seed-to-sale

2018 Michigan Cannabis / Hemp Legislative Summary: Ban on Cannabis Infused Alcohol, Industrial Hemp, and Technical Changes

The Michigan Legislature passed ten (10) bills related to marihuana / hemp during the 2018 legislative season. The Governor signed four into law and six are with the governor for signing.

HB 4668 of 2017  (PA 346 of 2018) Ban on Cannabis Infused Alcohol

Under the new law,  Michigan breweries and wineries would be prohibited from producing adult beverages, including non-alcoholic beer and wine, that contain THC or non-hemp CBD. Supporters of the new law believe that marijuana infused alcohol will increase the liability of bartenders and bar owners. A person may not feel the effects of the marihuana right away, which would prevent the bartender from being able to assess whether an individual is visibly intoxicated.  Opponents to the new law believe that the legislature is attempting to solve a problem before it exists, and prevents Michigan from remaining competitive in the beer and wine industries. The law went into effect on October 16, 2018.

HB 5144 of 2017 (PA 10 of 2018) Amendments to the Medical Marihuana Facilities Licensing Act

The new law made clarifying amendments to the Medical Marihuana Facilities Licensing Act including, among other things:

  • Noting that accountants, financial service providers and other entities would not be subject to criminal, civil or administrative sanctions for providing services to a licensee;

  • Prohibiting the state from issuing a license unless the municipality in which the establishment will be located has adopted an ordinance that permits the activity;

  • Allow the state regulator to obtain information needed for license renewals from municipalities; and

  • Require the state regulator to establish a monthly purchase limit for medical marihuana.

The law went into effect on January 26, 2018.

HB 6422 of 2018 (PA 439 of 2018) State Inventory Tracking System

The law allows the state regulator to disclose information about a licensee that is contained in the state inventory tracking system to a financial institution. The law went into effect on December 28, 2018.

SB 1262 of 2018 Amendments to the Medical Marihuana Facilities Licensing Act
Last Action: 12/28/2018 PRESENTED TO GOVERNOR 12/27/2018 @ 1:22 PM

The enrolled bill amends the Medical Marihuana Facilities Licensing Act to provide clarity around the definition of “applicant”, and to provide the state regulator with the power to revoke a license if a licensee attempts to transfer an ownership interest to a person that is not an “applicant”. The enrolled bill also prohibits persons from holding themselves out as a facility operator unless they hold a license. Any person that causes serious injury or death by violating the Act would be guilty of a felony.

SB 1263 of 2018 Amendments fo the Sentencing Guidelines
Last Action: 12/28/2018 PRESENTED TO GOVERNOR 12/27/2018 @ 1:24 PM

The enrolled bill amends the sentencing guidelines in the Code of Criminal Procedure to include the felony proposed the Medical Marihuana Facilities Licensing Act with a statutory maximum of four years' imprisonment.

SB 1264 of 2018 State Identification Cards
Last Action: 12/28/2018 PRESENTED TO GOVERNOR 12/27/2018 @ 1:26 PM

The enrolled bills requires the Secretary of State to forward a digitized photograph of applicant for a state registry identification card to department of licensing and regulatory affairs.

HB 6330 of 2018 Industrial Hemp
Last Action: 12/28/2018 presented to the Governor 12/27/2018 @ 5:08 PM

Bill 6330 will require the Michigan Department of Agriculture and Rural Development (MDARD) to establish and oversee an industrial hemp licensing and registration program. The amendments would prohibit any person in the state, including universities, from growing industrial hemp without registering as a grower. The grower registration expires on November 30th of the year that it was issued but applications can be submitted at any time. Growers must perform testing 15 days ahead of harvest, and receive a certification that the THC levels meed the maximum thresholds. A grower registration fee of $100.00, and a $50 fee for site modifications.. The enrolled bill also requires all persons processing, handling, brokering, or marketing industrial hemp to be licensed as a processor-handler. A processor-handler license application fee of $1,350.00.

HB 6331 of 2018 Definition of Industrial Hemp and Marihuana
Last Action: 12/28/2018 presented to the Governor 12/27/2018 @ 5:10 PM

The enrolled bill exempts industrial hemp from the definition of marihuana

HB 6380 of 2018 Rulemaking to Permit Dispensaries to Sell Industrial Hemp CBD products
Last Action: 12/28/2018 presented to the Governor 12/27/2018 @ 5:12 PM

The enrolled bill requires the state regulator to adopt rules by March 2019 that permits medical marihuana dispensaries to sell industrial hemp CBD products.

