to subdivisions (a)(1)(B) of Section 26060.1 of Business and Professions Code:
(A) And if the contract is for delivery or pickup of water from a surface water body or an underground stream

flowing in a known and definite channel, provide all of the following:

1. (i)  The name of the contract water supplier;
2. (ii)  The geographic location coordinates in either latitude and longitude or the California Coordinate System of

   any point of diversion used by the contract water supplier to divert water delivered to the applicant under the contract;

Page 13 of 62

(B)

(iii) The authorized place of use for any water right used by the contract water supplier to divert water delivered to the applicant under the contract; and

(iv) The maximum amount of water delivered to the applicant for cannabis cultivation in any year.
And if the contract is for delivery or pickup of water from a groundwater well, provide all of the following:

1. (i)  The name of the contract water supplier;
2. (ii)  The geographic location coordinates for any groundwater well used to supply water delivered to the

   applicant, in either latitude and longitude or the California Coordinate System;

3. (iii)  The maximum amount of water delivered to the applicant for cannabis cultivation in any year; and
4. (iv)  A copy of the well log filed with the Department of Water Resources pursuant to Section 13751 of Water

   Code for each percolating groundwater well used to divert water delivered to the applicant. If no well log is available, the applicant shall provide evidence from the Department of Water Resources indicating that the Department does not have a record of the well log. When no well log is available, the State Water Resources Control Board may request additional information about the well.

TEXT OF PROPOSED REGULATIONS

2. (b)  If the water source is a groundwater well:
   1. (1)  The groundwater well’s geographic location coordinates in either latitude and longitude or the California Coordinate

      System; and

   2. (2)  A copy of the well log filed with the Department of Water Resources pursuant to Section 13751 of Water Code. If no

      well log is available, the applicant shall provide evidence from the Department of Water Resources indicating that the Department of Water Resources does not have a record of the well log. If no well log is available, the State Water Resources Control Board may request additional information about the well.

3. (c)  If the water source is a rainwater catchment system:
   1. (1)  The total square footage of the catchment footprint area(s);
   2. (2)  The total storage capacity, in gallons, of the catchment system(s); and
   3. (3)  A detailed description of the type, nature, and location of each catchment surface. Examples of catchment surfaces

      include a rooftop and greenhouse.

4. (d)  If the water source is a diversion from a waterbody, provide any applicable statement, application, permit, license, or

   small irrigation use registration identification number(s); and either

   1. (1)  A copy of any applicable registrations, permits, or licenses or proof of a pending application, issued under Part 2

      (commencing with Section 1200) of Division 2 of the California Water Code as evidence of approval of a water

      diversion by the State Water Resources Control Board;

   2. (2)  A copy of any statements of diversion and use filed with the State Water Resources Control Board before October

      31, 2017 detailing the water diversion and use; or

   3. (3)  A copy of documentation submitted to the State Water Resources Control Board before October 31, 2017

Page 14 of 62

TEXT OF PROPOSED REGULATIONS

demonstrating that the diversion is authorized under a riparian right and that no diversion occurred in any calendar

year between January 1, 2010 and January 1, 2017.
(4) If the applicant has claimed an exception from the requirement to file a statement of diversion and use, the

applicant shall provide a copy of the documentation submitted to the State Water Resources Control Board before January 1, 2019 demonstrating that the diversion is subject to subdivision (a), (c), (d), or (e) of Section 5101 of Water Code.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26060.1, Business and Professions Code; and Section 13149, Water Code.

§ 8108. Cannabis Waste Management.

1. (a)  For the purposes of this Chapter, “cannabis waste” is organic waste, as defined in Section 42649.8(c) of Public Resources

   Code.

2. (b)  A licensee shall manage all hazardous waste, as defined in Section 40141 of Public Resources Code, in compliance with

   all applicable hazardous-waste statutes and regulations.

3. (c)  A licensee shall manage all cannabis waste in compliance with Division 30, Part 3, Chapters 12.8, 12.9 and 13.1 of the

   Public Resources Code. In addition, licensees are obligated to obtain all required permits, licenses, or other clearances and comply with all orders, laws, regulations, or other requirements of other regulatory agencies, including, but not limited to local health entities, regional water quality control boards, air quality management districts or air pollution control districts, local land use authorities, and fire authorities.

4. (d)  A licensee shall dispose of cannabis waste in a secured waste receptacle or in a secured area on the licensed premises designated on the licensee’s premises diagram and as identified in the licensee’s cultivation plan. For the purposes of this section, ‘secure waste receptacle’ or ‘secured area’ means that physical access to the receptacle or area is restricted to the licensee, employees of the licensee or by the local agency or local agency franchised or contracted waste hauler only. Public access to the designated receptacle or area shall be strictly prohibited.
5. (e)  A licensee’s cannabis waste management plan shall identify one or more of the following methods for managing cannabis waste generated on their licensed premises:
   1. (1)  On premises composting of cannabis waste;
   2. (2)  Collection and processing of cannabis waste by a local agency, local agency franchised or contracted, or permitted

      waste hauler;

   3. (3)  Self-haul cannabis waste to one, or more of the following;

      (A) A manned fully permitted solid waste landfill or transformation facility;

Page 15 of 62

TEXT OF PROPOSED REGULATIONS

(B) A manned fully permitted composting facility or manned composting operation;
(C) A manned fully permitted in-vessel digestion facility or manned in-vessel digestion operation;
(D) A manned fully permitted transfer/processing facility or manned transfer/processing operation; or (E) A manned fully permitted chip and grind operation.

6. (f)  If composting cannabis waste on the licensed premises, a licensee shall do so in compliance with Title 14 of the California Code of Regulations at Division 7, Chapter 3.1 (commencing with Section 17850).
7. (g)  If a local agency, or local agency franchised or contracted or permitted waste hauler is being used to collect and process cannabis waste, a licensee shall do all the following:
   (1) Provide the department with the following information for the local agency, local agency franchised or contracted,

   or permitted waste hauler who will collect and process the licensee’s cannabis waste;

   (A) Name of local agency providing waste hauling services, if applicable;
   (B) Company name of the local agency franchised or contracted or permitted waste hauler, if applicable; (C) Company business address; and
   (D) Name of the primary contact person at the company and contact person’s phone number;

   2. (2)  Obtain and retain documentation from the local agency, local agency franchised or contracted, or permitted waste hauler which indicates the date and time of each collection of cannabis waste at the licensed premises;
   3. (3)  Obtain and retain a copy of the certified weight ticket, or other documentation prepared by the local agency, or local agency franchised or contracted or permitted waste hauler evidencing receipt of the cannabis waste at one, or more, of the solid waste facilities in subsection (e)(3) above; and
   4. (4)  Cannabis waste may be collected from a licensee in conjunction with a regular organic waste collection route used by the local agency, or local agency franchised or contracted waste hauler.
8. (h)  If self-hauling cannabis waste to one, or more, of the solid waste facilities in (e)(3) above, a licensee shall obtain and retain, for each delivery of cannabis waste by the licensee, a copy of a certified weight ticket, or receipt documenting delivery, prepared by a representative(s) of the solid waste facility receiving the self-hauled cannabis waste. Transportation of self-hauled cannabis waste shall only be performed by the licensee or employees of the licensee.
9. (i)  In addition to all other tracking requirements set forth in sections 8405 and 8406 of this Chapter, a licensee shall use the track-and-trace system, and documentation required pursuant to this section to ensure the cannabis waste is identified, weighed, and tracked while on the licensed premises and when disposed of in accordance with subsections (f), (g) and (h) above.
10. (j)  A licensee shall maintain accurate and comprehensive records regarding cannabis waste that account for, reconcile, and evidence all activity related to the generation or disposition of cannabis waste. All records required by this section are records subject to inspection by the department and shall be kept pursuant to section 8400 of this Chapter.

Page 16 of 62

TEXT OF PROPOSED REGULATIONS

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26060, Business and Professions Code; and Sections 40141 and 42649.8, Public Resources Code.

§ 8109. Applicant Track and Trace Training Requirement.
(a) Each applicant is responsible for registering for state mandated training, as prescribed by the department, within ten

(10) business days of receiving notice from the department that their application for licensure has been received and is

complete.
(b) Documentation of training completion shall be provided to the department within ten (10) business days of completion.

Applicants approved for an annual license shall not have access to the track-and-trace system until the licensee’s designated account manager has completed, and provided proof of completion, of the track-and-trace training prescribed by the department.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26067, Business and Professions Code.

§ 8110. Proof of Local License, Permit, or Other Authorization.
When the applicant provides a license, permit, or other authorization from the local jurisdiction where the licensed premises will be or is located, the department will notify the contact person identified pursuant to Section 26055 of Business and Professions Code. If the local jurisdiction does not respond to the department’s notification within ten (10) calendar days, the department may issue a license to the applicant.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26050.1 and 26055, Business and Professions Code.

§ 8111. Priority Application Review.

1. (a)  Priority review of annual license applications shall be given to applicants that can demonstrate the commercial cannabis

   business was in compliance with the Compassionate Use Act of 1996 before September 1, 2016.

2. (b)  Eligibility for priority application review shall be demonstrated by any of the following, dated prior to September 1,

   2016.

   1. (1)  Local license, permit or other authorization;
   2. (2)  Collective or Cooperative Membership Agreement;
   3. (3)  Tax or business forms submitted to the California Department of Tax and Fee Administration or Franchise Tax

Page 17 of 62

TEXT OF PROPOSED REGULATIONS

Board;

4. (4)  Incorporation documents filed with the Secretary of State;
5. (5)  Any other verifiable business record adequate to demonstrate the operation of the business prior to September 1,

   2016; or

(6) Any applicant identified by the local jurisdiction pursuant to Section 26054.2(b) of Business and Professions Code.

(c) The department may request additional documentation to verify the applicant’s date of commencement of operations.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26054.2, Business and Professions Code.

§ 8112. Annual License Application Review for Completeness.
The department shall notify the applicant in writing that the application is either:

1. (a)  Complete and accepted for further review; or
2. (b)  Incomplete and the reasons for the incompleteness.
   1. (1)  The department shall receive the missing information from the applicant no later than ninety (90) calendar days from the date of the notification from the department. Failure to provide the designated missing information will result in disqualification of the application from further consideration.
   2. (2)  If disqualified, the applicant may reapply and pay a new application fee.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8113. Substantially Related Offenses Review.
(a) The following convictions shall be considered substantially related to the qualifications, functions, or duties of the

business for which the application is made and may be a basis for denying the license:
(1) A violent felony conviction, as specified in subdivision (c) of Section 667.5 of Penal Code;
(2) A serious felony conviction, as specified in subdivision (c) of Section 1192.7 of Penal Code;
(3) A felony conviction involving fraud, deceit, or embezzlement;
(4) Any felony conviction involving the hiring, employment, or use of children in transporting, carrying, selling, giving

away, preparing for sale or peddling any controlled substance to a minor, or offering, furnishing, or selling any

controlled substance to a minor; and
(5) A felony conviction for drug trafficking with enhancements pursuant to Sections 11370.4 or 11379.8 of Health and

Safety Code.

Page 18 of 62

TEXT OF PROPOSED REGULATIONS

(b) Except as provided in subparagraphs (4) and (5) of paragraph (a) and notwithstanding Chapter 2 (commencing with Section 480) of Division 1.5 of Penal Code, a prior conviction, where the sentence, including any term or probation, incarceration, or supervised release, is completed, for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance is not considered substantially related, and shall not be the sole ground of denial for a license. Conviction for any controlled substance felony subsequent to licensure shall be grounds for revocation of a license or denial of the renewal of the license.

(c) To determine whether an applicant who has been convicted of a criminal offense that is substantially related to the qualifications, functions, or duties of the business for which the application is made should be issued a license, the department shall conduct a review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation. Evidence of rehabilitation includes:

(1) The nature and severity of the act or offense;
(2) Whether the person has a felony conviction based on possession or use of cannabis or cannabis products that would

not be a felony if the person was convicted of the offense on the date of the person’s application;
(3) The applicant’s criminal record as a whole;
(4) Evidence of any act committed subsequent to the act or offense under consideration that could be considered

grounds for denial, suspension, or revocation of a commercial cannabis activity license;
(5) The time that has elapsed since commission of the act or offense;
(6) The extent to which the applicant has complied with any terms of parole, probation, restitution, or any other

sanctions lawfully imposed against the applicant;
(7) If applicable, evidence of dismissal under Section 1203.4 of Penal Code or another state’s similar law;
(8) If applicable, a certificate of rehabilitation obtained under Section 4852.01 of Penal Code or another state’s similar

law; and
(9) Other evidence of rehabilitation submitted by the applicant.

(c) If an applicant has been denied a license based on a conviction, the applicant may request a hearing pursuant to Section 26058 of Business and Professions Code to determine if the applicant should be issued a license.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26057 and 26058, Business and Professions Code.

§ 8114. Withdrawal of Application.
An applicant may withdraw an application at any time prior to the department’s issuance of a license or denial of a license. (a) Requests to withdraw an application shall be submitted to the department in writing, dated, and signed by the

designated responsible party.

Page 19 of 62

TEXT OF PROPOSED REGULATIONS

2. (b)  The department will not refund application fees for a withdrawn application.
3. (c)  An applicant may reapply and pay a new application fee at any time following the withdrawal of an application.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8115. Notification and Grounds for Denial of a License.
The department shall notify the applicant in writing if the application is denied with the reasons for denial.
(a) Within thirty (30) days upon service of the denial of an application, the applicant may file a written petition. Upon

receipt of a timely filed petition, the department shall set a date for a hearing to be conducted pursuant to Chapter 5

(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of Government Code.
(b) In addition to the reasons for denial in Section 26057 of Business and Professions Code, a license may be denied for the

following reasons:

1. (1)  The applicant’s premises does not fully comply with standards pursuant to this Chapter;
2. (2)  The applicant denied the department access to the premises to verify compliance with this Chapter;
3. (3)  The applicant made a material misrepresentation on the application;
4. (4)  The licensee had a license, permit, or other authorization to engage in commercial cannabis activity denied,

   suspended, or revoked by a state licensing authority or local agency; or

5. (5)  The applicant or licensee has outstanding fees owed to the department.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26057, Business and Professions Code.

Article 3: Cultivation License Fees and Requirements

§ 8200. Annual License Fees.
An annual license fee shall be paid to the department prior to issuance of a license or renewal license. The fee schedule is as follows:

1. (a)  Specialty Cottage Outdoor
2. (b)  Specialty Cottage Indoor
3. (c)  Specialty Cottage Mixed-Light Tier 1
4. (d)  Specialty Cottage Mixed-Light Tier 2
5. (e)  Specialty Outdoor
6. (f)  Specialty Indoor

$1,205 $1,830 $3,035 $5,200 $2,410 $19,540

Page 20 of 62

7. (g)  Specialty Mixed-Light Tier 1
8. (h)  Specialty Mixed-Light Tier 2
9. (i)  Small Outdoor
10. (j)  Small Indoor
11. (k)  Small Mixed-Light Tier 1
12. (l)  Small Mixed-Light Tier 2
13. (m)  Medium Outdoor
14. (n)  Medium Indoor

(o) Medium Mixed-Light Tier 1 (p) Medium Mixed-Light Tier 2 (q) Nursery
(r) Processor

$5,900 $10,120 $4,820 $35,410 $11,800 $20,235 $13,990 $77,905 $25,970 $44,517 $4,685 $9,370

TEXT OF PROPOSED REGULATIONS

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26180, Business and Professions Code.

§ 8201. Cultivation License Types. License types include:
(a) Specialty Cottage:

(1) “Specialty Cottage Outdoor” is an outdoor cultivation site with up to 25 mature plants.
(2) “Specialty Cottage Indoor” is an indoor cultivation site with 500 square feet or less of total canopy.
(3) “Specialty Cottage Mixed-Light Tier 1 and 2” is a mixed-light cultivation site with 2,500 square feet or less of total

canopy. (b) Specialty:

(1) “Specialty Outdoor” is an outdoor cultivation site with less than or equal to 5,000 square feet of total canopy, or up to 50 mature plants on noncontiguous plots.

(2) “Specialty Indoor” is an indoor cultivation site between 501 and 5,000 square feet of total canopy.
(3) “Specialty Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 2,501 and 5,000 square feet of total

canopy. (c) Small:

(1) “Small Outdoor” is an outdoor cultivation site between 5,001 and 10,000 square feet of total canopy.
(2) “Small Indoor” is an indoor cultivation site between 5,001 and 10,000 square feet of total canopy.
(3) “Small Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 5,001 and 10,000 square feet of total

Page 21 of 62

TEXT OF PROPOSED REGULATIONS

canopy. (d) Medium:

(1) “Medium Outdoor” is an outdoor cultivation site between 10,001 square feet and one acre of total canopy.
(2) “Medium Indoor” is an indoor cultivation site between 10,001 and 22,000 square feet of total canopy.
(3) “Medium Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 10,001 and 22,000 square feet of total

canopy.
(e) “Nursery” is a cultivation site that conducts the cultivation of cannabis solely as a nursery.
(f) “Processor” is a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis

and nonmanufactured cannabis products.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26050, Business and Professions Code.

§ 8202. General License Requirements.

