December 13, 2017

California growers, it’s an exciting time to be in the cannabis industry. We are on the ground floor of a once in a generation opportunity with the end of prohibition in California only two weeks away.

While the Bureau of Cannabis Control has released the emergency regulations, there’s a maze of info to get through, especially for cultivators. The changes affect everyone, but will have the largest impact on those who grow cannabis.

Until now, a cultivator could self-distribute their own flower without too much hassle in the way of regulations. Once harvested, they cure it, trim it, pack it into turkey bags (or garbage bags), and bulk sell it to dispensaries using personal vehicles to transport the product.

All of this is changing in 2018. With the passing of Proposition 64, the California state government has instituted an entirely new regulatory structure for the California cannabis industry. In addition to allowing adults 21+ to legally purchase cannabis, the new laws require cultivators and manufacturers to hire a licensed distributor, or to obtain their own distribution or microbusiness license to self-distribute their products to retail dispensaries.

If you are inclined to distribute your own products, here are the 12 steps you must take in order to maintain compliance with the new laws, known as MAUCRSA:

Pay The Cultivation Tax
In 2018 and beyond, the Bureau of Cannabis Control is requiring cultivators to pay a new cultivation tax equal to $9.25 per ounce of dry flower, and $2.75/ounce of trim or shake when the product is being transferred to the next licensee (be it a manufacturer, distributor, or retailer). The new tax amounts to $148/pound of flower, and $44/pound of trim or shake.

Break down flower into batches
All flower must be broken down into batches before being placed in quarantine. The Bureau of Cannabis Control has defined the maximum batch size at 50 pounds. If you’ve got 500 pounds of flower, the law requires that you break it down into 10 50 pound batches.

Hold Flower/Trim in Quarantine
Once the flower, trim, or shake has been broken down into batches, it must be placed in a climate controlled quarantine area (ideally with temperatures in the 41-65F range, with 59-63% humidity for optimal storage conditions). Quarantine rooms must also be outfitted with multiple video cameras to enable the Bureau to spot check sampling procedures as lab techs take random samples from each batch.

Arrange for lab testing
Once flower is placed in quarantine, you must arrange for a lab technician/courier to come to your facility and take random samples from every batch of flower in the quarantine room. Every batch of flower must be tested for potency, pesticides, yeast, mold and heavy metals. Product must be held in quarantine until the lab reports back with satisfactory test results.

Oversee sampling procedures
As a self-distributor, you will be required to oversee the sampling process to ensure the proper sampling methods were implemented by the lab technician/courier. Testing lab employees are required to take samples equal to .70% of each batch. That’s .35% for the primary sample, and .35% for the field sample.

Move cannabis to a climate-controlled storage area
Once the lab reports back with satisfactory results, place cannabis in a climate-controlled storage area with temperatures in the 41-65F range with 59-63% humidity. This will preserve the quality of the product.

Package cannabis
Perhaps the largest change to the law is the packaging requirement. All flower must be packaged before it is transported to retail stores. Cannabis must be packaged in child-resistant, opaque, tamper evident packages (e.g. bags, jars, bottles or boxes) before transporting to retailers.

Labeling cannabis
All packages must include a label with the product’s lab results, as well as the state’s disclaimer for cannabis: “GOVERNMENT WARNING: THIS PACKAGE CONTAINS CANNABIS, A SCHEDULE I CONTROLLED SUBSTANCE. KEEP OUT OF REACH OF CHILDREN AND ANIMALS. CANNABIS MAY ONLY BE POSSESSED OR CONSUMED BY PERSONS 21 YEARS OF AGE OR OLDER UNLESS THE PERSON IS A QUALIFIED PATIENT. CANNABIS USE WHILE PREGNANT OR BREASTFEEDING MAY BE HARMFUL. CONSUMPTION OF CANNABIS IMPAIRS YOUR ABILITY TO DRIVE AND OPERATE MACHINERY. PLEASE USE EXTREME CAUTION.”

2) For packages containing only dried flower, the net weight of cannabis in the package.

3) Identification of the source and date of cultivation, the type of cannabis or cannabis product and the date of manufacturing and packaging.

4) The appellation of origin, if any.

5) List of pharmacologically active ingredients, including, but not limited to, tetrahydrocannabinol (THC), cannabidiol (CBD), and other cannabinoid content, the THC and other cannabinoid amount in milligrams per serving, servings per package, and the THC and other cannabinoid amount in milligrams for the package total.

 6) A warning if nuts or other known allergens are used.

 7) Information associated with the unique identifier issued by the Department of Food and Agriculture.

 8) For a medicinal cannabis product sold at a retailer, the statement “FOR MEDICAL USE ONLY.”

 9) Any other requirement set by the bureau or the State Department of Public Health. 

Perform a quality assurance review
All products ready for transportation to retail dispensaries must be reviewed for quality assurance purposes. The quantity of the products being shipped must match the shipping manifest, the manifest must match the order placed by the store(s), and the labels on each package must match the lab results. In addition, all packages must be checked to ensure that they include the state’s disclaimers before they are transported to retail dispensaries.

Create digital and physical shipping manifests prior to transporting to retailers 
State law requires all cannabis products being transported to be logged in both a digital and physical shipping manifest before transporting. Shipping manifests must include

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.

Transportation
Transport cannabis to dispensaries using compliant delivery vehicles. All vehicles used to transport cannabis must be secure delivery vehicles with separate lockable storage compartments, refrigeration units, and alarm systems.

Tax collection
Collect excise tax from dispensaries in the amount of 15% of the value of the products they've sold. Remit both the cultivation tax and the excise taxes to the Bureau of Cannabis Control.

In addition to the onerous requirements above, distributors will also be required to be adequately insured and bonded in order to operate.

Pushr is a proud member of the California Grower's Association, and we believe in supporting family owned farms. Should you have any questions about distribution, or simply want to connect, don’t hesitate to contact us here

Dan Ripoll is co-founder and CEO of Pushr, a cannabis distributor located in Southern California.