CDFA Regulations: What’s Changing (but mostly what’s not)

Luke EwingRegulatory NewsLeave a Comment

CDFA regulations

Happy 2019, everyone! As the cliche goes: New Year, New Me…Rules. After being notified in early December, it looks like California just approved a new set of cannabis regulations! Effective immediately! So what does this mean for all you Emerald Trianglers and other California growers under the newest CDFA regulations? Not that much, honestly.

CDFA regulations: What’s not changing?

The changes are all pretty tame and I’ve listed them later, but to me, the real surprise in the new regulations is what they chose not to include.

  1. No large licenses, and still no small license caps. There has long been controversy over the fact that the CDFA regulations both allow and disallow large grows. (What do you mean by that, Mr. Ewing?) Well, large cultivation licenses will not be available until 2023, so the size of any current cultivator license is limited to one acre. So, no big grows, right? Actually, if you have enough cash, there is still no limit on how many small licenses you can get. Not much of a difference between a 5-acre grow and 5 one-acre grows all next to each other. Many speculators believed that the CDFA would want to close this loophole. They didn’t exactly close the loophole, but it is smaller. The “shared areas” changes mentioned below (item 6 in the list) mean that these growers who hold multiple small licenses must have a separate processing, packaging, and storage area for harvested cannabis from each license. The change will still hit large cultivators in the pocketbook since they now have to create new processing and storage areas for each small license they hold, but they will still be free to continue growing as much product as they can afford to license.
  2. Still no (real) security requirements. Most marijuana regulations I encounter have very thorough security requirements. Alarm system specifications, surveillance system specifications, an exhaustive list of every area that must be monitored 24/7. Minimum resolution, cloud storage, backup power, panic alarm, electric strike locks! These kinds of rules are nowhere to be found in the CDFA’s new permanent regulations. Sure, there is now the requirement that staff be on site, and maybe the rule that you must halt operations upon discovering a dead body could be considered a security requirement. But that’s it. The only time the rules mention “security” (aside from social security) is in a mandate that all security lights are shielded to face downward. And you don’t even have to have security lights in the first place.
    CDFA regulations
    This could be an artifact of the fact that the CDFA generally regulates crops that don’t require stringent security measures to protect. No crime syndicate is going to send someone to steal your almonds and grapes in order to finance their operations. Okay, maybe sometimes they will, but it’s still not as likely as with a field of marijuana. So maybe this is just an ongoing blind spot in the mind of a CDFA regulator. On the other hand, no one requested security requirements in the latest notice and comment round, so maybe they are just enacting the will of the people. Regardless of the reason, California’s localities almost universally include security requirements in their marijuana ordinances and codes, so perhaps they will fill in the gaps left by CDFA.
  3. No permanent structure requirements. Because non-permanent structures like trailers and shipping containers are popular among growers and the BCC had decided to require permanent structures, many speculated that the same requirements would soon be coming to growers. Luckily for growers, this did not come to pass. You can still tend to your crops from the comfort of a space heater toolshed if you are so inclined. But don’t get too attached to that space heater, because renewable energy mandates are coming in 2023.

CDFA regulations: What is changing?

