Proposed Rule Changes to California Cannabis Businesses

Nov 26 , 2018

Terrance Thibodeaux

Proposed Rule Changes to California Cannabis Businesses

California’s marijuana business regulations have been proposed a readjustment. These changes could in fact cause huge impacts on current cannabis companies within the state from growers, delivery businesses to makers and retailers. These changes were offered in October and the final regulations are set to be settled early December.


While there are a number of changes that have been put on the table; there are three in specific that could really affect current businesses.


  1. The End of Contract Manufacturing or “White Labeling”

White labeling in these terms is the processes of a licensed maker of cannabis goods that produces and packages products on behalf of a legal unlicensed business. Hundreds of contract manufacturers could see an end to their business as this regulation would put an end to any brand endorsement companies, and any company that is not a commercial MJ operator.


  1. Less Efficient Delivery

Currently, the state of California allows delivery driver businesses to hold $10,000 worth of product on them during any one delivery drive. The ruling wants to decrease it to only $5,000 worth of product.


One large issue lies within providing their customers with the quick level of service they expect upon a delivery company. If consumers are no longer able to receive immediate service they may result to quicker illegal way of obtaining their products.


If the ruling takes place it would cause a host of problems. If product runs out while a driver is out on route; then he needs to go back to the hub to restock. This will not allow the driver to cover as much territory, decrease revenues, increase costs to companies as new hires will be needed for more area coverage, and hurt customer retention.


  1. More Disclosures, More Problems

The ruling would ultimately reclassify the “owner” of a marijuana business license. It explains how any person such as executives, or other employees who have any vested say in what the business should sell, manufacture or cultivate would be considered an owner and need to file applicable paperwork with the state.


Going a step further it includes individuals who have ANY financial interest in the business to file as well. This can include landlords, commissioned salesforce, lawyers and consultants who all potentially take a share of the profits.


The final regulations will be determined on December 3rd. Although public hearing ended on November 5th; we encourage small and large businesses alike to weigh in on your option, thoughts and concerns to your local representative as soon as possible.




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