Manufactured Cannabis Training · Application Fee –Paid when application is submitted License Fee –Paid when application is approved –Seven scaled tiers –Based on gross annual

California Department of Public HealthManufactured Cannabis Safety Branch

Manufactured Cannabis Training

California Department of Public Health

Manufactured Cannabis Safety Branch

Understanding Regulations and State Licensing

Today’s Informational Session

• State Laws & Regulations

• State Cannabis Licensing Authorities

• Regulations for Cannabis Manufacturing

• Temporary License Application Process

• Annual License Application Process

• After You’re Licensed

• Q&A


Licensing Informational Sessions – Fall 2017 1


State Cannabis Offices

Bureau of

Cannabis Control

(Bureau)

Retailers

Distributors

Testing Labs

Microbusinesses


CA Department of Food & Agriculture

CalCannabis Cultivation Licensing

Cultivators

Track-and-Trace

CA Department of

Public Health

Manufactured Cannabis Safety Branch (MCSB)

Manufacturers

State Cannabis Law

1996 Compassionate Use Act

Proposition 215

2015 Medical Cannabis Regulation & Safety Act (MCRSA)

AB 266, AB 243, SB 643

2016 Adult Use of Marijuana Act (AUMA)

Proposition 64

2017 Medicinal and Adult-Use Cannabis Regulation

& Safety Act (MAUCRSA)

SB 94, AB 133




Principles of MAUCRSA

Public Health & Consumer

Safety

Neither Food Nor Drug

Vertical Integration

Dual Licensing Structure


Dual Licensing Structure

Local Authorization

Must comply with local

ordinances

Local cannabis ordinances and

permitting

State Licensing

All cannabis businesses

must be licensed

State cannabis licensing

authorities




State Regulations

• Emergency Regulations

– Released by each state licensing authority

– Outline requirements for specific aspects of

commercial cannabis market

• Permanent Regulations

– Rulemaking process

– Early 2018


California Track-and-Trace




WHAT MANUFACTURERS

NEED TO KNOW

MCSB EMERGENCY REGULATIONS


Role: Protect public health by promoting product and workplace safety


• Regulations

• Licensing

• Compliance




Cannabis Manufacturing

Extraction – separating cannabinoids from cannabis plant material

Infusion – using plant material or concentrates to create a cannabis product

Packaging and Labeling - putting finished cannabis products into a container and/or marking them for sale


License Categories and Types

License Categories: M (Medicinal) or A (Adult-use)

License Types:

• Extraction: Volatile SolventsType 7

• Extraction: Non-volatile Solvents, Mechanical MethodsType 6

• InfusionsType N

• Packaging & Labeling OnlyType P




Operational Requirements

• Good Manufacturing Practices– Clean, sanitary work environment

– Control of hazards

• Cannabis Product Safety– Free of contaminants

– Uniform THC levels

• Chemical Extraction Safety– Must adhere to local fire code and restrictions


Cannabis Product Standards

• Product Restrictions

–Prohibited Additives

–Prohibited Products

– Ingredients vs. Final Products

–Product Shapes

• Requirements for Edibles: Servings




THC Limits

Edibles

• 10 milligrams per serving

• 100 milligrams per package

Other Products

• 1000 milligrams per package (adult-use)

• 2000 milligrams per package (medicinal)


Packaging

Cannot resemble traditional food

packaging

Opaque packaging (Edibles)

Must be packaged before release to

distributor

Must be tamper evident and child

resistant

Must be re-sealable, if

there are multiple servings




Labeling

Primary Panel

• Includes product identity, THC content, universal symbol

Informational Panel:

• Includes list of ingredients, warning statement, UID

May not refer to product as candy

Cannot be attractive to children


State Licensing

Begins January 1, 2018

Temporary Licenses

• Valid 120 days

• May be extended for 90 day periods

• Submit via email or mail

• Need explicit local authorization

Annual Licenses

• Valid 1 year

• Online application process

• Must be “in compliance” with local jurisdiction




APPLICATION REQUIREMENTS

AND PROCEDURES

TEMPORARY LICENSE

Temporary License Application

• One page form

• Available on MCSB

website

• Submit via email or

mail with local

authorization




Local Authorization

What is a local jurisdiction?

Temporary License Requirement:

• Local authorization to operate a cannabis

business

• Examples: Cannabis business permit, letter

of acknowledgement, etc.


How We Process Temporary Applications

Check for Completeness

Contact Local Jurisdiction (10 Days)

Issue Temporary

License




Temporary Licenses

• Temporary Licenses are valid for 120 days

• Once you have your temporary license:

– Do business only with other licensees

– Apply for your annual license


APPLICATION REQUIREMENTS

AND PROCEDURES

ANNUAL LICENSE



Annual License Requirements

• Requirements of Operating a Business in CA

– CA Business Registration

– CA Seller’s Permit

– Federal Employer ID Number (FEIN)

– Compliance with city or county ordinances

• Owners and Financial Interest Holders


Annual License Requirements

• Who is an Owner?

– At least 20% ownership

– CEO, Nonprofit Board of Directors, Partners, LLC Members, Corporation Officers/Directors

– Anyone involved in the direction, control or management of the company

• Who is a Financial Interest Holder?