  1. Temporary licenses will be phased out. Existing licenses will be valid for 120 (calendar) days after their effective date, at which point, they won’t be renewed. Either get a permanent license or go back to the black market, I guess. Disclaimer: This is obviously a joke, do not actually go to the black market or your business will be shut down immediately.
  2. More environmental regulations! You now need to prove that your grow won’t screw up the local watershed 
    CDFA regulations
    (or other protected areas) and list all of your water sources as well as how they will be used. It is now clearer which type of generator permits you need for portable and stationary generators. You now have different evidence requirements for waste discharge from other cultivation licensees. The CDFA now explicitly lists the three registries from whom you can buy greenhouse gas offset credits. Lastly, you can now drop off your cannabis waste at a recycling center or recycle it on site.
  3. Outdoor Cultivators are now banned from using light deprivation because light dep is now included in the definition of Mixed-Light Cultivator. Okay, I suppose you’re not technically banned if you go get a Mixed-Light license, but do you really want to go through the application process again just to get your plants to flower earlier?
  4. New operating hours. Your business has to be operational for at least two hours between 8-5 each day, Monday-Friday, and an employee must be on site during those operating hours. Presumably, this is to discourage you farmers who like to plant your weed and then ignore it for months on end while all sorts of naughty people could be messing with your crops.
  5. A handful of compliance windows have been changed or clarified. The CDFA is clearly showing a penchant for calendars. They removed 19 mentions of “business days” (yes, I counted) and added 17 mentions of “calendar days.” The only exception is that the windows for administrative hearings will be measured in business days for some reason. Exciting stuff!
  6. Lastly, the CDFA regulations now require you to keep most areas separated if you hold multiple licenses. The only areas you are allowed to share between licenses are:
    • Storage of pesticides and agricultural chemicals
    • Composting
    • Secured areas for cannabis waste
    • Common breakrooms
    • Hallways
    • Breakrooms

So yeah, that’s about it. Keep on growin, growers!

Updated SOP templates address California BCC forms

Katelin EdwardsSimplifya NewsLeave a Comment

cannabis SOPs

California’s Bureau of Cannabis Control (BCC) recently announced the release of the proposed cannabis regulations that are right now under review by the California Office of Administrative Law (OAL). The Bureau’s rulemaking action regarding these regulations, initially noticed on July 13, 2018, was submitted to OAL for review on December 3, 2018. The proposed regulations have not yet been approved and are not currently in effect. While the regulations are under review, the readopted emergency regulations remain in effect. The OAL has 30 working days — until January 16, 2019 — to review the regulations. Not to mention that, in October, the BCC made changes to the proposed rules that were issued in July.

One major change to the readopted emergency regulations is the requirement that all applicants submit multiple forms to the BCC. These forms ask the applicant to provide detailed descriptions of the organization’s operating procedures. That doesn’t sound too tedious until you get ahold of the forms and realize how in-depth they are. California cannabis companies are left scratching their heads over how best to complete these forms and which regulations need to be addressed when filling out them out.

Using SOPs to solve for BCC forms

The solution for these BCC forms is standard operating procedures (SOPs). We drafted and edited numerous SOPs that provide thorough responses to the questions asked in the BCC’s forms. We also changed 68 SOP templates as a direct result of the updated rules. Key additions to the templates include:

  • Sharing security systems;
  • Facility pest control;
  • Tracking and monitoring delivery vehicles;
  • Auditing delivery activities;
  • Handling returns;
  • Employee inventory training;
  • Transporting cannabis goods by foot;
  • Environmental controls;
  • Inventory storage;
  • Facility maintenance and cleaning; and
  • Updating employee credentials.

All Simplifya SOPs reference the final version of BCC’s regulations. Our California retail and distribution SOPs have also been given a more general makeover. This “makeover” includes:

  • increased detail to policies and procedures,
  • more in-depth explanations of applicable definitions and resources needed for each SOP
  • additional procedures that are specific to California’s unique market, and
  • improvements in readability.

Here’s a breakdown of our California Retailer and Distribution SOP templates by category:

  • Books and Records (10)
  • Customers (1)
  • Deliveries (13)
  • Employees (17)
  • Facilities (2)
  • Inventory Management (24)
  • Inventory Tracking (11)
  • Quality (8)
  • Reporting Requirements (16)
  • Retail (4)
  • Sanitation (20)
  • Security (76)
  • Testing (2)
  • Transportation (6)
  • Visitors (4)
  • Waste (8)
  • Packaging and Labeling (4)

An illustration

An example of a Simplifya California SOP that has been created specifically to address the questions asked in the BCC forms is the Delivery Employee Training SOP. In the Delivery Procedures Form, the BCC asks that the applicant describe “the training provided to delivery employees.” Simplifya’s Delivery Employee Training SOP takes the BCC rules regarding delivery employees, cannabis goods carried during delivery, and the delivery route as well as general employee training standards and converts them into easy-to-follow tasks. Statewide delivery has been one of the most contested subjects within the proposed rules, so I would imagine the BCC will be very stringent when considering applicants wanting to participate in delivery. Therefore, comprehensive delivery SOPs are key.