(a) (b)

(c) (d)

(e) (f)

(g)

Cultivation licenses shall be valid for twelve (12) months from the date of issuance.
Every business entity shall obtain a separate license for each premises where it engages in commercial cannabis cultivation.
Cultivation licenses are not transferrable or assignable to any other person, entity, or property.
Licensees are prohibited from transferring any commercially cultivated cannabis or nonmanufactured cannabis products from their licensed premises. All transfer of cannabis and nonmanufactured cannabis product from a licensed cultivation site must be conducted by a distributor licensed by the bureau.
The license shall be prominently displayed on the licensed premises where it can be viewed by state or local agencies.
A licensee may hold both an A and an M license on the same premises, provided the inventory for each license type is kept separate and distinct.

A licensee shall not sublet any portion of the licensed premises.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26010, 26012, 26050, and 26053, Business and Professions Code.

§ 8203. Renewal of License.
(a) An application for renewal of a cultivation license shall be submitted to the department at least thirty (30) calendar days

prior to the expiration date of the current license. No renewal application shall be accepted by the department more than sixty (60) calendar days prior to the expiration date of the current license.

Page 22 of 62

TEXT OF PROPOSED REGULATIONS

2. (b)  If a complete renewal application is submitted in compliance with subsection (a) above, the licensee may continue to operate until the department approves or denies the renewal application.
3. (c)  If the department receives the renewal application less than thirty (30) calendar days prior to the expiration, or within thirty (30) calendar days after the expiration of the current license, a licensee shall submit a late fee of fifty (50) percent of the application fee to be paid in addition to the required annual renewal fee.
4. (d)  A licensed cultivator that does not submit a complete license renewal application to the department within thirty (30) calendar days after the expiration of the current license shall forfeit their eligibility to apply for a license renewal and, instead, shall be required to submit a new license application.

(e) The (1)

(2) (3) (4) (5)

(6)

license renewal shall be submitted to the department and contain the following: The legal name of the licensed entity;
The license number and expiration date;
The licensee’s mailing address and premises address;

The annual license fee pursuant to section 8200 of this Chapter;
If applicable, documentation regarding any changes that have occurred from the information originally submitted to the department pursuant to section 8102 of this Chapter; and
An attestation that all information provided to the department is accurate and current.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26050, 26051.5, and 26055, Business and Professions Code.

§ 8204. Notification of License Information Change.

1. (a)  Licensees shall notify the department in writing within ten (10) calendar days of any change to any item listed in the

   application, and any of the following events:

   1. (1)  Disciplinary proceeding initiated by any state or local government agency;
   2. (2)  Bankruptcy filing by any owner listed on the application for licensure;
   3. (3)  Temporary closure longer than thirty (30) calendar days. Include in the notification the reason for temporary

      closure and expected duration of closure;

   4. (4)  Modifications to the cultivation plan pursuant to section 8106 of this Chapter that do not require preapproval

      pursuant to section 8205 of this Chapter; and

   5. (5)  Any change in ownership that does not affect the business entity type. New owners shall submit all information

      pursuant to subsection 8102(g) of this Chapter.

2. (b)  Any change to the business entity type requires a new application and application fee.
3. (c)  Licensee shall notify the department in writing of the following within forty-eight (48) hours of:

Page 23 of 62

TEXT OF PROPOSED REGULATIONS

(1) Receiving the penalty or judgment of a criminal penalty or civil judgement rendered against the licensee; and (2) Receiving notification of the revocation of a local license, permit or other authorization.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8205. Physical Modification of Premises.
A licensee shall not make a physical modification of the licensed premises that materially or substantially alters the licensed premises or the use of the licensed premises from the premises diagram originally filed with the license application without the prior written approval of the department.
(a) The following premises modifications require approval in writing from the department prior to modification:

(1) Modification to any area described in the licensee’s cultivation plan including but not limited to the removal, creation, or relocation of canopy, processing, packaging, composting, harvest storage, and chemical storage areas;

(2) Change in water or power source(s); and
(3) Modifications or upgrades to electrical systems at a licensed premises shall be performed by a licensed electrician. A

copy of the electrician’s license shall be submitted with any premises modification requests for electrical systems. (b) A licensee shall request approval of a physical change, alteration, or modification in writing to the department, and the

request shall include a new premises diagram and/or cultivation plan pursuant to section 8106 of this Chapter.
(c) A licensee shall provide additional documentation requested by the department to evaluate the licensee’s request.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26055, Business and Professions Code.

§ 8206. Death or Incapacity of a Licensee.

1. (a)  In the event of the death, incapacity, receivership, assignment for the benefit of creditors of a licensee, or other event

   rendering a licensee incapable of performing the duties associated with the license, the licensee’s successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the department within ten (10) business days.

2. (b)  To continue operations or surrender the existing license, the successor in interest shall submit to the department the following:
   1. (1)  The name of the successor in interest;
   2. (2)  The name of the licensee for which the successor in interest is succeeding and the license number;
   3. (3)  The phone number, mailing address, and email address of the successor in interest; and

Page 24 of 62

TEXT OF PROPOSED REGULATIONS

(4) Documentation demonstrating that the licensee is incapable of performing the duties associated with the license such as a death certificate or a court order finding the licensee lacks capacity, and documentation demonstrating that the individual making the request is the licensee’s successor in interest such as a court order appointing guardianship or will or trust agreement.

(c) The department may give the successor in interest written approval to continue operations on the license business premises for a period of time specified by the department if:

1. (1)  The successor in interest or another person has applied for a license from the department for the license location

   and that application is under review; or

2. (2)  The successor in interest needs additional time to destroy or sell cannabis or nonmanufactured cannabis products;

   or

3. (3)  At the discretion of the department.

4. (d)  The licensee’s successor in interest is held subject to all terms and conditions under which a state cannabis license is held pursuant to the Act.
5. (e)  The approval creates no vested right to the issuance of a state cannabis license.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8207. Disaster Relief.

(a) (b) (c) (d) (e) (f)

(g)

If a licensee is unable to comply with any licensing requirements due to a disaster, the licensee may notify the department of this inability to comply and request relief from the specific licensing requirement.
The department may exercise its discretion to provide temporary relief from specific licensing requirements for licensees whose operations have been impacted by a disaster.

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.
The department may require that certain conditions be followed in order for a licensee to receive temporary relief from specific licensing requirements.

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.
For the purposes of this section, “disaster” means fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes when the Governor or State of California through an executive order has declared a state of emergency.

A licensed premises that has been vacated by a licensee due to a disaster shall not be deemed to have been
Page 25 of 62

TEXT OF PROPOSED REGULATIONS

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

can be 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 what the 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.

§ 8208. Surrender of License.

1. (a)  A licensee who surrenders, abandons, or quits the licensed premises, or who closes the licensed premises for a period

   exceeding thirty (30) consecutive calendar days without notifying the department pursuant to section 8204 of this

   Chapter, shall surrender the license to the department, and the department shall immediately cancel the license.

2. (b)  Upon the voluntary request by any licensee to surrender a license, the department shall immediately cancel the license.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 8209. Medium Cultivation License Limits.
A person shall be limited to one (1) Medium Outdoor, or one (1) Medium Indoor, or one (1) Medium Mixed-Light A-License or M-License. This section shall remain in effect until January 1, 2023.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26050, and 26061, Business and Professions Code.

Page 26 of 62

TEXT OF PROPOSED REGULATIONS

§ 8210. Sample Collection by the Bureau.
When a licensee transfers possession, but not title of cannabis to a licensed distributor, the licensee shall allow the bureau to collect samples for the bureau’s own laboratory analysis.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012 and 26110, Business and Professions Code.

§ 8211. Prohibition of Product Returns.
Licensees are prohibited from accepting returns of cannabis plants or nonmanufactured cannabis products after transferring possession of cannabis plants or nonmanufactured cannabis to another licensee after testing is performed pursuant to Section 26110 of Business and Professions Code.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26060, and 26110 Business and Professions Code.

§ 8212. Packaging and Labeling of Cannabis and Nonmanufactured Cannabis Products.
(a) All cannabis and nonmanufactured cannabis product packaged and/or labeled by a licensed cultivator shall meet all of

the following:

1. (1)  All applicable requirements pursuant to Sections 26070, 26120, 26121 of Business and Professions Code;
2. (2)  Any other requirements for cannabis and nonmanufactured cannabis product specified by the bureau and the

   California Department of Public Health.

(3) Packaging and labeling requirements pursuant to Chapter 6 (commencing with Section 12601), Division 5 of the

Business and Professions Code.
(b) A label may specify the county of origin only if one-hundred (100) percent of the cannabis or nonmanufactured cannabis

product contained in the package was produced within the designated county, as defined by finite political boundaries.

Authority: Sections 26012, 26013, and 26106, Business and Professions Code. Reference: Sections 26063, 26070, 26120, and 26121, Business and Professions Code.

§ 8213. Requirements for Weighing Devices and Weighmasters.
(a) Weighing devices used by a licensee for commercial purposes shall be approved, tested and sealed pursuant to Chapter

5 (commencing with Section 12500) of Division 5 of the Business and Professions Code, and registered with the county sealer consistent with Chapter 2 (commencing with 12240) of Division 5 of the Business and Professions Code.

Page 27 of 62

TEXT OF PROPOSED REGULATIONS

Approved and registered devices shall be used whenever:

1. (1)  Cannabis and nonmanufactured cannabis is bought or sold by weight or count;
2. (2)  Cannabis and nonmanufactured cannabis is packaged for sale by weight or count;
3. (3)  Cannabis and nonmanufactured cannabis is weighed or counted for entry into the track-and-trace system; and
4. (4)  The weighing device is used for commercial purposes as defined in Section 12500 of Business and Professions Code.

2. (b)  For the purposes of this Chapter a licensee must use wet weight or net weight. Wet weight and net weight shall be measured, recorded and reported in U.S. Customary units (e.g., ounce or pound); or International System units (e.g., kilograms, grams, or milligrams).
3. (c)  For the purposes of this Chapter, count means the numerical count of the individual cannabis plants, seeds or nonmanufactured cannabis product units.
4. (d)  For bulk shipments of cannabis and nonmanufactured cannabis products, a licensee shall be licensed as a weighmaster, and a certificate issued by a licensed weighmaster, shall be consistent with the requirements in Chapter 7 (commencing with Section 12700) of Division 5 of Business and Professions Code.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Chapter 7 (commencing with Section 12700) of Division 5, Business and Professions Code.

§ 8214. Transition Period.
Notwithstanding any other provision, until July 1, 2018, licensees may conduct commercial cannabis activities with any other licensee, regardless of the A or M designation of the license.

§ 8215. Personnel Prohibited from Holding Licenses.
(a) A license authorized by the Act and issued by the department may not be held by, or issued to, any person holding

office in, or employed by, any agency of the State of California or any of its political subdivisions when the duties of such person have to do with the enforcement of the Act or any other penal provisions of law of this State prohibiting or regulating the sale, use, possession, transportation, distribution, testing, manufacturing, or cultivation of cannabis.

(b) This section applies to, but is not limited to, any persons employed in the State of California Department of Justice as a peace officer, in any district attorney’s office, in any city attorney’s office, in any sheriff’s office, or in any local police department.

(c) All persons listed in subsection (a) or (b) may not have any ownership interest, directly or indirectly, in any business to be operated or conducted under a cannabis license.

(d) This section does not apply to any person who holds a license in the capacity of executor, administrator, or guardian.

Page 28 of 62

TEXT OF PROPOSED REGULATIONS

§ 8216. License Issuance in an Impacted Watershed.
If the State Water Resources Control Board or the Department of Fish and Wildlife finds, based on substantial evidence, that cannabis cultivation is causing significant adverse impacts on the environment in a watershed or other geographic area, the department shall not issue new licenses or increase the total number of plant identifiers within that watershed or area.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26069 of Business and Professions Code.

Article 4. Cultivation Site Requirements

§ 8300. Cultivation Requirements for Specialty Cottage, Specialty, Small, and Medium Licenses.

1. (a)  Cannabis plants maintained outside of the designated canopy area(s) are prohibited from flowering. Should plants outside of the canopy area(s) begin to flower, a UID shall be applied, the plant(s) shall be moved to the designated

   canopy area without delay, and reported in the track-and-trace system.

2. (b)  All plants, or portions of a plant used for seed production shall be tagged with a UID pursuant to section 8403 of this

   Chapter.

3. (c)  Licensees propagating immature plants for distribution or seed for distribution to another licensee shall obtain a

   nursery license.

(d) Licensees shall process their harvested cannabis only in area(s) designated for processing in their cultivation plan

provided they are compliant with packaging and labeling requirements pursuant to section 8212 of this Chapter, or transfer their harvested cannabis to a licensed processor, manufacturer or distributor via a licensed distributor.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26060, 26070, and 26120, Business and Professions Code.

§ 8301. Seed Production Requirements for Nurseries.
Nurseries producing seed for distribution shall tag all mature plants pursuant to section 8403 of this Chapter. All products, except seed, derived from these plants are prohibited from entering the commercial distribution chain.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26067, Business and Professions Code.

§ 8302. Research and Development Requirements for Nurseries.
Nurseries may maintain a research and development area, as identified in their cultivation plan, for the cultivation of

Page 29 of 62

TEXT OF PROPOSED REGULATIONS

mature plants. All mature plants shall be tagged with a UID pursuant to section 8403 of this Chapter. All products derived from these plants are prohibited from entering the commercial distribution chain.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26060, and 26067, Business and Professions Code.

§ 8303. Cultivation Requirements for Processor Licenses.
Processor licensees shall comply with all of the following requirements:

1. (a)  All aggregation of product shall adhere to track-and-trace requirements pursuant to sections 8405 and 8406 of this

   Chapter;

2. (b)  Licensees may produce nonmanufactured cannabis products without a manufacturing license, provided compliance

   with packaging and labeling requirements pursuant to section 8212 of this Chapter; and

3. (c)  Cultivation of cannabis plants is prohibited at a licensed processor premises.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26060, 26067, 26069, and 26120, Business and Professions Code.

§ 8304. General Environmental Protection Measures.
All licensees shall comply with all of the following environmental protection measures:

1. (a)  Compliance with Section 13149 of Water Code as implemented by the State Water Resources Control Board or Regional

   Water Quality Control Boards.

2. (b)  Compliance with any conditions requested by the California Department of Fish and Wildlife or the State Water

   Resources Control Board under Section 26060.1, subdivision (b)(1), of Business and Professions Code.

3. (c)  All outdoor lighting used for security purposes shall be shielded and downward facing.
4. (d)  Immediately halt cultivation activities and implement Section 7050.5 of Health and Safety Code if human remains are

   discovered.

5. (e)  Requirements for generators pursuant to section 8306 of this Chapter.
6. (f)  Compliance with pesticide laws and regulations as enforced by the Department of Pesticide Regulation pursuant to

   section 8307 of this Chapter.

7. (g)  Mixed-light license types of all tiers and sizes shall ensure that lights used for cultivation are shielded from sunset to

   sunrise to avoid nighttime glare.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26060, 26066, and 26201,
Page 30 of 62

Business and Professions Code.

TEXT OF PROPOSED REGULATIONS

§ 8305. Renewable Energy Requirements.
Beginning January 1, 2023, all indoor, tier 2 mixed-light license types of all sizes, and nurseries using indoor or tier 2 mixed- light techniques, shall ensure that electrical power used for commercial cannabis activity meets the average electricity greenhouse gas emissions intensity required of their local utility provider pursuant to the California Renewables Portfolio Standard Program, Division 1, Chapter 2.3, Article 16 (commencing with Section 399.11) of Public Utilities Code. As evidence of meeting the standard, licensees shall comply with the following:
(a) Beginning January 1, 2022, an application for renewal of a license shall include the following records, for each power

source indicated on the application for licensure, for the previous annual licensed period:
(1) Total electricity supplied by local utility provider, name of local utility provider, and greenhouse gas emission

intensity per kilowatt hour reported by the utility under Section 398.4 (c) of Public Utilities Code for the most recent

calendar year available at time of submission.
(2) Total electricity supplied by a zero net energy renewable source, as defined by Section 398.4 (h)(5) of Public Utilities

Code, that is not part of a net metering or other utility benefit.
(3) Total electricity supplied from other unspecified sources, as defined in 398.2 (e) of Public Utilities Code, and other

on-site sources of generation not reported to the local utility provider (e.g., generators, fuel cells) and the

greenhouse gas emission intensity from these sources.
(4) Average weighted greenhouse gas emission intensity considering all electricity use in parts (1), (2), and (3).

(b) Beginning January 1, 2023, if a licensee’s average weighted greenhouse gas emission intensity as provided in subsection (a)(4) above is greater than the local utility provider’s greenhouse gas emission intensity, the licensee shall provide evidence of carbon offsets or allowances from any of the following sources to cover the excess in carbon emissions from the previous annual licensed period:

(1) Allowances purchased from California Cap and Trade Auctions; any currently acceptable vintages allowed, pursuant to Section 95910 of Title 17. Public Health Code.

(2) Offsets purchased from Offset Project Registry System used for the California Cap and Trade Program, pursuant to Section 95981 of Title 17. Public Health Code.

(3) Offsets purchased from California Air Pollution Control Officers Association California-based Greenhouse Gas Credit Exchange.

(c) Beginning January 1, 2023, new licensees, without a record of weighted greenhouse gas emissions intensity from the previous calendar year, shall report the average weighted greenhouse gas emissions intensity, as provided in subsection (a)(4) above, used during their licensed period at the time of license renewal. If a licensee’s average weighted greenhouse gas emissions intensity is greater than the local utility provider’s greenhouse gas emissions intensity for the

Page 31 of 62

TEXT OF PROPOSED REGULATIONS

most recent calendar year, the licensee shall provide evidence of carbon offsets or allowances to cover the excess in carbon emissions from any of the sources provided in (b).