HB 6421 of 2018 (PA 504 of 2018) State Identification Cards
The enrolled bills requires the Secretary of State to forward a digitized photograph of applicant for a state registry identification card to department of licensing and regulatory affairs. The law went into effect on December 28, 2018.


Oregon Cancels Cannabis License for Regulatory Violations Discovered After Burglary

The Oregon Liquor Control Commission (OLCC) recommended the cancellation of Greenway Venture’s cannabis license after an OLCC visited following a reported burglary on February 2, 2018. An employee of Greenway Venture’s also failed to promptly provide local law officials with evidence related to the burglary. The OLCC discovered many regulatory violations including the

  • inaccurate entry of cannabis inventory;

  • failure to adequately securely store cannabis product;

  • failure to ensure that surveillance cameras captured all areas

  • lack of a security system that could detect an unauthorized entry;

  • failure to capture the date and time on surveillance recordings;

  • failure to notify the OLCC of a system outage greater than 30 minutes; and

  • substantial alteration of licensed premises.

As a part of the stipulated settlement, Greenway Ventures must surrender 21 totes of cannabis to the OLCC for destruction. Greenway Ventures has until March 30, 2019 to surrender its license or transfer ownership in the license.

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

Massachusetts Issues Seed-to-Sale Guidance

Yesterday, Massachusetts issued guidance on seed-to-sale that is intended to help firms entering inventory of plants and packages into Massachusetts’ seed-to-sale inventory system, Metrc. The guidance also instructs firms on how to enter initial inventories into the system.

Metrc classifies plants as either immature, vegetative or flowering. Firms should initially enter strain specific plants into the system as immature, and immediately move them to their corresponding growth phase. Harvested marijuana that is being dried and cured should be entered into Metrc as packages. Accurate and timely data entry into Metrc through the planting, growth, harvesting, packaging, testing and sales phases is imperative to avoid regulatory scrutiny and the risk of harvest destruction.

Firms should document their processes throughout the Metrc reporting cycle to ensure that proper controls exist for an accurate daily reconciliation, and secondary checks exist to identify problems that can help mitigate losses. Employees should review this documentation and receive effective training on the firm’s processes, the controls and Metrc.

MASS: MEDICAL MARIJUANA & COLOCATION RULES

The Massachusetts Cannabis Control Commission published two draft rules on Friday.   The draft rules  outline the requirements for licensed medical marijuana dispensaries, and permit the colocation of medical marijuana and adult use licensees including cultivation, product manufacturing or retail ("CMO").  The draft medical marijuana regulations establish the requirements for the licensing and operation of medical marijuana dispensaries. The draft CMO regulations cover the operations of a shared premises, and requires the CMO to appoint a registered agent who will need to be registered under the medical marijuana regulations and the adult use regulations in order to provide services to both licensees.  Under the draft regulations, CMOs are subject to three additional application requirements including the submission of an inventory plan for entering inventory into seed-to-sale such that the adult use products remain separate from medical marijuana, a proposed transportation plan, and a plan for maintaining records including tax records for adult use products.  The draft CMO regulations, among other things, also cover training, advertising, packaging and labeling, transfer, sale, liability insurance, transportation and security requirements.  A link to both draft regulations is provided below.

Colocation Regulation
mass-cannabis-control.com/wp-content/uploads/2018/09/Colocation-Regs-502.000-for-public-1.pdf

Medical Use of Marijuana
mass-cannabis-control.com/wp-content/uploads/2018/09/Medical-Regs-501.000-for-public.pdf

MICHIGAN INTRODUCES INDUSTRIAL HEMP BILL

The Michigan House introduced bill No. 6330 to amend the Industrial Hemp Research and Development Act. The bill will provide the Department of Agricultural and Rural Development with the authority to establish an industrial hemp licensing program. The amendments provide the Department with significant oversight authority including access, seizure and destruction authority.  Unless emergency relief is granted, it will take time for the program to get up and running as the Department must adopt rules to implement including more onerous parts of the Act such as reporting and testing requirements.

he Act will require persons, other than a college or university, to apply for a license to grow, process, handle, broker or market industrial hemp. The application requirements are similar to other states such as Delaware in that they require a GPS coordinates of where the industrial hemp is grown, stored or handled, and a research plan must be submitted for growing industrial hemp. The Act differs from other states in that the Department of Agriculture will collect a sample from each crop pre, and possibly post, harvest to perform a THC test. The grower must harvest or destroy the crop within 15 days of the collection of the pre-harvest sample, or the Department of Agriculture can order a second pre-harvest sample. The state will also rely on reporting rather than utilizing a seed-to-sale tracking system. The amendments propose to establish an advisory board that will include, among others, representatives for hemp grain, fiber or seed growers,  hemp grain or fiber process handlers, hemp phytocannabinoid growers, and hemp phytocannabinoid process handlers. 

