California Bureau of Cannabis Control (BCC) Proposed Final Regulations:
There are some quirky cannabis regulations seldom discussed by industry professionals which have a hidden impact on your business operations. Most business owners are, as they should be, preoccupied with the more prevalent draconian-styled regulations, like license fees, taxation, and testing.
Obviously the state has public safety concerns with the legalization of marijuana, but has the state overreached in its mission to craft “robust regulations” for the industry. Upon review of 142 pages of proposed regulations, we opted to shine light on what we consider to be quirky cannabis provisions that have gone unnoticed by cannabis business owners. Some are laughable, others insulting; and as to the remainder, the state’s regulation of your cannabis business simply never ends.
The California Bureau of Cannabis Control BCC proposed final cannabis regulations are currently under review of California Office of Administrative Law AOL to complete the rulemaking process. After considering the following, one might ask, what exactly were the rule-makers thinking when they wrote these provisions?
California Quirky Cannabis Regulations
No. 1No Naked Employees
5806 Attire and Conduct
No licensee shall employ or use the services of any “host or other person to mingle with the patrons” … “in the sale or service of cannabis goods in or upon the licensed premises while such person is unclothed or in such attire, costume, or clothing as to expose to view any portion of the male or female breast below the top of the areola or of any portion of the pubic hair, anus, cleft of the buttocks, vulva, or genitals.” Nor shall the licensee encourage or permit any person “to touch, caress, or fondle the breasts, buttocks, anus, or genitals of any other person.”
– Cannabis Strip Club?
No. 2Beware Of Fake Buyers
5805 Minor Decoys
“Peace officers may use a person under 21 years of age to attempt to purchase cannabis goods, for the purposes of enforcing the Act, and to apprehend licensees, employees, or agents of licensees who sell cannabis goods to minors.”
– Entrapment?
No. 3Your Coffee Cup Is Regulated
5041.1 Branded Merchandise Approval
If a licensed distributor, retailer, or microbusiness “wishes to sell branded merchandise” – goods other than cannabis such as clothing, hats, pencils, pens, keychains, mugs, water bottles, beverage glasses, notepads, lanyards, cannabis accessories – “the licensee must receive written approval from the Bureau.”
To obtain a approval, the licensee must submit a written request and provide a photograph to the Bureau. Notably, there appears a discrepancy in the language of the regulation 5041.1 as to whether or not approval is required for all items listed in §5000(b) definition of “branded merchandise.”
Is this kindergarten?
No. 4$500 State Fee To Modify Your Reception Area
5014 Licensing Fees
An application and licensing fee of $500 is charged for “Physical Modification of Premises.”
Alterations or modifications to the premises include, but are not limited to: “the removal, creation, or relocation of a wall or barrier; or changing the activities conducted in or the use of an area identified in the last premises diagram provided to the Bureau.”
Hidden fee for commercial lease space improvements?
No. 5Cannabis Goods Intended For Disposal Must First Be Destroyed On The Premises Except Vape Cartridges Filled With Cannabis Oil
5054 Destruction of Cannabis Goods Prior To Disposal
Cannabis goods intended for disposal must remain on the licensed premises until destroyed into cannabis waste. The licensee must restrict access to the cannabis goods intended for disposal, store the disposal goods separate from the other goods, and first destroy the goods “on the licensed premises.” This includes separating the cannabis goods from any packaging, or container rendering it “unrecognizable and unusable.”
However, the licensee is not required to empty vape cartridges of cannabis oil prior to disposal, “provided that the vape cartridge itself is unrecognizable and unusable at the time of disposal.”
Statutory rhetoric?
No. 6 You Get One Chance, With One Lab, To Test Your Cannabis
5305.1 Re-sampling
Once a cannabis sample has been obtained for testing by the laboratory employee – which sampling must be “video recorded with the batch number stated verbally or in writing on the video at the beginning of the video and a visible time and date indication on the video recording footage” (§5305) – a licensed distributor may not have another licensed testing laboratory sample or re-sample the same batch for regulatory compliance testing without the Bureau’s blessings, e.g. you must first making a written request to, and obtain, the Bureau’s written approval to re-sample the same batch (§5705(g).)
Unnecessary barrier to quality control leading to heightened chance for product recall?
No. 7 Unfettered Discretion To Audit Your Business 24/7 Without Notice
5037 Record Retention
Licensees shall keep and maintain all business records related to commercial cannabis activity for at least 7 years to and including (a)(9) “all other documents prepared or executed by an owner or their employees or assignees in connection with the licensed commercial cannabis business.”
