Last Thursday, California’s three cannabis licensing agencies published emergency regulations to govern both the medical and adult-use cannabis industry in California under the Medical and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) (Bus. & Prof. Code 26000 et seq.).
The California Department of Food and Agriculture (CDFA), through its CalCannabis Cultivation Licensing Division (CalCannabis), is the licensing authority for all cannabis cultivators in California. CalCannabis is also developing the track-and-trace systems that will record the movement of cannabis through the supply chain from cultivation to sale. Below are the highlights of the CDFA’s emergency regulations and how they may impact growers.
This post is the second in a series of entries on the Duane Morris Cannabis Industry blog that will provide an analysis of the new regulations. If you have any questions about the regulations, please contact Jennifer Briggs Fisher in our San Francisco office or Justin Santarosa in our Los Angeles office.
The Big News – No 1-Acre Limit on Farm Size
On November 13th, three days before the emergency regulations were released, the CDFA issued an environmental impact report that proposed a 1-acre cap on cannabis farms and nurseries until 2023. However, when the actual regulations were released – they scrapped the cap.
While CDFA’s emergency regulations do not include the 1-acre cap proposed in its environmental review, they do limit the size of a grow farm depending on what kind of license the farmer obtains. For example, a “medium” cultivation license allows for one acre of outdoor cultivation per license, but a person is limited to only one “medium” license. In contrast, there are no limits on smaller cultivation licenses, which allow up to about a quarter-acre of cannabis cultivation.
Licenses for cultivators are defined by the size of canopy (see below). Licenses are also available for the following categories:
- Nurseries – facilities that produce only clones, immature plans, seeds and other products used in cultivation.
- Processors – sites that conduct only trimming, drying, curing, grading or packaging of cannabis and non-manufactured cannabis products. Processors may not grow cannabis under their license.
Definition of “Canopy”
The emergency regulations define “canopy” as “the designated area(s) at a licensed premise that will contain mature plants at any point in time.” The regulations also provide the following:
- canopy will be calculated in square feet and measured using clearly identifiable boundaries of all area(s) that will contain mature plants at any point in time, including all of the space(s) within the boundaries;
- canopy may be noncontiguous, but each unique area included in the total canopy calculation shall be separated by an identifiable boundary which includes interior walls, shelves, greenhouse walls, hoop house walls, garden benches, hedgerows, fencing, garden beds, or garden plots; and
- if mature plants are being cultivated using a shelving system, the surface area of each level shall be included in the total canopy calculation.
Compliance Considerations for Cultivator Licensees
Local Approval: Applicants must submit proof of approval by their local jurisdiction for commercial cannabis activity; CDFA will not issue licenses to applicants in local jurisdictions where cannabis cultivation is banned.
Environmental Compliance: Applicants must be in compliance with CEQA (the California Environmental Quality Act) and will be required to comply with conditions imposed by the State Water Resources Control Board and Department of Fish and Wildlife. Applicants will be required to disclose all water sources used for cultivation activities and must provide all well logs, statements of diversion and any other applications, permits or licenses relating to water use. The State Water Resources Control Board or the Department of Fish and Wildlife can stop the issuance of new licenses in certain areas if they determine cannabis cultivation has had an adverse impact on a watershed or geographic area.
Renewable Energy Requirements: The renewable energy requirements for cultivators have been revised and will be phased in. Licensees will be required to report on energy use and sources beginning in 2022 and will be required to meet the average electricity greenhouse gas emissions intensity required of their local utility provider by 2023.
Cannabis Waste: All cannabis waste must be disposed of in a secured waste receptacle or in a secured area and must be managed in compliance with applicable waste-management laws.
Track-and-Trace System: After a license is approved, licensees will have 10 business days to register for training and 30 business days to move all inventory into a track-and-trace system.
Criminal History: Applicants will have to submit Live Scan fingerprinting and undergo a criminal history check to determine if any convictions are substantially related to their commercial cannabis cultivation license.
Please continue to check the Duane Morris Cannabis Industry blog, as we will be providing further updates and a more detailed analysis of how these regulations will impact distributors, dispensaries, and other licensed entities.