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26060, 26066, and 26201, Business and Professions Code.

§ 8306. Generator Requirements.

1. (a)  For the purposes of this section, generator is defined as a stationary or portable compression ignition engine pursuant

   to Title 17, Division 3, Chapter 1, Subchapter 7.5, Section 93115.4 of the California Code of Regulations.

2. (b)  Licensees using generators rated at fifty (50) horsepower and greater shall demonstrate compliance with Airborne Toxic

   Control Measures pursuant Title 17, Division 3, Chapter 1, Subchapter 7.5, Sections 93115 through 93116.5 of the California Code of Regulations. Compliance shall be demonstrated by providing a copy of one of the following to the department upon request:

   1. (1)  A Portable Equipment Registration Certificate provided by the California Air Resources Board, or;
   2. (2)  A Permit to Operate obtained from the Local Air District with jurisdiction over the licensed premises.
3. (c)  Licensees using generators rated below fifty (50) horsepower shall comply with the following by 2023:

   (1) Designate the generator as emergency or low use as defined in Title 17, Division 3, Chapter 1, Subchapter 7.5, Sections 93116.2(a)(12) and 93116,2(a)(22) of the California Code of Regulations CCR, Title 17 or;

   (2) Either (A) or (B);
   (A) Meet Tier 3 with level 3 diesel particulate filter requirements pursuant to Title 13, Division 3, Chapter 9, Article

   4, Section 2423 of the California Code of Regulations;
   (B) Meet Tier 4 engine requirements pursuant to Title 13, Division 3, Chapter 14, Section 2702 of the California

   Code of Regulations.

4. (d)  All generators shall be equipped with nonresettable hour-meters.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26060, 26066, and 26201, Business and Professions Code.

§ 8307. Pesticide Use Requirements.
(a) Licensees shall comply with all pesticide laws and regulations as enforced by the Department of Pesticide Regulation. (b) For all pesticides that comply with subsection (a) above and are exempt from registration requirements, licensees shall

comply with the following pesticide application and storage protocols: (1) Comply with all pesticide label directions;

Page 32 of 62

TEXT OF PROPOSED REGULATIONS

2. (2)  Store chemicals in a secure building or shed to prevent access by wildlife;
3. (3)  Contain any chemical leaks and immediately clean up any spills;
4. (4)  Apply the minimum amount of product necessary to control the target pest;
5. (5)  Prevent offsite drift;
6. (6)  Do not apply pesticides when pollinators are present;
7. (7)  Do not allow drift to flowering plants attractive to pollinators;
8. (8)  Do not spray directly to surface water or allow pesticide product to drift to surface water. Spray only when wind is

   blowing away from surface water bodies;

9. (9)  Do not apply pesticides when they may reach surface water or groundwater; and

(10) Only use properly labeled pesticides. If no label is available consult the Department of Pesticide Regulation.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26060, 26066, and 26201, Business and Professions Code.

Article 5. Records and Reporting

§ 8400. Record Retention.
For the purposes of this Chapter, the term record includes all records, applications, reports or other supporting documents required by the department.
(a) Each licensee shall keep and maintain the records listed in subsection (d) for at least seven (7) years from the date the

document was created.
(b) Records shall be kept in a manner that allows the records to be provided at the licensed premises or delivered to the

department, upon request.
(c) All records are subject to review by the department during standard business hours, or at any other reasonable time, or

as otherwise mutually agreed to by the department and the licensee. For the purposes of this section, standard business hours are deemed to be 8:00am – 5:00pm (Pacific Standard Time). Prior notice by the department to review records is not required.

(d) Each licensee shall maintain all of the following records on the licensed premises, including but not limited to:

1. (1)  Department issued cultivation license(s);
2. (2)  Cultivation plan;
3. (3)  All records evidencing compliance with the environmental protection measures pursuant to sections 8304, 8305,

   8306 and 8307 of this Chapter;

4. (4)  All supporting documentation for data or information input into the track-and-trace system;
5. (5)  All UIDs assigned to product in inventory and all unassigned UIDs. UIDs associated with product that has been

Page 33 of 62

TEXT OF PROPOSED REGULATIONS

retired from the track-and-trace system must be retained for six (6) months after the date the tags were retired;

6. (6)  Financial records, including but not limited to, bank statements, tax records, sales invoices, and sales receipts;
7. (7)  Personnel records, including each employee’s full name, social security, or individual tax payer identification

   number, date of beginning employment, and date of termination of employment if applicable;

8. (8)  Records related to employee training for the track-and-track system or other requirements of this Chapter. Records

   shall include, but are not limited to, the date(s) training occurred, description of the training provided, and the

   names of the employees that received the training;

9. (9)  Contracts with other state licensed cannabis businesses;

(10) Permits, licenses, and other local authorizations to conduct the licensee’s commercial cannabis activity;
(11) Security records; and
(12) Records associated with composting or disposal of cannabis waste.
(13) Documentation associated with loss of access to the track-and-trace system prepared pursuant to section 8402 (d)

of this Chapter.
(e) All required records shall be prepared and retained in accordance with the following conditions:

1. (1)  Records shall be legible; and
2. (2)  Records shall be stored in a secured area where the records are protected from debris, moisture, contamination,

   hazardous waste, fire and theft.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26055, 26060, 26060.1, 26067, 26069, 26160, and 26161, Business and Professions Code.

§ 8401. Sales Invoice or Receipt Requirements.
The licensee shall prepare a sales invoice or receipt for every sale or transport of cannabis or nonmanufactured cannabis product to another licensee. Sales invoices and receipts may be retained electronically but must be readily accessible for examination by the department, other state licensing authorities, any state or local law enforcement authority, and the California Department of Tax and Fee Administration. Each sales invoice or receipt shall include all the following:

1. (a)  Name, business address, and department issued license number of the seller;
2. (b)  Name, business address, and department issued license number of the purchaser;
3. (c)  Date of sale or transfer (month, day and year). The date of any sale or transfer of cannabis and nonmanufactured

   cannabis products shall be the date of transfer to the licensee receiving it;

4. (d)  Invoice or receipt number;
5. (e)  Weight or quantity of cannabis and nonmanufactured cannabis products sold;

   (1) Weight. For the purposes of this section a licensee must use wet weight or net weight. Wet weight and net weight Page 34 of 62

TEXT OF PROPOSED REGULATIONS

shall be measured, recorded and reported in U.S. Customary units (e.g., ounce or pound); or International System

units (e.g., kilograms, grams, or milligrams).
(2) Weighing Devices. A licensee shall follow weighing device requirements pursuant to section 8213 of this Chapter. (3) Count. For the purposes of this section count means the numerical count of the individual plants or units.

(f) Cost to the purchaser, including any discount applied to the total price, shall be recorded on the invoice. (g) Description for each item including strain or cultivar, and all of the applicable information below:

(1) Plant; (2) Flower; (3) Leaf;
(4) Shake; (5) Kief;and (6) Pre-rolls.

(h) Signature of the seller, or designated representative of the seller, acknowledging accuracy of the cannabis and nonmanufactured cannabis products being shipped.

(i) Signature of the purchaser, or designated representative of the purchaser, acknowledging receipt or rejection of the cannabis or nonmanufactured cannabis products.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26161, 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.

1. (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.

2. (b)  Each licensee shall use the track-and-trace system for recording all applicable commercial cannabis activities. Each

   licensee shall:

   1. (1)  Designate an owner or other party(ies) in the licensee’s organization that can legally represent the licensee, to be

      the licensee’s track-and-trace account manager(s);

   2. (2)  Require the track-and-trace account manager to complete track-and-trace system training as required by the

      department. If the designated account manager did not complete department required track-and-trace training Page 35 of 62

TEXT OF PROPOSED REGULATIONS

prior to receiving their annual license, the account manager will be required to register for state mandated system

training, as prescribed by the department, within five (5) business days of license issuance;

3. (3)  Designate track-and-trace system users, as needed, and require the users to be trained by the licensee’s track-and-

   trace account manager in the proper and lawful use of the track-and-trace system before the users are permitted to

   access the track-and-trace system;

4. (4)  Require the track-and-trace account manager to maintain an accurate and complete list of all track-and-trace

   system account managers and users and update the list immediately when changes occur;

5. (5)  Cancel any track-and-trace users from the licensee’s track-and-trace system account if that individual is no longer a

   licensee representative; and

6. (6)  Correct any data that is entered into the track-and-trace system in error within three (3) business days of discovery

   of the error.

(c) The licensee is responsible for all actions any licensee representatives take while logged into the track-and-trace system

or otherwise conducting commercial cannabis activities.
(d) 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. (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) business days.

2. (2)  A licensee shall document the date and time when access to the track-and-trace system was lost and when it was

   restored and the cause for each loss of access.

3. (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 26160, 26067, 26069 and 26070, Business and Professions Code.

§ 8403. Track-and-Trace System Unique Identifiers (UID).
(a) Within five (5) business days of the date the licensee’s designated account manager(s) was credentialed by the

department to use the track-and-trace system, the licensee shall request UIDs using the track-and-trace system as prescribed by the department.

1. (1)  The licensee shall only use UIDs provisioned and distributed by the department, or the department’s designee.
2. (2)  The licensee shall maintain a sufficient supply of UIDs in inventory to support tagging in accordance with this

   section.

3. (3)  The licensee shall use the track-and-trace system to document receipt of provisioned and distributed UIDs within

Page 36 of 62

TEXT OF PROPOSED REGULATIONS

three (3) business days of physical receipt of the UIDs by the licensee.
(4) Except as provided in section 8407 of this Chapter, all cannabis shall be entered into the track-and-trace system by

the licensee starting with seed, clone propagated onsite or purchased from a licensed nursery, or seedling

purchased from a licensed nursery pursuant to this Chapter.
(b) The UID shall accompany the cannabis products through all phases of the growing cycle, as follows:

(1) Licensees with immature plants shall assign a UID to each established lot respectively. The lot UID shall be placed in a position so it is visible and within clear view of an individual standing next to the immature lot to which the UID was assigned, and all UIDs shall be kept free from dirt and debris. For the purposes of this subsection, each lot of immature plants shall not have more than one-hundred (100) immature plants, at any one time. All immature plants in a lot shall be labelled with the corresponding UID number assigned to the lot and shall be contiguous to one another in order to facilitate identification by the department.

(2) Immature plants transferred from a licensed nursery, via a distributor, to a licensed cultivator shall meet requirements of subsection (b)(1) above. Each immature plant intended for retail sale shall have a UID affixed, or be labeled with the corresponding UID number of the lot, and be recorded in the track-and-trace system prior to transfer from the licensed nursery.

(3) The licensee shall apply a UID to all individual plants at the time any plant is moved to the designated canopy area or when an individual plant begins flowering, as defined in Section 8000 (l).

(4) UIDs are required for each mature plant. UIDS shall be attached to the main stem, at the base of each plant. The UID shall be attached to the plant using a tamper evident strap or zip tie and placed in a position so it is visible and within clear view of an individual standing next to the mature plant to which the UID was assigned and UIDs shall be kept free from dirt and debris. Licensees are prohibited from removing the UID from the mature plant to which it was attached and assigned until the plant is harvested, destroyed or disposed.

(c) Each harvest batch shall be assigned a unique harvest batch name which will be associated with all UIDs for each individual plant, or portion thereof, contained in the harvest batch.

(d) UIDs are required for all cannabis and nonmanufactured cannabis products and shall be associated with the corresponding harvest batch name from which the cannabis and nonmanufactured cannabis products were derived.

(e) Upon destruction or disposal of any cannabis or nonmanufactured cannabis products, the applicable UIDs shall be retired in the track-and-trace system by the licensee within three (3) business days of the destruction or disposal and be performed in accordance with the licensee’s approved cannabis waste management plan.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26160, 26067, 26069 and 26070, Business and Professions Code.

Page 37 of 62

TEXT OF PROPOSED REGULATIONS

§ 8404. Track-and-Trace System User Requirements.

1. (a)  All track-and-trace account managers or users, as identified by the licensee pursuant to section 8402 of this Chapter,

   shall enter all commercial cannabis activities in the track-and-trace system.

2. (b)  Each track-and-trace account manager and user shall have a unique log-on, consisting of a username and password,

   which shall not be used by or shared with any other person.

3. (c)  No track-and-trace account manager, user, or other licensee representative shall intentionally misrepresent or falsify

   information entered into the track-and-trace system.

4. (d)  The account manager shall monitor all notifications from the track-and-trace system and resolve all issues included in

   the notification in the timeframe specified in the notification. An account manager shall not dismiss a notification from the track-and-trace system until the issue(s) included in the notification has been resolved.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26012, 26067, and 26069, Business and Professions Code.

§ 8405. Track-and-Trace System Reporting Requirements.

1. (a)  Except as provided in section 8405 (e) below, the track-and-trace account manager or users shall report in the track-

   and-trace system any and all transfers of cannabis or nonmanufactured cannabis products to another licensed entity

   prior to the movement of the cannabis or nonmanufactured cannabis product off the licensed premises.

2. (b)  The track-and-trace account manager or users shall report in the track-and-trace system, any and all cannabis or

   nonmanufactured cannabis products physically received or rejected from another licensed within twenty-four (24)

   hours of receipt or rejection of the products.

(c) The track-and-trace account manager or users shall report in the track-and-trace system any change in the disposition of

(d)

cannabis plants, as applicable, on the licensed premises. All changes in disposition shall be made within three (3) business days of the change in disposition of the cannabis plants. Changes in disposition of cannabis plants include but are not limited to:

1. (1)  Flowering;
2. (2)  Destruction or disposal;
3. (3)  Harvest;
4. (4)  Processing;
5. (5)  Storage;and
6. (6)  Packaging.

The account manager or user shall be required to record information for each transfer of cannabis or nonmanufactured cannabis products to, or cannabis or nonmanufactured cannabis products received from, other licensed premises.

Page 38 of 62

TEXT OF PROPOSED REGULATIONS

Required information to be entered includes, but is not limited to:

1. (1)  Name, business address, and department issued license number of the seller;
2. (2)  Name, business address, and department issued license number of the purchaser;
3. (3)  Name and department issued license number of the distributor;
4. (4)  Date of sale, transfer or receipt (month, day and year). The date of any sale, transfer or receipt of cannabis or

   nonmanufactured cannabis products shall be the date of transfer to the licensee receiving it;

5. (5)  Weight or count of individual units of cannabis or nonmanufactured cannabis products sold, transferred or

   received;

   1. (A)  Weight. For the purposes of this section a licensee must use wet weight or net weight. Wet weight and net

      weight shall be measured, recorded and reported in U.S. Customary units (e.g., ounce or pound); or

      International System units (e.g., kilograms, grams, or milligrams).

   2. (B)  Weighing Devices. A licensee shall follow weighing device requirements pursuant to section 8213 of this

      Chapter.

   3. (C)  Count. For the purposes of this section count means the numerical count of the individual plants or units.
6. (6)  Estimated departure and arrival time;
7. (7)  Actual departure time;
8. (8)  Description for each item including strain or cultivar, and all of the applicable information below:

   (A) Plant; (B) Flower; (C) Leaf;
   (D) Shake; (E) Kief;and (F) Pre-rolls.

9. (9)  UID(s).

5. (e)  Temporary Licensees. A licensee operating under a temporary license, issued by the department pursuant to section

   8100 of this Chapter, is not required to record commercial cannabis activity in the track-and-trace system as otherwise required by this Chapter. Temporary licensees shall record all commercial cannabis activity in accordance with section 8401 of this Chapter.

6. (f)  Annual licensees may continue to conduct commercial cannabis activities with temporary licensees pursuant to section 8401 of this Chapter.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26067 and 26160, Business and Professions Code.

Page 39 of 62

TEXT OF PROPOSED REGULATIONS

§ 8406. Track-and-Trace System Inventory Requirements.
Licensees shall use the track-and-trace system for all inventory tracking activities at a licensed premises, including, but not limited to all the following:

1. (a)  Reconcile all on-premises and in-transit cannabis or nonmanufactured cannabis products inventories pursuant to the

   time frames defined by the department; and

2. (b)  Record the net weight of all harvested cannabis once the majority of drying, trimming and curing activities have been

   completed, or within sixty (60) calendar days from the initial harvest date, whichever is sooner.

3. (c)  Licensee’s shall close-out their physical inventory of all cannabis and nonmanufactured cannabis products, and UIDs, if

   applicable prior to the effective date of any of the following changes to their license:

(1) Voluntary surrender of a temporary license or annual license. (2) Expiration of an annual license.
(3) Revocation of a license.

4. (d)  Close-out of physical inventory includes, but is not limited to, all of the following items:
   1. (1)  Immature plants and their corresponding lot UID(s);
   2. (2)  Mature plants and their corresponding plant UID(s);
   3. (3)  Harvest batches and their corresponding UID(s);
   4. (4)  Nonmanufactured cannabis products and their corresponding UID(s); and
   5. (5)  UIDs in the licensee’s possession which have not been assigned in the track-and-trace system.
5. (e)  All transfers and sales shall be documented pursuant to sections 8401 and 8405 of this Chapter.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26067, Business and Professions Code.

§ 8407. Track-and-Trace System Requirements for Product in Licensee Possession at the Time of Annual License Issuance.

