California Governor Signs Cannabis Control Department Bill | Fox Rothschild LLP

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On July 12, 2021, California Governor Gavin Newsom signed Assembly Bill 141 (AB-141), which creates the Department of Cannabis Control (DCC). The DCC will consolidate the three state cannabis programs – the Bureau of Cannabis Control (BCC), the California Department of Food and Agriculture’s CalCannabis Cultivation Licensing Division (CDFA), and the California Department of Health’s Department of Manufactured Cannabis Safety (CDPH) – into a single division, to centralize and simplify regulatory and licensing oversight in California. Governor Newsom has named Nicole Elliott as DCC’s first director.

The complexities associated with dealing with California’s three-headed cannabis regulatory monster – such as deciding which regulator to respond, understanding the various regulators involved in vertical integration, and keeping track of the frequent updates to each program – sometimes hampered the success of Entrepreneurs and companies in the cannabis industry.

The creation of the DCC aims to eliminate these problems. AB-141 transfers the “Powers, Duties, Purposes, Functions, Responsibilities and Powers” ​​of the BCC, CDFA and CDPH to the DCC.

“The state’s consolidation efforts are in line with the Newsom administration’s pledge to listen to and work with the California legal cannabis industry to streamline legal market participation by providing a single point of contact for licensed operators,” said Lourdes Castro Ramirez, secretary the of Business, Consumer Services and Housing (BCSH) Agency said in a statement.

In addition to consolidating California’s cannabis regulators, the DCC will also increase licensing transparency within the cannabis industry. AB-141 requires the DCC to post information on its Internet website about the status of any license issued by the DCC, including the address of a licensee. As of January 1, 2022, AB-141 will need this information to contain information about the suspension and revocation of licenses, as well as the final decisions of the DCC. However, AB-141 prohibits the disclosure of personal identification information, including home addresses, home telephone numbers, dates of birth, or social security numbers.

AB-141 includes a few additional notable changes:

  • The deadline for the issuing and renewal of provisional licenses by the DCC will be extended from January 1, 2022 to June 30, 2022. The DCC can issue a provisional license if the applicant has submitted a fully completed license application that includes the fulfillment of the following requirements:
    • The applicant can demonstrate compliance with the California Environmental Quality Act (CEQA) or demonstrate compliance is in progress.
    • The applicant can demonstrate compliance with local regulations or demonstrate compliance.
    • For a license application that includes cultivation, the applicant must submit one of the following documents
      • a final agreement to change the creek bed;
      • a draft creek bed modification agreement provided and signed by the Department of Fish and Wildlife (DFW) and returned to the DFW;
      • Written proof from the DFW that no streambed change agreement is required;
      • Written confirmation from the DFW that the applicant has submitted a 1602 notification, has paid the applicable fees and has “responded” to the DFW.
    • If an application for a cultivation license is made on or after January 1, 2022, the DCC may not issue a provisional license if the granting of such a license would result in the licensee holding multiple cultivation licenses on contiguous land of more than one acre the total canopy for outdoor cultivation or 22,000 square meters for mixed light or indoor cultivation.
    • The definition of “commercial cannabis” will be revised to include the activity of organizing cannabis events for temporary cannabis events. The bill would revise the definition of “manufacture” to include the packaging or label of a cannabis product. The bill would remove the definition of “manufacturer”.

The steady growth of the cannabis industry in California calls for a centralized regulator, and the passage of AB-141 provides the solution. The establishment of the DCC is a positive step in creating a navigable system in which participants will have adequate access to resources and a better understanding of the processes involved in owning and operating a cannabis business in California.

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