Conclusion

As California works out the kinks of its legal cannabis market, it’s a good time for companies seeking retailer and distributor licenses to get their ducks in a row. One step in doing this is drafting detailed answers to the questions asked in BCC forms. Using Simplifya’s updated standard operating procedures to draft these answers is a great way to efficiently fulfill the license application requirement.

Updated SOP templates now available for Colorado

Katelin EdwardsSimplifya NewsLeave a Comment

cannabis SOPs

What better way to start your new year than by using SOP templates that comply with Colorado’s new marijuana rules? While most of us were sipping champagne and celebrating the New Year, Colorado’s updated marijuana rules went into effect. In a recent blog post, we pointed out the most significant changes to rules. Most notably, there are enhanced standards for audited products including nasal sprays, “weed lube,” and “butt pot.” But as tempting as it may be to consider marijuana-infused arousal lube, have you considered that these changes might mean for your company’s standard operating procedures (SOPs)?

SOP templates

A reminder about the benefit of our SOP templates

Let’s not forget that SOPs are required by the MED. They can also be used as a mitigating factor to prevent violations. Aside from compliance purposes, well-written SOPs can:

  • save time and training costs,
  • reduce risk,
  • increase productivity, and
  • control consistency and product quality for an organization.

As someone who has worked in the compliance department at a national marijuana company, I can say confidently that SOPs are very important documents. Updating SOPs when rules change should not fall by the wayside.

How Colorado’s update rules impacted our SOP templates

Although maintaining SOPs is critical, it is a very time consuming task that requires much attention to detail. That is why Simplifya updated its bundle of SOPs in alignment with the new rules. We changed 20 SOP templates as a direct result of the updated rules. Key changes and additions include:

  • fibrous waste procedures,
  • sampling manager designation in METRC,
  • sampling unit transfers,
  • cleaning and maintenance of equipment used in the production of audited use products,
  • facility requirements for MIPs manufacturing audited products,
  • cleaning and sanitizing requirements for audited products,
  • employee hygiene requirements for audited products,
  • audited products packaging and labeling checklists,
  • alternative use products packaging and labeling checklists,
  • sampling units packing and labeling checklists for transfer to sampling managers,
  • packaging and labeling checklists for kief products.

Additionally, all of Simplifya’s Colorado SOPs have been given a more general makeover. This “makeover” includes:

  • updated references to the MED’s proposed permanent retail and medical marijuana rules,
  • increased detail to policies and procedures,
  • more in-depth explanations of applicable definitions and resources needed for each SOP
  • additional procedures that are specific to Colorado’s unique market, and
  • improvements in readability.

Here’s a breakdown of our Colorado SOP templates by category:

  • Books and Records (1)
  • Cultivation (5)
  • Customers (1)
  • Employees (2)
  • Inventory Management (4)
  • Inventory Tracking (1)
  • Quality (1)
  • Sanitation (7)
  • Security (7)
  • Transportation (1)
  • Visitors (1)
  • Waste (5)
  • Packaging and Labeling (42)

An illustration

An example of a Simplifya Colorado SOP that has been created specifically to address the new MED rules is the Fibrous Waste SOP. SB18-187 gave the MED rule-making authority to allow cultivators and manufacturers to transfer marijuana fibrous waste to a company to make into industrial fiber products. The MED defined “fibrous waste” as any roots, stalks, and stems from a marijuana plant. The MED also outlined requirements about:

Simplifya’s Fibrous Waste SOP breaks down these requirements into easy-to-understand tasks. These tasks allow the employee responsible for handling fibrous waste to compliantly and efficiently store, weigh, record, and transfer fibrous waste.

