SUBCHAPTER 2.

Manufacturing Licenses

Table of Contents

Article 1. Applications for Licensure

§40126. Temporary Licenses.

§ 40126 (a) A temporary license shall be valid for 120 days from the effective date. No temporary license shall be issued on or after January 1, 2019.

§ 40126 (c) Any temporary license issued or extended that has an expiration date after December 31, 2018, will be valid until it expires, but shall not be extended beyond the expiration date.

§ 40126 (e) Refusal by the Department to issue or extend a temporary license shall not entitle the applicant to a hearing or appeal of the decision.

§ 40126 (f) A temporary license does not obligate the Department to issue an annual license to the temporary license holder, nor does the temporary license create a vested right in the holder to either an extension of the temporary license or to the granting of a subsequent annual license.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26012, Business and Professions Code.

§40128. Annual License Application Requirements.

§ 40128 (a) To apply for a manufacturer license from the Department, the applicant shall submit the following on behalf of the commercial cannabis business:

(1) A completed application form as prescribed by the Department, or through MCLS, which includes all of the following information:

(A) Business information as specified in Section 40129;

(B) Owner information as specified in Section 40130; and

(C) Manufacturing premises and operations information as specified in Section 40131;

(2) For new applications, the nonrefundable application fee as specified in Section 40150(a). The annual license fee shall be paid upon approval of the application, as prescribed in Section 40155. For license renewal applications, the nonrefundable annual license fee as specified in Section 40150(b) shall be submitted with the license renewal application. The application fee described in Section 40150(a) is not required for license renewal applications; 

(3) Evidence of compliance with or exemption from the California Environmental Quality Act (CEQA) as specified in Section 40132; and

(4) The limited waiver of sovereign immunity as specified in Section 40133, if applicable.

§ 40128 (b) The application shall be signed by the applicant under penalty of perjury that the information provided in and submitted with the application is complete, true, and accurate, and shall include the following attestations:

(1) The applicant is authorized to act on behalf of the commercial cannabis business;

(2) The applicant entity, when it has 20 or more employees, has entered, or will enter as soon as reasonably practicable, into a labor peace agreement and will abide by the terms of the agreement as required by section 26051.5 (a)(5)(A) of the Act. The applicant shall provide the Department a copy of the page of the labor peace agreement that contains the signatures of the union representative and the applicant;

(3) The commercial cannabis business is operating in compliance with all local ordinances;

(4) The proposed premises is not within a 600-foot radius of the perimeter of a school providing instruction in kindergarten or any grades 1 through 12, or a day care center, or youth center, or that the premises complies with the local ordinance specifying a different radius, as specified in section 26054(b) of the Act.; and

(5) For an applicant entity with more than one employee, the applicant employs, or will employ within one year of receiving a license, one supervisor and one employee who have successfully completed a Cal/OSHA 30-hour general industry outreach course offered by a training provider that is authorized by an OSHA Training Institute Education Center to provide the course.

§ 40128 (c) The Department may request additional information and documents from the applicant as necessary to determine whether the applicant or the commercial cannabis business meets the requirements and qualifications for licensure.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050, 26051.5 and 26054, Business and Professions Code.

§40129. Annual License Application Requirements – Business Information.

§ 40129 (a) The applicant shall submit the following information for the commercial cannabis business:

(1) The legal business name;

(2) The federal tax identification number. If the commercial cannabis business is a sole proprietorship, the applicant shall submit the social security number or individual taxpayer identification number of the sole proprietor;

(3) The registered name(s) under which the business will operate (Fictitious Business Name, Trade Name, “Doing Business As”), if applicable;

(4) The business’s mailing address which will serve as the address of record;

(5) The name, title, phone number and email address of the primary contact person for the commercial cannabis business;

(6) The seller’s permit number issued by the California Department of Tax and Fee Administration or notification issued by the California Department of Tax and Fee Administration that the business is not required to have a seller’s permit. If the applicant has not yet received a seller’s permit, the applicant shall attest that the applicant is
currently applying for a seller’s permit;

(7) The business structure of the commercial cannabis business as filed with the California Secretary of State (e.g., limited liability company, partnership, corporation) or operation as a sole proprietor. A commercial cannabis business that is a foreign corporation or foreign limited liability company under the California Corporations Code
shall include with its application the certificate of status issued by the California Secretary of State;

(8) A list of all owners, as defined in Section 40102;

(9) A list of all financial interest holders, as defined in Section 40102, which shall include:

(A) For financial interest holders that are individuals, the first and last name of the individual, and the type and number of the individual’s government-issued identification (e.g. driver’s license); or

(B) For financial interest holders that are entities, the legal business name and federal taxpayer identification number of the entity.