– Less than 20% ownership

– Not involved in day-to-day business operation




Annual License Application

• Online Application System

– Manufactured Cannabis Licensing System (MCLS)

– Launches mid-December 2017

– Access through MCSB website

– Submit your application, update your information, make a payment

• Resources and Guides Coming Soon


CDPH Application Portal




Manufactured Cannabis Licensing System (MCLS)


Individual Profile

All Owners must complete an Individual Profile

• Live Scan

• Criminal Disclosure

Individual Profile Number – Keep this number




Business Information

• Information about the

Business

• Contact Information

• Other Licenses

(Voluntary Survey)


Business Information

• Add Owners to Your Business Profile

– Use Individual Profile Number

• List Financial Interest Holders




Premises Information

• What is a Premises?

– Where cannabis manufacturing will occur

• Physical Address

• Priority Review

• Operations

– Gross Annual Revenue

– Manufacturing Activities

– Local Authorization


License Information

Documents:

• Local Authorization

• Property Owner

Authorization

• Diagram of the Premises

• Closed-Loop System

Certification

• Surety Bond

• List of Cannabis Products

Descriptions or SOPs:

• Waste Disposal

• Inventory Control

• Quality Control

• Transportation

• Security




Annual License Application


Application & Licensing Fees

Application Fee – Paid when application is submitted

License Fee – Paid when application is approved

– Seven scaled tiers

– Based on gross annual revenue of the licensed premises




Making a Payment

• Include Payment Instructions Form

• Payment Forms Accepted– Application Fee: Cashier’s Check, Money Order or

Credit Card

– Make Payments to “California Department of Public Health”

– License Fee: Credit Card, E-Check, Cash

• Cash Location– Sacramento (Opening Soon)


How We Process Annual Applications

Check for Completeness

Contact Local Jurisdiction

(10 or 60 Days)

Review of Operational

Activities

Annual License Approved

License Fee Paid

Annual License Issued




AFTER YOU RECEIVE YOUR

LICENSE

ANNUAL LICENSE

Next Steps

• After you apply for your annual license:

– Sign Up for Track-and-Trace Webinar

• Tracking Movement of Cannabis Products

– Temporary License – Sales Invoice

– Annual License – Track-and-Trace

• Compliance Through Education




Transition Period (Jan 1 – July 1, 2018)

License Designations:

• A- and M-License overlap (until July 1, 2018)

Existing manufactured products:

• Secondary packaging: Child-resistant

• Add: Government warning statement, amount of THC/CBD per serving and per package

All products manufactured on/after January 1, 2018 must meet THC limits and product restrictions


Resources

Manufactured Cannabis Safety Branch (MCSB)

www.cdph.ca.gov/mcsb

[email protected]

Cannabis Portal

www.cannabis.ca.gov

Cannabizfile

www.sos.ca.gov

California Department of Tax & Fee Administration (CDTFA)

www.cdtfa.ca.gov

www.cdtfa.gov/industry/cannabis.html




Thank You




[email protected]

Cannabis Portal

www.cannabis.ca.gov


MANUFACTURED

CANNABIS SAFETY

BRANCH

THE ROAD TO JANUARY 1 :

OCT

LATE NOV

Community Lic nsing Fairs

Lic nsing ag nci s r l as m rg ncy r gulations

DEC Onlin lic nsing syst m launch s,

t mporary lic ns applications availabl

LATE DEC T mporary lic ns applications acc pt d

Ag nci s can b gin issuing cannabis lic ns s JAN , 20 8

EARLY 20 8 Lic nsing ag nci s issu p rman nt r gulations

AGENCIESWILL NOT ISSUE LICENSES EFFECTIVE BEFORE JAN , 20 8

CANNABIS LICENSING AGENCIES :

Bur au of Cannabis Control (Bur au)

Hous d within th D partm nt of Consum r Affairs, th Bur au is

th l ad ag ncy for cannabis in California and will lic ns r tail rs,

distributors, t sting labs and microbusin ss s.

www.bcc.ca.gov

Manufactur d Cannabis Saf ty Branch (MCSB)

Hous d within th D partm nt of Public H alth, MCSB will lic ns

manufactur rs of cannabis products. This includ s n arly all non-

flow r products ( dibl s, oils, tinctur s, tc.).


CalCannabis Cultivation Lic nsing (CalCannabis)

Hous d within th D partm nt of Food & Agricultur , CalCannabis will

lic ns cannabis cultivators and stablish a track-and-trac syst m to

r cord mov m nt of cannabis through th distribution chain.

www.calcannabis.cdfa.ca.gov

http:www.calcannabis.cdfa.ca.govwww.cdph.ca.gov/mcsbhttp:www.bcc.ca.gov

TEMPORARY LICENSES

At mporary lic ns isaconditional lic ns thatallowsabusin ssto

ngag incomm rcial cannabisactivity.Onc issu d, th s lic ns swill

b valid for 20 daysandmayb xt nd dforadditionalp riodsof90

days,atMCSB'sdiscr tion, if th busin sshassubmitt dacompl t

annual lic ns application.

T mporary lic ns applicationswill b availabl onth MCSBw bsit in

D c mb r20 7. Th applicationcanb submitt dvia mail ormail.

Instructionsforsubmissionwill b onth applicationandth MCSB

w bsit .

Lic ns swillnotb issu dwithan ff ctiv dat prior to

January ,20 8, butMCSB xp ctstob ginacc ptingt mporary

lic ns applicationsprior tothatdat .