1. (a)  Within thirty (30) business days of receipt of the UIDs ordered pursuant to section 8403 of this Chapter, the licensee

   shall enter into the track-and-trace system and assign and apply a UID to each existing immature plant lot, each

   individual mature plant, and all nonmanufactured cannabis products physically located on the licensed premises.

2. (b)  After the thirty (30) day time frame referenced in subsection (a) above expires, all cannabis at the licensed premises

   shall be entered into the track-and-trace system starting with seed, clone propagated onsite or purchased from a licensed nursery, or seedling purchased from a licensed nursery pursuant to this Chapter. This section shall remain in effect until July 1, 2019.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26067, Business and Professions Page 40 of 62

Code.

TEXT OF PROPOSED REGULATIONS

§ 8408. Inventory Audits.
The department may perform an audit of the physical inventory and inventory as reported in the track-and-trace system of any licensee at the department’s discretion. Audits of the licensee shall be conducted during standard business hours or at other reasonable time, or as otherwise mutually agreed to by the department and the licensee. For the purposes of this section standard business hours are 8:00am – 5:00pm (Pacific Standard Time). Prior notice of audit is not required.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26015 and 26067, Business and Professions Code.

§ 8409. Notification of Diversion, Theft, Loss, or Criminal Activity.
Licensees shall notify the department and law enforcement authorities, within three (3) business days of discovery of any diversion, theft, loss of, or criminal activity related to licensee’s cannabis or nonmanufactured cannabis products.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26015, Business and Professions Code.

Article 6. Inspections, Investigations and Audits

§ 8500. Inspections, Investigations and Audits Applicability.
All licensees and applicants shall be subject to inspection, investigation or audit of their licensed premises and records by the department to determine compliance with state laws and regulations.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013 and 26015, Business and Professions Code.

§ 8501. Inspections, Investigations and Audits.
The department shall conduct inspections, investigations and audits of licensees including but not limited to, a review of any books, records, accounts, inventory, or onsite operations specific to the license.
(a) The department may conduct an inspection, investigation or audit for any of the following purposes:

1. (1)  Prior to issuing a license to determine accuracy and completeness of the application;
2. (2)  Determine compliance with license requirements including, but not limited to, the cultivation plan;
3. (3)  Audit or inspect any records outlined in section 8400 of the Chapter;

Page 41 of 62

TEXT OF PROPOSED REGULATIONS

(4) In response to a complaint(s) received by the department regarding the licensee;
(5) Inspect incoming or outgoing shipments of cannabis and nonmanufactured cannabis products; and (6) As deemed necessary by the department.

(b) All inspections, investigations and audits of the licensed premises shall be conducted during standard business hours or at other reasonable time, or as otherwise mutually agreed to by the department and the licensee. For the purposes of this section standard business hours are 8:00am – 5:00pm (Pacific Standard Time). Prior notice of inspection, investigation or audit is not required.

(c) No applicant, licensee, its agent or employees shall interfere with, obstruct or impede the department’s inspection, investigation or audit. This includes, but is not limited to the following actions:

1. (1)  Denying the department access to the licensed premises;
2. (2)  Providing false or misleading statements;
3. (3)  Providing false, falsified, fraudulent or misleading documents and records; and
4. (4)  Failing to provide records, reports, and other supporting documents.

(d) Upon completion of an inspection, investigation or audit, the department shall notify the applicant or licensee of any

violation(s) and/or action(s) the department is taking.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Sections 26013, 26015, and 26160, Business and Professions Code.

Article 7. Enforcement

§ 8600. Enforcement Applicability.
Notwithstanding any other provision of law the department may take a licensing or administrative action, at any time within five years after the department discovers, or with reasonable diligence should have discovered any violation of state law or local ordinances.

Authority: Sections 26012 and 26013, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8601. Administrative Actions.
The department shall use the violation classes and applicable amounts as follows:
(a) For the purpose of this section, violation classes are designated as “Minor,” “Moderate,” and “Serious”.

(1) “Serious”. Violations which preclude or significantly interfere with enforcement, or those which cause significant false, misleading or deceptive business practices, potential for significant level of public or environmental harm, or

Page 42 of 62

TEXT OF PROPOSED REGULATIONS

for any violation which is a repeat of a Moderate violation that occurred within a two-year period and which

resulted in an administrative civil penalty. All serious violations are subject to revocation

2. (2)  “Moderate”. Violations which undermine enforcement or those where it is likely there will be public or

   environmental harm; or for any violation which is a repeat of a Minor violation that occurred within a two-year

   period and which resulted in an administrative civil penalty.

3. (3)  “Minor”. Violations that are not likely to have an adverse effect on public safety or environmental health or first

   violation.

(b) Repeat violations may result in an escalation of violation class.
(c) Pursuant to Section 26038 (a) of the Business and Professions Code Section, a person(s) engaging in commercial

cannabis activity without a license shall be subject civil penalties of up to three (3) times the amount of the license fee

for each violation.

4. (d)  Pursuant to Section 26160 (f) of the Business and Profession Code, a licensee, or an agent or employee of the licensee,

   fails to maintain or provide required records, the licensee shall be subject to a citation and a fine of up to thirty

   thousand dollars ($30,000) per individual violation.

5. (e)  Table A below shall be used to establish the initial level of severity of a particular violation and the corresponding

   penalty range for “Serious,” “Moderate,” and “Minor” violation classes.

Page 43 of 62

TEXT OF PROPOSED REGULATIONS

Page 44 of 62

TEXT OF PROPOSED REGULATIONS

Page 45 of 62

TEXT OF PROPOSED REGULATIONS

Page 46 of 62

TEXT OF PROPOSED REGULATIONS

Page 47 of 62

TEXT OF PROPOSED REGULATIONS

Page 48 of 62

TEXT OF PROPOSED REGULATIONS

Page 49 of 62

TEXT OF PROPOSED REGULATIONS

Page 50 of 62

TEXT OF PROPOSED REGULATIONS

Page 51 of 62

TEXT OF PROPOSED REGULATIONS

Page 52 of 62

TEXT OF PROPOSED REGULATIONS

Page 53 of 62

TEXT OF PROPOSED REGULATIONS

Page 54 of 62

TEXT OF PROPOSED REGULATIONS

Page 55 of 62

TEXT OF PROPOSED REGULATIONS

Page 56 of 62

TEXT OF PROPOSED REGULATIONS

Page 57 of 62

TEXT OF PROPOSED REGULATIONS

Page 58 of 62

TEXT OF PROPOSED REGULATIONS

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8602. Notice of Violation.
(a) The department shall issue a Notice of Violation to a license that is in violation of the applicable statutes and

regulations. A Notice of Violation shall be served upon the licensee and legal owner of the property. The Notice of Violation shall contain all of the following:
(1) A brief statement of the violation(s) alleged;
(2) The proposed penalty;

(3) A statement of whether the violation is correctable, and a timeframe in which the violation shall be corrected; and

(4) Notice of an administrative hold of property, if applicable.
(b) The right to a hearing will be deemed waived if respondent fails to respond in writing within thirty (30) calendar days

from the date the Notice of Violation was received.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8603. Administrative Hold Procedure.
To prevent destruction of evidence, illegal diversion of cannabis or nonmanufactured cannabis products, or to address potential threats to the environment or public safety, while allowing a licensee to retain its inventory pending further inspection, or enforcement action, the department may order an administrative hold of cannabis or nonmanufactured cannabis products pursuant to the following procedure:

1. (a)  The notice of administrative hold shall provide a documented description of the cannabis or nonmanufactured cannabis

   products to be subject to the administrative hold and a concise statement, regarding the basis for issuing the

   administrative hold.

2. (b)  Following the issuance of a notice of administrative hold to the licensee, the department shall identify the cannabis or

   nonmanufactured cannabis products subject to the administrative hold in the track-and-trace system.

Page 59 of 62

TEXT OF PROPOSED REGULATIONS

(c) Within twenty-four (24) hours of receipt of the notice of administrative hold, the licensee shall physically segregate all designated cannabis or nonmanufactured cannabis products subject to the hold and shall safeguard and preserve the subject property as noticed.

4. (d)  While the administrative hold is in effect, the licensee is restricted from selling, donating, transferring, transporting, gifting, giving away or destroying the subject property noticed.
5. (e)  Nothing herein shall prevent a licensee from the continued possession, cultivation, or harvesting of the cannabis subject to the administrative hold. During the hold period, all cannabis or nonmanufactured cannabis products subject to an administrative hold shall be put into separate batches.
6. (f)  Nothing herein shall prevent a licensee from voluntarily surrendering cannabis or nonmanufactured cannabis products that are subject to an administrative hold. The licensee shall identify the cannabis or nonmanufactured cannabis products being voluntarily surrendered in the track-and-trace system. Voluntary surrender does not waive the right to a hearing and any associated rights.
7. (g)  The licensee shall have the right to appeal an administrative hold ordered by the department pursuant to section 8604 of this Chapter, except the department shall schedule an informal hearing within ten (10) calendar days from receipt of the request for an informal hearing and issue the written decision within five (5) calendar days after the conclusion of the hearing.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8604. Informal Administrative Hearings.

1. (a)  The respondent may appeal a Notice of Violation or an administrative hold and request an informal hearing by written

   correspondence to the California Department of Food and Agriculture, Legal Office of Hearings and Appeals, 1220 “N” Street, Suite 400, Sacramento, California 95814 or via email to [email protected]. The request shall be received within thirty (30) calendar days from the date the Notice of Violation was received. The request shall include the following:

   1. (1)  The respondent’s name, mailing address, and daytime phone number;
   2. (2)  If applicable, the license number issued by the department;
   3. (3)  Copy of the Notice of Violation; and
   4. (4)  A clear and concise statement for the basis of the appeal or counts within the Notice of Violation.
2. (b)  Failure to submit a written request constitutes a waiver of the respondent’s right to contest the Notice of Violation. Untimely requests for an informal hearing will not be considered.
3. (c)  If the Notice of Violation places an administrative hold on cannabis or nonmanufactured cannabis products, the hold Page 60 of 62

TEXT OF PROPOSED REGULATIONS shall remain in effect pending the outcome of the informal hearing.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8605. Informal Hearing Schedule and Notification.
(a) The department shall schedule an informal hearing within forty-five (45) calendar days from receipt of the request for

an informal hearing.
(b) The department shall provide a notice of the informal hearing to the respondent containing the following information:

(1) Date, location, and time of the informal hearing;
(2) Summary of the violations;
(3) Any other information or documentation necessary for the hearing; and (4) Standard of Proof.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8606. Conduct of Informal Hearings.
Informal hearings shall be conducted as follows:

1. (a)  The standard of proof to be applied by the hearing officer shall be a preponderance of the evidence;
2. (b)  Hearings may be conducted by phone at the request of the respondent;
3. (c)  The decision of the hearing officer shall be in writing and shall include a statement of the factual legal basis of the

   decision;

4. (d)  The written decision shall be issued within thirty (30) calendar days after the conclusion of the hearing and may be

   issued orally at the conclusion of the hearing subject to written confirmation;

5. (e)  The decision shall be served on the respondent either by personal service, mail, email or via facsimile per respondent’s

   request/direction; and

6. (f)  The respondent may appeal the hearing officer’s decision by filing a petition for a writ of administrative mandamus in

   accordance with the provisions of the Section 1094.5 of Code of Civil Procedure.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

Page 61 of 62

TEXT OF PROPOSED REGULATIONS

§ 8607. Licensing Actions.

1. (a)  The department may take a licensing action for any violation of this Chapter.
2. (b)  If the licensee holds multiple cultivation licenses, the department may take any one of, or combination of, the following

   actions on all the licensee’s cultivation licenses:

   1. (1)  Revocation of the license;
   2. (2)  Suspension of the license for a specified period of time;
   3. (3)  Issuance of a probationary license with terms and conditions determined by the department; and
   4. (4)  Order an administrative hold of cannabis or nonmanufactured cannabis products.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

§ 8608. Formal Administrative Hearings.

1. (a)  Notice shall be given to the applicant or licensee of the department’s intent to hold adjudication proceedings to

   consider the following disciplinary actions:

   1. (1)  Denial of an application for a license;
   2. (2)  Denial of a license renewal;
   3. (3)  Revocation of a license; and
   4. (4)  Suspension of a license for a specified period of time.
2. (b)  Hearings concerning proceedings in subsection (a) above shall be held pursuant to Chapter 5 (commencing with Section

   11500) of Part 1 of Division 3 of Title 2 of the Government Code.

Authority: Sections 26012, 26013 and 26031, Business and Professions Code. Reference: Section 26031, Business and Professions Code.

Page 62 of 62

BUREAU OF CANNABIS CONTROL PROPOSED TEXT OF REGULATIONS

BUREAU OF CANNABIS CONTROL PROPOSED TEXT OF REGULATIONS, 420 Biz Connect will complete any proposed business applications to any city in california and the state of california

The following is new text to be added to the California Code of Regulations

CALIFORNIA CODE OF REGULATIONS TITLE 16
DIVISION 42. BUREAU OF CANNABIS CONTROL

Chapter 1. ALL BUREAU LICENSEES

Article 1. Division Definitions

§ 5000. Definitions

For the purposes of this division, the definitions in this section shall govern the construction of this division unless otherwise indicated.

(a) “Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act.

(b) “Bureau” means the Bureau of Cannabis Control, previously named the Bureau of Marijuana Control, Bureau of Medical Cannabis Regulation, and Bureau of Medical Marijuana Regulation.

(c) “Cannabis goods” means cannabis, including dried flower, and products containing cannabis.

(d) “Cannabis waste” means waste that is not hazardous waste, as defined in Public Resources Code section 40141, that contains cannabis and that has been made unusable and unrecognizable in the manner prescribed in sections 5054 and 5055 of this division.

(e) “Canopy” means the designated area(s) at a licensed premise that will contain mature plants at any point in time.

(f) “Delivery employee” means an individual employed by a retailer who delivers cannabis goods from the retailer premises to a customer at a physical address.

(g) “Free cannabis goods” means any amount of cannabis goods provided to any person without cost or payment or exchange of any other thing of value.

(h) “Limited-access area” means an area in which cannabis goods are stored or held and is only accessible to a licensee and its employees and contractors.

(i) “Lot number” or “batch number” means a distinctive group of numbers, letters, or symbols or any combination of these that is unique to a group of cannabis goods.

Bureau of Cannabis Control Emergency Regulation Text Page 1 of 115

(j) “Medicinal cannabis patient” includes a qualified patient as defined in Health and Safety Code section 11362.7 and a person in possession of a valid identification card issued under Health and Safety Code section 11362.71.

(k) “Nonvolatile solvent” means any solvent used in the extraction process that is not a volatile solvent. For purposes of this division, a nonvolatile solvent includes carbon dioxide (CO2) used for extraction and ethanol used for extraction or post-extraction processing.

(l) “Package” and “Packaging” means any container or wrapper that may be used for enclosing or containing any cannabis goods for final retail sale. “Package” and “packaging” does not include a shipping container or outer wrapping used solely for the transport of cannabis goods in bulk quantity to a licensee.

(m) “Publicly owned land” means any building or real property that is owned by a city, county, state, federal, or other government entity.

(n) “Residential area” is an area that is within 600-feet of any single-family or multifamily residence, other than commercial hotels, motels, and similar establishments for temporary lodging.

(o) “Retail area” means a building, room, or other area that is open to the public, upon the retailer premises in which cannabis goods are sold or displayed.

(p) “Security monitoring” means the continuous and uninterrupted attention to potential alarm signals that can be transmitted from a security alarm system for the purpose of summoning law enforcement.

(q) “Sublet” means to lease or rent all or part of a leased or rented property.

(r) “Transport” means the physical movement of cannabis goods from one licensed premises to another licensed premises.

(s) “Vehicle alarm system” is a device or series of devices installed to discourage theft of the vehicle or its contents and is intended to summon general attention or to summon law enforcement as a result of an indication of an attempted breach of the vehicle.

Authority: Section 26013, Business and Professions Code. Reference: Section 26013, Business and Professions Code.

Article 2. Applications
§ 5001. Temporary License Application Requirements

(a) Temporary license applications may be completed and submitted online at www.bcc.ca.gov or completed in hard copy and submitted by delivering a printed copy to the Bureau’s office(s).

(b) Applicants that submit their applications online shall first register for a user account. To register for a user account, the applicant shall do all of the following:

(1) Create a user name, password, and security question and answer;
Bureau of Cannabis Control Emergency Regulation Text Page 2 of 115

(2) Provide an email address; and
(3) Provide the owner’s first and last name, primary phone number, social security number or

individual taxpayer identification number, date of birth, and mailing address.

(c) An application must be completed by an owner as defined by section 5003 of this division. An application must be submitted to the Bureau for each temporary license applied for. An application for a temporary license includes:

(1) The legal business name of the applicant.
(2) The email address of the applicant’s business and the telephone number for the premises.

(3) The business’ federal employer identification number.

(4) A description of the business organizational structure of the applicant, such as partnership or corporation.

(5) The temporary license type that is being requested.

(6) The license designation requested, A-license or M-license, for all license types other than testing laboratories.

(7) The contact information for the applicant’s designated primary contact person including the name, title, phone number, and email address of the individual.

(8) For each owner who meets the criteria of Business and Professions Code section 26001(al), the owner’s name, title, percentage of ownership, mailing address, telephone number, and email address if applicable.

(9) The physical address of the premises to be licensed.

