MAUCRSA Webinar: Your Burning Questions re: California Marijuana Manufacturing

California cannabis lawyers
In case you missed it…

Over the course of the next week or so, we’ll be putting together a series of blog posts addressing the many questions asked by those who tuned in to our MAUCRSA licensing webinar on December 18th. Unfortunately, we ran out of time to answer all of those questions, so we’ll do our best to cover as many as possible in these posts. And if any of our readers have questions they would like to see addressed via a blog post, please let us know. And stay tuned, because we’ll be posting a recording of the webinar for those who missed out on the 18th.

In this post, we’ll be answering the most-asked questions regarding cannabis manufacturing. In no particular order, here’s the Q and A:

Q:        Are pre-rolls considered a “manufactured” item requiring a manufacturer’s license?

A:         Pursuant to rules for cultivation licensees, pre-rolls are considered “Nonmanufactured cannabis product,” along with flower, shake, kief, and leaf. So, you wouldn’t need a manufacturing license–you would need a cultivation processing license.

Q:        Do consultants who receive a flat fee in exchange for operating a facility need to be disclosed under the financial interest section?

A:         No, so long as the consultant has not made an investment into or loan to the licensed business, and is not entitled to any equity interest in the company, including the right to a percentage of sales, profits or revenue.

Q:        What is the “processor license?”

A:         This license type falls under the cultivation rules, not the manufacturing rules, and allows for only trimming, drying, curing, grading, packaging, or labeling of cannabis and nonmanufactured cannabis products (flower, shake, kief, leaf, and pre-rolls). If you hold a cultivation license, you will not need a separate processor license to conduct these activities. But if you are solely a processor, that processor license must have its own distinct premise (and you can’t cultivate at your processing facility).

Q:        Can manufacturers share spaces or any amenities, like commercial kitchens, sinks, etc?

A:         No, each manufacturer must have its own separate and distinct premises and amenities, and cannot share any common points of entry with any other licensee. The state has indicated that it may consider a Type-S license to allow for shared manufacturing space, but that won’t be decided until sometime next year.

Q:        What about brand licensing deals? Are they allowed?

A:         Yes, they’re allowed. We’ve written extensively about brand licensing deals here, but one key thing to note about licensing deals in California is that receiving royalty payments from a brand licensing deal WILL constitute a disclosable financial interest in a licensee. This may make licensing deals tricky for some licensors if they want royalties based on sales.

Q:        Will mobile kitchens be allowed for manufacturing?

A:         No. Your premises has to be a fixed, fully secured location.

Q:        Will the state issue a manufacturing license with no premises if I am using a contract manufacturer?

A:         No. Each license must be tied to a physical premises.

Q:        Can you be both a cultivator and a manufacturer?

A:         Yes, but each license needs to have its own separate and distinct premises. There is no prohibition in California on vertical integration for licensees (but you do have to apply for medicinal and adult use licenses separately).

Q:        Are breath strips considered “edibles” or “tinctures? when it comes to packaging”

A:         For purposes of packaging (i.e. whether this product would require opaque packaging like other edible products), breath strips likely need to meet the requirements for edibles (since mints are definitely on the edibles list and fairly similar), which are cannabis products “intended to be used orally, in whole or in part, for human consumption. But another important distinguishing factor will be whether they are manufactured using an infusion process, which would mean they would fall under a Type N license (infusions), or an extraction process for extracts or concentrates, which would require either a Type 6 (non-volatile solvents) or Type 7 (volatile solvents) manufacturing license.

Q:        Do you need a separate license for medicinal and adult-use manufacturing?

A:         Yes, you will need an M-license and an A-license for manufacturing, although those two licenses can share the same premises so long as they’re owned by the same company.

Q:        Is it possible to share space with a non-cannabis company (i.e. a catering company run by a different individual)?

A:         No, you cannot manufacture non-cannabis products on a licensed premises, and no licensee can sublease any portion of its premises anyway.

Q:        What type of license would I need to make CBD-infused products?

A:         If you are sourcing raw materials from licensed cultivators, you would need a Type N license.

We’ll continue to address more questions from the webinar over the next few weeks, so stay tuned.