(d) All records are subject to review by the Bureau anytime . . . . Prior notice by the Bureau to review records is not necessary. The Bureau may review records outside of the licensee’s standard daily business hours.”
– Something Unconstitutional About This, Right?
No. 8 Ultimate Veto Power Over Renewal Of Your Retail License
5019 Excessive Concentration
Even if you satisfy all licensing regulatory requirements on both the local and state levels – the Bureau maintains the exclusive discretion to deny you a license and/or deny renewal of your license if the Bureau determines that (a) “an excessive concentration exists in the [geographical] area” where you operate.
Excessive concentration applies when either of the following conditions exist: “(1) the ratio of licensees to population within the census tract or census division in which the applicant premises is located exceeds the ratio of licensees to population in the county in which the applicant premises is located . . . . (2) The ratio of retail licenses or microbusiness licenses to the population within the census tract, census division, or jurisdiction exceeds that allowable by local ordinance . . . .”
Should the Bureau deny your license on this basis, the burden is on the you, the applicant licensee, to (f) “provide reliable evidence establishing, to the satisfaction of the Bureau, that a denial of a license would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis goods.”
Unreasonable evidentiary burden and extraordinary cost on applicant licensee to conduct an economic field study on an illegal market that is, in effect, a legal impossibility to achieve under any circumstances.
The list goes on. While the California BCC has clearly satisfied its commitment to promulgate “robust state regulations” for the industry, one wonders about the state’s definition of robust.
An experienced corporate litigator having worked in both the private and government sectors, Attorney Robyn Ranke has taken a modern business approach to the cannabis industry and in working with cannabis business startups. Throughout her legal career, Robyn has represented a diverse base of business clientele in a variety of industries involving both complex and novel legal matters. Her diverse experience as a business litigator provides a valuable legal platform from which she is uniquely postured to address the regulatory hurdles, costly pitfalls, unique business transactions, and business litigation risks that confront California cannabis business owners today and into the future as state regulations continue to evolve.
Member Blog: Raising The Bar – Setting New Standards and Building Public Trust
In 1991, professors Harry G. Levine and Craig Reinarman published an article in the healthcare journal The Milbank Quarterly titled, “From Prohibition to Regulation: Lessons from Alcohol Policy for Drug Policy.”
In their study, they note the quiet effectiveness of an industry that has regulated itself without issue since 1934.
“The leaders of the major alcohol industries, just like other members of the economic establishment, have a strong investment in maintaining order and obedience to law. Now, many decades after national alcohol prohibition ended, it is easy to forget that all this was the outcome of self-conscious public policy and not the ‘natural’ result of market forces or national zeitgeist.”
As recreational cannabis laws continue to evolve, our industry—everyone from cultivators to regulators to entrepreneurs—continues to navigate uncharted territory. As we do, we would be wise to lean on the lessons of history and those responsible for managing and maintaining the alcohol industry in guiding our future. Here’s what my study of history leads me to believe:
Regulation Standards Must Do More to Protect the Consumer
I once had an English teacher who doled out chapter quizzes rather than assigning a culminating test or paper after we’d finished the book. Cram for the quiz by reading a CliffsNotes synopsis, or interrogate your more well-read friends on chapter highlights and chances were you’d pass the quiz.
It’s not unlike today’s state testing policies in which cultivators can breathe a sigh of relief knowing that if they simply do what’s needed to ensure the sample they have submitted for testing passes, their entire strain is in the clear.
The result of these kinds of regulations is a frenzy of activity focused on what’s needed to pass, rather than a shift in behavior focused on producing an altogether better product that is cleaner and safer for the consumer. A similar story goes for process validation. Submit batches for testing over a series of weeks and a passing grade ensures that your cultivation process can be considered “contaminant free.”
If our ultimate concern is public health, regulators should consider avenues that result in testing more product, more often. While there are certainly roadblocks that make this far from easy—namely the cost to cultivators and availability of labs for testing—steps in this direction would signal to consumers that shortcuts and workarounds won’t be tolerated.
An FDA-like approach to health and safety are needed to reshape our industry
Levine and Reinarman note that at the time of the prohibition repeal, producers of alcohol, “had to be regulated to ensure that products were safe and of a uniform alcohol content.” These regulatory efforts, “directly reshape[d] both an entire industry and the conditions under which its product are consumed.”