TEMPORARY LICENSE APPLICATION CHECKLIST

Applicant & Busin ss Information: applicant nam , titl , phon numb r, mail, l gal busin ss nam , trad nam (DBA), and mailing addr ss

Pr mis Information: addr ss of manufacturing pr mis

Op rational Activiti s: product typ and manufacturing activiti s ( xtraction, infusion and/or packaging and lab ling)

Local Jurisdiction: Local jurisdiction and contact information

Attach Local Authorization: applicants must hav authorization from th city/county in which th pr mis is locat d to conduct comm rcial cannabis manufacturing op rations. This may b a cannabis busin ss lic ns , l tt r of acknowl dg m nt, tc.

NOTE: IF COMMERCIAL CANNABISMANUFACTURING IS PROHIBITED IN

YOURCITY/COUNTY, YOUWILL NOT BEABLE TOOBTAIN ASTATE LICENSE.

CALIFORNIA DEPARTMENTOF PUBLIC HEALTH

MANUFACTUREDCANNABIS SAFETY BRANCH

WWW.CDPH.CA.GOV/MCSB

WWW.CANNABIS.CA.GOV

[email protected]

PACKAGING & LABELING U N D E R S T A N D I N G S T A T U T E R U L E S F O R C A N N A B I S P R O D U C T S

BASIC PACKAGING REQUIREMENTS

products cannot be: packages must be: track-and-trace

attractive to children or

easily confused with

candy/foods that do

not contain cannabis.

re-sealable,

tamper-evident,

child-resistant, and

labeled.

Each cannabis product must

have a unique ID number for

identification and tracking

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

California Department of Public Health Manufactured Cannabis Safety Branch

PACKAGING & LABELING

"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.” (in bold print),

Manufactured cannabis products must be labeled with the following information:

WHAT'S ON THE LABEL?

date of manufacturing and packaging,

known allergens (nuts, etc.)

source and date of cultivation,

type of cannabis or cannabis product,

number of servings per package,

pharmacologically active ingredients (THC, CBD, etc.) and amount

(mg per serving),

"FOR MEDICAL USE ONLY" (for medicinal cannabis),

universal symbol for cannabis

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EMERGENCY REGULATIONS SUMMARY FOR CANNABIS MANUFACTURING

The California Department of Public Health (CDPH) is one of three state licensing authorities charged with licensing and

regulating commercial cannabis activity in California. CDPH is responsible for regulation of the manufacturing component

of the industry, which it will do through the Manufactured Cannabis Safety Branch.

In November 2017, CDPH released Emergency Regulations that outline the standards and licensing procedures for both

medicinal and adult-use commercial cannabis manufacturing and products. These replace the medicinal regulations

released in April 2017 developed in response to previous versions of state law.

Key Components of Cannabis Manufacturing Emergency Regulations

Temporary Licenses

CDPH will issue temporary licenses that allow a business to engage in commercial cannabis activity. Once issued, these

licenses will be valid for 120 days and may be extended for additional periods of 90 days, if the business has submitted a

complete annual license application. The application will be available on the CDPH website and can be submitted by mail

or email. City or county authorization to conduct commercial cannabis activity must be submitted with the temporary

license application. Once the application is received, CDPH will contact the city or county to verify the local authorization,

and the office will have 10 days to respond. There is no fee for the temporary license.

Annual Licenses

Applications for annual licenses will be accepted through an online licensing system that will launch in December 2017.

This application will require information on the business, owners and financial interest holders, and operating premises, as

well as descriptions of procedures for waste disposal, inventory and quality control, transportation and security. Businesses

in operation under the Compassionate Use Act prior to September 1, 2016, will receive priority application review.

Applicants must be in compliance with city or county ordinances. During the application review process, CDPH will contact

the city or county to verify the local authorization. If the applicant does not provide a copy of their local authorization, the

local office will have 60 days to respond. If the applicant includes a copy of their local authorization with their application,

the local office will have 10 days to respond.

License Categories & Types

Anyone conducting commercial cannabis manufacturing must obtain a license from CDPH. Each license issued will have

one category and one type.

The two license categories are:

A-License

Cannabis products for sale in

the adult-use market

M-License

Cannabis products for sale in

the medicinal market

A business may hold both M- and A-

Licenses at the same premises as long as

separate applications are completed.

The four license types are:

Type 7

Extraction using volatile solvents (ex: butane, hexane, pentane)

Type 6

Extraction using a non-volatile solvent or mechanical method

(ex: food-grade butter, oil, water, ethanol, or carbon dioxide)

Type N

Infusions (ex: using pre-extracted oils to create edibles, beverages,

capsules, vape cartridges, tinctures or topicals)

Type P

Packaging and labeling only

Operational Requirements

Licensees must have written procedures for inventory control, quality control, transportation, security and cannabis waste

disposal. Descriptions of these procedures or Standard Operating Procedures (SOPs) must be submitted with the annual

license application. Cannabis waste cannot be sold, must be placed in a secured area and be disposed of according to

applicable waste management laws.

Good manufacturing practices must be followed to ensure production occurs in a sanitary and hazard-free environment,

cannabis products are contaminant free and THC levels are consistent throughout the product and within required limits.