(10) Evidence that the applicant has the legal right to occupy and use the proposed location that complies with section 5007 of this division.

(11) A premises diagram pursuant to section 5006.

(12) A copy of a valid license, permit, or other authorization issued by a local jurisdiction, that enables the applicant to conduct commercial cannabis activity at the location requested for the temporary license. For purposes of this section, “other authorization” shall include, at a minimum, a written statement or reference that clearly indicates the local jurisdiction intended to grant permission for the commercial cannabis activity or to the person to conduct commercial cannabis activity at the premises. Upon receipt of the application, the Bureau shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Bureau shall consider the authorization valid.

(13) Attestation to the following statement: Under penalty of perjury, I hereby declare that the information contained within and submitted with the application is complete, true, and accurate. I

Bureau of Cannabis Control Emergency Regulation Text Page 3 of 115

understand that a misrepresentation of fact is cause for rejection of this application, denial of the license, or revocation of a license issued.

(d) A temporary license is a conditional license that authorizes the licensee to engage in commercial cannabis activity as would be permitted under the privileges of a non-temporary license of the same type. A temporary licensee shall follow all applicable rules and regulations as would be required if the licensee held a non-temporary license of the same type.

(e) A temporary license does not obligate the Bureau to issue a non-temporary license nor does the temporary license create a vested right in the holder to either an extension of the temporary license or to the granting of a subsequent non-temporary license.

(f) A temporary license issued under this section shall be valid for 120 days from the effective date. No temporary license shall be effective prior to January 1, 2018.

(g) A temporary license may be extended by the Bureau for additional 90-day periods if a complete application for an annual license has been submitted to the Bureau pursuant to section 5002 of this division prior to the initial expiration date of the temporary license.

Authority: Section 26013, Business and Professions Code. Reference: Section 26050.1, Business and Professions Code.

§ 5002. Annual License Application Requirements

(a) Applications may be completed and submitted online at www.bcc.ca.gov or completed in hard copy and submitted by delivering a printed copy to the Bureau’s office(s).

(b) Applicants that submit their applications online shall first register for a user account. To register for a user account, the applicant shall do all of the following:

(1) Create a user name, password, and security question and answer; (2) Provide an email address; and

(3) Provide the owner’s first and last name, primary phone number, social security number or individual taxpayer identification number, date of birth, and mailing address.

(c) An application must be completed by an owner as defined by section 5003 of this division. An application must be submitted to the Bureau for each cannabis license applied for. An application for an annual cannabis license includes the following:

(1) The name of the applicant. For applicants who are individuals, the applicant shall provide both the first and last name of the individual. For applicants who are business entities, the applicant shall provide the legal business name of the applicant.

(2) If applicable, the business trade name (“DBA”) of the applicant.

(3) The license type the applicant is applying for, including A-license or M-license designation for all license types other than testing laboratories.

Bureau of Cannabis Control Emergency Regulation Text Page 4 of 115

(4) Payment of an application fee pursuant to section 5014 of this division.

(5) Whether the owner is serving or has previously served in the military. Disclosure of military service is voluntary. An applicant that has served as an active duty member of the Armed Forces of the United States and was honorably discharged and who can provide evidence of such honorable discharge shall have his or her application expedited pursuant to Business and Professions Code section 115.4.

(6) A list of the license types and the license numbers issued from the Bureau and all other state cannabis licensing authorities that the applicant holds, including the date the license was issued and the licensing authority that issued the license.

(7) Whether the applicant has been denied a license or has had a license suspended or revoked by the Bureau or any other state cannabis licensing authority. The applicant shall provide the type of license applied for, the name of the licensing authority that denied the application, and the date of denial.

(8) The physical address of the premises.

(9) The mailing address for the applicant, if different from the premises address.

(10) The telephone number for the premises.

(11) The website address and email address of the applicant’s business.

(12) The business’ federal employer identification number.

(13) Contact information for the applicant’s designated primary contact person including the name, title, phone number, and email address of the individual.

(14) A description of the business organizational structure of the applicant, such as partnership or corporation.

(15) The business-formation documents, which may include, but are not limited to, articles of incorporation, operating agreements, partnership agreements, and fictitious business name statements. The applicant shall also provide all documents filed with the California Secretary of State, which may include, but are not limited to, articles of incorporation, certificates of stock, articles of organization, certificates of limited partnership, and statements of partnership authority.

(16) A list of every fictitious business name the applicant is operating under including the address where the business is located.

(17) A commercial cannabis business that is a foreign corporation shall include in its application the certificate of qualification issued by the Secretary of State of California.

(18) The applicant shall supply the following financial information:

(A) A list of funds belonging to the applicant held in savings, checking, or other accounts maintained by a financial institution. The applicant shall provide for each account, the financial

Bureau of Cannabis Control Emergency Regulation Text Page 5 of 115

institution’s name, the financial institution’s address, account type, account number, and the amount of money in the account.

(B) A list of loans made to the applicant. For each loan, the applicant shall provide the amount of the loan, the date of the loan, term(s) of the loan, security provided for the loan, and the name, address, and phone number of the lender.

(C) A list of investments made into the applicant’s commercial cannabis business. For each investment, the applicant shall provide the amount of the investment, the date of the investment, term(s) of the investment, and the name, address, and phone number of the investor.

(D) A list of all gifts of any kind given to the applicant for its use in conducting commercial cannabis activity. For each gift, the applicant shall provide the value of the gift or description of the gift, and the name, address, and phone number of the provider of the gift.

(19) A complete list of every individual that has a financial interest in the commercial cannabis business as defined in 5004 of this division, who is not an owner pursuant to Business and Professions Code section 26001(al).

(20) A complete list of every owner of the applicant as defined in Business and Professions Code section 26001(al). Each individual named on this list shall submit the following information:

(A) The full name of the owner.

(B) The owner’s title within the applicant entity.

(C) The owner’s date of birth and place of birth.

(D) The owner’s social security number or individual taxpayer identification number.

(E) The owner’s mailing address.

(F) The owner’s telephone number. This may include a number for the owner’s home, business, or mobile telephone.

(G) The owner’s email address.

(H) The owner’s current employer.

(I) The percentage of the ownership interest held in the applicant entity by the owner.

(J) Whether the owner has an ownership or a financial interest as defined in 5003 and 5004 of this division in any other commercial cannabis business licensed under the Act.

(K) A copy of the owner’s government-issued identification. Acceptable forms of identification are a document issued by a federal, state, county, or municipal government that includes the name, date of birth, physical description, and picture of the person, such as a driver license.

(L) A detailed description of the owner’s convictions. A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere. Convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must

Bureau of Cannabis Control Emergency Regulation Text Page 6 of 115

be disclosed. Convictions dismissed under Health and Safety Code section 11361.8 or equivalent non-California law must be disclosed. Juvenile adjudications and traffic infractions under $300 that did not involve alcohol, dangerous drugs, or controlled substances do not need to be included. For each conviction, the owner shall provide the following:

(i) The date of conviction.
(ii) Dates of incarceration if applicable.
(iii) Dates of probation if applicable.
(iv) Dates of parole if applicable.
(v) A detailed description of the offense for which the owner was convicted.

(vi) A statement of rehabilitation for each conviction. The statement of rehabilitation is to be written by the owner and may contain evidence that the owner would like the Bureau to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, a certificate of rehabilitation under Penal Code section 4852.01, dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual providing the reference.

(M) If applicable, a detailed description of any suspension of a commercial cannabis license, revocation of a commercial cannabis license, or sanctions for unlicensed commercial cannabis activity by a licensing authority or local agency against the applicant or a business entity in which the applicant was an owner or officer within the three years immediately preceding the date of the application.

(N) Attestation to the following statement: Under penalty of perjury, I hereby declare that the information contained within and submitted with the application is complete, true, and accurate. I understand that a misrepresentation of fact is cause for rejection of this application, denial of the license, or revocation of a license issued.

(21) Evidence that the applicant has the legal right to occupy and use the proposed location that complies with section 5007 of this division.

(22) Evidence that the proposed premises is in compliance with Business and Professions Code section 26054(b).

(23) For an applicant with 20 or more employees, the applicant shall attest that the applicant has entered into a labor peace agreement and will abide by the terms of the agreement, and the applicant shall provide a copy of the agreement to the Bureau. For applicants who have not yet entered into a labor peace agreement, the applicant shall provide a notarized statement indicating the applicant will enter into and abide by the terms of a labor peace agreement.

(24) The applicant shall provide a valid seller’s permit number issued by the California Department of Tax and Fee Administration, if applicable. If the applicant has not yet received a seller’s permit, the applicant shall attest that the applicant is currently applying for a seller’s permit.

Bureau of Cannabis Control Emergency Regulation Text Page 7 of 115

(25) A diagram of the premises as required by section 5006 of this division.

(26) Proof of a bond as required by section 5008 of this division.

(27) For testing laboratory applications, the certificate(s) of accreditation as required by section 5702 of this division, or the information required for a provisional license as required by section 5703 of this division.

(28) When an applicant provides a license, permit, or other authorization from the local jurisdiction where the licensed premises will be or is located, the Bureau will notify the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Bureau shall consider the authorization valid.

(29) All licensee applications shall include a detailed description of the applicant’s operating procedures including the following (if applicable):

(A) The Transportation Procedures

(i) A description of the applicant’s procedure for transportation of cannabis goods, including whether or not the applicant will be transporting cannabis goods or contracting for transportation services.

(B) Inventory Procedures
(i) A description of the applicant’s procedure for receiving shipments of inventory.

(ii) Where the applicant’s inventory will be stored on the premises and how records of the inventory will be maintained.

(iii) The applicant’s procedure for performing inventory reconciliation and for ensuring that inventory records are accurate.

(C) Non-Laboratory Quality Control Procedures

(i) The applicant’s procedures for preventing the deterioration of cannabis goods held by the applicant.

(ii) The applicant’s procedures for ensuring that cannabis goods are properly packaged and labeled prior to retail sale.

(iii) The applicant’s procedures for ensuring that a licensed testing laboratory samples and analyzes cannabis goods held by the applicant.

(D) Security Procedures
(i) The applicant’s procedure for allowing individuals access to the premises.

(ii) A description of the applicant’s video surveillance system including camera placement and procedures for the maintenance of video surveillance equipment.

Bureau of Cannabis Control Emergency Regulation Text Page 8 of 115

(iii) How the applicant will ensure that all access points to the premises will be secured, including the use of security personnel.

(iv) A description of the applicant’s security alarm system.

(30) For applicants applying for a microbusiness license, the application shall include a detailed description of the applicant’s operating procedures required by this section for each cannabis activity the applicant intends to engage in.

(31) For applicants applying for a testing laboratory license, in addition to the operating procedures required under subsection (c)(29) of this section, the standard application shall include the operating procedures required by Chapter 6 of this division.

(32) The limited waiver of sovereign immunity required by section 5009 of this division, if applicable.

(33) Evidence of exemption from, or compliance with, the California Environmental Quality Act as required by section 5010.

Authority: Section 26013, Business and Professions Code. Reference: Sections 115.4, 144, 26030, 26051.5, 26054 and 26054.2, Business and Professions Code.

§ 5003. Designation of Owner

(a) All applicants for a commercial cannabis license shall have at a minimum one individual that meets the definition of “owner” under Business and Professions Code section 26001(al) and who will submit the information required of owners under section 5002.

(b) “Owner” means any of the following:

(1) A person with an aggregate ownership interest of 20 percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, encumbrance.

(2) The chief executive officer of a nonprofit or other entity.

(3) A member of the board of directors of a nonprofit.

(4) An individual who will be participating in the direction, control, or management of the person applying for a license. An owner who is an individual participating in the direction, control, or management of the commercial cannabis business includes any of the following:

(A) A partner of a commercial cannabis business that is organized as a partnership.

(B) A member of a limited liability company of a commercial cannabis business that is organized as a limited liability company.

(C) An officer or director of a commercial cannabis business that is organized as a corporation.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26001(al), 26012 and 26013, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 9 of 115

§ 5004. Financial Interest in a Commercial Cannabis Business

(a) A financial interest means an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other equity interest in a commercial cannabis business.

(b) The license application shall include the name, birthdate, and government issued identification type and number for all individuals that have a financial interest in a commercial cannabis business but are not owners as defined in Business and Professions Code section 26001 (al), however they shall not be required to submit the information required of owners under section 5002(c)(20).

(c) Notwithstanding subsection (b), the following individuals are not required to be listed on an application for licensure under section 5002(c)(19):

(1) A bank or financial institution whose interest constitutes a loan;

(2) Individuals whose only financial interest in the commercial cannabis business is through an interest in a diversified mutual fund, blind trust, or similar instrument;

(3) Individuals whose only financial interest is a security interest, lien, or encumbrance on property that will be used by the commercial cannabis business; and

(4) Individuals who hold a share of stock that is less than 5 percent of the total shares in a publicly traded company.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26051.5 and 26012, Business and Professions Code.

§ 5005. Personnel Prohibited from Holding Licenses

(a) A license authorized by the Act and issued by the Bureau may not be held by, or issued to, any person holding office in, or employed by, any agency of the State of California or any of its political subdivisions when the duties of such person have to do with the enforcement of the Act or any other penal provisions of law of this State prohibiting or regulating the sale, use, possession, transportation, distribution, testing, manufacturing, or cultivation of cannabis goods.

(b) This section applies to, but is not limited to, any persons employed in the State of California Department of Justice as a peace officer, in any district attorney’s office, in any city attorney’s office, in any sheriff’s office, in any local police department.

(c) All persons listed in subsection (a) or (b) may not have any ownership interest, directly or indirectly, in any business to be operated or conducted under a cannabis license.

(d) This section does not apply to any person who holds a license in the capacity of executor, administrator, or guardian.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26010 and 26012, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 10 of 115

§ 5006. Premises Diagram

(a) An applicant shall submit to the Bureau, with the application, a complete and detailed diagram of the proposed premises.

(b) The diagram shall show the boundaries of the property and the proposed premises to be licensed, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, windows, doorways, and common or shared entryways, and shall include a brief statement or description of the principal activity to be conducted therein.

(c) The diagram shall show and identify commercial cannabis activities that will take place in each area of the premises, and identify limited-access areas.

(d) The diagram shall show where all cameras are located and assign a number to each camera for identification purposes.

(e) The diagram shall be to scale.

(f) The diagram shall not contain any highlighting and the markings on the diagram shall be in black and white print.

(g) If the proposed premises consists of only a portion of a property, the diagram must be labeled indicating which part of the property is the proposed premises and what the remaining property is used for.

(h) If the proposed premises will be a microbusiness, in addition to the requirements of subsections (b) through (g), the diagram must also include measurements of the planned canopy, including aggregate square footage and individual square footage of separate cultivation areas, if any.

Authority: Section 26013, Business and Professions Code. Reference: Section 26051.5, Business and Professions Code.

§ 5007. Landowner Approval

(a) If the applicant is not the landowner of the real property upon which the premises is located, the applicant shall provide to the Bureau a document from the landowner or the landowner’s agent that states that the applicant has the right to occupy the property and acknowledging the applicant may use the property for the commercial cannabis activity for which the applicant is applying for licensure. An applicant shall also provide a copy of the rental agreement, as applicable.

(b) If the applicant is the landowner of the real property upon which the premises is located, the applicant shall provide to the Bureau a copy of the title or deed to the property.

Authority: Section 26013, Business and Professions Code. Reference: Section 26051.5, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 11 of 115

§ 5008. Bond

An applicant shall provide proof of having obtained a surety bond of at least $5,000 payable to the State of California to ensure payment of the cost incurred for the destruction of cannabis goods necessitated by a violation of the Act or the regulations adopted thereunder. All bonds required under this regulation must be issued by a corporate surety licensed to transact surety business in the State of California.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26051.5 and 26070, Business and Professions Code.

§ 5009. Limited Waiver of Sovereign Immunity

(a) Any applicant or licensee that may fall within the scope of sovereign immunity that may be asserted by a federally recognized tribe or other sovereign entity must waive any sovereign immunity defense that the applicant or licensee may have, may be asserted on its behalf, or may otherwise be asserted in any state administrative or judicial enforcement actions against the applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise, under the state laws and regulations governing commercial cannabis activity. The applicant or licensee must submit a written waiver of sovereign immunity to the Bureau with any license application or renewal, which is valid for the period of the license. The written waiver shall include that the applicant or licensee has the lawful authority to enter into the waiver required by this section, the applicant or licensee hereby waives sovereign immunity, and the applicant or licensee agrees to do all of the following:

(1) Provide documentation to the Bureau that establishes that the applicant or licensee has the lawful authority to enter into the waiver required by this section;

(2) Conduct all commercial cannabis activity in full compliance with the state laws and regulations governing commercial cannabis activity, including submission to all enforcement provisions thereof;

(3) Allow access as required by state statute or regulation by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any premises or property at which the applicant conducts any commercial cannabis activity, including premises or property where records of commercial cannabis activity are maintained by or for the applicant or licensee;

(4) Provide any and all records, reports, and other documents as may be required under the state laws and regulations governing commercial cannabis activity;

(5) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise specified by state law;

(6) Meet all of the requirements for licensure under the state laws and regulations governing the conduct of commercial cannabis activity, and provide truthful and accurate documentation and other information of the applicant’s qualifications and suitability for licensure as may be requested; and

Bureau of Cannabis Control Emergency Regulation Text Page 12 of 115

(7) Submit to the personal and subject matter jurisdiction of the California courts to address any matter related to the waiver or the commercial cannabis application, license, or activity, and that all such matters and proceedings shall be governed, construed and enforced in accordance with California substantive and procedural law, including but not limited to the Medicinal and Adult- Use Regulation and Safety Act and the Administrative Procedure Act.

