Background: Assembly Bill 195 & DCC Emergency Regulations
New track and trace requirements have hit the books for commercial cannabis retailers engaged in sales via delivery. As you may remember, California Governor Gavin Newsom signed a slew of cannabis-related legislation into law in June of 2022, including Assembly Bill 195. On December 7, 2022, in response to the Governor’s passage of Assembly Bill 195, the California Department of Cannabis Control (“DCC”) published notice of its intent to adopt emergency regulations implementing Assembly Bill 195.
Assembly Bill 195, which is codified in among other places, Business and Professions Code sections 26067 and 26068, requires that the track and trace program established by the DCC have the ability to capture information relating to cannabis and cannabis products leaving licensed retail premises in a delivery vehicle and that the DCC incorporate delivery into the track and trace program by no later than January 1, 2023.
As required by Assembly Bill 195, the emergency regulations noticed by the DCC on December 7th require, among other things, that applicable retail licensees generate and maintain delivery inventory ledgers to track the location of cannabis and cannabis products leaving a licensed retail premises in a delivery vehicle such that the location of said items is traceable from the moment they are removed of general retail inventory. On December 27, 2022, the DCC received approval from the Office of Administrative Law for its emergency rulemaking action and the emergency regulations related to track and trace cannabis delivery requirements became effective that same day.
Overview of Emergency Regulations
While retailers were required to implement the new track and trace regulations by January 1, 2023, the use of the state’s track and trace software, METRC, to generate the required delivery inventory ledgers is not mandated until April 1, 2023. From January 1, 2023 – April 1, 2023, required delivery inventory ledgers created by licensed retailers pursuant to the new regulations may be physical or electronic. However, as of April 1, 2023, all required delivery inventory ledgers must be created and managed within METRC. If they haven’t done so already, cannabis retailers should be actively updating their standard operating procedures to include the new delivery inventory tracking requirements and training their employees to ensure a seamless and compliant implementation of the new regulations.
No Grace Period to Implement New Regulations
As shown in the text of the emergency regulations, cannabis retailers must now identify, record, and manage a high volume of information about any and all cannabis and cannabis products placed in a delivery vehicle. The sheer amount of information that needs to be managed means the risk of non-compliance, especially during the period immediately following the implementation of the new regulations, will likely be high. Though the DCC has typically given licensees a specific grace period to come into compliance post publication of new regulations, no grace period is reflected in the emergency regulations other than that which was described above.
Given that the DCC has been ramping up enforcement actions in recent months and taking swift and decisive licensing actions, particularly against provisional license holders, cannabis retail licensees should not expect leniency from the DCC regarding the enforcement of the emergency regulations.
Snapshot of New Inventory Ledger Requirements for Retailers Engaged in Delivery
While understanding the legislative history associated with the newly adopted emergency regulations and reading the full text of the regulations is always strongly suggested, most operators just want to know what they need to do to be compliant. For a quick snapshot of the new inventory ledger requirements contained within the emergency non-storefront cannabis retail regulations, see below.
General Inventory Ledger Requirements from January 1, 2023 – March 31, 2023
Prior to a Delivery Employee Leaving for a Delivery Trip
Delivery inventory ledgers maintained by licensed retailers from January 1, 2023 – March 31, 2023 may be in physical or electronic form and must include all the following for each cannabis good carried on a delivery trip:
- Item name
- Item category
- Item UID
- The quantity of unit
Additionally, all cannabis goods prepared for an order that was received and processed by the licensed retailer prior to the delivery employee leaving from the licensed retail premises must be clearly identified on every delivery inventory ledger.
Actions Required After Each Delivery & Within 24 Hours of Each Sale
After each customer delivery, the delivery inventory ledger must be updated to reflect the current inventory in the possession of the delivery employee. All sales of cannabis goods conducted by delivery must be entered into the track and trace system within 24 hours of the date and time at which the sale was completed.
General Delivery Inventory Ledger Requirements as of April 1, 2023
Prior to a Delivery Employee Leaving for a Delivery Trip
Starting April 1, 2023, all licensed retailers conducting deliveries must create a delivery inventory ledger in METRC and record the following things prior to the delivery employee leaving the licensed premises for each delivery trip:
- The delivery inventory ledger number generated by the track and trace system and assigned to the specific delivery trip.
- The name and license number of the licensed retailer.
- The delivery employee’s name, employee ID, and driver’s license number.
- The delivery vehicle’s make, model, and license plate number.
- The item name(s) and category(ies) of each cannabis good to be carried on the delivery trip, the UID(s) assigned to those cannabis goods, and the number of units associated to each UID on the delivery inventory ledger.
- The UID(s) of any cannabis goods ordered by customers and processed by the licensed retailer prior to the delivery employee leaving the licensed retail premises.
- The date and time the delivery employee leaves the licensed retail premises to begin conducting deliveries.
Post-Sale via Delivery – By End of Calendar Day
For each sale of cannabis goods that occurs via delivery, the following information must be recorded within METRC by the end of the calendar day on which the sale was completed:
- The date and time at which the sale was completed. A sale is completed at the time the cannabis goods are physically provided to the customer.
- Whether the customer is an adult-use customer, medicinal cannabis patient, or patient’s primary caregiver
- The UID and quantity of each cannabis good sold.
- The purchase price of each cannabis good sold.
- The county of the physical location at which the delivery occurred, which is the location at which the cannabis goods were provided to the customer.
Conclusion: Update SOPs and Train Your Team to Prevent Any Enforcement Actions
As noted above, licensed cannabis retailers must maintain compliance with these new regulations. Retailers should update their standard operating procedures (SOPs) to include the new delivery inventory tracking requirements and train their delivery employees to ensure a seamless and compliant implementation of the DCC’s new regulations.
If you have questions about the new emergency regulations or how they will impact your business, call the regulatory compliance cannabis law attorneys at Rogoway Law.