If you’re seeking to obtain a marijuana products manufacturing license, you will need to navigate a complex legal and regulatory landscape. California’s laws governing the manufacture of cannabis products such as edibles, concentrates, and ointments are not just complex, they are going through significant changes. The agencies tasked with developing the licensing requirements and business regulations for manufacturers are expected to be ready sometime in early 2018. Until then, you can significantly improve your business’s chances of getting a manufacturer’s license by preparing for your application now.
Free consultation for criminal defense cases only. Cannabis business consultation requires a fee.
Legalization of Cannabis Products Manufacturing
It’s been more than twenty years since California first legalized medical marijuana. Since then, the state’s cannabis industry has grown enormously – but so have the rules and regulations applying to businesses who want to get in the game. Last year, California passed into law the Medical Cannabis Regulation and Safety Act (MCRSA), which creates a new licensing and regulatory framework for California’s medical marijuana industry. Shortly afterward, California voters approved Proposition 64 – or the Adult Use of Marijuana Act (AUMA) – which authorizes the cultivation, sale, and manufacture of cannabis and cannabis products for recreational use. If you want to manufacture cannabis products, you will need to consider both MCRSA and AUMA.
What License Do I Need for Manufacturing Cannabis Related Products?
Both the MCRSA and AUMA task the Department of Public Health with issuing licenses for and regulating businesses that manufacture cannabis-derived products. The licenses for manufacturers are identical under both laws:
- Type 6 – Manufacturer of marijuana products not requiring the use of volatile solvents
- Type 7 – Manufacturer of cannabis products using volatile solvents such as butane
If your business plan involves the production of marijuana candies, cookies, creams, ointments, or concentrates such as wax or shatter hash, you will need a Type 6 or 7 license, depending on the solvents you intend to use during the extraction process. Note that in some local jurisdictions, the use of flammable gases in the manufacturing process may be illegal.
Can a Manufacturer Have Other Marijuana Licenses?
Yes. Although a single licensee may not have more than two licenses in different categories. This is because the government wants to limit the ability of large companies to take control over the growing, distribution, and retail aspects of the cannabis business. If you’re a manufacturer of cannabis, you can also have the following licenses:
- A cultivator’s license (Type 1, 1A, 1B, 2, 2A, or 2B)
- A dispensary license (Type 10A)
How Do I Get a State Cannabis Manufacturing License?
The Department of Health is still developing the licensing process and regulations pertaining to cannabis product manufacturing businesses. The Department estimates that it will start accepting license applications in early 2018. For now, there is no indication of what the application and licensing fees will be, but if the cost of obtaining a local permit is any indication, they will likely be expensive.
If you want a license, MCRSA requires that you show proof of your local permit or authorization, and that you have the legal right to occupy your business’s premises. Note that AUMA does not require you to obtain a local permit before applying for a manufacturer’s or any other license. It is likely, however, that the Department of Public Health will iron out this inconsistency when it develops its own regulations.
You must submit your fingerprints to the Department of Justice for a background check. Although there are slight discrepancies between the AUMA and MCRSA, basically anyone who has been convicted of a felony involving drugs, violence, fraud, or deceit, or any other offense that relates to the qualifications needed to operate a marijuana business, will probably not qualify for a manufacturer’s license.
Cannabis Products Manufacturer Regulations
Both AUMA and MCRSA require that your manufactured products be contained in a tamper-evident package that clearly displays the following warning:
GOVERNMENT WARNING: THIS PACKAGE CONTAINS MARIJUANA, A SCHEDULE I CONTROLLED SUBSTANCE. KEEP OUT OF REACH OF CHILDREN AND ANIMALS. MARIJUANA MAY ONLY BE POSSESSED OR CONSUMED BY PERSONS 21 YEARS OF AGE OR OLDER UNLESS THE PERSON IS A QUALIFIED PATIENT. MARIJUANA USE WHILE PREGNANT OR BREASTFEEDING MAY BE HARMFUL. CONSUMPTION OF MARIJUANA IMPAIRS YOUR ABILITY TO DRIVE AND OPERATE MACHINERY. PLEASE USE EXTREME CAUTION.
You must use the services of a state-licensed distributor and transporter to get your products to the retail market. The distributor will also pass samples to a licensed testing facility, and you will have to pay for this service. All your products must include a unique identifier to conform with the state’s track and trace program, which aims at ensuring that no marijuana products get diverted to the black market. If you fail to comply with the track and trace program, you will face significant fines and possible criminal prosecution. Finally, if you have more than 20 employees, you must make a labor peace agreement with the appropriate union.
Will I Be Protected From Raids and Criminal Prosecution?
Any license holder under AUMA or MCRSA that operates a manufacturing business in accordance with state and local law will be protected from arrest, prosecution, or other adverse legal action by the State of California. But marijuana remains illegal at the federal level, and raids targeting manufacturers are a real possibility.
Under the Rohrabacher–Farr amendment to the federal appropriations bill, federal agencies cannot put their resources towards investigating and prosecuting medical marijuana businesses that are properly licensed within their state. Additionally, the Department of Justice has instructed its prosecutors to make cases involving medical marijuana their lowest priority. Even the new conservative Attorney General, Jeff Sessions, has indicated that he will continue this policy.
Nonetheless, as recently as last year medical cannabis product manufacturers have been raided by the authorities. The reason was the use of volatile solvents in the manufacturing process, which used to be illegal under California law. Although the use of butane and other solvents is now legal under state law, it may attract the attention of the federal authorities. The use of volatile solvents represents the sort of public health risk factor that can justify a federal agency’s investigation into an otherwise legitimate cannabis business.
Finally, neither the Rohrabacher–Farr amendment nor the DOJ policy concern recreational marijuana – they only apply to medical marijuana businesses. So if you manufacture products intended for recreational use, you face a serious risk of being raided and having your business’s assets confiscated by the federal authorities.
An Experienced Cannabis Business Lawyer Can Help You
If you intend to open a cannabis manufacturing business, you need a dedicated and experienced San Diego cannabis business lawyer by your side. At McElfresh Law, we are committed to providing San Diego marijuana businesses with sage counsel and aggressive legal defense when the authorities attempt to interfere with their operations.
This website is intended for informational purposes only. Use of this website does not create an attorney-client relationship. Free consultation for criminal defense cases only. Cannabis business consultation requires a fee.