(10) Proof of having obtained a surety bond in the amount of $5,000, payable to the State of California as obligee, to ensure payment of the cost incurred for the destruction of cannabis or cannabis products necessitated by a violation of the Act or the regulations adopted thereunder. The bond shall be issued by a corporate surety licensed to transact surety business in the State of California;

(11) The license type applied for and whether the application is for medicinal cannabis product manufacturing, adult-use cannabis product manufacturing, or both;

(12) The business formation documents, which may include, but are not limited to, articles of incorporation, bylaws, operating agreements, partnership agreements, and fictitious business name statements. If the commercial cannabis business is held in trust, the applicant shall provide a copy of the certificate of trust establishing trustee
authority;

(13) All documents filed with the California Secretary of State, which may include, but are not limited to, articles of incorporation, articles of organization, certificates of limited partnership, and statements of partnership authority.

§ 40129 (b) Pursuant to section 26055(e) of the Act, an applicant may voluntarily submit a copy of a license, permit, or other authorization to conduct commercial cannabis manufacturing activities issued by the local jurisdiction. When an applicant submits a local authorization, upon receipt of the application, the Department shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050 and 26051.5, Business and Professions Code.

§40130. Annual License Application Requirements - Owners.

§ 40130 (a) Each owner shall submit all of the following information:

(1) Name;

(2) Title or position held;

3) Social security number or individual taxpayer identification number;

(4) Date of birth;

(5) Mailing address;

(6) Contact phone number and email address;

(7) A copy of Department of Justice form BCIA 8016, provided to the applicant by the Department of Public Health and signed by the live scan operator;

(8) Disclosure of all of the following, including any actions against the owner as an individual and against a business entity in which the owner was an officer or an owner. The information provided shall include dates and a description of the circumstances:

(A) Any criminal conviction from any jurisdiction. Adjudications by a juvenile court and infractions do not need to be disclosed. Convictions dismissed under Penal Code section 1203.4 or equivalent non-California law must be disclosed;

(B) Any civil proceeding or administrative penalty or license sanction that is substantially related to the qualifications of a manufacturer as identified in Section 40162;

(C) Any fines, penalties, or other sanctions for cultivation or production of a controlled substance on public or private lands pursuant to Fish and Game Code section 12025 or 12025.1;

(D) Any sanctions by a licensing authority, city, or county for unauthorized commercial cannabis activity within 3 years preceding the date of the application;

(E) Any suspension or revocation of a cannabis license by a licensing authority or local jurisdiction within 3 years preceding the date of the application; and

(F) Any administrative orders or civil judgements for violations of labor standards within the 3 years immediately preceding the date of the application.

(9) Disclosure of any ownership interest or financial interest in any other cannabis business licensed under the Act.

§ 40130 (b) The owner shall sign under penalty of perjury that the information provided in and submitted with the application is complete, true, and accurate.

§ 40130 (c) An owner disclosing a criminal conviction or other penalty or sanction pursuant to subsection (a), paragraphs (8)(A) and (B), shall submit any evidence of rehabilitation with the application for consideration by the Department. A statement of rehabilitation shall be written by the owner and contain all the evidence that the owner would like the Department to consider that demonstrates the owner’s fitness for licensure. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, evidence specified in Section 40165, and dated letters of reference from employers, instructors, or counselors that contain valid contact information for the individual providing the reference.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012, 26013, 26050, 26055 and 26130, Business and Professions Code.

§40131. Annual License Application Requirements – Manufacturing Premises and Operations Information.