(b) The Bureau shall not approve an application for a state license if approval of the license would violate the provisions of any local ordinance or regulation adopted in accordance with Business and Professions Code section 26200 that is issued by the county or, if within a city, the city, within which the licensed premises is to be located.

(c) Any applicant or licensee must immediately notify the Bureau of any changes that may materially affect the applicant or licensee’s compliance with subsection (a) of this section.

(d) Any failure by an applicant or licensee to comply with the requirements of subsections (b) or (c) shall be a basis for denial of an application or renewal or discipline of a licensee.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26012, 26050 and 26051.5, Business and Professions Code.

§ 5010. Compliance with the California Environmental Quality Act

(a) All applicants shall provide evidence of exemption from, or compliance with, Division 13 of the Public Resources Code, California Environmental Quality Act (CEQA), as required by section 5002(c)(33) of this division.

(b) The evidence provided pursuant to subsection (a) of this section shall be one of the following:

(1) A copy of the applicant’s license, permit, or other authorization from the local jurisdiction if the local jurisdiction has adopted an ordinance, rule, or regulation pursuant to Business and Professions Code section 26055(h) that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity.

(2) A copy of the Notice of Determination or Notice of Exemption and a copy of the CEQA document, or reference to where it can be located electronically, if the applicant does not wish to provide a copy of the license, permit, or other authorization provided by the local jurisdiction or if the local jurisdiction has not adopted an ordinance, rule, or regulation pursuant to Business and Professions Code section 26055(h) that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity.

(c) If an applicant does not have the evidence specified in subsection (b) of this section, or if the local jurisdiction did not prepare a CEQA document, the applicant will be responsible for the preparation of an environmental document in compliance with CEQA that can be approved or certified by the Bureau, unless the Bureau specifies otherwise.

Authority: Section 26013, Business and Professions Code. Reference: Section 26055, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 13 of 115

§ 5011. Additional Information

The Bureau may request additional information and documents from the applicant. The Bureau will provide the applicant a deadline for submittal of additional information. The Bureau will consider the complexity of the information requested and the ease with which the information can be obtained and transmitted to the Bureau by the applicant in determining the deadline.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26031, 26050 and 26051.5, Business and Professions Code.

§ 5012. Incomplete Applications

(a) If the Bureau determines that the application is incomplete, the Bureau may provide notice to the applicant in accordance with Business and Professions Code section 124.

(b) If the Bureau issues a notice pursuant to Business and Professions Code section 124, an applicant has one-year from the date of the notice in subsection (a) to correct all deficiencies. If the applicant fails to correct the deficiencies within the one-year period, the application shall be considered abandoned under Business and Professions Code section 142.

(c) An applicant may reapply at any time following an abandoned application.
(d) The Bureau will not refund application fees for an incomplete or abandoned application.

Authority: Section 26013, Business and Professions Code. Reference: Sections 124, 142, 26050 and 26051.5, Business and Professions Code.

§ 5013. Withdrawal of Application

(a) An applicant may withdraw an application at any time prior to the Bureau’s issuance of a license or denial of a license.

(b) Requests to withdraw an application must be submitted to the Bureau in writing, dated, and signed by the applicant.

(c) In accordance with Business and Professions Code section 118, withdrawal of an application shall not, unless the Bureau has consented in writing to such withdrawal, deprive the Bureau of its authority to institute or continue a proceeding against the applicant for the denial of the license upon any ground provided by law or to enter an order denying the license upon any such ground.

(d) The Bureau will not refund application fees for a withdrawn application.

(e) An applicant may reapply at any time following the withdrawal of an application and will be required to submit a new application and fee.

Authority: Section 26013, Business and Professions Code. Reference: Sections 118 and 26050, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 14 of 115

Article 3. Licensing

§ 5014. Fees

(a) The application fee for an annual license under section 5002 of this division, a cannabis event organizer license under section 5600 of this division, a temporary cannabis event license under section 5601 of this division for each event, and physical modification of the premises under section 5027 of this division shall be paid by an applicant or licensee as provided by this division. Applicants and licensees shall pay the appropriate fee as outlined in the fee schedule below.

Application Fee Schedule

(b) The annual licensing fee for each license shall be paid by an applicant or licensee as provided by this division.

(c) In determining the appropriate license fee to be charged, each applicant or licensee shall estimate the maximum dollar value of its planned operation in terms of the value of the product expected to be tested, distributed, transported, retailed, cultivated and/or manufactured as determined in assessing the 15% excise tax pursuant to Revenue and Taxation Code section 34011. The applicant or licensee will use the maximum dollar value of its planned operation to determine the appropriate fee as outlined in the fee schedule below.

Annual License Fee Schedule

Bureau of Cannabis Control Emergency Regulation Text Page 15 of 115

(d) Notwithstanding the fees identified above, cannabis event organizers shall follow the fee schedule below.

Annual License Fee Schedule for Cannabis Event Organizers

(e) No license shall be issued or renewed before the license fee is paid to the Bureau. (f) All fees are nonrefundable.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26051.5 and 26180, Business and Professions Code.

§ 5015. Payment of Fees

(a) Any fee specified in this division shall be made to the Bureau of Cannabis Control by cash, check, money order, debit card, or credit card.

(b) If the fee is paid by debit or credit card:
(1) The payment shall be made through the Bureau’s online licensing system; and

Bureau of Cannabis Control Emergency Regulation Text Page 16 of 115

(2) The applicant or licensee may be required to pay any associated processing or convenience fees to the third-party vendor processing the payment on behalf of the Bureau.

(c) If the Bureau determines that the licensee paid an amount less than the appropriate licensing fee under section 5014 of this division, the licensee will be required to pay the balance of the appropriate fee and a penalty fee of 50 percent of the appropriate licensing fee. Failure to pay the appropriate fee is grounds for disciplinary action.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26051.5 and 26180, Business and Professions Code

§ 5016. Priority Licensing

(a) Priority licensing is available for annual licenses only, and is not applicable to any temporary or cannabis event organizer license.

(b) To be eligible for priority licensing, an applicant must be able to demonstrate that the applicant operated in compliance with the Compassionate Use Act of 1996 and its implementing laws before September 1, 2016. Eligibility for priority licensing shall be established by one of the following methods:

(1) The applicant is included on the list provided to the Bureau by the local jurisdiction in response to the Bureau’s request required by Business and Professions Code section 26054.2.

(2) If the local jurisdiction does not provide a list to the Bureau or the applicant’s name does not appear on the list provided to the Bureau, the applicant shall provide to the Bureau evidence of operation in compliance with the Compassionate Use Act of 1996. Such evidence shall be in the form of a document issued or signed by the applicant’s local jurisdiction that contains the following:

(A) Name of the applicant;

(B) Address of the premises to be licensed;

(C) License type(s) that the applicant is applying to the Bureau for;

(D) Name of the local jurisdiction;

(E) Name of the local jurisdiction office that is responsible for enforcing compliance with the Compassionate Use Act of 1996;

(F) Name and contact information for the person authorized by the local jurisdiction to sign on its behalf;

(G) Signature of the person authorized to sign on behalf of the local jurisdiction; and

(H) A statement to the effect of: “The above named party is currently conducting commercial cannabis activity in this jurisdiction and has been operating in compliance with the Compassionate Use Act of 1996 before September 1, 2016.”

Authority: Section 26013, Business and Professions Code. Reference: Section 26054.2, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 17 of 115

§ 5017. Substantially Related Offenses and Criteria for Rehabilitation

(a) For the purpose of license denial, convictions that are substantially related to the qualifications, functions, or duties of the business for which the application is made include:

(1) A violent felony conviction, as specified in subdivision (c) of Section 667.5 of the Penal Code.

(2) A serious felony conviction, as specified in subdivision (c) of Section 1192.7 of the Penal Code.

(3) A felony conviction involving fraud, deceit, or embezzlement.

(4) A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling, any controlled substance to a minor; or selling, offering to sell, furnishing, offering to furnish, administering, or giving any controlled substance to a minor.

(5) A felony conviction for drug trafficking with enhancements pursuant to Health and Safety Code sections 11370.4 or 11379.8.

(b) Except as provided in subsections (4) and (5) of subsection (a) and notwithstanding Chapter 2 (commencing with Section 480) of Division 1.5 of the Business and Professions Code, a prior conviction, where the sentence, including any term of probation, incarceration, or supervised release, is completed, for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance is not considered substantially related, and shall not be the sole ground for denial of a license. Conviction for any controlled substance felony subsequent to licensure shall be grounds for revocation of a license or denial of the renewal of a license.

(c) When evaluating whether an applicant who has been convicted of a criminal offense that is substantially related to the qualifications, functions, or duties of the business for which the application is made should be issued a license, the Bureau shall consider the following criteria of rehabilitation:

(1) The nature and severity of the act or offense;

(2) Whether the person has a felony conviction based on possession or use of cannabis or cannabis products that would not be a felony if the person was convicted of the offense on the date of the person’s application;

(3) The applicant’s criminal record as a whole;

(4) Evidence of any act committed subsequent to the act or offense under consideration that could be considered grounds for denial, suspension, or revocation of a commercial cannabis activity license;

(5) The time that has elapsed since commission of the act or offense;
Bureau of Cannabis Control Emergency Regulation Text Page 18 of 115

(6) The extent to which the applicant has complied with any terms of parole, probation, restitution, or any other sanctions lawfully imposed against the applicant;

(7) If applicable, evidence of dismissal under Penal Code sections 1203.4, 1203.4(a), 1203.41 or another state’s similar law;

(8) If applicable, a certificate of rehabilitation obtained under Penal Code section 4852.01 or another state’s similar law; and

(9) Other evidence of rehabilitation submitted by the applicant.

(d) If an applicant has been denied a license based on a conviction, the applicant may request a hearing pursuant to Business and Professions Code section 26058 to determine if the applicant should be issued a license.

Authority: Section 26013, Business and Professions Code. Reference: Sections 482 and 26057, Business and Professions Code.

§ 5018. Additional Grounds for Denial of a License

In addition to the reasons for denial in Business and Professions Code section 26057, a license may be denied for the following reasons:

(a) The applicant’s premises does not fully comply with standards set in regulation.

(b) The applicant’s premises is substantially different from the diagram of the premises submitted by the applicant, in that the size, layout, location of common entryways, doorways, or passage ways, means of public entry or exit, or limited-access areas within the licensed premises is not the same.

(c) The applicant denied the Bureau access to the premises.
(d) The applicant made a material misrepresentation on the application.

(e) The applicant did not correct the deficiencies within the application in accordance with sections 5002 and 5012 of this division.

(f) The applicant has been denied a license, permit, or other authorization to engage in commercial cannabis activity by a state or local licensing authority.

(g) The applicant’s premises is not in compliance with Division 13 (commencing with Section 21000) of the Public Resources Code.

Authority: Section 26013, Business and Professions Code. Reference: Sections 480, 490, 26012, 26030 and 26050, Business and Professions Code.

§ 5019. Excessive Concentration

(a) In determining whether to grant, deny, or renew a license for a retail license or microbusiness license, the Bureau shall consider if an excessive concentration exists in the area where the

Bureau of Cannabis Control Emergency Regulation Text Page 19 of 115

licensee will operate. For the purposes of this section “excessive concentration” applies when either of the following conditions exist:

(1) The ratio of licensees to population within the census tract or census division in which the applicant premises is located exceeds the ratio of licensees to population in the county in which the applicant premises is located, unless denial of the application would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis or cannabis products.

(2) The ratio of retail licenses or microbusiness licenses to the population within the census tract, census division, or jurisdiction exceeds that allowable by local ordinance adopted under section 26200.

(b) “Population Within the Census Tract or Census Division” as used in this section means the population as determined by the most recent United States decennial or special census. Such population determination shall not operate to prevent an applicant from establishing that an increase of resident population has occurred within the census tract or census division.

(c) “Population in the County” as used in this section, shall be determined by the most recent annual population estimate for California counties published by the Demographic Research Unit, State Department of Finance.

(d) Beginning July 1, 2018, the Bureau shall calculate the ratios described in subsection (a) of this section once every six months using the most current available data. The Bureau’s consideration of whether to grant, deny, or renew a license shall be based upon the most recent ratio calculated by the Bureau on the date of the Bureau’s decision.

(e) The existence of an excessive concentration shall not be considered in determining whether to grant, deny, or extend a temporary license under Business and Professions Code section 26050.1.

(f) The applicant may provide reliable evidence establishing, to the satisfaction of the Bureau, that a denial of a license would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis and cannabis products.

Authority: Section 26013, Business and Professions Code. Reference: Section 26051, Business and Professions Code

§ 5020. Renewal of License

(a) To renew a license, a completed license renewal form and annual license fee pursuant to section 5014 of this division shall be received by the Bureau from the licensee no earlier than 60 calendar days before the expiration of the license and no later than 5:00 p.m. Pacific Time on the last business day before the expiration of the license if the renewal form is submitted to the Bureau at its office(s), or no later than 11:59 p.m. on the last business day before the expiration of the license if the renewal form is submitted to the Bureau through its electronic licensing system. Failure to receive a notice for license renewal does not relieve a licensee of the obligation to renew all licenses as required.

Bureau of Cannabis Control Emergency Regulation Text Page 20 of 115

(b) In the event the license is not renewed prior to the expiration date, the licensee must not sell, transfer, transport, manufacture, test, or distribute any commercial cannabis goods until the license is renewed.

(c) A licensee may submit a license renewal form for 30 days after the license expires. Any late renewal form will be subject to a late fee equal to 50 percent of the applicable licensing fee required by subsection (a).

(d) The license renewal form shall contain the following:

(1) The name of the licensee. For licensees who are individuals, the applicant shall provide both the first and last name of the individual. For licensees who are business entities, the licensee shall provide the legal business name of the applicant.

(2) The license number and expiration date.
(3) The licensee’s address of record and premises address.

(4) An attestation that all information provided to the Bureau in the original application under section 5002 of this division or subsequent notification under sections 5023 and 5024 of this division is accurate and current.

(5) A limited waiver of sovereign immunity pursuant to section 5009 of this division.

Authority: Section 26013, Business and Professions Code. Reference: Section 26050, Business and Professions Code.

§ 5021. Denial of License

(a) The Bureau may deny an application for a new license or a renewal of a license for any reason specified in section 26057 in the Business and Professions Code, and on any additional grounds including, grounds for denial under section 5018 of this division, and grounds for discipline under the Act or this division.

(b) Upon denial of an application for a license or renewal of a license, the Bureau shall notify the applicant in writing, with the reasons for denial, and the right to a hearing to contest the denial.

(c) The applicant may request a hearing to contest the denial by submitting a written request to the Bureau.

(1) The written request for a hearing must be postmarked within 30 calendar days of service of the notification of denial.

(2) If the written request for a hearing is not received within the required timeframe, the applicant’s right to a hearing is waived.

(3) Upon timely receipt of the written request for hearing, the Bureau shall set a date for hearing to be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

Bureau of Cannabis Control Emergency Regulation Text Page 21 of 115

Authority: Section 26013, Business and Professions Code; Reference: Sections 26051, 26057, and 26058, Business and Professions Code.

§ 5022. Surrender and Cancellation of License

(a) Every licensee who surrenders, abandons, or quits the licensed premises, or who closes the licensed premises for a period exceeding 30 consecutive calendar days, shall, within 10 business days after closing, surrendering, quitting, or abandoning the licensed premises, surrender the license certificate to the Bureau. The Bureau may seize the license certificate of a licensee who fails to comply with the surrender provisions of this section and may proceed to revoke the license or licenses.

(b) A person whose license has been surrendered may submit to the Bureau a written request for the license to be returned. Any request should be submitted to the Bureau prior to the expiration of the surrendered license. The written request shall specify the reason the license was surrendered and why the license should be returned. The Bureau in its discretion may return the license.

(c) The Bureau may cancel the license or licenses of a licensee upon request by the licensee.

Authority: Section 26013, Business and Professions Code. Reference: Section 26050, Business and Professions Code.

§ 5023. Notification of Changes

(a) Every licensee shall notify the Bureau in writing within 10 business days of any change to any item listed in the application, with the exception of a change to standard operating procedures. The notification shall be signed by an owner as defined in section 5003 of this division.

(b) If at the time of licensure, a licensee employed less than 20 employees and later employs 20 or more employees, the licensee shall provide to the Bureau a document attesting that the licensee has entered into a labor peace agreement and will abide by the terms of the agreement, and a copy of the agreement, within 30 days of employing 20 or more employees.

(c) Licenses are not transferrable. If one or more of the owners of a license change, a new license application and fee shall be submitted to the Bureau within 10 business days of the effective date of the ownership change. A change in ownership occurs when a new person meets the definition of owner in section 5003 of this division. A change in ownership does not occur when one or more owners leave the business by transferring their ownership interest to the other existing owner(s). In cases where one or more owners leave the business by transferring their ownership interest to the other existing owner(s), the owner or owners that are transferring their interest shall provide a signed statement to the Bureau confirming that they have transferred their interest.

