Cannabis Compliance: Operating Legally in California in 2018

Posted by Margolin & Lawrence on April 10, 2018

California’s transition into a regulated market has many operators wondering what the universe of compliance looks like and where they fit into the process. In order to operate legally in California after January 1, 2018, you need both a local authorization and a state license. Temporary licenses from the state of California are sufficient to continue operating, though you will eventually need to obtain an Annual License. To date, 954 cannabis businesses in California have received Cease and Desist letters from the Bureau of Cannabis Control. While some were in error, others were operating without the required licenses for California.

It’s important to understand that licensure is not the end-all-be-all of compliance -- in fact, it is the minimum requirement for your business to operate legally. In addition to having a state license (which requires local authorization), you will need to begin thinking about how to set up your business with compliance processes that facilitate and enable adherence to state regulations for your activities: cannabis microbusiness, retail, manufacturing, cultivation or testing. The below infographic is an overview of the entire licensing/compliance process.


Where does your business fit in?


Where is Volatile Cannabis Manufacturing Allowed?

Posted by Margolin & Lawrence on July 18, 2017

'Dabbing' and vape pens are some of the newest and most popular methods of consuming cannabis. Instead of smoking marijuana flowers, users ingest cannabis concentrate, otherwise known as wax or oil.

One of the main ways to extract this cannabis concentrate is legally referred to as “volatile manufacturing." "Manufacturing" here refers to all aspects of the cannabis extraction and/or infusion processes, including the processing, preparing, holding, storing, packaging, and/or labeling of cannabis products, as well as the various components and ingredients involved in the production of cannabis. "Volatile," meanwhile, refers to the use of "volatile solvents," which California Senate Bill 94 defines as “volatile organic compounds and dangerous poisons, toxins, or carcinogens."

These types of solvents produce a flammable gas or vapor that, when present in the air in sufficient quantities, will create an explosion or ignite a flame. Of these solvents, the one most commonly used in cannabis extraction is butane. Manufacturing using butane is highly effective for mass production of oil, but it can also be highly dangerous. The major burn treatment centers at two hospitals in Northern California reported in 2015 that nearly 10 percent of severe burn cases were attributed to butane hash oil explosions – more than the amount attributed to car accidents and house fires combined. Due to these hazards, California cannabis manufacturers must obtain a Type 7 / "Manufacturing Level 2" license in order to use volatile solvents. Currently, the cities of Davis, Nevada City, Coachella, Long Beach, and California City are issuing these Type 7 licenses. 

In order to further ensure safe manufacturing, each locality is also requiring chemical extractions using volatile solvents to be subject to the following requirements: (a) Hydrocarbon-based solvents shall be at least 99 percent purity, and (b) all extractions shall be performed in a closed loop extraction system. California is very specific about the nature of the closed loop extraction system: it's required to be commercially manufactured, to be certified by a licensed engineer, and to bear a permanently affixed and visible serial number. The certification document must contain the signature and stamp of a professional engineer, and the serial number of the extraction unit must also be certified. Moreover, professional closed loop systems, the equipment used in conjunction with the extraction operation, and the entire manufacturing facility must be approved for use by the local fire code official and meet any additional fire, safety, and building code requirements.

For more information about California marijuana business and cannabis manufacturing, check our guide to California cannabis laws or email us at info@margolinlawrence.com.

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This blog is not intended as legal advice and should not be taken as such. The possession, use, and/or sale of marijuana is illegal under federal law.