The applicant shall submit all of the following information regarding the manufacturing premises and operation:

§ 40131 (a) The physical address of the manufacturing premises;

§ 40131 (b) Whether medicinal-use cannabis products, adult-use cannabis products, or both, are manufactured at the premises;

§ 40131 (c) The type(s) of activity conducted at the premises (extraction, infusion, packaging, or labeling);

§ 40131 (d) The types of products that will be manufactured, packaged, or labeled at the premises, including a product list;

§ 40131 (e) The name, title, email address, and phone number of the on-site individual who manages the operation of the premises;

§ 40131 (f) The name, title, email address, and phone number of an alternate contact person for the premises, if applicable;

§ 40131 (g) The number of employees at the premises;

§ 40131 (h) The anticipated gross annual revenue from products manufactured at the premises as specified in Section 40152;

§ 40131 (i) A premises diagram as specified in Section 40105;

§ 40131 (j) The following information:

(1) A description of inventory control procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40282, or a copy of the standard operating procedure addressing inventory control;

(2) A description of quality control procedures sufficient to demonstrate how the applicant will comply with all of the applicable requirements specified in Sections 40235-40258 or a copy of the standard operating procedure addressing quality control;

(3) A description of the transportation process describing how cannabis or cannabis products will be transported into and out of the premises, or a copy of the standard operating procedure addressing transportation;

(4) A description of security procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40200, or a copy of the standard operating procedure addressing security procedures;

(5) A description of the cannabis waste management procedures sufficient to demonstrate how the applicant will comply with the requirements of Section 40290, or a copy of the standard operating procedure addressing cannabis waste management.

§ 40131 (k) A written statement signed by the owner of the property, or the owner’s agent, identifying the physical location of the property and acknowledging and consenting to the manufacture of cannabis products on the property. The name, address and contact phone number for the owner or owner’s agent shall be included;

§ 40131 (l) A copy of the signed closed-loop system certification and a document evidencing approval of the extraction operation by the local fire code official required pursuant to Section 40223 or 40225, if applicable;

§ 40131 (m) Any manufacturer submitting operating procedures and protocols to the Department pursuant to the Act and this chapter may claim such information as a trade secret or confidential by clearly identifying such information as “confidential” on the document at the time of submission. Any claim of confidentiality by a manufacturer must be based on the manufacturer’s good faith belief that the information marked as confidential constitutes a trade secret as defined in Civil Code section 3426.1(d), or is otherwise exempt from public disclosure under the California Public Records Act in
Government Code section 6250 et seq.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050, 26050.1, 26055 and 26130, Business and Professions Code.

§40132. Annual License Application Requirements - Compliance with CEQA.

§ 40132 (a) An applicant for a new license shall provide evidence of exemption from or compliance with the California Environmental Quality Act (CEQA), Division 13 (commencing with section 21000) of the Public Resources Code.

§ 40132 (b) The evidence provided pursuant to subsection (a) shall be one of the following:

(1) If the premises is located in a local jurisdiction that has adopted an ordinance, rule, or regulation pursuant to Business and Professions Code section 26055(h), a copy of the local license, permit, or other authorization shall be sufficient to demonstrate compliance.

(2) If the applicant does not provide a copy of the local license, permit, or other authorization pursuant to subsection (b)(1), or if the premises is located in a local jurisdiction that has not adopted an ordinance, rule, or regulation pursuant to Business and Professions Code section 26055(h), a copy of the Notice of Exemption or Notice of Determination and a copy of the CEQA document from the local jurisdiction, or a reference to where it can be found electronically to demonstrate compliance.

(3) Persons whose only financial interest is a security interest, lien, or encumbrance on the property that will be used by the commercial cannabis business; and

(4) Persons who hold a share of stock that is less than 5 percent of the total shares in a publicly traded company

§ 40132 (c) If an applicant does not have the evidence specified in subsection (b), or if the local jurisdiction did not prepare a CEQA document, the applicant shall be responsible for the preparation of an environmental document in compliance with CEQA that can be approved or certified by the Department, if applicable.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26055, Business and Professions Code.

§40133. Limited Waiver of Sovereign Immunity.

§ 40133 (a) Any applicant or licensee that may fall within the scope of sovereign immunity that may be asserted by a federally recognized tribe or other sovereign entity must waive any sovereign immunity defense that the applicant or licensee may have, may be asserted on its behalf, or may otherwise be asserted in any state administrative or judicial enforcement actions against the applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise, under the state laws and regulations governing commercial cannabis activity. The applicant or licensee must submit a written waiver of sovereign immunity to the Department with any license application or renewal, which is valid for the period of the license. The written waiver shall include that the applicant or licensee has the lawful authority to enter into the waiver required by this section, the applicant or licensee hereby waives sovereign immunity, and the applicant
or licensee agrees to do all of the following:

(1) Provide documentation to the Department that establishes that the applicant or licensee has the lawful authority to enter into the waiver required by this section;