California Passes Industrial Hemp Law
www.thcregs.com/blog/california-passes-industrial-hemp-law

Delaware Enacts Industrial Hemp Law
www.thcregs.com/blog/september-01st-2018

Rhode Island Requests Comment of Proposed Industrial Hemp Regulations
www.thcregs.com/blog/comment-period-ending-for-hemp-grow-rule

DEADLINE FOR COMMENT ON OREGON GROW RULE

Today is the deadline for submitting comments to the Oregon Liquor Control Commission (OLCC) on a draft rule requiring medical marijuana growers to track inventory from seed to sale using the cannabis tracking system.  Under the proposed rule, the inventory of registered medical marijuana growers must be entered into the system within 10 days of establishing an account.  All transfers to patients, primary caregivers, dispensaries, laboratories and processors must be recorded.including the amount of marijuana transferred and the date.  Comments can be submitted on the OLCC website.

Growsite Administrator Package
www.oregon.gov/olcc/marijuana/Documents/Rules/Growsite_Administrator_Package/Rulemaking_Notice_GrowsiteAdministratorPackage.pdf

SUSPICIOUS POT ACTIVITY LEADS TO LOWER LIMITS

Oregon detected suspicious activity in the medical marijuana market, and  implemented a temporary rule to reduce the medical marijuana daily purchase limits to the recreational limits.  The Oregon Liquor Control Commission relied on the cannabis tracking system to identify the suspicious activity, and took immediate action as a means of halting the illegal activity.  The OLCC with investigate the incident with the Oregon Health Authority, and determine whether possible findings should be forwarded to law enforcement. The temporary rules expire in 6 months.  

WASHINGTON REQUESTS COMMENTS ON RULES

The Washington State Liquor and Cannabis board requested public comment on two rule proposals by October 3, 2018.  The rule proposals implement legislative changes that occurred during 2017 and 2018 sessions, and incorporate technical changes (links below).

During 2018, the Washington State legislature enacted the following laws:

  • Financial Services.  The law states that financial service providers are not violating Washington law by entering into financial transactions (i.e., deposits, extending credit, conducting funds transfers, transporting cash) with commercial cannabis businesses.  

  • Marijuana Product Container Labels - Business Information.  The law mandates the placement of labels on marijuana containers that contain the unified buisiness identifier number of the marijuana producer and processor.  

  • Use of Cannaboid Additives in Marijuana Products.  The law provides that marijuana producers and processors that use a cannaboid additive in marijuana products must obtain the cannaboid additive product from a licensed producer or processor unless the CBD product has (1) less a THC level of 0.3 percent or less on a dry weight basis, and (2) been lawfully tested for contaminants and toxins.

2018 Cannabis Legislation Implementation Rules
lcb.wa.gov/sites/default/files/publications/rules/2018%20Proposed%20Rules/WSR_18-17-184_CR_102_MJ_Leg_Rules.pdf

During 2017, the Washington State legislature enacted the following laws:

  • Marijuana Lock Boxes.  The law allows retail outlets to provide customers with a free marijuana lock box.  The retail outlet cannot use the lock box as an inducement for a sale.

  • Sanitary Processing of Edibles.  The law provides the Department of Agriculture with authority to regulate the sanitary processing of edibles.

  • Marijuana License Fee.  The law imposes a $480 additional fee to license applications and renewals. The fee is being used to pay for the traceability system.

  • Various Changes.  The law contains amendments that address privileges for research licenses, local authority notifications, the retail licensing merit-based application process, certain transfers of plants and seeds, licensing agreements and contracts, advertising, and jurisdictional requirements.


2017 Cannabis Legislation and Technical Housekeeping Rules
lcb.wa.gov/sites/default/files/publications/rules/2018%20Proposed%20Rules/WSR_18-17-185_2017_MJ_Leg_Rules_Supplemental_CR_102.pdf