Simply put, the Department of Cannabis Control (DCC) is the regulator that oversees all commercial cannabis activity in the State of California. The DCC creates commercial cannabis regulations, drafts and circulates proposed regulations, and is in charge of drafting emergency regulations. The DCC is also responsible for enforcement actions against non-compliant licensed cultivation, manufacturing, distribution, cultivation, testing laboratories, and retail businesses.

When was the Department of Cannabis Control created?

The DCC was created in 2017 as part of the Medical and Adult Use Cannabis Regulation Safety Act (MAUCRSA). The purpose of MAUCRSA was to create a comprehensive regulatory framework governing commercial cannabis activity in California. The DCC was established to ensure that commercial cannabis activity is conducted safely and complies with state laws, including ensuring only tested cannabis products are sold to the public.

What does the DCC’s rulemaking process look like?

The department’s rulemaking process typically begins with a notice of proposed rulemaking (NPRM). In the NPRM, the DCC outlines its proposed changes to regulations and provides an opportunity for public comment.

After gathering input from stakeholders where stakeholders can submit comments and concerns about the proposed new rules, the DCC drafts a final version of the regulation. The regulation goes through another round of public comments before being adopted by the agency. Once the regulations are approved and adopted by the DCC, they become the rules that govern commercial cannabis activity in California.

How do I make my voice heard?

The DCC will typically allow any members of the public to submit a proposal for a period of at least 30 days before adopting a regulation. You can submit any proposed change, including suggestions to simplify or consolidate one or more regulations.

What happens when the DCC begins an enforcement action against a business?

When the Department of Cannabis Control begins an enforcement action against a business, the department may issue a warning or a notice of violation. Warning letters typically identify possible violations and provide the business with an opportunity to take corrective action to avoid formal enforcement action. Suppose the business does not take corrective action. In that case,the Department may issue a Notice of Violation (NOV), which sets forth the details of the alleged violations and may include a proposed penalty. The business then canrequest an administrative hearing to contest the alleged violation and the proposed penalty.

What is the most important thing to remember if I receive an NOV?

If you receive an NOV, you must respond promptly and make every effort to demonstrate that your business complies with current regulations. If the agency believes your business is not in compliance, it may take further action against you.

What if I fail to correct the alleged deficiencies in a Department of Cannabis Control NOV?

Businesses that fail to make the changes described in the NOV could face immediate administrative action. For example, if an NOV alleges a business was violating a specific regulation by selling adult-use cannabis to individuals under 18, typically, the agency would request the business provide standard operating procedures explaining how cannabis would no longer be sold to minors. The agency normally imposes a 15 days timeline for the business to submit a proposed corrective action plan. If the business still fails to provide a corrective action plan, the matter will, in all likelihood, escalate to the agency’s legal division, where an administrative action will be filed against the business, likely seeking a suspension or revocation of the company’s cannabis license.

Contact our office immediately if you receive an NOV!

Our experienced cannabis business attorneys can help you navigate the DCC’s enforcement process and protect your license. Contact us today for a consultation.

The cannabis industry is one of the fastest-growing industries in California, and if you are thinking about getting involved, there are a few things you need to know. In this blog post, we will give you an overview of different cannabis license types, what you need to know before getting involved in the cannabis business, and some key ideas for you to consider if you decide to enter the industry.

What You Need to Know Before Getting Involved in the Cannabis Industry.

There are a few things a prospective applicant should consider before getting involved in the cannabis industry, including the legal landscape and the different types of businesses that make up the industry. In our experience, the most critical differentiator that separates successful cannabis businesses from others is a solid business plan that accounts for and appreciates the risks associated with starting a business in a constantly changing industry.

Who Regulates Commercial Cannabis Activity? The California Department of Cannabis Control.

This Department is responsible for regulating the commercial cannabis industry in California, including licensing and enforcement. The Department of Cannabis Control (DCC) ensures that all businesses comply with state laws and regulations regarding selling, transporting, distributing, and testing of cannabis and cannabis products. In addition, the DCC regulates the manufacturing, packaging, labeling, advertising, and tracking of cannabis products.

The DCC also works with local governments to ensure they are taking steps to regulate commercial marijuana activity within their boundaries. For example, a cannabis business typically will not receive a cannabis license form the DCC unless a city or county government has notified the DCC that the business has sufficient local approval to engage in commercial cannabis activity. This is just one of many areas where the DCC works in cooperation with hundreds of local agencies.

California Cannabis License Types

The first question new market entrants typically ask us is, “what cannabis licenses are available?” A simple list includes:

Retailer (Storefront)

Retail licenses, also called Type 10 licenses, Retailer (Storefront) licenses are for those cannabis businesses that want to run a brick-and-mortar dispensary. However, applicants should be aware that a local jurisdiction is under no obligation to issue a retailer license. Many local jurisdictions have either banned dispensaries or limited the issuance of these licenses to only a handful of businesses. The main reason is local police departments routinely instill fear in city council members that commercial cannabis activities conducted by storefront retailers will attract crime to the retail premises.

