Regulation Education Breaking down CDPH manufacturing rules

The state of California finally adopted permanent cannabis regulations in January. This article details many of the main changes regarding the California Department of Public Health Manufactured Cannabis Safety Branch’s (CDPH-MCSB) permanent regulations.

No more Farm Bill hemp-CBD ingredients or additives

It’s no secret that the California Department of Health Food and Drug Branch (FDB) has an issue with hemp-derived cannabidiol (CBD). Specifically, an FAQ issued by the FDB last year made clear that it prohibits hemp-derived CBD in “food” for humans and pets. Now, CDPH-MCSB is following suit. Pursuant to new regulation 40175(c), “a manufacturer licensee shall only use cannabinoid concentrates and extracts that are manufactured or processed from cannabis obtained from a licensed cannabis cultivator.” What this means is that using Farm Bill hemp-derived CBD as an ingredient or addictive to cannabis manufactured products is not allowed unless it comes from a licensed cannabis cultivator. The protections of the Farm Bill won’t apply.

Owners and financial interest holders

It’s still unclear as to how far the state will now go in finding and vetting entity owners and entity financial interest holders, especially since the Bureau of Cannabis Control (BCC) articulates in its rules that it intends to locate and vet every human possible in pretty much any ownership structure. But what about MCSB? MCSB entity owner regulations now state that “if the owner . . . is an entity, then the chief executive officer and members of the board of directors of the entity shall be considered owners,” and for financial interest holders, MCSB rules mandate only that “financial interest holders shall be disclosed on the application for licensure.” The BCC’s owner and financial interest holder rules are much more aggressive than MCSB, and the BCC’s comments to its owner and financial interest holder rules was that all agencies would apply the same standards for vetting.

“What this means is that using Farm Bill hemp-derived CBD as an ingredient or addictive to cannabis manufactured products is not allowed unless it comes from a licensed cannabis cultivator.”

 

Changes in ownership

Again in contrast with the BCC, the MSCB is going to be much easier on changes in ownership of licensees. Under BCC regulations, if there’s a full buy-out of all existing owners, the entity can no longer operate while the change of ownership is being reviewed and processed by the BCC. The MCSB however has no such standard, at least not one that’s codified under the new regs. Specifically, for any changes of ownership or changes to financial interest holders, the MCSB expects to implement a dedicated protocol.

Labeling

Labeling is still just as intense and comprehensive as it was under the emergency regulations. Even now, manufacturers need to ensure that, if a product container is separable from the outer-most packaging (e.g., a container placed inside of a box), the product container includes the following: (1) For edible cannabis products, topical cannabis products, suppositories or orally-consumed concentrates, all information required for the primary panel except for cannabinoid content, and (2) for inhaled products (e.g., dab, shatter and wax), the universal symbol (which is the black triangle with a cannabis leaf and an “!” with “CA” underneath). We also now have specific labeling requirements for pre-roll and packaged flower that didn’t exist before outside of the statute, itself.

Packaging

Until 2020, manufacturers are off the hook for providing child resistant packaging (CRP). Until then, retailers will bear the burden of CRP through the continued use of CRP exit packaging. Once CRP for manufacturers kicks in though, they’ll need to adhere to a litany of requirements, including compliance with the Poison Prevention Packaging Act of 1970 Regulations.

Changes to operations that now require state approval

As the state moves along with licensing and enforcement, it was inevitable that certain licensee actions would first require state approval. What this usually means is that major changes to your business or SOPs can’t go down without the state’s blessing, which can take weeks or months to secure. Specifically, for the MCSB, licensees will now have to report to and clear with the state the following action items before the licensee pulls the trigger on them (all to the tune of a $700 change application fee, which is non-refundable).

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