(2) Conduct all commercial cannabis activity in full compliance with the state laws and regulations governing commercial cannabis activity, including submission to all enforcement provisions thereof;

(3) Allow access as required by state statute or regulation by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any premises or property at which the applicant conducts any commercial cannabis activity, including premises or property where records of commercial cannabis activity are maintained by or for the applicant or licensee;

(4) Provide any and all records, reports, and other documents as may be required under the state laws and regulations governing commercial cannabis activity;

(5) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise specified by state law;

(6) Meet all of the requirements for licensure under the state laws and regulations governing the conduct of commercial cannabis activity, and provide truthful and accurate documentation and other information of the applicant’s qualifications and suitability for licensure as may be requested;

(7) Submit to the personal and subject matter jurisdiction of the California courts to address any matter related to the waiver or the commercial cannabis application, license, or activity, and that all such matters and proceedings shall be governed, construed, and enforced in accordance with California substantive and procedural law,
including but not limited to the Medicinal and Adult-Use Cannabis Regulation and Safety Act and the Administrative Procedure Act.

§ 40133 (b) The Department shall not approve an application for a state license if approval of the license would violate the provisions of any local ordinance or regulation adopted in accordance with section 26200 of the Act that is issued by the county or, if within a city, the city, within which the licensed premises is to be located.

§ 40133 (c) Any applicant or licensee must immediately notify the Department of any changes that may materially affect the applicant and licensee’s compliance with subsection (a).

§ 40133 (d) Any failure by an applicant or licensee to comply with the requirements of subsections (a) or (c) shall be a basis for denial of an application or renewal or discipline of a licensee.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26011.5, 26012, 26050 and 26051.5, Business and Professions Code.

§40135. Incomplete and Abandoned Applications.

§ 40135 (a) Incomplete applications will not be processed. Applications will only be considered complete if all of the information requested under Sections 40128 to 40131 is included. The Department shall issue a written notice to the applicant, by mail or through MCLS, informing them of any information missing from the application.

§ 40135 (b) If the applicant fails to submit the required information within 180 days from the date of notice, the application shall be deemed abandoned. Application fees for abandoned applications shall not be refunded.

§ 40135 (c) An applicant may reapply at any time following an abandoned application. However, a new application and application fee are required.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012 and 26050, Business and Professions Code.

§40137. Application Withdrawal.

§ 40137 (a) An applicant may withdraw an application for annual licensure at any time prior to the issuance or denial of the license. Requests to withdraw an application shall be submitted in writing to the Department or through MCLS.

§ 40137 (b) An applicant may reapply for annual licensure at any time subsequent to the withdrawal of an application. However, a new application and application fee are required.

§ 40137 (c) Withdrawal of an application shall not deprive the Department of its authority to institute or continue a proceeding against the applicant for the denial of the license upon any ground provided by law or to enter an order denying the license upon any such ground.

§ 40137 (d) The application fee paid for a new application and the annual license fee paid for a renewal application shall not be refunded if an application is withdrawn.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012 and 26050, Business and Professions Code.

Article 3. Fees

§40150. Application and License Fees.

§ 40150 (a) Manufacturer application fees for new applications shall be as follows:

(1) For a Type 7, Type 6, Type N, or Type P license application, the nonrefundable application fee is $1,000 for each new application submitted;

(2) For a Type S license application, a nonrefundable application fee of $500 for each new application submitted.

§ 40150 (b) The annual license fee shall be as follows:

(1) For a licensed premises with gross annual revenue of up to $100,000 (Tier I), the fee shall be $2,000;

(2) For a licensed premises with gross annual revenue of $100,001 to $500,000 (Tier II), the fee shall be $7,500;

(3) For a licensed premises with gross annual revenue of $500,001 to $1,500,000 (Tier III), the fee shall be $15,000;

(4) For a licensed premises with gross annual revenue of $1,500,001 to $3,000,000 (Tier IV), the fee shall be $25,000;

(5) For a licensed premises with gross annual revenue of $3,000,001 to $5,000,000 (Tier V), the fee shall be $35,000;

(6) For a licensed premises with gross annual revenue of $5,000,001 to $10,000,000 (Tier VI), the fee shall be $50,000;

(7) For a licensed premises with an annual gross revenue of over $10,000,000 (Tier VII), the fee shall be $75,000.