Retailer (Non-storefront)

Type 9 Licenses (Non-storefront) are for those businesses that want to sell cannabis products to consumers through delivery only. While delivery services do need a physical location to operate out of, no cannabis products cannot be displayed on the business premises. Moreover, the business is prohibited from allowing any customers into any areas where business activities take place. Retailer (Non-storefront) license holders will still need a location for their business to hold their inventory and serve as a hub for their delivery driver employees.

Distributor

The Type 11 license is the most common cannabis license. Distributor licenses allow cannabis businesses to transport cannabis products between licensees. For example, a distributor may use its cannabis license to lawfully transport cannabis products from a cultivator to a manufacturer or to a retail licensee.

Distributors may also: (1) arrange for testing of cannabis goods; (2) conduct quality assurance review; (3) package, re-package, label, and re-label for retail sales; and (4) provide storage services for cannabis accessories, licensees’ branded merchandise or promotional materials, and packaged cannabis goods as they will be sold at a retailer.

Distributor (Transport Only)

A Type 13 license is a unique type of cannabis business. A typical Type 13 cannabis business will employ ex-law enforcement or military professionals experienced in armed transport. A type 13 licensee may transport cannabis goods between licensees but is restricted toonlytransporting cannabis goods. Type 13 licensees are not allowed to engage in any of the additional activities listed above for a Type 11 license.

Manufacturing

Manufacturing licenses are associated with the extraction or distillment of cannabis. Manufacturers also package flower and roll/package pre-rolls on their licensed premises.

Previously, manufacturing licenses were issued by the department of public health. Due to the inherent risk of fire or explosions, a company’s manufacturing premises is always given a strict review by the DCC, with even minor issues delaying licenses for several months. For example, issues like the placement of flammable gas, carbon dioxide sensors, the storage of plant material, and cannabis product are each reviewed by both line analysts and supervisors.

There are five (5) different types of commercial cannabis activity associated with a manufacturing license:

Type 7:

Type 7 licensees may manufacture cannabis using volatile solvents such as butane, hexane, or propane. The use of volatile solvents is typically subject to strict oversight and a vigorous local approval process. A Type 7 license allows a license holder to conduct activities of a Type 6, N, or P license.

Type 6:

Type 6 licensees may manufacture cannabis using non-volatile solvents or perform extraction using mechanical methods. Type 6 licensees may also conduct activities of a Type N or P license.

Type N:

Type N licenses are for manufactures that want to infuse cannabis. Type N licensees may also conduct Type P activities.

Type P:

Type P licensees may only package or label cannabis products. A Type P licensee may only conduct Type P activities.

Type S:

Type S licenses are for manufacturers operating on a registered shared-used facility. The shared-use manufacturing facility must be approved before Type S licensee may submit license applications.

Cultivation:

The most sought-after cannabis business. Cultivation licensees are for those that want to grow cannabis. Currently, the state has 14 different cannabis licenses, differentiated by light source and size. Cultivation licenses encompass Type 1, Type 1A, Type 1B, Type 2, Type 2A, Type 2B, Type 3, Type 3A, Type 3B, Type 4, Type 5, Type 5A, and Type 5B. Type 5, 5A, and 5B is reserved for “Large” sized cultivation operations (greater than 22,000 sq. ft. of total canopy) and will not be issued prior to January 1, 2023.

Microbusiness:

Also called a Type 12 license, a Microbusiness license allows the licensee to engage in vertical integration. All microbusiness licensees must conductat least three (3)of the six (6) possible activities: (1) Retailer (Storefront); (2) Retailer (Non-storefront); (3) Distributor; (4) Distributor (Transport Only); (5) Cultivation less than 10,000 sq. ft of canopy; and (6) Level 1 Type 6 Manufacturer.

Testing Laboratory:

Also called a Type 8 license, Testing Laboratory licensees are permitted to perform testing of cannabis goods. Testing laboratories must obtain and maintain ISO/IEC 17025 accreditation; they may be issued a provisional license allowing them to operate while obtaining accreditation, so long as they meet all other requirements.

Event Organizer:

This is a license required for those looking to organize cannabis events. A Cannabis Event Organizer Licensee may apply for a Temporary Cannabis Event License for a specific event the licensee wishes to hold. A Temporary Cannabis Event License is required to hold a temporary cannabis event where onsite sale and consumption of cannabis goods is authorized at the located indicated on the license. A Temporary Cannabis Event License will only be issued to an Event Organizer licensee.

Contact Us Now to Learn More About Different Cannabis License Types!