Conclusion

These new rules might create an opportunity for your business to expand or they may lead to changes in your business operations. Therefore, relying on Simplifya’s updated and understandable standard operating procedures is a great way to guarantee compliance and efficiency throughout your organization’s departments.

Your cannabis business should have New Year’s resolutions too

Taylor Hart-BowlanGeneralLeave a Comment

cannabis business

If you’re anything like me, coming up with New Year’s resolutions for yourself (and sticking to them, for that matter) is just so … blegh.  For cannabis business owners, though, some healthy 2019 resolution-reflection time can go a long way in setting up a great year.

…But what should those goals be?

I’m so happy you asked! Here are some ideas to spark that elusive New-Year inspiration and get your company in gear for 2019.  

THERE WILL BE ORDER! 

New Year’s resolution idea #1: Perfect your record keeping

cannabis business resolution

Much like exercising is a necessary aspect of getting into shape, making sure that your business’s documents are organized is a high-priority must. If your office is a mess of papers (or your computer is a doc-storage nightmare), this resolution is for you.

Why is record-keeping so important? Because literally every state that has legalized marijuana has record-retention requirements, and some states impose mega-fines for not having all of those records organized and immediately available. For example, California requires all cannabis business owners to keep every document “related to commercial cannabis activity” for at least seven years. The penalty for not? A citation, for starters — and a fine of up to $30,000 per violation.

…You know what you don’t want for 2019 Future You? To end up frantically ripping apart your office one day because you can’t find a missing (and now potentially very expensive) visitor log sheet from August of 2014.

Nobody wants that future. Avoid it by using 2019 to get those records in order and creating a system to keep them that way.

CRANK UP YOUR CULTURE! 

New Year’s resolution idea #2: Revamp your employee education

A few weeks ago, I asked a budtender here in Denver if he could tell me more about “the butt pot stuff.” And, believe it or not, it wasn’t because I secretly have the maturity of a 12-year-old boy and wanted to say the phrase “butt pot” with a straight face. Rather, it was because Colorado had recently passed new rules regarding marijuana suppositories, and I was curious if this dispensary had relayed those updates to its employees.

Based on his stifled man-giggle of a response, it hadn’t.

cannabis business resolutions

Using 2019 to revisit (or implement) a quality ongoing training program for your employees benefits everyone involved. For one, providing your staff with continuing education on the industry allows them to relay that knowledge and expertise to customers and other businesses. In turn, that quality customer service helps build consumer loyalty, putting more cash in your business’s pocket. And who doesn’t want that? In addition, it tells your employees that they matter, especially if you let them help guide you by asking them where their interests lie.

A dispensary owner I know did this last year, and he was floored by how little some of his staff knew about manufacturing. However, he was also pleasantly surprised by how much those employees genuinely wanted to learn more. The result? An employee field trip to a manufacturing facility — and more motivated, educated budtenders.

How you do it doesn’t matter. Rather, what matters is that you provide your staff with engaging ways to broaden their knowledge — and increase their interest. Why not start in 2019?

DUST OFF THOSE SOPS! 

New Year’s resolution idea #3: Revisit your SOPs

When was the last time you updated your SOPs? If you’re like many businesses, the answer to that question may be something like: “The last time I had to submit them for an application renewal.”

Why is this a problem, you ask? Because it means the odds are pretty good that you’re only doing the bare minimum when you do update them — especially if it’s a situation like a license renewal application, which requires numerous other paperwork “face lifts” as well.

So here is a reminder: Your SOPs matter! In short, they dictate how your business operates — and if they’re “not that great,” your day-to-day operations might be paying the price. Taking the time to revisit these in 2019 can help your business ensure it’s compliant with the newest regulations. It can also have positive effects on your company’s efficiency, the quality of your product, and, well, why you do things the way you do.

