Pubdate: Mon, 02 May 2016
Source: Orange County Register, The (CA)
Copyright: 2016 The Orange County Register
Author: Brooke Edwards Staggs


California blazed a trail to legalize medical marijuana 20 years ago. 
But the Golden State is only now confronting the full complexity of 
regulating consumer safety and business practices in an industry 
that's ballooned to an estimated $2.7 billion annually.

It's no simple task, requiring startup-like coordination and 
enforcement across a dozen state agencies looking to rein in a sector 
of the economy that has thrived in a decidedly spotty patchwork of 
local oversight.

California's lack of control over the industry thus far has not gone 
unnoticed, according to John Hudak, a senior fellow at the Brookings 
Institution who focuses on marijuana policies.

"The state's medical marijuana program is in many ways the 
laughingstock of marijuana policies in the United States," Hudak 
said. "It's a significant example of everything that can go wrong, 
serving in many ways as a proxy system for recreational marijuana."

One measure of the challenge ahead? The state is expecting tens of 
thousands of cannabis businesses - from growers to distributors, 
testing labs to retail shops - to begin seeking one or more of 17 
types of licenses starting Jan. 1, 2018.

And the regulatory challenges for the new system could skyrocket if 
voters approve the recreational use of pot later this year.

Three agencies will actually issue licenses. Nine more have been 
charged with various oversight and review responsibilities.

That includes the Medical Board, which must step up procedures to 
investigate and discipline doctors who aren't adhering to ethical 
standards in recommending marijuana for patients. The Department of 
Justice will conduct background checks on all licensees. And the 
Board of Equalization will issue seller permits to all retailers, 
oversee tax collections and help develop a system to trace the 
movement of all cannabis products.

The departments that stand to gain the most employees and biggest 
boost to their budgets in the coming fiscal year are the Department 
of Fish and Game and the State Water Resources Control Board. Each 
agency will get more than 30 new positions to help mitigate impacts 
marijuana cultivation has on the state's waterways.

All told, the state expects to add 126 jobs and spend $24.6 million 
on the new regulatory effort in the coming year alone.

Overseeing the process is the new Bureau of Medical Marijuana 
Regulation, created within the Department of Consumer Affairs. The 
BMMR  referred to as "Bummer" by some in the industry  will regulate 
all transportation, distribution and sales under the direction of Lori Ajax.

Ajax will lead information sessions on the state oversight in Santa 
Ana today. She said she's been meeting at least weekly with other 
agencies involved in the new regulations. Leaders from each 
department also have been consulting other states that have more 
robust policies in place to regulate both medical and recreational marijuana.

There are "nuances" to launching programs involving multiple 
agencies, Ajax said. But so far, the process has gone smoothly.

"Everyone is just on board to meeting" the 2018 deadline to begin 
issuing licenses, Ajax said.

Here's a look at how several key state agencies are gearing up for the task.


There are an estimated 50,000 cannabis cultivators in California, and 
thousands of them are expected to apply for growing licenses under 
new regulations enforced by the Department of Food and Agriculture, 
according to agency spokesman Jay Van Rein.

Cultivation licenses range from allowing outdoor grows under 5,000 
square feet up to 20,000-square-foot warehouses. The department is 
charged with setting limits on the number of grow sites larger than 
10,000 square feet.

Amber Morris, who spent the past decade overseeing plant health and 
pest prevention services, was named chief of the department's new 
Medical Cannabis Cultivation Program. Van Rein said officials are in 
the early stages of drafting rules for cultivators.

Unlike with other types of agriculture his department regulates, Van 
Rein noted, the cannabis law calls for criminal background checks on 
applicants. It also requires the department to create a "track and 
trace" program that allows authorities to follow cannabis plants 
through the distribution chain, from their growing plots to their 
purchase by customers.

"Although the 'track and trace' requirement is complex, it is helpful 
that other states have gone before us," Van Rein said, alluding to 
enforcement programs in states that have legalized recreational pot, 
such as Colorado and Washington.


Businesses producing edibles, concentrates and other marijuana 
products also will have to answer to the state Department of Public Health.

The department is hiring additional staff to oversee manufacturing 
and laboratory testing of pot products, according to Miren Klein, 
assistant deputy director for the department's Center for Environmental Health.

Under the new system, all marijuana products must be sent to a 
licensed lab for testing before they can be sold to consumers. Labs 
will check marijuana flowers for pesticides, mold and other 
contaminants, along with how potent they are. Extracts will be tested 
for concentration and purity.

Currently, Klein said medical cannabis testing labs are approved by 
their local city or county. Under the new law, they'll have to obtain 
state licenses . And she expects many more labs to open in 
anticipation of the spike in demand for testing.

Along with a license for labs, Klein's department will issue two 
types of licenses for manufacturers. One will be for companies that 
use nonvolatile chemicals to extract cannabis from plants in 
concentrated oils. The other is for companies that use potentially 
explosive chemicals such as butane in the extraction process.

The regulations call for a limit on the number of licenses for 
companies using volatile substances. That cap is being worked out, Klein said.

Officials are in the early stages of developing regulations on the 
methods that labs will be required to use, assessing how much it will 
cost to license those labs and creating guidelines for regular audits 
to ensure they're following protocols.

Cannabis is a new oversight area for her agency, but Klein said her 
department "is quite knowledgeable regarding the handling and storage 
of food that dovetails with this new commodity."


For now, there are no clear standards for the types and amounts of 
pesticides that can be present in medical marijuana.

The Department of Pesticide Regulation expects to begin by hiring 
three scientists to analyze chemical studies and help determine what 
levels are safe for the public, according to department spokeswoman 
Charlotte Fadipe.

The department has shared general rules about pesticide use with 
growers, she said. But because federal law doesn't allow for 
marijuana cultivation, Fadipe pointed out there are no pesticides 
specifically registered for use on marijuana.

At this point, she said it's not clear how many cultivators are using 
pesticides safely or whether major changes in cultivation practices are needed.

"We are relying on anecdotal information and reports from other 
states at this point," Fadipe said.


There are a lot of unknowns about how the new state regulations will 
work. At least six follow-up bills are pending in the Legislature, 
covering everything from a training program for industry employees to 
substituting the word "cannabis" for "marijuana" in the law.

One ongoing and contentious regulatory issue is whether the cannabis 
distributor system should be modeled on the state's system for the 
alcohol industry, where beverage makers have to turn their products 
over to a third party to transport and sell them to stores.

Distributors are needed in a state as large as California, said David 
Weidenbach, who runs the Costa Mesa packaging company Collective 
Supply and helped draft the new state oversight law as a board member 
with the California Cannabis Industry Association. But he also said 
many industry insiders are worried the state will be too restrictive 
when it comes to distributors, making it more difficult and costly to 
move products to customers.

Overall, Weidenbach said he considers the Medical Marijuana 
Regulation and Safety Act "a major victory" for California's cannabis industry.

It's a start "that was desperately needed," he said  especially 
considering voters approved the sale of medical marijuana in 1996. 
"There has been virtually zero progression since," he said.
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MAP posted-by: Jay Bergstrom