Extractions using CO2 or a volatile solvent must be conducted using a closed-loop system, certified by a California-licensed

engineer. Volatile, hydrocarbon-based solvents must have at least 99% purity. Finally, volatile solvent, CO2 and ethanol

extractions must be certified by the local fire code official.



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

www.cannabis.ca.gov

Product Standards and Prohibited Products

Products cannot be infused with nicotine or alcohol or have added caffeine. Edible products cannot be shaped like

a human, animal, insect, or fruit. Some potentially-hazardous foods, such as meat and seafood, and other products

requiring refrigeration, are prohibited for sale as cannabis products. Juice and dried meat made in accordance with

requirements are allowed. Perishable ingredients, such as eggs and milk, may be used as long as the final product

meets regulatory standards.

THC Limits

Edible products are limited to a maximum of 10 mg of THC per serving and 100 mg of THC per package. Other

cannabis products, such as tinctures, capsules and topicals, are limited to a maximum of 1,000 mg per package

for the adult-use market and 2,000 mg of THC per package for the medicinal-use market.

Packaging & Labeling

Cannabis product packaging cannot resemble traditionally available food packages, and edibles packaging must

be opaque. All manufactured products must be packaged before they are released to a distributor. In addition to

these requirements, statute requires that cannabis product packaging not be attractive to children and be tamper-

evident, re-sealable if the product includes multiple servings, and child-resistant.

Cannabis product labels must include an ingredient list, some nutritional facts and the CDPH-issued universal

symbol. The label may not refer to the product as a candy. In addition to these requirements, statute requires that

labels not be attractive to individuals under age 21 and include mandated warning statements and the amount of

THC content.

Annual License Fees

Application Fee – Processing fee of $1,000.00 per license

License Fee – Scaled according to the gross annual revenue of the licensed premises. These fees are intended to

cover costs of administering the manufactured cannabis safety program and range from $2,000 to $75,000.

Transition Period

The state licensing authorities have established a transition period, from January 1 until July 1, 2018, to support a

smooth transition into a newly regulated market. During this period, product will be allowed to move between

A- and M-licensees. Products manufactured prior to January 1, 2018, can be packaged in secondary packaging

that is child resistant, and stickers may be used for the government warning statement and amount of THC/CBD

per serving. All products manufactured on or after January 1, 2018 must meet THC limits and product restrictions.

Shared Manufacturing Facilities

CDPH is currently developing an additional license type, Type S, which will allow businesses to share facility space.

This license type will reduce barriers to entry into the legal, regulated market and ensure that cannabis products

are manufactured in clean, regulated facilities. This license type should be ready to be issued in early 2018.

Other Laws to Know:

California Business & Professions Code – Includes requirements set forth by MAUCRSA

Emergency Regulations released by the Bureau of Cannabis Control – Includes specific requirements for retailers,

distributors, third-party testing laboratories and microbusinesses

Emergency Regulations released by the CalCannabis Cultivation Licensing – Includes specific requirements for

cultivators and the track-and-trace system

Your Local City or County Ordinances

http://leginfo.legislature.ca.gov/faces/codes_displayexpandedbranch.xhtml?tocCode=BPC&division=10.&title=&part=&chapter=&article

State of California—Health and Human Services Agency California Department of Public Health

KAREN L. SMITH, MD, MPH EDMUND G. BROWN JR. Director and State Public Health Officer Governor

California Department of Public Health, Office of Regulations 1415 L Street, Suite 500, Sacramento, CA 95814

(916) 558-1710 ● (916) 440-5747 FAX Internet Address: www.cdph.ca.gov

FINDING OF EMERGENCY

Emergency Cannabis Regulations for

Cannabis Manufacturing Licensing

DPH-17-010E

The director of the California Department of Public Health (Department) finds that an

emergency exists and that the proposed emergency regulations, as required by the

legislature, are necessary to address a situation that calls for immediate action to avoid

serious harm to the public peace, health, safety or general welfare.

NOTICE AND INTRODUCTION

Notice is hereby given that the California Department of Public Health proposes to

adopt the regulations described below. Government Code section 11346.1(a)(2)

requires that, at least five working days prior to submission of the proposed emergency

action to the Office of Administrative Law, the adopting agency provide a notice of the

proposed emergency action to every person who has filed a request for notice of

regulatory action with the agency. After submission of the proposed emergency to the

Office of Administrative Law, the Office of Administrative Law shall allow interested

persons five calendar days to submit comments on the proposed emergency

regulations as set forth in Government Code section 11349.6.

DEEMED EMERGENCY

The Department has been provided specific statutory authority to adopt emergency

regulations as needed to implement the Medicinal and Adult Use Cannabis Regulation

and Safety Act (Act), codified in Business and Professions Code section 26000 et seq.

Section 26013, subdivision (b), paragraph (3) of the Business and Professions Code

states that “the initial adoption of emergency regulations and readoption of emergency

regulations authorized by this section shall be deemed an emergency and necessary for

the immediate preservation of the public peace, health, safety, or general welfare.”

The Department previously published a proposed regulatory action in April 2017, to

implement the Medical Cannabis Regulation and Safety Act (MCRSA). In July 2017,

the MCRSA was repealed, leaving the Department without statutory authority to

proceed with its previous rulemaking package. The same bill that repealed the MCRSA

also incorporated provisions from Proposition 64, or the Adult Use of Marijuana Act,

http://www.cdph.ca.gov/

DPH-17-010E

Page 2 of 7

approved by the voters in November 2016. Proposition 64 required that the

Department, along with the other state cannabis licensing authorities, begin issuing

licenses on January 1, 2018. After the two laws were combined in July, the licensing

authorities did not have sufficient time to promulgate permanent regulations to meet

their statutory responsibility to begin issuing licenses as of January 1, 2018.