For starters, checking your SOPs for completeness can go a long way: Are all of the packaging and labeling requirements included and current? Does each adequately address all appropriate hygiene and sanitation requirements?

Next, ask yourself how they can be better. Do any need more clarification or guidelines? Do they address what to do in unexpected circumstances? Perhaps most important: do they make sense to the people doing them?

Taking some time to really review the quality of your SOPs can help you position your business for a fantastic year — and make sure you remain compliant in the process.

3 cannabis industry predictions for 2019

Bill GunnisonRegulatory News1 Comment

cannabis 2019

It’s hard to make cannabis industry predictions, but some of the largest markets in the world will open for business in 2019. Billion dollar industries are on the horizon in places like New York City and Chicago. And, most importantly, the federal government is poised to enact cannabis reform.

Here are three cannabis industry predictions for  2019:

Cannabis Reform at the Federal Level

The Democratic takeover of the house in November makes cannabis reform at the federal level a real possibility in 2019.

Earl Blumenauer (D-OR) released a memo in October that contained a blueprint for how the 116th Congress could legalize marijuana. Committees that are key to the effort will now be lead by Democrats. Most notably, Pete Sessions (R-TX) is no longer the chair of the House rules committee. Sessions notoriously blocked every piece of cannabis legislation from reaching the house floor during his time as chair. Now that he’s gone, the long overdue debate on cannabis reform can finally begin.

I do not expect legalization at the federal level to happen immediately. Instead, I expect this next Congress to take incremental steps. I think it will address the 280E tax issue, the access to banking issue, and will protect states from federal intervention. However it plays out, reform is coming and it will be exciting to watch. Here are some bills to follow at the federal level in 2019:

Marijuana Revenue and Regulation Act

Marijuana Freedom and Opportunity Act

Ending Federal Marijuana Prohibition Act

Marijuana Justice Act

Strengthening the Tenth Amendment Through Entrusting States (STATES) Act

Recreational Cannabis in New York

Gov. Andrew Cuomo and New York City mayor Bill De Blasio have both indicated they would like to legalize cannabis for recreational purposes. And it could happen fast. Cuomo would like to somehow get it done in the first 100 days of his next administration.

It is important to note that Gov. Cuomo has the support of the State’s Health Department. The Department studied the issue extensively and concluded that the positive effects of a regulated cannabis market would outweigh the potential negative impacts.

New York City recently released its own report on cannabis legalization. Mayor De Blasio convened a marijuana task force to study the issue and make recommendations on how the industry should be regulated. That report previews what the city expects to see in any state-level legislation to regulate cannabis.

It will be interesting to see how the state and city work together to establish regulations for what could be one of the largest cannabis markets in the world. Keep an eye on the Empire state in 2019.

Recreational Cannabis in Illinois

Gov.-elect J.B. Pritzker campaigned on legalizing cannabis and intends to follow through in his first term. He is already in negotiations with legislators who are crafting the bill to regulate the industry.

State Rep. Heather Steans and State Sen. Kelly Cassidy introduced legislation in March to legalize recreational cannabis but that effort failed. They are ready to try again with the Governor’s support. They also have the public’s support.

Nearly 66% of registered voters in Illinois support cannabis legalization, according to a report from the Illinois Economic Policy Institute. The report also predicts that legal cannabis would create 24,000 jobs, generate $500 million in taxes (with a 26.25% state excise tax on retail marijuana and a 6.25% general sales tax), and inject $1 billion into the state economy.

2019: The Year of Cannabis?

2019 could be a huge year for cannabis. Cannabis businesses may finally access banking services, get relief from the 280E tax burden and the threat of federal intervention might go up in smoke. Further, billion-dollar markets will open in the nation’s biggest cities. Bold prediction: 2019 will go down in history as the Year of Cannabis. The analysts at Simplifya will be tracking every development!