(d) When there is a change in persons with financial interest(s) in the commercial cannabis business that do not meet the requirements for a new license application under this section, the licensee shall submit the information required by sections 5002 (c)(19) and 5004 of this division to the Bureau within 10 business days of the change.

Bureau of Cannabis Control Emergency Regulation Text Page 22 of 115

(e) In order to change the location of a premises, a licensee shall submit a new application and fee to the Bureau. A licensee shall not begin operating out of a new premises until the Bureau has approved the application.

Authority: Section 26013, Business and Professions Code. Reference: Section 136, Business and Professions Code.

§ 5024. Death or Incapacity of a Licensee

(a) In the event of the death, incapacity, receivership, assignment for the benefit of creditors of a licensee, or other event rendering a licensee incapable of performing the duties associated with the license, the licensee’s successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the Bureau in writing, within 10 business days.

(b) To continue operations or surrender the existing license, the successor in interest shall submit to the Bureau the following:

(1) The name of the successor in interest.

(2) The name of the licensee for which the successor in interest is succeeding and the license number;

(3) The phone number, mailing address, and email address of the successor in interest; and

(4) Documentation demonstrating that the licensee is incapable of performing the duties associated with the license such as a death certificate or a court order finding the licensee lacks capacity, and documentation demonstrating that the individual making the request is the licensee’s successor in interest such as a court order appointing guardianship or will or trust agreement.

(c) The Bureau may give the successor in interest written approval to continue operations on the licensed business premises for a period of time specified by the Bureau if:

(1) The successor in interest or another person has applied for a license from the Bureau for the licensed premises and that application is under review; or

(2) The successor in interest needs additional time to destroy or sell cannabis goods; or (3) At the discretion of the Bureau.

(d) The licensee’s successor in interest is held subject to all terms and conditions under which a state cannabis license is held pursuant to the Act.

(e) The approval creates no vested right to the issuance of a state cannabis license.

Authority: Section 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 5025. Premises

(a) Each license shall have a designated premises for the licensee’s commercial cannabis activity, which is subject to inspection by the Bureau.

(b) The Bureau may allow a licensee to have the same licensed premises for two separate commercial cannabis licenses if all of the following criteria are met:

Bureau of Cannabis Control Emergency Regulation Text Page 23 of 115

(1) The licensee holds both an A-license and an M-license for the identical type of commercial cannabis activity;

(2) The licensee who holds both licenses is identical in name, business formation, and ownership;

(3) The licensee only conducts one type of commercial cannabis activity on the premises; (4) All cannabis and cannabis products are clearly marked with an “A” or “M”; and

(5) Records are kept separately for each license and clearly indicate that the records are related to the A-license or the M-license.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26001 and 26053, Business and Professions Code.

§ 5026. Premises Location

(a) A premises licensed under this division shall not be located within a 600-foot radius of a school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center that is in existence at the time the license is issued.

(b) Notwithstanding subsection (a), if a local jurisdiction has issued a license or permit to conduct commercial cannabis activity at a premises that is located within a 600-foot radius of a school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center, the Bureau may approve the premises for licensure if the following conditions are met:

(1) The applicant submits a copy of a valid license or permit from the local jurisdiction with the application for licensure; and

(2) The local jurisdiction notifies the Bureau that the applicant is in compliance with all applicable local ordinances and regulations pursuant to Business and Professions Code section 26055(g)(2)(C).

(c) A premises shall not be in a location that requires persons to pass through a business that sells alcohol or tobacco to access the licensed premises, or that requires persons to pass through the licensed premises to access a business that sells tobacco or alcohol.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26051.5, 26054 and 26055, Business and Professions Code.

§ 5027. Physical Modification of Premises

(a) A licensee shall not, without the prior written approval of the Bureau, make a physical change, alteration, or modification of the licensed premises that materially or substantially alters the licensed premises or the use of the licensed premises from the premises diagram originally filed with the license application. A licensee whose premises is to be materially or substantially changed, modified, or altered is responsible for filing a request for premises modification with the Bureau.

Bureau of Cannabis Control Emergency Regulation Text Page 24 of 115

(b) Material or substantial changes, alterations, or modifications requiring approval include, but are not limited to, the removal, creation, or relocation of a common entryway, doorway, passage, or a means of public entry or exit, when such common entryway, doorway, or passage alters or changes limited-access areas within the licensed premises.

(c) A licensee shall request approval of a physical change, alteration, or modification in writing, and the request shall include:

(1) A new premises diagram that conforms to requirements in section 5006 of this division; and (2) A fee pursuant to section 5014 of this division.

(d) A licensee shall provide additional documentation requested by the Bureau to evaluate the licensee’s request to modify the premises.

Authority: Section 26013, Business and Professions Code. Reference: Section 26055, Business and Professions Code.

§ 5028. Subletting of Premises

A licensee shall not sublet any portion of the licensed premises.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26010 and 26070, Business and Professions Code

§ 5029. Transition to Regulated Commercial Cannabis Market

(a) Beginning January 1, 2018, licensees shall not transport or sell any edible cannabis product that exceeds 10 milligrams of tetrahydrocannabinol (THC) per serving.

(b) Notwithstanding any other law, or regulation in this division, beginning January 1, 2018 and before July 1, 2018 licensees may do all of the following:

(1) Licensees may conduct business with other licensees irrespective of the M or A designation on their licenses.

(2) Cannabis goods held in inventory by a retailer at the time of licensure that are not in child- resistant packaging may be sold if they are placed into child-resistant packaging by the retailer at the time of sale.

(3) Non-edible cannabis products that do not meet the THC limits per package specified by the State Department of Public Health in regulation may be transported and sold.

(4) An M-license may transport or sell medicinal edible cannabis products that are 10 milligrams of THC or less per serving regardless of the THC amount in the package.

(5) Cannabis goods that do not meet the labeling requirements prescribed by the Act or the State Department of Public Health in regulation may be transported and sold if a sticker with the applicable warning statement under Business and Professions Code section 26120, subdivisions (c)(1)(A) and (c)(1)(B) is affixed to the cannabis goods prior to sale by the retailer.

Bureau of Cannabis Control Emergency Regulation Text Page 25 of 115

(6) Cannabis goods that have not undergone laboratory testing may be transported and sold if a label stating that the cannabis goods have not been tested as required under Business and Professions Code section 26070(l) is affixed to each package containing the cannabis goods prior to sale by the retailer.

(7) Dried flower held in inventory by a retailer at the time of licensure that is not packaged may be packaged by the retailer into individual packages for sale.

(8) Cannabis products held in inventory by a retailer that do not meet the requirements set by the State Department of Public Health, pursuant to Business and Professions Code section 26130 and 26131, for ingredients or appearance may be sold by the retailer.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, 26106, 26120 and 26130, Business and Professions Code.

§ 5030. Licensee’s Responsibility for Acts of Employees and Agents

In construing and enforcing the provisions of the Act and the regulations in this division, the act, omission, or failure of an agent, officer, representative, or other person acting for or employed by a licensee, within the scope of his or her employment or office, shall in every case be deemed the act, omission, or failure of the licensee.

Authority: Section 26103, Business and Professions Code. Reference: Sections 26031 and 26110, Business and Professions Code.

§ 5031. Employee Age Restriction

A licensee shall not employ or retain persons under 21 years of age.

Authority: Section 26013, Business and Professions Code. Reference: Section 26140, Business and Professions Code.

§ 5032. Commercial Cannabis Activity Between Licensees

(a) All commercial cannabis activity shall be conducted between licensees. Retail licensees may conduct commercial cannabis activity with customers in accordance with Chapter 3 of this division.

(b) Beginning July 1, 2018, A-licensees shall only conduct business with A-licensees and M- licensees shall only conduct business with M-licensees, except for testing laboratories.

Authority: Section 26013, Business and Professions Code. Reference: Section 26001, 26013 and 26053, Business and Professions Code.

§ 5033. Storage of Inventory

(a) A licensee shall not store cannabis goods outdoors.

(b) Employee break rooms, changing facilities, and bathrooms shall be separated from any and all storage areas.

Bureau of Cannabis Control Emergency Regulation Text Page 26 of 115

(c) Each location where cannabis goods are stored must be separately licensed.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26010 and 26070, Business and Professions Code.

§ 5034. Significant Discrepancy in Inventory

(a) A significant discrepancy in inventory means a difference in actual inventory compared to records pertaining to inventory of at least $5,000 or 2 percent of the average monthly sales of the licensee, whichever is less.

(b) For the purposes of this section, average monthly sales shall be calculated by taking a per month average of the total sales for the previous 6 months. If the licensee has not been in operation for at least 6 months, only the months in which the licensee was operating shall be used in determining average monthly sales.

(c) For the purposes of this section, the licensee’s acquisition price shall be used to determine the value of cannabis goods in a licensee’s inventory.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5035. Notification of Criminal Acts, Civil Judgments, and Revocation of a Local License, Permit, or Other Authorization After Licensure

(a) A licensee shall ensure that the Bureau is notified in writing of a criminal conviction of any owner, either by mail or electronic mail, within 48-hours of the conviction. The written notification to the Bureau shall include the date of conviction, the court docket number, the name of the court in which the licensee was convicted, and the specific offense(s) for which the licensee was convicted.

(b) A licensee shall ensure that the Bureau is notified in writing of a civil penalty or judgment rendered against the licensee or any owner in their individual capacity, either by mail or electronic mail, within 48-hours of delivery of the verdict or entry of judgment, whichever is sooner. The written notification shall include the date of verdict or entry of judgement, the court docket number, the name of the court in which the matter was adjudicated, and a description of the civil penalty or judgement rendered against the licensee.

(c) A licensee shall ensure that the Bureau is notified in writing of the revocation of a local license, permit, or other authorization, either by mail or electronic mail within 48-hours of receiving notice of the revocation. The written notification shall include the name of the local agency involved, a written explanation of the proceeding or enforcement action, and the specific violation(s) that led to revocation.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26030, 26031 and 26070, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 27 of 115

§ 5036. Notification of Theft, Loss, and Criminal Activity

(a) A licensee shall notify the Bureau and local law enforcement within 24 hours of discovery of any of the following situations:

(1) The licensee discovers a significant discrepancy as defined in section 5034 of this division in its inventory.

(2) The licensee becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity pertaining to the operations of the licensee.

(3) The licensee becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity by an agent or employee of the licensee pertaining to the operations of the licensee.

(4) The licensee becomes aware of or has reason to suspect the loss or unauthorized alteration of records related to cannabis goods, customers, or the licensee’s employees or agents.

(5) The licensee becomes aware of or has reason to suspect any other breach of security.

(b) The notification to the Bureau pursuant to subsection (a) of this section shall be in writing and include the date and time of occurrence of the theft, loss, or criminal activity, the name of the local law enforcement agency that was notified, and a description of the incident including, where applicable, the item(s) that were taken or lost.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5037. Record Retention

(a) Each licensee shall keep and maintain the following records related to commercial cannabis activity for at least seven years:

(1) Financial records including, but not limited to, bank statements, sales invoices, receipts, tax records, and all records required by the California Department of Tax and Fee Administration (formally Board of Equalization) under Title 18 California Code of Regulations sections 1698 and 4901.

(2) Personnel records, including each employee’s full name, social security or individual tax payer identification number, date employment begins, and date of termination of employment if applicable.

(3) Training records, including but not limited to the content of the training provided, and the names of the employees that received the training.

(4) Contracts with other licensees regarding commercial cannabis activity.

(5) Permits, licenses, and other local authorizations to conduct the licensee’s commercial cannabis activity.

Bureau of Cannabis Control Emergency Regulation Text Page 28 of 115

(6) Security records, except for surveillance recordings required pursuant to section 5044 of this division.

(7) Records relating to the composting or destruction of cannabis goods.
(8) Documentation for data or information entered into the track and trance system.

(9) All other documents prepared or executed by an owner or his employees or assignees in connection with the licensed commercial cannabis business.

(b) The Bureau may make any examination of the books and records of any licensee as it deems necessary to perform its duties under the Act.

(c) Records shall be kept in a manner that allows the records to be produced for the Bureau at the licensed premises in either hard copy or electronic form, whichever the Bureau requests.

(d) A licensee may contract with a third party to provide custodial or management services of the records. Such a contract shall not relieve the licensee of the licensee’s responsibilities under this section.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26160 and 26161, Business and Professions Code.

§ 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 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 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 fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes.

(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 under section 5022 of this division.

(h) Notwithstanding subsection (a) of this section, if a licensee needs to move cannabis goods stored on the 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:

Bureau of Cannabis Control Emergency Regulation Text Page 29 of 115

(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 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 to the Bureau within 10 business 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.

Article 4. Posting and Advertising
§ 5039. License Posting Requirement

Upon issuance of any license, the licensee shall prominently display the license on the licensed premises where it can be viewed by state and local agencies. If the licensed premises is open to the public, the license shall be displayed in an area that is within plain sight of the public.

Authority: Section 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code.

§ 5040. Advertising Placement

(a) Any advertising or marketing placed in broadcast, cable, radio, print, and digital communications shall only be displayed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable up-to-date audience composition data.

(b) Upon request, a licensee shall provide to the Bureau audience composition data as required in subsection (a) of this section for advertising or marketing placed by the licensee. This information shall be provided to the Bureau within the time specified by the Bureau.

(c) If the Bureau determines that audience composition data for advertising or marketing provided by a licensee, does not comply with the requirements of subsection (a) of this section, or the licensee fails to provide audience composition data to the Bureau within the time specified by the Bureau, the licensee shall remove the advertising or marketing placement in question.

Authority: Section 26013, Business and Professions Code. Reference: Section 26151 and 26152, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 30 of 115

§ 5041. Age Confirmation in Advertising

(a) Prior to any advertising or marketing from the licensee involving direct, individualized communication or dialog, the licensee shall use age affirmation to verify that the recipient is 21 years of age or older.

(b) For the purposes of this section, direct, individualized communication or dialog, may occur through any form of communication including: in person, telephone, physical mail, or electronic.

(c) A method of age verification is not necessary for a communication if the licensee can verify that the licensee has previously had the intended recipient undergo a method of age affirmation and the licensee is reasonably certain that the communication will only be received by the intended recipient.

(d) A licensee shall use a method of age affirmation before having a potential customer added to a mailing list, subscribe, or otherwise consent to receiving direct, individualized communication or dialog controlled by a licensee.

Authority: Section 26013, Business and Professions Code. Reference: Section 26151 and 26152, Business and Professions Code.

Article 5. Security

§ 5042. Access to Limited-Access Areas

Licensees shall ensure that any person on the licensed premises, except for employees and contractors of the licensee, are escorted at all times by the licensee or at least one employee of the licensee when in the limited-access areas of the premises.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5043. Licensee Employee Badge Requirement

All agents, officers, or other persons acting for or employed by a licensee shall display a laminated or plastic-coated identification badge issued by the licensee at all times while engaging in commercial cannabis activity. The identification badge shall, at a minimum, include the licensee’s “doing business as” name and license number, the employee’s first name, an employee number exclusively assigned to that employee for identification purposes, and a color photograph of the employee that clearly shows the full front of the employee’s face and that is at least 1 inch in width and 1.5 inches in height.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5044. Video Surveillance System

(a) At a minimum, a licensed premises shall have a digital video surveillance system with a minimum camera resolution of 1280 × 720 pixels.

Bureau of Cannabis Control Emergency Regulation Text Page 31 of 115

(b) The surveillance-system storage device or the cameras shall be transmission control protocol (TCP) capable of being accessed through the internet.

(c) The video surveillance system shall at all times be able to effectively and clearly record images of the area under surveillance.

(d) Each camera shall be permanently mounted and in a fixed location. Each camera shall be placed in a location that allows the camera to clearly record activity occurring within 20-feet of all points of entry and exit on the licensed premises, and allows for the clear and certain identification of any person and activities in all areas required to be filmed under subsection (e).

(e) Areas that shall be recorded on the video surveillance system include, but are not limited to, the following:

(1) Areas where cannabis goods are weighed, packed, stored, loaded, and unloaded for transportation, prepared, or moved within the premises;

(2) Limited-access areas; (3) Security rooms;

(4) Areas storing a surveillance-system storage device with at least one camera recording the access points to the secured surveillance recording area; and

(5) Entrances and exits to the premises, which shall be recorded from both indoor and outdoor vantage points.

(f) Retailers shall also record point-of-sale areas and areas where cannabis goods are displayed for sale on the video surveillance system. At each point of sale location, camera placement must allow for the recording of the facial features of any person purchasing or selling cannabis goods, or any person in the retail area, with sufficient clarity to determine identity.

(g) Cameras shall record continuously 24 hours per day and at a minimum of 15 frames per second (FPS).

(h) The physical media or storage device on which surveillance recordings are stored shall be secured in a manner to protect the recording from tampering or theft.

(i) Surveillance recordings shall be kept for a minimum of 90 days.

(j) Surveillance recordings are subject to inspection by the Bureau, and shall be kept in a manner that allows the Bureau to view and obtain copies of the recordings at the licensed premises immediately upon request. The licensee shall also send or otherwise provide copies of the recordings to the Bureau upon request within the time specified by the Bureau.

(k) Recorded images shall clearly and accurately display the time and date. Time is to be measured in accordance with the United States National Institute Standards and Technology standards.