There are a few things you need to know before getting involved in the cannabis industry, including the legal landscape and different types of businesses that make up this rapidly growing sector. With a solid business plan and an understanding of the risks involved, you can be well on your way to starting a successful business in this exciting industry! Contact us today!

The Department of Cannabis Control (DCC) is the regulator that oversees all commercial cannabis activity in the State of California. The DCC creates commercial cannabis regulations, drafts and circulates proposed regulations, and is in charge of drafting emergency regulations. The DCC is also responsible for enforcement actions against non-compliant licensed cultivation, manufacturing, distribution, cultivation, testing laboratories, and retail businesses.

When was the Department of Cannabis Control created?

The DCC was created in 2017 as part of the Medical and Adult Use Cannabis Regulation Safety Act (MAUCRSA). The purpose of MAUCRSA was to create a comprehensive regulatory framework governing commercial cannabis activity in California. The DCC was established to ensure that commercial cannabis activity is conducted safely and complies with state laws, including ensuring only tested cannabis products are sold to the public.

What does the DCC’s rulemaking process look like?

The DCC’s rulemaking process typically begins with a notice of proposed rulemaking (NPRM). In the NPRM, the DCC outlines its proposed changes to regulations and provides an opportunity for public comment.

After gathering input from the public, where stakeholders can submit comments and concerns about the proposed new rules, the DCC drafts a final version of the regulations. The regulation goes through another round of public comments before being adopted by the department. Once the regulations are approved and adopted by the DCC, they become the rules that govern commercial cannabis activity in California.

How do I make my voice heard?

The DCC will typically allow the public to submit a proposal for at least forty-five (45) days before adopting a regulation. You can submit any proposed change, including suggestions to simplify or consolidate one or more regulations during this time.

What happens when the Department of Cannabis Control begins an enforcement action against my business?

The DCC starts enforcement actions against businesses for various reasons, including ensuring that only tested cannabis products are sold, that cannabis is not being diverted to minors, and that businesses remain in compliance with the current regulations.
If the (DCC) begins an enforcement action against your business, it will issue a notice of violation detailing the violation and the possible penalties associated with it. The notice will also provide instructions on responding to the violation and requesting a hearing if you wish to contest the violation. Once the notice has been received, you will need to respond within the specified timeframe or face the possibility of additional penalties. Depending on the severity of the violation, the DCC may impose administrative fines, suspend or revoke your license, or refer the matter to the local law enforcement agency for criminal prosecution.

What is the usual first step in a DCC enforcement action?

The first step in a DCC enforcement action is typically a warning letter called a notice of violation (NOV). The NOVis a formal document issued by the DCC when a licensee or licensee applicant is found to violatestate laws or regulations governing the cannabis industry. The Notice of Violation outlines the nature of the violation, the penalty, and any corrective measures that must be taken to remedy the violation. If a business does not respond or fails to demonstrate that it has come into compliance, then the DCC may take further action, such as suspending or revoking the business’s license.

What is the most important thing to remember if I receive an NOV from the Department of Cannabis Control?

If you receive an NOV, you must respond promptly and make every effort to demonstrate that your business complies with current regulations. If the DCC believes your business is not in compliance, it may take further action against you.

What if I fail to correct the alleged deficiencies in the NOV?

Businesses that fail to make the changes described in the NOV could face immediate administrative action. For example, if an NOV alleges a business was violating a specific regulation by selling adult-use cannabis to individuals under 18, typically, the agency would request the business provide standard operating procedures explaining how cannabis would only be sold to only authorized individuals. The agency normally imposes a 15 days timeline for the business to submit a proposed corrective action plan.

What if a business fails to submit the corrective action plan? In that case, the matter will, in all likelihood, escalate to the agency’s legal division, where an administrative action is filed against the business, likely seeking a suspension or revocation of the company’s cannabis license.

Contact our office immediately if you receive an NOV!

Our experienced cannabis business attorneys can help you navigate the DCC’s enforcement process and protect your license. Contact us today for a consultation.

Define your legal problem

Most people will encounter a legal problem while in the cannabis business. While some legal problems can be handled without the assistance of a lawyer, others, including matters involving regulators like the California Department of Cannabis Control or the Los Angeles Department of Cannabis Regulations, may be more complicated and require the help of a specialized cannabis law firm. In addition, tax law, criminal law, and intellectual property issues are typically best handled by an experienced subject matter expert – even if that firm has limited legal experience in the cannabis industry.

Research different cannabis law firms specializing in your type of legal issue, e.g. cbd, medical marijuana, adult use, etc.

If your adult use or medical marijuana business has a legal issue, it is essential to seek an attorney specializing in this area. California’s cannabis law is a new and dynamic field, so you want to ensure your lawyer has the most up-to-date information and knows how to navigate complex regulations.

