proposed_rule

Los Angeles to Shut Off Illegal Pot Shops' Electricity

Los Angeles will soon be adopting an ordinance that is aimed at shutting down illegal pot shops. The Los Angeles City Council directed the City Attorney to draft an ordinance as quickly as possible. At a meeting held on February 26, 2019, City Council members voiced their frustration over the inability to effectively shut down the illegal operations that are not following the rules. Illegal pot shops reduce the city’s overall tax revenues and engage in criminal activities.

The proposed ordinance would allow the Los Angeles Department of Water and Power (LADWP) to disconnect utility services after the Department of Cannabis Regulation has informed the illegal pot shop that it needs a license to operate, and a Los Angeles city department confirms that illegal cannabis activity is occurring at the address

The city of Los Angeles started to focus on shutting unlicensed cannabis businesses in July 2018. The Los Angeles Police Department issued a report on November 9, 2018 that noted that, in the last year, it executed 143 search warrants on unlicensed businesses, and made 435 arrests. The LAPD also confiscated 67 firearms, over $600,000 in money and 34,852 pounds of cannabis. The arrests did little to stop the reopening of the unlicensed businesses. The LAPD indicated that additional enforcement efforts are needed as the misdemeanor charges for most violations is not adequate.

Mendocino County to Prohibit Hemp Growing Until California Hemp Program is Operational

The Mendocino County Board of Supervisors will meet on Tuesday, February 26, 2019 to discuss adopting an ordinance that would prohibit the growing of hemp in the county. The temporary moratorium is needed until California’s Industrial Hemp Advisory Board develops the regulations for the registration and oversight of hemp cultivators. Mendocino County’s ordinance indicates that persons who grow hemp ahead of these regulations will violate the county’s cannabis regulations including the evasion of the cannabis tax. Growing hemp before the county is prepared could cause cross-pollination risks to licensed outdoor cannabis cultivators in the county. The county is concerned that pollen from the male hemp plants will travel and cross pollinate with female cannabis plants, which would result in the destruction of the cannabis crop. Mendocino County also notes that California has yet to identify and approve seed sources for industrial hemp. The county notes that unapproved hemp seeds can increase the risk of exotic weed infestation or plant disease, which are costly to eradicate. Under the ordinance, the Board of Supervisors has directed the county’s staff to prepare an ordinance addressing these risks and the process for growing hemp.

Public Comment Period for Missouri Hemp Pilot Program Rules Closes Tomorrow

The public comment period for Missouri’s proposed rules to implement the industrial hemp pilot program closes tomorrow. Missouri’s Department of Agriculture (DOA) published proposed rules for the industrial hemp agricultural pilot program. Missouri enacted the Industrial Hemp Act on August 28, 2018 under which the DOA is directed to establish a registration framework for the cultivation and handling of industrial hemp. Under current hemp CBD regulations, the DOA is authorized to approve only 2 non-profit growers and processors that make hemp extract. The new rules remove the license cap and offer new opportunity to grow out the hemp industry in the state.

The proposed rules establish requirements for the registration of industrial hemp growers and handlers. The proposed registration fee for growers, handlers, processors of fiber or leaf and/or floral material component, and agricultural hemp seed production is $500. Growers pay an additional $45 per acre to be planter, and a $45 per acre renewal fee for the second and third year of registration. Processors of CBD oil will pay $3,000. Hemp registrations are effective for a three year period, which is different from other states that require an annual renewal. Applicants will also need to submit a $100 application fee.

Interested individuals may submit written comments to the following address. The DOA will not hold a public hearing.

Missouri Department of Agriculture, ATTN: John Brunnert, PO Box 630, 1616 Missouri Boulevard, Jefferson City, MO 65102, or online at Agriculture.Mo.Gov/proposed-rules/.


Denver to Review Changes to Cannabis Social Consumption Rules

The Denver City Council will review the cannabis social consumption pilot program and repeal the sunset date during a meeting on January 28, 2019. Denver adopted the social consumption rules in July 2017. Under the rules, persons can apply for a permit to operate a cannabis consumption establishment or a cannabis consumption special event license. A cannabis consumption establishment can designate an area where cannabis can be consumed; whereas the cannabis special event license permits a designated area for consumption for up to 10 days in one year. The original rule included a December 31, 2020 sunset date. The proposed legislation will repeal this sunset date.

During the meeting, the City Council will also review a presentation on the distance requirements for marijuana social consumption areas. The presentation analyzes the availability of new areas that would be available if the city lowered the buffering zones from 1000 feet to 500 feet. The presentation indicates that the availability of new sites will not be significantly impacted by a decrease in the buffer zone requirements.