Sounds familiar. While state laws are slowly shifting to allow for greater medical and recreational use, the laws that shape the conditions under which cannabis can be cultivated, sold and consumed are still in flux. Not only do we have to add our voice to the conversation as those laws are being shaped, in doing so we have to advocate for both the industry and the consumer—with lawmakers and in public forums—showing our commitment to safety and uniformity.
That means instituting strict yet sensible FDA-like requirements that center on production, procurement and handling, as well as manufacturing, distribution and consumption of the finished product. It also means implementing common-sense standards like wearing protective gear in our grows, conducting regular analysis of critical control points like storage, packaging and distribution areas, and instituting a contamination kill-step before cannabis extraction is complete.
Reshaping the conditions in which we operate and aligning them with standards already in place for like-minded industries will do for us what it once did for alcohol: move us from an industry continuing its uphill battle for legitimacy to, “something routine and manageable, a little-noticed thread in the fabric of American life.”
We must recognize our responsibility and be conscious of the impact of our choices
Our industry is overflowing with individuals who treat cannabis not as a career, but a lifestyle. It isn’t just about the plant itself. We embrace it for what it represents and how it reflects our core attitudes towards humanity and our planet. Now it is also affording us the opportunity to make a profit in a legal and legitimate way.
As tempting as it is to be swayed by potential profitability, we can’t afford to lose ourselves in the process. Like the leaders of the alcohol industry, we have to be self-conscious about the precedent we are setting. If we can balance passion with profit, we can take pride in being pioneers who reshaped our country’s attitudes on cannabis.
If we take this moment for granted, if we fail to responsibly grow and sell our product, we do more than just damage our businesses; we lose the ability to influence lawmakers and further sway public opinion. Rather than driving cultural change, we will be at fault for failing to take advantage of a moment ripe for change. Now is our time to create our legacy and set the standard for years to come; to evolve our industry from legal to legitimate by being its leaders.
If we play our cards right today, our country may look back at this moment, as Levine and Reinarman suggest, and judge our previous attitudes towards cannabis prohibition much like alcohol prohibition, “repressive, unjust, expensive and ineffective.” With history as our guide, we have a chance to shape our future. Let’s take advantage of it.
Jill Ellsworth is CEO and founder of Willow Industries, which uses ozone-based technology to clean and purify flower and trim while maintaining a plant’s medicinal properties.
Jill is a Registered Dietitian Nutritionist (RDN) with a Master of Science in nutrition, dietetics, and food science.
The following topics are areas to be aware of while creating and designing packaging. Using these tips can save you time and money in the process of creating or selling cannabis products.
Originality of content – Imitating consumer packaged goods for your packaging design through parody of a popular brand logo or using parody in packaging design can lead to serious issues. Use packaging is an opportunity to define your brand.
Lead times – Timing and shipping are usually underrated factors that can cause headache and unnecessary costs. Depending on the complexity of the packaging, if tooling is be required, this can easily add six weeks to your delivery time. Is your packaging being produced domestically or internationally? How much space will packaging use and where will it be stored?
Issues compliance labeling on design – If you are creating a product to be sold at a dispensary, make sure to consider additional labeling that will appear on the final product delivered to customers at retail. There needs to be enough surface area or clever design to make sure your packaging identity isn’t lost amongst compliance stickers. If you are a retailer, it is important to educate salespeople about where to place required labels to not obscure important information that may be on the packaging.
Adaptable – Rules change constantly. Your company’s strategies to deal with changing regulations should include packaging and labeling. You could predict and order units based on when regulations go into effect, or start with packaging that goes beyond current standards. As a retailer, can you find a way to insist the brands you carry comply with child resistant standards or order more exit bags? Going above and beyond current regulations can save you money and elevate your product.
It is important to have packaging graphics that get noticed at retail. Consumers often skim shelves quickly looking for brands that are known to them or graphics that catch their eye. With limited space in dispensaries it is important to have branding that is well presented in the packaging. Creating packaging that represents your brand is best done early in the process so that it is not rushed and attainable lead times for desired packaging can be met. In our industry, states can update packaging guidelines at any time, make sure your final packaging adheres to all regulations structurally and graphically.
Member Spotlight: Simplifya
In this month’s Member Spotlight, we spoke with Marion Mariathasan, CEO of Simplifya. The company provides tools for scheduling, audit management, and tracking issues, giving users a 360-degree view of their compliance. The company was founded in 2016 by partners from Vicente Sederberg, the law firm that led Colorado’s Amendment 64 campaign, and investors with proven track records in tech start-ups.