AUTHORITY AND REFERENCE

The Department is proposing to adopt the proposed rulemaking under the authority

provided in sections 26001, 26011.5, 26012, 26013, 26050.1, 26051.5, 26054.2,

26057, 26106, 26120, and 26130 of the Business and Professions Code.

The Department is proposing to add Chapter 13 to Division 1 of Title 17, California

Code of Regulations in order to implement, interpret, or make specific sections 480 et

seq, 26000, 26001, 26010, 26011.5, 26012, 26013, 26030, 26031, 26050, 26050.1,

26051.5, 26053, 26054.2, 26055, 26057, 26058, 26060, 26062.5, 26067, 26070, 26106,

26120, 26121, 26130, 26131, 26132, 26133, 26134, 26135, 26140, 26150, 26160,

26161, 26180 of the Business and Professions Code; section 37104 of the Food and

Agriculture Code; and section 11018.1 of the Health and Safety Code.

INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW

Purpose

These proposed regulations will implement the Department’s responsibilities under the

Medicinal and Adult Use Cannabis Regulation and Safety Act (Act).

The proposed regulations will:

1. Establish the licensing scheme, including temporary licenses, for manufacturers

of manufactured cannabis products, including the requirements for applications

and the individuals or entities that are required to submit applications;

2. Establish licensing fees;

3. Set minimum standards for extraction processes;

4. Set minimum standards for sanitary manufacturing practices;

5. Establish licensee responsibilities for operations, including, among others,

requirements related to security, training, recordkeeping, and disposal;

6. Establish quality and safety standards for finished manufactured cannabis

products; and

7. Establish packaging and labeling standards for manufactured cannabis products.

DPH-17-010E

Page 3 of 7

Background

The Department is one of several state agencies with regulatory authority under the Act.

Primary responsibilities for administration and enforcement of the Act are divided

between:

• California Department of Food and Agriculture (CDFA), which will create, issue, and suspend or revoke licenses for the cultivation of cannabis.

• Bureau of Cannabis Control (Bureau) in the Department of Consumer Affairs, which will administer, enforce, create, issue, renew, discipline, suspend, and/or

revoke licenses for the transportation, storage unrelated to manufacturing

activities, and sale of cannabis within the state. The Bureau will issue licenses to

distributors, testing laboratories, and dispensaries.

• California Department of Public Health, which will license cannabis product manufacturers. The Department is also required to develop standards for the

production and labeling of all cannabis products.

Legislative History of Cannabis Regulation:

In 1996, voters approved the Compassionate Use Act (CUA), which allows patients and

primary caregivers to obtain and use medical marijuana, as recommended by a

physician, and prohibits physicians from being punished or denied any right or privilege

for making a medical marijuana recommendation to a patient. In 2003, Chapter 875,

Statutes of 2003 (Senate Bill (SB) 420) established the Medical Marijuana Program

(MMP), which allows patients and primary caregivers to collectively and cooperatively

cultivate medical marijuana. It also established a medical marijuana card program for

patients to use on a voluntary basis.

Passed in 2015, Assembly Bill (AB) 266 established the Medical Marijuana Regulation

and Safety Act (MMRSA) for the licensure and regulation of medical marijuana. Also

passed in 2015, AB 243 and SB 643, in conjunction with AB 266, established the

regulatory framework to regulate the cultivation, sale, testing, manufacturing and

transportation of medical cannabis in California. In 2016, several provisions of the

MMRSA were amended through SB 837, including a renaming of the law to the

MCRSA. Prior to the enactment of the MCRSA, California had no regulatory oversight

of medical cannabis at the state level. Some local jurisdictions regulated cannabis

cultivation or dispensaries.

In November 2016, voters passed Proposition 64, the Adult Use of Marijuana Act

(AUMA). The AUMA legalized the use of cannabis in California for non-medical

purposes for adults aged 21 and over. Thereafter, SB 94 (Chapter 27, Statutes of 2017)

DPH-17-010E

Page 4 of 7

made changes to the Medical Cannabis Regulation and Safety Act (MCRSA) and the

Adult Use of Marijuana Act (AUMA). It combined portions of both laws to create the

Medicinal and Adult-Use Cannabis Regulation and Safety Act (Act).

The Act establishes protection of the public as the primary concern of regulatory

agencies1. The Department considers public health and safety a critical element of

protecting the public and developed this proposal to protect public health and safety

through the establishment of the following:

• Safety requirements for extraction processes, especially volatile solvent extractions, to minimize potential negative effects;

• Security requirements to protect the physical safety of employees and to minimize the potential for diversion;

• Standard operating procedures to protect the integrity of the product throughout the manufacturing process by preventing contamination; and

• Product standards to protect public health by minimizing unintentional consumption by children and adults.

Policy Statement Overview

Problem Statement: Recently enacted statute requires the Department to license manufacturers of cannabis products and to set packaging and labeling standards for

such products.

