July 1 Compliance Deadline Affects California Cannabis Companies

Marijuana Compliance Jun 30, 2018 Nevada City, CA

California cannabis business owners have had over seven months to prepare for the July 1 compliance deadline, but more than a few companies will still be caught off guard. Starting this Sunday, retailers can only sell product that has passed testing lab standards mandated by regulators. According to the Bureau of Cannabis Control California, “Cannabis goods that do not meet all statutory and regulatory requirements must be destroyed in accordance with the rules pertaining to destruction.” Some sources estimate that the entire industry could stand to lose $367M due to these new requirements.

Here are five things for California cannabis companies to consider in the days and weeks ahead.

While some organizations have called for an emergency extension from the Governor’s Office, the reality of that happening appears unlikely. It’s best to assume the July 1 deadline will stand and prepare accordingly.
Familiarize yourself with the new regulations, and work with your attorney when guidelines appear unclear. The new regulations include only selling product that has passed full compliance testing, ensuring product packaging and labeling compliance, and adhering to potency limits for edible and topical packages. You can find a summary of the requirements from the Bureau of Cannabis Control here.
The state only has 31 licensed labs, so the supply-chain will likely be impacted – if not flat-out disrupted. The industry is preparing for a supply shortages and price spikes, so take stock of where your supply sits today and create plans for different scenarios you may experience in the coming weeks.
This deadline will most greatly affect cultivators and distributors who have taken title to the cannabis or cannabis products. Distributors who have not taken title can bring the cannabis and cannabis products back to the licensee who holds title.
Cultivators and manufacturers who are sitting on back stock do not have to destroy their cannabis pursuant to this deadline. However, they will have to submit their cannabis and cannabis products to the stringent new testing rules in order for it to be moved into the regulated market.

If you’re concerned about how the new regulations could affect your business, our attorneys are here to help. Reach out today to schedule a consultation.

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