Bureau of Cannabis Control Emergency Regulation Text Page 32 of 115

(l) The video surveillance system shall be equipped with a failure notification system that provides notification to the licensee of any interruption or failure of the video surveillance system or video surveillance-system storage device.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5045. Security Personnel

A retail licensee or microbusiness licensee that is engaged in retail sale, shall hire or contract for security personnel to provide security services for the licensed retail premises. All security personnel hired or contracted for by the licensee shall comply with Chapters 11.4 and 11.5 of Division 3 of the Business and Professions Code.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5046. Locks

A licensee shall ensure that the limited-access areas described in section 5042 of this division can be securely locked using commercial-grade, nonresidential door locks. A licensee shall also use commercial-grade, nonresidential door locks on all points of entry and exit to the licensed premises.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5047. Alarm System

(a) A licensee shall maintain an alarm system as defined in Business and Professions Code section 7590.1(n) at the licensed premises.

(b) A licensee shall ensure a licensed alarm company operator or one or more of its registered alarm agents installs, maintains, monitors, and responds to the alarm system.

(c) Upon request, a licensee shall make available to the Bureau all information related to the alarm system, monitoring, and alarm activity.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

Article 6. Track and Trace Requirements

§ 5048. Track and Trace System

(a) A licensee shall create and maintain an active and functional account within the track and trace system prior to engaging in any commercial cannabis activity, including the purchase, sale, test, packaging, transfer, transport, return, destruction, or disposal, of any cannabis goods.

Bureau of Cannabis Control Emergency Regulation Text Page 33 of 115

(b) A licensee shall designate one individual owner as the track and trace system account manager. The account manager may authorize additional owners or employees as track and trace system users and shall ensure that each user is trained on the track and trace system prior to its access or use.

(1) The account manager shall attend and successfully complete all required track and trace system training, including any orientation and continuing education.

(2) If the account manager did not complete the required track and trace system training prior to receiving their annual license, the account manager shall sign up for and complete state mandated training, as prescribed by the Bureau, within five business days of license issuance.

(d) The account manager and each user shall be assigned a unique log-on, consisting of a username and password. The account manager or each user accessing the track and trace system shall only do so under his or her assigned log-on, and shall not use or access a log-on of any other individual. No account manager or user shall share or transfer his or her log-on, username, or password, to be used by any other individual for any reason.

(e) The account manager shall maintain a complete, accurate, and up-to-date list of all track and trace system users, consisting of their full names and usernames.

(f) A licensee shall monitor all compliance notifications from the track and trace system, and timely resolve the issues detailed in the compliance notification.

(1) A licensee shall keep a record, independent of the track and trace system, of all compliance notifications received from the track and trace system, and how and when compliance was achieved.

(2) If a licensee is unable to resolve a compliance notification within three business days of receiving the notification, the licensee shall notify the Bureau immediately.

(g) A licensee is accountable for all actions its owners or employees take while logged into or using the track and trace system, or otherwise while conducting track and trace activities.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26067, 26070, 26160 and 26161, Business and Professions Code.

§ 5049. Track and Trace Reporting

(a) A licensee shall record in the track and trace system, all commercial cannabis activity, including any:

(1) Packaging of cannabis goods.
(2) Sale of cannabis goods.
(3) Transportation of cannabis goods to a licensee. (4) Receipt of cannabis goods.

Bureau of Cannabis Control Emergency Regulation Text Page 34 of 115

(5) Return of cannabis goods.

(6) Destruction and disposal of cannabis goods.

(7) Laboratory testing and results.

(8) Any other activity as required pursuant to this division, or by any other licensing authority.

(b) The following information shall be recorded for each activity entered in the track and trace system:

(1) Name and type of the cannabis goods.

(2) Unique identifier of the cannabis goods.

(3) Amount of the cannabis goods, by weight or count.

(4) Date and time of the activity or transaction.

(5) Name and license number of other licensees involved in the activity or transaction.

(6) If the cannabis goods are being transported:

(A) The licensee shall transport pursuant to a shipping manifest generated through the track and trace system, that includes items (1) through (5) of this subsection, as well as:

(i) The name, license number, and premises address of the originating licensee.

(ii) The name, license number, and premises address of the licensee transporting the cannabis goods.

(iii) The name, licensee number, and premises address of the destination licensee receiving the cannabis goods into inventory or storage.

(iv) The date and time of departure from the licensed premises and approximate date and time of departure from each subsequent licensed premises, if any.

(v) Arrival date and estimated time of arrival at each licensed premises.

(vi) Driver’s license number of the personnel transporting the cannabis goods, and the make, model, and license plate number of the vehicle used for transport.

(B) Upon pick-up or receipt of cannabis goods for transport, storage, or inventory, a licensee shall ensure that the cannabis goods received are as described in the shipping manifest, and shall record acceptance and acknowledgment of the cannabis goods in the track and trace system.

(C) If there are any discrepancies between the type or quantity specified in the shipping manifest and the type or quantity received by the licensee, the licensee shall record and document the discrepancy in the track and trace system and in any relevant business record.

Bureau of Cannabis Control Emergency Regulation Text Page 35 of 115

(7) If cannabis goods are being destroyed or disposed of, the licensee shall record in the track and trace system the following additional information:

(A) The name of the employee performing the destruction or disposal. (B) The reason for destruction or disposal.

(C) The name of the entity being used to collect and process cannabis waste, pursuant to section 5055.

(8) Description for any adjustments made in the track and trace system, including, but not limited to:

(A) Spoilage or fouling of the cannabis goods.
(B) Any event resulting in exposure or compromise of the cannabis goods.

(9) Any other information as required pursuant to this division, or by any other applicable licensing authorities.

(c) Unless otherwise specified, all transactions must be entered into the track and trace system by 11:59 p.m. Pacific Time, on the day the transaction occurred.

(d) Licensees shall only enter and record complete and accurate information into the track and trace system, and shall correct any known errors entered into the track and trace system immediately upon discovery.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26067, 26070, 26160 and 26161, Business and Professions Code.

§ 5050. Loss of Access

(a) If at any point a licensee loses access 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 access.

(b) The licensee shall both document and notify the Bureau immediately: (1) When access to the system is lost;
(2) When it is restored; and
(3) The cause for the loss of access.

(c) Once access is restored, all commercial cannabis activity that occurred during the loss of access shall be entered into the track and trace system within three business days of access being restored.

(d) A licensee shall not transport, transfer or deliver any cannabis goods until such time as access is restored and all information recorded in the track and trace system.

Bureau of Cannabis Control Emergency Regulation Text Page 36 of 115

Authority: Section 26013, Business and Professions Code. Reference: Sections 26067, 26070, 26160 and 26161, Business and Professions Code.

§ 5051. Track and Trace System Reconciliation

(a) In addition to other inventory reconciliation requirements under this division, a licensee shall reconcile the physical inventory of cannabis goods at the licensed premises with the records in the track and trace database at least once every 14 days.

(b) If a licensee finds a discrepancy between its physical inventory and the track and trace system database, the licensee shall conduct an audit, and notify the Bureau of any reportable activity pursuant to section 5036.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26067, 26070, 26160 and 26161, Business and Professions Code.

§ 5052. Temporary Licenses; Licensees in Operation at Time of Licensure

(a) A licensee operating under a temporary license issued pursuant to section 5001 is not required to record commercial cannabis activity in the track and trace system as otherwise required by this article.

(b) Temporary licensees shall track and record all cannabis commercial activities and information required pursuant to this division and any other provision of law, at a minimum, on paper receipts, invoices, or manifests.

(c) Any commercial cannabis activity conducted between annual license holders shall be recorded in the track and trace system.

(d) Any licensee in operation at the time the annual license is issued shall input all required inventory and other reportable information into the track and trace system no later than 30 days after the track and trace system account manager attends the training required pursuant to section 5048.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26050.1, 26067, 26070, 26160 and 26161, Business and Professions Code.

Article 7. Returns and Destruction § 5053. Returns Between Licensees

(a) If a licensee discovers that a manufactured cannabis good that was purchased from another licensee is defective, the purchasing licensee may return the cannabis good to the selling licensee only in exchange for a non-defective version of the same type of cannabis good or in exchange for a cannabis good of equal value.

(b) Except as provided in subsection (a) of this section, a licensee shall not return cannabis goods purchased from another licensee.

Bureau of Cannabis Control Emergency Regulation Text Page 37 of 115

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5054. Destruction of Cannabis Products Prior to Disposal

No cannabis goods shall be disposed of as cannabis waste pursuant to section 5055 of this division unless the cannabis goods have been removed from their packaging and rendered unrecognizable and unusable.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26067, 26070 and 26110, Business and Professions Code.

§ 5055. Cannabis Waste Management

(a) A licensee may not sell cannabis waste.

(b) Licensees shall comply with all applicable waste management laws including, but not limited to, Division 30 of the Public Resources Code.

(c) A licensee shall dispose of cannabis waste in a secured waste receptacle or in a secured area on the licensed premises. For the purposes of this section, “secure waste receptacle” or “secured area” means that physical access to the receptacle or area is restricted to the licensee and its employees and the local agency, local agency franchiser, or permitted private waste hauler. Public access to the designated receptacle or area is prohibited.

(d) If a licensee is composting cannabis waste on the licensed premises, a licensee shall do so in compliance with Title 14 of the California Code of Regulations at Chapter 3.1 (commencing with Section 17850).

(e) If a local agency, a local agency franchiser, or permitted private waste hauler is being used to collect and process cannabis waste, a licensee shall do all the following:

(1) Provide the Bureau with the name of the entity hauling the waste;

(2) Obtain documentation from the entity hauling the waste that indicates the date and time of each collection of cannabis waste at the licensed premises; and

(3) Obtain a copy of the certified weight ticket, or other documentation prepared by the entity hauling the waste confirming receipt of the cannabis waste at one, or more, of the following solid waste facilities:

(A) A manned fully permitted solid waste landfill or transformation facility;
(B) A manned fully permitted composting facility or manned composting operation;

(C) A manned fully permitted in-vessel digestion facility or manned in-vessel digestion operation;

(D) A manned fully permitted transfer/processing facility or manned transfer/processing Operation; or

Bureau of Cannabis Control Emergency Regulation Text Page 38 of 115

(E) A manned fully permitted chip and grind operation.

(f) If a licensee is self-hauling cannabis waste to one, or more, of the solid waste facilities in subsection (e)(3) of this section, a licensee shall obtain for each delivery of cannabis waste by the licensee a copy of a certified weight ticket or receipt documenting delivery from the solid waste facility. Only the licensee or its employees may transport self-hauled cannabis waste.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

Chapter 2. DISTRIBUTORS

§ 5300. Non-Cannabis Distribution Activities

A distributor shall not store or distribute non-cannabis goods on or from the premises licensed for distribution of cannabis goods.

Authority: Sections 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5301. Storage-Only Services

A distributor may provide cannabis goods storage-only services to a licensed cultivator, manufacturer, microbusiness, nonprofit, or another distributor, unrelated to the quality assurance and laboratory testing processes.

Authority: Section 26013, Business and Professions Code. Reference: Section 26110, Business and Professions Code.

§ 5302. Storage of Batches for Testing

(a) A distributor shall ensure that all cannabis goods batches are stored separately and distinctly from other cannabis goods batches on the distributor’s premises.

(b) A distributor shall ensure a label with the following information is physically attached to each container of each batch:

(1) The manufacturer or cultivator’s name and license number, who provided the batch; (2) The date of entry into the distributor’s storage area;
(3) The unique identifiers and batch number associated with the batch;
(4) A description of the cannabis goods with enough detail to easily identify the batch; (5) The weight of or quantity of units in the batch; and

(6) The best-by, sell-by, or expiration date of the batch, if any.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26110 and 26120, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 39 of 115

§ 5303. Packaging and Labeling

(a) A distributor may package, re-package, label, and re-label cannabis for retail sale.

(b) A distributor shall not package, re-package, label, or re-label manufactured cannabis products except for when the distributor also holds a manufacturing license and is packaging, re- packaging, labeling, or re-labeling its own manufactured cannabis products.

(c) Notwithstanding subsection (b) of this section, if it is determined during laboratory testing that a manufactured product is labeled with the incorrect amount of THC per package or serving but is within the THC limits for sale, the distributor may re-label the package with the accurate THC amount.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26013 and 26120, Business and Professions Code.

§ 5304. Testing Arrangements

After taking physical possession of a cannabis goods batch, the distributor shall contact a testing laboratory and arrange for a laboratory employee to come to the distributor’s licensed premises to select a representative sample for laboratory testing.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26110, Business and Professions Code.

§ 5305. Testing Sample

(a) The distributor shall ensure that the batch size from which the sample is taken meets the requirements of this division.

(b) A distributor or an employee of the distributor shall be physically present to observe the laboratory employee obtain the sample of cannabis goods for testing and shall ensure that the increments are taken from throughout the batch.

(c) The sampling shall be video recorded with the batch number stated at the beginning of the video and a visible time and date indication on the video recording footage. The video recordings shall be maintained for 180 days.

(d) After the sample has been selected, both the distributor and the laboratory employee shall sign and date the chain of custody form pursuant to section 5709 of this division, attesting to the sample selection having occurred.

(e) A distributor shall not assist the laboratory employee nor touch the cannabis goods or the sampling equipment while the laboratory employee is obtaining the sample.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26104 and 26110, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 40 of 115

§ 5306. Laboratory Testing Results

(a) A sample “passes” a laboratory test when the sample meets specifications in Chapter 6 of this division.

(b) When a batch from a manufactured or harvest batch passes, the cannabis goods may be transported to one or more retailers.

(c) A sample “fails” a laboratory test when it does not meet specifications of Chapter 6 of this division.

(d) If a failed sample was collected from a batch and the batch could be remediated pursuant to section 5727 of this division, a distributor may transport or arrange for the transportation of the batch to a cultivator or manufacturer for remediation.

(e) A distributor shall not destroy a batch that failed laboratory testing and cannot be remediated pursuant to section 5727 of this division.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26070, 26104 and 26110, Business and Professions Code.

§ 5307. Quality-Assurance Review

When a distributor receives a certificate of analysis stating that the sample meets specifications required by law, the distributor shall ensure the following before transporting the cannabis goods to one or more retailers:

(a) The certificate of analysis the distributor received from the testing laboratory is the certificate of analysis that corresponds to the batch;

(b) The label on the cannabis goods is consistent with the certificate of analysis regarding cannabinoid content and contaminants required to be listed by law;

(c) The packaging complies with applicable packaging laws including, but not limited to, Business and Professions Code section 26120;

(d) The packaging is tamper evident. “Tamper evident” means a one-time-use seal is affixed to the opening of the package, allowing a person to recognize whether or not the package has been opened;

(e) The weight or count of the cannabis batch comports with that in the track and trace system. A distributor shall use scales as required by the Act; and

(f) All events up to this point have been entered into the track and trace system.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26070, 26110 and 26120, Business and Professions Code.

Bureau of Cannabis Control Emergency Regulation Text Page 41 of 115

§ 5308. Insurance Requirements

(a) An applicant for a distributor license shall provide the Bureau with a certificate of insurance that shows the types of insurance coverage and minimum amounts that have been secured as required by this section, and documentation establishing compliance with subsection (d) of this section.

(b) A distributor licensee shall at all times carry and maintain commercial general liability insurance in the aggregate in an amount no less than $2,000,000 and in an amount no less than $1,000,000 for each loss.

(c) A distributor licensee shall maintain the insurance required in subsection (b) from an insurance company that is:

(1) A non-admitted insurer, that meets the requirements of Insurance Code section 1765.1 or 1765.2, and the insurance is placed pursuant to Insurance Code section 1763 and through a surplus line broker licensed under Insurance Code section 1765; or

(2) An insurer qualified to do business in California by the Secretary of State and authorized by the Insurance Commissioner to write the liability and property classes of insurance as defined by Insurance Code sections 102, 103, 107, 114, 108, and 120; or

(3) A registered risk retention group compliant with the California Risk Retention Act of 1991. (See California Insurance Code sections 125-140.)

(d) Admitted insurers and risk retention groups must show proof of capitalization in the amount of at least $10,000,000.

(e) A distributor licensee shall notify the Bureau in writing within 10 calendar days of a lapse in insurance.

Authority: Section 26013, Business and Professions Code. Reference: Section 26070, Business and Professions Code.

§ 5309. Inventory Reconciliation

(a) A distributor shall reconcile all inventories of cannabis goods at least once every 14 days.
(b) A distributor shall keep an inventory log containing the following information for each batch: (1) The manufacturer or cultivator’s name and license number, who provided the batch;
(2) The date of entry into the distributor’s storage area;
(3) The unique identifiers and batch number associated with the batch;
(4) A description of the cannabis goods with enough detail to easily identify the batch;
(5) The weight of or quantity of units in the batch;
(6) The best-by, sell-by, or expiration date of the batch, if any; and

Bureau of Cannabis Control Emergency Regulation Text Page 42 of 115

(7) Where on the premises the batch is kept;

(c) If a distributor finds a discrepancy between the inventory of stock and the inventory log or track and trace system that is outside of normal weight loss caused by moisture loss, the distributor shall commence a full audit of the batch in which the discrepancy was found.

Authority: Section 26013, Business and Professions Code. Reference: Section 26110, 26160 and 26070, Business and Professions Code.

§ 5310. Records

(a) In addition to the records required by section 5037 of this division, a distributor shall maintain the following records:

(1) Records relating to branding, packaging and labeling; (2) Inventory logs and records;

(3) Transportation bills of lading and shipping manifests for completed transports and for cannabis goods in transit;

(4) Vehicle and trailer ownership records;