Nevada: Las Vegas to Hold Public Meeting on Monday to Hear Comments on Proposed Social Use Venue Law

At today’s planning commission meeting, the Las Vegas City Council will re-consider a proposal to permit cannabis social use venues in the city . Under current law, consumption of cannabis products must occur within a personal residence. The ordinance would provide a venue for persons to socially consume marijuana. The city expects to issue no more than 10 licenses in the near future. Las Vegas expects to make $50,000 from registration fees in the first year. The proposed ordinance is similar to the social consumption licenses offered in Denver, Colorado that allows persons to bring their own cannabis to a venue for consumption.

The proposed Bill No. 2018-61 would permit a registrant open an establishment where people can socially use marijuana and purchase beer or wine. The social venue may not sell, provide or distribute cannabis products. Nor can the social venue store marijuana products. If alcohol is sold, the proposed bill limits the sale to alcoholic beverages with less than 11% alcohol, the alcohol must be pre-mixed and in its original container.

Las Vegas has also scheduled a meeting on Monday, January 14, 2019 to hear public comments on the proposed ordinance. Interested parties should attend and provide feedback on the city’s plan.

Missouri Eliminates Hemp Extract Producer Cap With Proposed Industrial Hemp Rules

Missouri’s Department of Agriculture (DOA) published proposed rules for the industrial hemp agricultural pilot program. Missouri enacted the Industrial Hemp Act on August 28, 2018 under which the DOA is directed to establish a registration framework for the cultivation and handling of industrial hemp. The DOA will accept public comments on the proposed rules for thirty (30) days following the January 2, 2019 publication date. Under current hemp CBD regulations, the DOA is authorized to approve only 2 non-profit growers and processors that make hemp extract. The new rules remove the license cap and offer new opportunity to grow out the hemp industry in the state.

The proposed rules establish requirements for the registration of industrial hemp growers and handlers. The proposed registration fee for growers, handlers, processors of fiber or leaf and/or floral material component, and agricultural hemp seed production is $500. Growers pay an additional $45 per acre to be planter, and a $45 per acre renewal fee for the second and third year of registration. Processors of CBD oil will pay $3,000. Hemp registrations are effective for a three year period, which is different from other states that require an annual renewal. Applicants will also need to submit a $100 application fee.

Interested individuals may submit written comments to the following address. The DOA will not hold a public hearing.

Missouri Department of Agriculture, ATTN: John Brunnert, PO Box 630, 1616 Missouri Boulevard, Jefferson City, MO 65102, or online at Agriculture.Mo.Gov/proposed-rules/.

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Alaska: 4:30 PM Deadline for Comments on 5 Proposed Rules: Inventory Tracking, Inspections of Business Operations, Permit Card Renewal Fee, Sample Jar, and Business Operations

The comment period for five (5) rules proposed by the Alaska Marijuana Control Board (MCB) will close today at 4:30 pm. The rule changes will provide the MCB with the authority and information that is needed to adequately oversee the marijuana industry. Marijuana establishments will be required to ensure that employees follow approved operating procedures and processes. A summary of the rules proposals, the impact on marijuana establishments and recommended changes are provided below.

  • Marijuana Establishment Inspections:

    • Entities Impacted: All Marijuana Establishments

    • Summary of Change: The rule proposal amends current rule 3 AAC 306.725(a) to expand the MCB’s ability to inspect not only storage areas, but also waste disposal and other elements of business operations.

    • Impact of Change: The rule amendment will provide the MCB with authority to perform complete inspections of a marijuana establishment.

    • Compliance Enhancements: Marijuana establishments should review waste disposal areas and processes for adherence to the operating plan.

  • Acting in Accordance with Operating Plan Approved by MCB:

    • Entities Impacted: All Marijuana Establishments

    • Summary of Change: The rule proposal amends 3 AAC 306.703 to provide that marijuana establishments must follow the operating plan that was approved by the MCB. Marijuana establishments must also obtain approval the MCB’s prior to changing the operating plan.

    • Impact of Change: The proposal increases enforcement risk for all marijuana establishments. The amendments fail to provide a materiality standard against which adherence to the operating plan can be measured. Without such a standard, the MCB could determine that any failure to follow the operating plan, regardless of the materiality, is a rule violation.

    • Compliance Enhancements: Marijuana establishments should also implement a supervisory checklist process and a periodic testing program to demonstrate adherence to the operating plan. Employees should trained on the new requirements.