Cannabis Industry Sector: Information Technology and Software
NCIA Sustaining Member Member Since: October 2016
Marion, tell us a bit about your background and why you launched your company?
I immigrated to Kansas from Sri Lanka when I was 9 years old. I attended both University of Kansas and Emporia State University studying Architecture, Computer Science and Computer Information Systems. After graduation, I took on my first technical role with a medical software company. Since then, I’ve been fortunate enough to have held management and executive level positions with incredible companies – large and small. In addition, I’ve been blessed with the opportunity to have either founded or be involved with many new startup-ups over the years.
Most recently prior to Simplifya, I was one of the founders of a tequila brand. After years of building and distributing the brand nationally, in 2015, we took an exit from the tequila business.
Soon after the exit, I reached out to a good family friend to learn more about the cannabis industry. The good friend happened to be Christian Sederberg of Vicente Sederberg. After a few discussions with Christian and a few others at Vicente Sederberg, it became obvious that the burgeoning cannabis industry needed an enterprise-level software solution to help the highly regulated industry tackle the everchanging compliance needs in a cost-effective and efficient way. After months of discussions and planning, in early 2016, Simplifya was born.
What unique value does your company offer to the cannabis industry?
Simplifya’s Brooke Butler presenting
Simplifya distills complex state and local regulations into a straightforward simple series of yes-or-no questions to generate management and audit reports, identify areas of noncompliance, and hold employees accountable for remediation. Simplifya helps save business owners time and money while providing them peace of mind by staying current with ever changing state and local regulations in real time and streamlining the overlap between jurisdictions and license types.
Simplifya also gives businesses the ability to atomize and store their own customized checklists and SOPs and then assign out those checklists to specific employees enabling companies to monitor business activities and employee performance.
Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?
The cannabis industry at the state and local level has an opportunity to demonstrate that it is worthy of the changes it is seeking at the federal level. There are a number of ways to do this, but creating and maintaining a strong compliance profile is an essential building block. It’s true for regulators, who want to show they are effective with their regulations and enforcement; and for marijuana business owners, who need to overcome the stereotype of being underground operators that don’t care about compliance. By behaving like the best players in other highly regulated industries, and doing things like developing robust compliance programs, actively participating in the rule-making process, and ultimately placing a very high priority on compliance as a path to success, the industry can continue to propel itself toward federal legalization.
Simplifya wanted to be able to provide a simple and affordable tool the industry could use to be able to more easily comply with ever changing regulations and enable them to be able to spend more time focusing on their core business and perfecting their craft.
Why did you join NCIA? What’s the best part about being a member?
One of the first checks that Simplifya wrote when we launched in 2016 was membership dues to the NCIA because we strongly believe the cannabis industry needs strong representation and lobbying power on the national level. We are all working in our own ways to pave the way forward for the cannabis industry and being able to come together as a group of industry leaders with one voice is truly powerful and exciting.
My favorite part of being an NCIA member is the chance to meet all of the other interesting and accomplished men and women that are a part of growing and changing this emerging industry. Many of the NCIA members I met at my first NCIA event shared their own invaluable experiences and insights that helped guide me and Simplifya when we first started this adventure into the cannabis industry. It is so empowering to be a part of an organization like the NCIA that provides forums and regular opportunities for us to help each other grow and succeed.
Member Spotlight: CannaRegs
This month, as we watch nine states vote on cannabis-related ballot initiatives on Election Day, we’re highlighting NCIA member CannaRegs, the company that is responsible for the data that appears on NCIA’s online State Marijuana Policies Map. Co-founder Amanda Ostrowitz prepares now to handle a flood of incoming data as new states begin to implement cannabis laws in the coming months and beyond.
Cannabis Industry Sector: Legal/Technology NCIA Member Since: 2015
Tell me a bit about your background and why you founded CannaRegs.
CannaRegs co-founder Amanda Ostrowitz
Prior to launching CannaRegs in May 2015, I was an attorney specializing in banking regulation. While serving in my position at the Federal Reserve Bank, I was engaged in several conversations regarding the issues of banking and cannabis. With just a few questions in mind, I began to research the rules and regulations of the cannabis industry. Although the questions seemed simple, it required several hours of research and more importantly, I noticed the answers varied by location, and at the state, county, and municipal levels. At that point I realized that I probably would not be able to fix the banking problem, but I had an idea to simplify researching the regulations into a user-friendly online database – CannaRegs was born!