Objectives (Goals): The objective of these proposed regulations is to implement the Department’s responsibility under the Act to protect public health and safety through the

licensing of cannabis product manufacturers, the establishment of safety standards for

cannabis products, and the establishment of minimum standards for packaging and

labeling of cannabis products.

These proposed regulations serve to implement the Department’s responsibilities under

the Act.

The emergency regulations proposed generally include the following overall areas to

implement the Act:

• Provides descriptions of the types of licenses to be issued by the Department; • Establishes required information to be submitted by an applicant for a license; • Provides processes for the rejection of license applications; • Establishes procedures for temporary licenses and priority licensing;

1 Business and Professions Code section 26011.5.

DPH-17-010E

Page 5 of 7

• Provides food and product safety processes in manufacturing and labeling; • Provides safety and security practices, and Cannabis waste disposal practices; • Establishes limitations of ingredients of Cannabis products including potency; • Provides requirements regarding child proof packaging, and other packaging

requirements.

Benefits: The benefits of the regulations, including benefits to the health and welfare of California residents, worker safety, and the state’s environment, are as follows:

• The proposal increases and strengthens the health and welfare of California residents, and worker safety by providing regulatory oversight to a previously

unregulated industry. The proposed regulations improve health benefits through

packaging and labeling requirements, minimum facility requirements, and product

standards. As a result of these regulations, the Department anticipates a more

sanitary and safer product that results in fewer instances of over-consumption,

consumption by children, potential exposure to product contaminants, or other

related harm to the consumer.

• These proposed regulations will also positively impact public safety through safety measures designed to reduce accidents involving explosions and fires.

STATEMENTS OF DETERMINATIONS AND ECONOMIC IMPACT ASSESSMENT

The Department has determined that the proposed regulatory action would have a

significant economic impact on California business enterprises and individuals. The

permanent regulations package will be accompanied by a Standardized Regulatory

Impact Assessment (SRIA) that will address the economic impact of the regulations.

EVALUATION AS TO WHETHER THE REGULATIONS ARE INCONSISTENT OR

INCOMPATIBLE WITH EXISTING STATE REGULATIONS

The Department has made a determination that these regulations are not inconsistent

or incompatible with existing state regulations. As the oversight of cannabis commercial

activity is a newly-created state responsibility, no other state regulations are already in

existence that address the same topic.

MANDATED BY FEDERAL LAW OR REGULATIONS

The Department has made a determination that this proposal is not mandated by

federal law or regulations.

LOCAL MANDATE

The Department has determined that this regulatory action would not impose a mandate

on local agencies or school districts, nor are there any costs for which reimbursement is

DPH-17-010E

Page 6 of 7

required by part 7 (commencing with Section 17500) of division 4 of the Government

Code.

FISCAL IMPACT ASSESSMENT

A. Cost to Any Local Agency or School District: None.

B. Cost or Savings to Any State Agency: Funding for the Department for FY 2017-18

is $12.8 million appropriated from the Cannabis Control Fund.

C. Other Nondiscretionary Cost or Savings Imposed on Local Agencies: None.

D. Cost or Savings in Federal Funding to the State: None.

DOCUMENTS RELIED UPON

The following studies, reports, and laws were used by the Department in development

of these regulations:

A. Dunkelberger, The Statutory Basis for the FDA’s Food Safety Assurance Programs: From GMP, to Emergency Permit Control, to HACCP (1995) 50 Food & Drug L.J. 357.

B. Colorado Department of Revenue, Marijuana Enforcement Division. House Bill 14-

1366 Marijuana Edibles Work Group Report. (January 30, 2015).

C. Guohua, et al., “Drug use and fatal motor vehicle crashes: A case-control study.”

(2013) 60 Accident Analysis and Prevention, pages 205-210.

D. Janczyk et al., “Two Hundred and Thirteen Cases of Marijuana Toxicoses in Dogs.”

(2014) 46 Veterinary Human Toxicology, pages 19-21.

E. Mead et al., Food Related Illness and Death in the United States (Sept.-Oct. 1999) 5 Journal of Emerging Infectious Diseases, pages 607-625.

F. Meier, A review of the additive health risk of cannabis and tobacco co-use (Sept. 1,

2016) 166 Drug Alcohol Depend., pages 6-12.

G. National Academies of Sciences, Engineering, and Medicine, The, The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research (2017). The National Academies Press.

H. Pava-Ripoll et al., Detection of Foodborne Bacterial Pathogens from Individual Filth Flies (Feb. 13, 2015) Journal of Visualized Experiments.

I. United States Department of Justice, Memorandum (“Cole Memo”), (Aug. 29, 2013).

J. United States Food and Drug Administration (USFDA), 2014 Reportable Food

Registry (2014).

K. USFDA, Bad Bug Book, The, Foodborne Pathogenic Microorganisms and Natural

Toxins (2012).

L. USFDA, Compliance Policy Guidance: Filth from Insects, Rodents, and other Pests in

Foods (Last updated: Nov. 14, 2002).

M. USFDA, 21 C.F.R. Part 117. Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food.

DPH-17-010E

Page 7 of 7

N. USFDA, 21 C.F.R. Part 111. Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements.

O. USFDA Compliance Policy Guide. Foods, Adulteration Involving Hard or Sharp

Foreign Objects (Last Updated: May 2005).

P. World Health Organization (WHO), Hazard prevention and control in the work

environment: Airborne dust (August 1999).

