COMPLIANCE IS KEY

On September 29, 2016, just one year after signing the landmark bill called the Medical Cannabis Regulation and Safety Act (“MCRSA”), Governor Jerry Brown took yet another huge step in favor of California’s medical cannabis industry by signing AB-2679 into law. The new law, which is aimed at making wax manufacturing operations more safe, states that cannabis manufacturing is now legally acceptable under certain conditions. This is a far cry from the current situation where butane “hash blasters” are getting constantly raided, arrested, and prosecuted under misapplied meth lab laws. Now, under AB-2679, butane extractors who meticulously follow strict standards and requirements will be shielded from misguided raids and state criminal prosecution, at least until state licenses are issued in 2018.

“Last year, California took a historic step by regulating medical cannabis to protect patients, businesses, our communities, and the environment. But across the state, locally authorized medical cannabis manufacturers continue to be targeted by municipal law enforcement. As we await full implementation of medical cannabis regulations, manufacturers cannot continue to operate in a legal grey area,” stated Assemblymember Rob Bonta. “Under AB-2679, local governments will be given guidance and manufacturers will be protected in preparation for state licenses in 2018.”[i]

“The bill highlights a very strict protocol for running an extraction lab and says that manufacturers will no longer have to endure state criminal penalties so long as they play by the new rules. “

Authored by the same legislators who drafted the MCRSA, AB-2679 “brings needed clarity to local governments about the type of manufacturing of medical cannabis that is allowed during this interim period before the MCRSA is fully implemented,” says joint author, Assemblymember Ken Cooley (D-Rancho Cordova).[ii] The bill highlights a very strict protocol for running an extraction lab and says that manufacturers will no longer have to endure state criminal penalties so long as they play by the new rules.

So what are the new rules under AB-2679?

First, the manufacturer must operate as a “collective” or “cooperative” under SB-420.

Second, the manufacturer must only use manufacturing processes that: (1) are either solventless or use a nonflammable, nontoxic solvent extraction technique (i.e., CO2); and/or (2) use solvents that are recognized as “safe” under federal guidelines (i.e., butane), exclusively within a “closed-loop” extraction system that doesn’t allow highly flammable solutions to escape. If the extraction process utilizes the latter, the system must be certified by a licensed engineer.

Third, the manufacturer must obtain certification and approval from local fire officials for both the extraction facility and its closed-loop system.

Fourth, the manufacturer must meet all required safety, fire and building codes set by relevant local, state and/or federal laws.

Fifth, the manufacturer must hold a valid cannabis seller’s permit from the California Board of Equalization.

And lastly, but certainly not least, the manufacturer must comply with all local cannabis manufacturing laws and obtain proper licensing from their local jurisdiction that specifically authorizes them to manufacture cannabis using a certain method of extraction.  Because most local ordinances that outlaw the sale of medical cannabis also outlaw the manufacturing of medical cannabis, as of now there are only a few known cities—i.e., Cathedral City, Coachella and Adelanto—that will give licenses to manufacturing labs to operate within their borders.[iii] This may change, however, if other cities or counties decide to change their local laws.

Keep in mind that these new rules are only temporary—they will be repealed one year after the Bureau starts issuing states licenses.

What does this mean for current butane extractors?

Compliance is key. If you play by the new rules and secure all the proper approvals, certifications, permits, etc., your extraction lab will be shielded from raids and prosecution. However, unlicensed wax manufacturers who do not comply with AB-2679 will still face felony arrests and heavy prison time under existing meth lab laws.

If the AUMA passes this November, adults 21+ will be able to legally possess up to eight ounces of concentrate, which will make the wax industry more lucrative than ever. So if you’re a wax manufacturer who intends on capitalizing on recreational cannabis profits in the (hopefully) near future, now would be the best time to start prepping for AB-2679 compliance.

[i] http://www.eastbayexpress.com/LegalizationNation/archives/2016/10/04/california-medical-marijuana-extract-makers-get-historic-protections

[ii] http://www.eastbayexpress.com/LegalizationNation/archives/2016/10/04/california-medical-marijuana-extract-makers-get-historic-protections

[iii] http://www.record-bee.com/article/NQ/20161017/NEWS/161019861