What unique value does CannaRegs offer to the cannabis industry?
CannaRegs offers a unique value to the cannabis industry as the only cannabis-specific comprehensive research platform that aggregates state-, county-, and municipal-level law. Notable features of CannaRegs are:
Searchable Cannabis Rules and Regulations: The law on CannaRegs is searchable using three unique search functions—browse, smart search, and search laws. These search features were created by attorneys to address the difficulties encountered using conventional legal research tools. What previously took hours of research has been reduced to minutes.
No longer do you have to compile binders full of ordinances:CannaRegs’ technology and team of attorneys are constantly monitoring the law, keeping the database up to date. As new regulations and ordinances are adopted CannaRegs is the reliable source for a current amalgamated version of the law.
Rule-making Event Calendar: CannaRegs provides a consolidated schedule of rule and policy-making events happening around the U.S. In the month of October 2016, CannaRegs covered 82 municipal, county, and state-sanctioned meetings specific to marijuana.
Access to Official Publications: Where most databases provide access to the law, CannaRegs goes beyond by providing quick access to any official publications including forms, official guidance documents, industry bulletins, position statements, product recalls, etc.
CannaRegs Resource Tools: CannaRegs provides additional resource documents to help navigate the intricacies of cannabis rule-making.
CannaRegs & NCIA State Policy Map: This resource is the result of a collaboration between NCIA and CannaRegs that provides a detailed summary of each state’s cannabis market and regulations. This interactive resource is free to the public and is a great starting point for learning the basics about each state. CannaRegs keeps this map updated so that viewers are always looking at current information. Click on the map to see this unique member benefit or to sign up for a demo of CannaRegs.
With nine states voting for either adult-use or medical cannabis ballots on November 8, what does this mean in the larger scheme as it relates to your work?
The CannaRegs team of attorneys is prepared to begin monitoring laws and regulations for the nine state-level votes and more than 50 local marijuana ballot initiatives on November 8. It will be a busy time for the team, but it has also been exciting to see the growth in the number of CannaRegs users in anticipation of legalization.
In the larger scheme of things, the results of this election are likely to inform the trajectory of legalization for years to come. It is not just the number of states voting that is key, but also the states themselves.
California has the largest population of any state in the U.S., with nearly 12% of the entire country’s population living there. The results of California’s adult-use vote are likely to have a ripple effect throughout the country.
If California, Maine, Arizona, Massachusetts, and Nevada all approve adult-use, then nearly 25% of the U.S. population will live in states with adult-use cannabis.
If the medical initiatives in Arkansas, Florida, North Dakota and Montana all pass, then approximately 64% of the U.S. population will live in states with robust medical cannabis programs.
If the Arkansas initiative passes it will be the first state in the South to have a robust medical marijuana program. Combine that with the more limited program in Louisiana and it will only be a matter of time before the rest of the South embraces medical cannabis.
Three of the four states voting on medical cannabis are historically red states (Arkansas, North Dakota, and Montana). This is notable because up until now only two historically red states (Arizona and Alaska) have created robust medical marijuana programs. Louisiana has a more limited medical cannabis program than other red states.
Why did you join NCIA? What’s the best part about being a member?
CannaRegs joined NCIA to be able to connect with industry leaders and other cannabis organizations that are committed to best practices in the regulated market. NCIA offers several ways to support the industry in its efforts to legalize marijuana federally. As the most important trade association to the cannabis industry, NCIA has helped CannaRegs to connect with industry peers at annual conferences, networking events, or quarterly caucuses. CannaRegs was also excited to collaborate with NCIA on the creation of the State-By-State Marijuana Policy Map. We always look forward to connecting with other NCIA members, and provide a 15% subscription discount to other member businesses.
An experienced corporate litigator having worked in both the private and government sectors, Attorney Robyn Ranke has taken a modern business approach to the cannabis industry and in working with cannabis business startups. Throughout her legal career, Robyn has represented a diverse base of business clientele in a variety of industries involving both complex and novel legal matters. Her diverse experience as a business litigator provides a valuable legal platform from which she is uniquely postured to address the regulatory hurdles, costly pitfalls, unique business transactions, and business litigation risks that confront California cannabis business owners today and into the future as state regulations continue to evolve. 
Jill Ellsworth is CEO and founder of 
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