  • Marijuana Handler Permit Card Renewal Fee:

    • Entities Impacted: All Marijuana Establishments

    • Summary of Change: The rule proposal clarifies that a $50 fee will be charged for new and renewed marijuana handler permit cards.

    • Impact of Change: The change increases operating costs by implementing renewal fees. It is unclear whether a fee is charged for the replacement of a lost marijuana handler permit card.

  • Inventory Tracking and Harvest Grading:

    • Entities Impacted: Cultivators

    • Summary of Change: The rule proposal requires cultivators to include assign identification numbers to seeds for tracking in the inventory tracking system under 3 AAC 306.435(a). The rule proposal also cleans up the definition of harvest batch, and increases the harvest size to 10 lbs.

    • Impact of Change: Cultivators will need to input seeds into the tracking and trading system, and ensure that all plants and seeds are transported using a shipping manifest and entered into the inventory tracking system. Cultivators should ensure that the rule language provides enough clarity around the initial entry of a seed inventory into the tracking system. The MCB should also clarify how cultivators should record the sale and transport of plants that are shorter than 8 inches under 3 AAC 306.435(b) as cultivators are not required to assign an identification number to these plants under 3 AAC 306.435(a).

    • Compliance Enhancements: Marijuana cultivators should review operating plans and procedures to incorporate the additional requirements. In addition, marijuana cultivators should train employees on the new requirements and procedures.

  • Sample in a Jar:

    • Entities Impacted: Retail Marijuana Stores

    • Summary of Change: The proposal allows retail marijuana stores to provide a sample jar to customers to smell a marijuana product prior to purchase.

    • Impact of Change: The rule amendment under 3 AAC 306.325(d) provides that “the jar must remain in the monitored custody of the retail marijuana store during consumer inspection.” The MCB should provide clarity around the requirements for monitoring custody and address situations in which a video may be obstructed by the sales person or consumer.

    • Compliance Enhancements: Marijuana retailers should review their operating plan and procedures to incorporate the additional requirements. In addition, marijuana retailers should review the video surveillance angles and coverage.

ALASKA: COMMENT LETTER DEADLINE FOR INVENTORY TRACKING AND HARVEST GRADING

  • Wednesday, December 12, 2018

  • 4:30 PM  5:30 PM

ALASKA: COMMENT LETTER DEADLINE FOR INSPECTIONS OF WASTE DISPOSAL AND OTHER ELEMENTS OF BUSINESS OPERATIONS

  • Wednesday, December 12, 2018

  • 4:30 PM  5:30 PM

ALASKA: COMMENT LETTER DEADLINE FOR SAMPLE IN A JAR REGULATION

  • Wednesday, December 12, 2018

  • 4:30 PM  5:30 PM

ALASKA: COMMENT LETTER DEADLINE FOR OPERATING ESTABLISHMENT IN ACCORDANCE WITH PLAN APPROVED BY BOARD

  • Wednesday, December 12, 2018

  • 4:30 PM  5:30 PM

ALASKA: COMMENT LETTER DEADLINE FOR MARIJUANA HANDLER PERMIT CARD FEES

  • Wednesday, December 12, 2018

  • 4:30 PM  5:30 PM

California Cultivators: Comment Period on State Water Board's Cannabis Cultivation Policy Ends at 12PM Today

The comment period for the State Water Board’s Cannabis Cultivation Policy ends at 12pm PT today. The Cannabis Cultivation Policy will apply statewide. The Policy will implement measures that mitigate the negative environmental impact of cannabis cultivation including diversion of water and waste runoff. The principles and guidelines apply to the cultivation of commercial and medicinal personal use cannabis. The cultivation of recreational cannabis for personal use (6 plants) is exempted from the Policy.

CALIFORNIA: STATE WATER BOARD: COMMENT PERIOD ON CANNABIS CULTIVATION POLICY

  • Tuesday, November 27, 2018

  • 12:00 PM  1:00 PM

Cannabis Regulatory Analysis for 2018: Hyper-Active Rulemaking to Continue

Alaska, California, Colorado, Oregon, Nevada and Washington engaged in a tremendous amount of rulemaking in 2018 implementing new legislation and making technical rule changes. Both California and Colorado are completing permanent cannabis regulations, which will phase out emergency rules and temporary licenses.

The volume of rulemaking is compounded by additional rules adopted by local counties, cities, and municipalities to address zoning requirements and time, place and manner requirements for the day-to-day business operations.

