California's New Cannabis Law Expands Distribution Network

Yesterday, The Governor signed into law a bill that allows distributors to transport marijuana product to another distributor. To date, licensed distributors could only deliver marijuana product directly to a retailer. The change in current law will create a more efficient distribution network through multiple hubs, and will help operators in rural communities reach new retail markets.

Distributors are a significant link in the seed-to-sale process in that they fulfill the primary quality assurance role by coordinating the testing of marijuana product, ensuring that the analysis was performed on the appropriate batch, and that the marijuana is packaged and labeled in accordance with the regulations. Distributors must ensure that all these activities are appropriately entered into California’s inventory tracking system and collect the appropriate cultivation and excise taxes. The amended law does not change a distributor’s obligations, which will result in duplicative checks on marijuana before it hits the retail shelves. The extended distribution network should work together to establish automated processes that ensures that products maintain the appropriate quality level through the chain of custody while mitigating the costs associated with performing redundant reviews.