Comments on Manufacturing Regulations

California Department of Public Health,
Office of Regulations,
1415 L Street, Ste. 500,
Sacramento, CA 95814

RE: Proposed Regulations for Medical Cannabis Manufacturing License (DPH-17-004)

One behalf of the California Growers Association we are pleased to submit the following comments for your consideration.

Section 40100: Definitions

Reducing barriers to entry and ensuring that all those currently operating in the marketplace have a pathway forward is a top priority of our membership. The proposed definition of "premises" presents a significant and unnecessary barrier that will disproportionately impact cottage, specialty and small manufacturers. We recomend the following changes to the definition of premises":

"Premises"means the designated structure(s) and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity as defined in subdivision (f) of section 19300.5 of the Business and Professions Code, will be or is conducted. The premises shall be a contiguous area. and shall only be occupied by one licensee. Some portion of each licensed premises shall be occupied by a single licensee. Inventory and records shall be kept in the part of the premises that is exclusively under the control of the licensee but the premises may include shared spaces such as kitchens.

Section 40118: License Classifications

One of our high level guiding principles is that there should be a license classification for every business in California. With the addition of these two licenses the Department of Public Health has closed a serious gap in the licensing framework.

  • a       “Type P” – Packaging; We recommend coordinating with the Department of Food and Agriculture to avoid confusion resulting from the proposed “Type 1P – Processing license”
  • b      “Type N” – Infusion;

Section 40128: Application Requirements

The application requirements generally seem reasonable and clear. We recommend the following changes:

  • Subsection (a), subdivision (1) (L) “Identification of other medical cannabis licenses the applicant holds or has applied for, including licenses in other states.
  • Subsection (a), subdivision (2) (D) “The number of employees expected to be at the manufacturing site”
  • Subsection (a), subdivision (2) (F) “A premises diagram. The diagram shall be specific enough to enable ready determination of the bounds of the property and the proposed premises to be licensed, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, room, windows, and common or shared entryways. The diagram must show the areas in which all commercial cannabis activities will be conducted. The diagram must show any space that is shared with another commercial cannabis business and identify those licensees or applicants, if any. The diagram shall be to scale. If the proposed premises consists of only a portion of a property, the diagram shall be labeled indicating which part of the property is the proposed premises and will identify what the remaining property is used for.”

Rationale: Available real estate is a significant barrier to entry. This problem is especially acute for cottage, specialty and small businesses (Tier 1-3). Allowing businesses to share facilities (especially kitchens) is and important way to ensure greater diversity and more opportunity.

Alternative: Allow co-location only for Tier 1 through Tier 3 licensees.

  • Subsection (a), subdivision (3) (C) “Any fines or penalties for cultivation or production of a controlled substance on public or private land that occurred after the date of implementation of these rules;”
    • Subsection (a), subdivision (3) (D) “Any sanctions by a licensing authority or a city or county for unlicensed commercial cannabis activity within 3 years preceding the date of the application that were for activities that took place after the date of implementation of these rules;”
    • Subsection (a), subdivision (8): Some of our member’s report challenges obtaining bonds. We recommend clarifying that bonds are available to cannabis businesses before imposing this requirement.

Section 40132. Waiver of Sovereign Immunity.

We have no formal opinion on this section, however we believe strongly that tribal governments should be consulted before these regulations are imposed.

Section 40140. Applicants Operating Prior to January 1, 2018.

We support this language and recommend adding:

  • Add Subsection (c) “An applicant operating pursuant to this section may do business with other applicants operating pursuant to this section or licensed by CalCannabis or by the Bureau.” 
  • Rationale: This clarity will ensure that there initial applica

Section 40150. Applications and License Fees.

We support the establishment of tiered fees for applications and licenses. Generally, we feel that the fees are reasonable. We would encourage featuring these tiers more prominently throughout the regulations. The tiered framework provides a foundation to ensure regulatory burden is appropriately scaled to the business and that barriers to entry are reduced.

Section 40205. Video Surveillance.

This section will be prohibitive to many cottage and specialty cultivators that rely on manufacturing as a secondary source of revenue. We recommend these requirements be waived for Tier 1 and Tier 2 Manufacturers to reduce barriers for entry.

Section 40300. Prohibited Products.

  • Subsection (b) “No cannabis product shall contain any non-cannabinoid additive that would increase potency, toxicity or addictive potential, or that would create an unsafe combination with other psychoactive substances. Prohibited additives include but are not limited to nicotine and caffeine. This shall not include naturally occurring caffeine in coffee, tea, chocolate or other similar products.”
  • Clarify Subsection (c) subdivision (3) “Any canned cannabis product;” clarify that this does not prohibit canning as a method of packaging for non-hazardous products.

 

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