What does all of this mean for the Cannabis Industry?

We expect the rate of rulemaking to continue into 2019 as the industry matures, and the regulators identify and address specific areas of risk for public health and safety. Regulators are fine-tuning rules to correct technical problems, implement the new state legislation, right social injustices and to close holes that impede the investigation or enforcement of rule violations.
 

The active rulemaking calendar is also attributed to the lack of certainty around the federal legalization of cannabis.  State regulators are protecting state businesses and consumers from the prosecution by the federal government for the possession or sale of cannabis.

This means that the states must ensure to adopt regulations that address the enforcement priorities raised by the DOJ in the 2014 Cole Memo including: 

  • the sale of cannabis to minors;

  • the profiting of criminal enterprises; the diversion of cannabis to other states;

  • the sale of illegal drugs under the guise of a legal license; the prevention of violence or the use of violence or firearms in the cultivation or distribution of cannabis;

  • the prevention of drugged driving or other public health issues;

  • the prevention of the growing of marijuana on public lands; and

  • the prevention of the possession or use of cannabis on federal property


A review of 2018 rulemaking reveals that state regulators are primarily focusing on the following DOJ's enforcement priorities.

Diversion of Marijuana Products:  Regulators are focusing on reducing the sale of cannabis in the black market by enhancing insight into the lifecycle of marijuana products, from the production of inventory through to its sale, by further refining inventory tracking systems and surveillance video retention requirements. 

Regarding inventory tracking systems, regulators are expanding the products that must use an identification number and tracked in the inventory systems. They are also focused on instituting appropriate penalties that will help ensure that marijuana establishments accurately enter inventory. We expect inventory tracking to remain a high compliance risk area for marijuana establishments in order to motivate them to implement proper controls designed to protect the health and safety of the public and consumers.  

Regulators are also amending the surveillance recording retention requirements to ensure that videotapes exist for all time periods being investigated.  We expect this area to evolve as enforcement actions continue to reveal failures by marijuana establishments to ensure the proper functioning of surveillance cameras and retention of videotapes

Marijuana Products that are Attractive to Children:  Regulators continue to struggle with providing guidance to cannabis establishments on the types of products that are considered attractive to children.  These issues should be fleshed out over the next six months as Oregon and Washington implement their packaging and labeling rules. Washington has started an industry dialogue as it announced that all products will be re-reviewed as a part of the phased-in process for the new packaging regulations.  Industry participants should consider establishing a national standard that state regulators can adopt so that such products and packaging can be leveraged across states when interstate commerce is permitted.  

Product Rationalization (Cannabis / CBD / Hemp): States continue to rationalize definitions and rules related to various cannabis products including CBD and hemp.  The complex regulatory schema across the fifty states and the federal regulations makes it difficult to determine a national approach to the sale of products by adult use / medical cannabis establishments or other retailers. This issue will continue to become more convoluted as states open their borders to manufacturers of CBD products that can be added to cannabis products.

Independent Testing: We expect an evolution in the independent testing requirements as the industry matures, and new testing methodologies are developed.  To date, the regulatory schema across the legal states is complex, as states rely on different industry standards and guidelines for best practices. Testing laboratories face a challenge of developing an efficient and effective compliance program that meets the complex regulatory requirements.


Oregon Regulators Will Discuss Rule Changes Today: Medical Marijuana Purchase Limits, Surveillance Camera Fines, and Marijuana Genetics

The Oregon Liquor Control Commission (OLCC) will meet with the public today at 10am to review proposed rule changes that are required to implement the 2018 state legislation, and to incorporate lessons learned over the past year. Highlights of the proposed changes include:

  • Medical Marijuana Purchase Limits: Medical marijuana patients would be allowed to purchase 4 oz of medical marijuana a day and a total of 24 oz a month. The OLCC performed an emergency rulemaking over the summer, and reduced the sales limit to match adult use marijuana after the OLCC detected large purchases that appeared to be possible diversion. The OLCC held a public meeting on the appropriate purchase limit, and is open to taking additional comments.

  • Surveillance Cameras: The OLCC has brought numerous actions against licensees for failing to retain surveillance recordings. The proposed amendment will implement a tiered penalty structure based on the total of days and amount of missing footage. Currently, the fee structure fails to provide the appropriate level of deterrent effect.

  • Marijuana Genetics: Producers can apply to bring new strains of marijuana into the regulated market including seeds, plants, and tissue.

The OLCC will accept comments on the proposed rulemaking until November 30, 2018.