Q. WHO, Cockroaches: Their biology, distribution and control (1999).

CONTACT PERSON

Inquiries regarding the proposed regulatory action can be directed to Linda M. Cortez,

with the Office of Regulations at (916) 440-7807, or the designated backup contact,

Dawn Basciano at (916) 440-7367.

DPH-17-010E Cannabis Manufacturing Licensing

NOTE: This chapter and subsequent text is a new

adoption to California Code of Regulations, Title 17,

Division 1

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) “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.

(b) “Act” means the Medicinal and Adult-Use Cannabis Regulation and Safety Act,

codified at Business and Professions Code section 26000, et seq.

(c)“Actual yield” means the quantity that is actually produced at any appropriate step

of manufacture or packaging of a particular cannabis product.

(d) “Adequate” means that which is necessary to accomplish the intended purpose

to ensure cannabis product quality in keeping with good public health practice.

(e) “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.

(f) “Adulterated” or “adulteration” has the meaning stated in section 26131 of the

Business and Professions Code.

(g) “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.

(h) “Allergen cross-contact” means the unintentional incorporation of a food allergen

into a cannabis product.


Page 2 of 86

(i) “Applicant” means the owner that is applying on behalf of the commercial

cannabis business for a license to manufacture cannabis products.

(j) “Batch” or “production batch” means either:

(1) An amount of cannabis concentrate or extract produced in one production cycle

using the same extraction methods and standard operating procedures; or

(2) An amount of a type of cannabis product produced in one production cycle using

the same formulation and standard operating procedures.

(k) “Bureau” means the Bureau of Cannabis Control in the Department of Consumer

Affairs.

(l) “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 purif ied, tinctures, capsules,

suppositories, extracts, and vape cartridges.

(m) “Cannabis product” as used in this chapter means cannabis that has undergone

a process whereby the plant material has been transformed into a concentrate,

including, but not limited to, concentrated cannabis, or an edible or topical product

containing cannabis or concentrated cannabis and other ingredients.

(n) “Cannabis product quality,” “quality cannabis product,” or “quality” means that the

cannabis product consistently meets the established specifications for identity,

cannabinoid concentration (as defined in Section 5724 of Title 16 of the California Code

of Regulations) , composition, and limits on contaminants (as defined in Section 5718 to

5723, inclusive, of Title 16 of the California Code of Regulations), and has been

manufactured, packaged, labeled, and held under conditions to prevent adulteration and

misbranding.

(o) “Cannabis waste” is waste that contains cannabis or cannabis products.

(p) “CBD” means the compound cannabidiol.

(q) “Commercial-grade, non-residential door lock” means a lock manufactured for

commercial use.

(r) “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


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appear in the final form of the product. “Component” may include cannabis, cannabis

products used as ingredients, other ingredients, and processing aids.

(s) “Contact surface” means any surface that contacts cannabis products and

cannabis product components and those surfaces from which drainage, or other

transfer, onto the cannabis product or cannabis product components, occurs during the

normal course of operations. Examples of contact surfaces include containers, utensils,

tables, and equipment.

(t) “Department” means the State Department of Public Health.

(u) “Distribution” means the procurement, sale, and transport of cannabis and

cannabis products between licensees.

(v) “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.”

(w) “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.

(x) “Extraction” means a process by which cannabinoids are separated from

cannabis plant material through chemical or physical means.

(y) “Finished product” means a cannabis product in its final form to be sold at a retail

premises.

(z) “Hazard” means any biological, chemical, radiological, or physical agent that has

the potential to cause illness or injury.

(aa) “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.

(bb) “Informational panel” means any part of the cannabis product label that is not

the primary panel and that contains required labeling information.


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(cc) “Infusion” means a process by which cannabis, cannabinoids, or cannabis

concentrates are directly incorporated into a product formulation to produce a cannabis

product.

(dd) “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.

(ee) “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.

(ff) “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.

(gg) “Limited-access area” means an area in which cannabis is stored or held and is

only accessible to a licensee and authorized personnel.

(hh) “M-license” means a license issued for commercial cannabis activity involving

medicinal cannabis.

(ii) “Manufacturer licensee” or “licensee” means the holder of a manufacturer license

issued pursuant to the Act.

(jj) “Manufacture” means to compound, blend, extract, infuse, or otherwise make or

prepare a cannabis product.

(1) The term “manufacture” includes the following processes:

(A) Extraction processes;

(B) Infusion processes;

(C) Packaging or repackaging of cannabis products; and

(D) Labeling or relabeling the packages of cannabis products.

(2) 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; or


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(C) The collection of the glandular trichomes that are dislodged from the cannabis

plant incident to cultivation activities.

(kk) “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.

(ll) “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.

(mm) “Monitor” means to conduct a planned sequence of observations or

measurements to assess whether control measures are operating as intended.

(nn) “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.

(oo) “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.

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

(qq) “Personnel” means any worker engaged in the performance or supervision of

operations at a manufacturing facility and includes full-time employees, part-time

employees, temporary employees, contractors, and volunteers. For purposes of

training requirements, “personnel” also includes owner-operators.

(rr) “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 6 of 86

(ss) “Pest” means an 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.

(tt) “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.

(uu) “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.

(vv) “Primary panel” means the part of a cannabis product label that is most likely to

be displayed, presented, shown, or examined under customary conditions of display for

retail sale.

(ww) “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.

(xx) “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.”