Attorneys at our firm have

spent over a decade in the Los Angeles and California cannabis industry. They have interacted with the same regulators and attorneys at the Los Angeles Department of Cannabis Control and the Department of Cannabis Control since each agency’s inspection. Many on our team have built respectful working relationships with government agents and regulators, sometimes leading to quick and cost-effective results for our clients. This experience will ensure that you have the best representation possible and that your rights are protected at all stages of the legal process.

Don’t settle on the first cannabis law firm you meet with.

Many in the business world don’t realize they need an attorney until they are in the midst of a nasty legal situation. At that point, it’s often too late to start looking for representation. The best time to find an attorney is before you need one. That way, you can take your time to find a person or firm that is a good fit for you and your case.

When you are ready to seek an attorney, schedule consultations with a few different lawyers; this will allow you to meet with the attorneys, get a feel for their personalities and styles, and see if you can informally gauge their understanding of the law. You can also ask questions about their experience to understand how they might handle your case. Once you have met with all the attorneys, you can decide who to hire.

Do not settle for the criminal defense attorney who moonlights as a cannabis specialist.

Unfortunately, many California lawyers who have traditionally taken on criminal defense cases will hold themselves out as cannabis specialists who “represent medical marijuana businesses” or purport to run a legal practice that “focuses” on marijuana laws. This is typically a lie. Few, if any, of these moonlighting attorneys understand the legal protections and risks that impact cannabis companies – most can’t cite a single applicable law. They have little knowledge of corporate formation, local or state licensing, regulatory compliance, the promulgation of new regulations, or the nuances of administrative hearings. Many have never come across a California land use issue or run a compliance audit in their lives.

Choose an attorney who understands the interplay between local, state, and federal laws.

While cannabis may be considered a legal and emerging industry, in the eyes of the federal government, marijuana is still considered a Schedule 1 drug under the controlled substances act. In other words, people or business entities who engage in the cultivation or sale of medical or recreational cannabis, whether inside of California or if engaging in interstate commerce, are breaking federal law. Being a licensed member of the California cannabis industry will not change this fact. Even if prosecution is unlikely, marijuana businesses remain at constant risk of prosecution by federal agencies. This is not a risk that “normal” businesses face.

Ask each attorney questions about their experience in the cannabis industry, their experience working with cannabis businesses, and how they would handle your case

The Department of Cannabis Control oversees the cannabis industry in California, and they have specific rules and regulations that attorneys should be aware of. While interviewing an attorney, learn if they have experience working with the Department of Cannabis Control and any local agency or regulator that governs your cannabis business. It is also vital that clients ask attorneys what their strategy will be, and the scope of services the attorney will provide. Asking questions will help you find a marijuana attorney who is experienced and knowledgeable about cannabis laws and can represent you effectively.

Choose the attorney you feel most comfortable with and who you think will best represent your cannabis business.

When choosing a marijuana attorney, it is important to select someone who you feel comfortable with and who you believe will be the best advocate for your case. There are several factors to consider when making this decision. First, you should look for an attorney with experience in handling cases similar to yours, not just in California, but also in your specific jurisdiction. This will ensure that the attorney is familiar with the applicable laws and procedures. Additionally, you should ask for references from past clients to understand what it is like to work with this specific attorney. Finally, you should schedule a consultation to meet with the attorney and get a better sense of their personality and how they would manage your case. By following these steps, you can be sure to choose the right attorney for your needs.

If you are hiring an attorney to obtain a license, then it is important to know they have provided those types of services to clients in the past. For example, an attorney in Riverside County specializing in hemp production law, employment law, or whose firm provides services unrelated to marijuana, will make a poor choice to represent a business in the cannabis industry. On the other hand, a cannabis business seeking a license will see much better success by retaining a cannabis attorney with a practice dedicated to obtaining licenses for marijuana businesses.

What are the risks of not hiring an attorney?

If you represent yourself, you are taking on a huge risk. There are many things an attorney can do to help your case that you cannot do alone. An experienced attorney will know the relevant cannabis laws inside and out and will be able to guide you through the legal process. They will also be able to negotiate with the other side on your behalf and ensure your rights are protected. Without an attorney, you could make costly mistakes, resulting in the suspension or loss of your cannabis license. The risks of not hiring an attorney are too great to ignore. Contact our office today for a consultation with an experienced Los Angeles marijuana lawyer if you have any questions about this topic.

Work with law firms with a track record of success.

At Baghoomian Law, we have provided legal services to Los Angeles marijuana businesses for over a decade. From Los Angeles to Sacramento to San Diego, we have represented every type of marijuana business, from dispensaries to cultivators. We have assisted clients in a full range of matters, including:

• marijuana business structuring.
• obtaining licenses
• advising on new and upcoming regulations, including industry changes
• compliance
• regulatory litigation

Contact us

Contact us if you have any questions about finding an attorney or need help getting started. Our experienced attorneys are here to help you with all your cannabis-related legal needs.