(yy) “Qualified individual” means a person who has the education, training, or

experience (or a combination thereof) necessary to manufacture quality 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.


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(aaa) “Quality control” means a planned and systematic operation or procedure for

ensuring the quality of a cannabis product.

(bbb) “Quality control operation” means a planned and systematic procedure for

taking all actions necessary to prevent cannabis product(s) from being adulterated or

misbranded.

(ccc) “Quality control personnel” means any person, persons, or group, designated

by the licensee to be responsible for quality control operations.

(ddd) "Quarantine" means the storage or identification of a product, to prevent

distribution or transfer of the product.

(eee) “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.

(fff) “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.

(ggg) “Serving” means the designated amount of cannabis product established by

the manufacturer to constitute a single unit.

(hhh) “THC” means the compound tetrahydrocannabinol. For purposes of this

chapter, “THC” refers specifically to delta 9-tetrahydrocannabinol.

(iii) “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.

(jjj) “Topical cannabis product” means a cannabis product intended to be applied to

the skin rather than ingested or inhaled.

(kkk) “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.


Page 8 of 86

(lll)“UID” means the unique identifier for use in the track-and-trace system

established by the Department of Food and Agriculture in accordance with section

26069 of the Act.

(mmm) “Universal symbol” means the symbol developed by the Department

pursuant to paragraph (7) of subdivision (c) of section 26130 of the Act to indicate a

product contains cannabinoids.

(nnn) “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.

(ooo) “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.

(ppp) “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.

Authority: Sections 26012; 26013; and 26130, Business and Professions Code.

Reference: Sections 26001; 26120; 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) The requirements of subchapters 3, 4, and 5 shall apply to licensed

microbusinesses conducting manufacturing operations.


Page 9 of 86

Authority: Sections 26012; 26013; and 26130, Business and Professions Code.

Reference: Sections 26050; and 26106, 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

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

any of the following:

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

partnership;

(B) Each non-member manager or managing member of a limited liability company

for a commercial cannabis business that is organized as a limited liability company; and

(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) of section 26051.5 of the Act and shall be disclosed on the application for

licensure. 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.

(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;


Page 10 of 86

(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) Persons who hold a share of stock that is less than 5 percent of the total shares

in a publicly traded company.

Authority: Sections 26012; and 26013, Business and Professions Code. Reference:

Sections 26001; and 26051.5, Business and Professions Code.

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) A 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; 26013 and 26130, Business and Professions Code.

Reference: Sections 26053, 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 or cannabis products.


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(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.


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

§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 pursuant to Section 40131 is provided to the Department;

(B) Conduct infusion operations on the licensed premises, provided that the infusion

method is noted on the application form and that the relevant information pursuant to

Section 40131 is provided to the Department; and

(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

infusion method is noted on the application form and that the relevant information

pursuant to Section 40131 is provided to the Department.


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(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. 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 or wrapper. 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.


Reference: Sections 26012; 26050; and 26130, Business and Professions Code.


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SUBCHAPTER 2 – MANUFACTURING LICENSES

Article 1. Applications for Licensure

§40126. Temporary Licenses.

(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 a local

jurisdiction, that enables the applicant to conduct commercial cannabis business at the

location requested for the temporary license. 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 annual

licensure to the Department pursuant to Section 40128 prior to the initial expiration date

of the temporary license.

(d) A temporary license is a conditional license and authorizes the holder thereof to

engage in commercial cannabis activity as would be permitted under the privileges of

the license for which the applicant may submit an application to the licensing authority.

(e) Refusal by the Department to issue or extend a temporary license shall not

entitle the applicant to a hearing or appeal of the decision. Chapter 2 (commencing with

Section 480) of Division 1.5 and Chapter 4 (commencing with Section 26040) of the

Business and Professions Code shall not apply to temporary licenses.

(f) A temporary license does not obligate the Department to issue an annual license

to the temporary license holder, 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.


Page 14 of 86

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

Section 26050.1, Business and Professions Code.

§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 all of the following information:

(A) Business information specified in Section 40129;

(B) Owner information as specified in Section 40130; and

(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 that the

information provided is complete, true, and accurate, 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

section 26051.5 (a)(5)(A) of the Act. 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;

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

ordinances; and

(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.


Page 15 of 86


Reference: Sections 26050; 26051.5; and 26054, 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;

(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.

(11) The license type applied for and whether the application is for medicinal or

adult-use manufacturing.


Page 16 of 86

(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.


Reference: Sections26050; and 26051.5, Business and Professions Code.

§40130. Annual License Application Requirements - Owners.

(a) Each owner that is an individual shall submit all of the following information:

(1) Name;

(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; and

(8) Disclosure of all of the following, including dates and a description of the

circumstances, if applicable:

(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;


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(D) Any sanctions by a licensing authority, 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

with the application for consideration by the Department. 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

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.


Reference: Sections 26012; 26013; 26050; 26055; and 26130, Business and

Professions Code.

§40131. Annual License Application Requirements – Manufacturing Premises

and Operations Information.

The applicant shall submit all of 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;


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(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;

(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,

rooms, 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 to indicate 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 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;


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(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.

(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 is

otherwise exempt from public disclosure under the California Public Records Act in

Government Code section 6250 et seq.


Reference: Sections26050; 26050.1; 26055; and 26130, Business and Professions

Code.

§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