§ 40150 (c) All fees are nonrefundable.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012 and 26180, Business and Professions Code.

§40152. Gross Annual Revenue Calculation.

§ 40152 (a) The applicant shall calculate the gross annual revenue for the licensed premises based on the annual gross sales of cannabis products and, if applicable, the annual revenue received from manufacturing, packaging, labeling or otherwise handling cannabis or cannabis products for other licensees, in the twelve months preceding the date of application.

§ 40152 (b) For a new license applicant, the gross annual revenue shall be based on the gross sales and revenue expected during the first 12 months following licensure.

§ 40152 (c) For a manufacturer licensee that is also licensed as a distributor or retailer, and that sells or transfers cannabis products manufactured on the licensed premises in a non-arm’s length transaction, the annual gross sales or revenue for such transactions shall be based on the product’s fair market value if it were to be sold in an arm’s length transaction at wholesale.

§ 40152 (d) For purposes of this section, an “arm’s length transaction” means a sale entered into in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012 and 26180, Business and Professions Code. 

Article 4. Approval or Denial of Application for Licensure

§40155. New License Approval.

§ 40155 (a) The Department shall notify the applicant upon approval of a new license application by email or through MCLS.

§ 40155 (b) The applicant shall pay the applicable license fee specified in Section 40150(b) within 30 calendar days of notification. The license fee for the first year of licensure shall be based on the estimated gross annual revenue as calculated pursuant to Section 40152 and submitted in the license application.

§ 40155 (c) No license shall be issued before the license fee is paid to the Department in full.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012 and 26130, Business and Professions Code.

§40156. Priority License Issuance.

§ 40156 (a) Priority issuance of licenses shall be given to applicants that can demonstrate that the commercial cannabis business was in operation under the Compassionate Use Act of 1996, Health and Safety Code sections 11362.5 et seq., as of September 1, 2016.

§ 40156 (b) Eligibility for priority in application processing shall be demonstrated by any of the following, dated prior to September 1, 2016:

(1) Local license or permit or other written authorization;

(2) Collective or Cooperative Membership Agreement;

(3) Tax or business forms submitted to the Board of Equalization or Franchise Tax Board;

(4) Incorporation documents; or

(5) Any other business record that demonstrates the operation of the business prior to September 1, 2016.

§ 40156 (c) Any applicant identified by the local jurisdiction pursuant to section 26054.2(b) of the Act shall be considered eligible for priority issuance.

§ 40156 (d) The Department may request additional documentation to verify the applicant’s date of commencement of operations.

§ 40156 (e) This section shall expire on December 31, 2019, unless otherwise provided by law.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26012, 26054.2 and 26130, Business and Professions Code.

§40159. Denial of License.

§ 40159 (a) The Department may deny an application for a new or renewal license for any reason specified in section 26057(b) of the Act. Further, the Department may deny a new or renewal license application for any of the following additional reasons:

(1) The applicant, an owner, or licensee made a material misrepresentation in the application for the license;

(2) An owner of the commercial cannabis business has been convicted of a crime or has committed a violation of law substantially related to the qualifications, functions, or duties of a manufacturer as identified in Section 40162;

(3) The applicant, an owner, or licensee has been denied a license to engage in commercial cannabis activity by a state licensing authority;

(4) The applicant, an owner, or licensee has denied the Department access to the premises; or

(5) The licensee has engaged in conduct that is grounds for disciplinary action specified in section 26030 of the Act.

§ 40159 (b) The Department shall deny an application for a new or renewal license if the proposed manufacturing operation or premises would violate the applicable local ordinance.

§ 40159 (c) A conviction within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere.

§ 40159 (d) Prior to denial of a license based upon paragraph (2) of subsection (a) of this Section, the Department shall consider any evidence of rehabilitation as provided in Section 40165.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26030 and 26057, Business and Professions Code.

§40162. Substantially Related Acts.

For the purpose of denial of a license, a conviction or violation from any jurisdiction that is substantially related to the qualifications, functions, and duties of the business for which the application is made include:

§ 40162 (a) A violent felony conviction, as specified in subdivision (c) of Section 667.5 of the Penal Code;

§ 40162 (b) A serious felony conviction, as specified in subdivision (c) of Section 1192.7 of the Penal Code;

§ 40162 (c) A felony conviction involving fraud, deceit, or embezzlement;

§ 40162 (d) A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling, any controlled substance to a minor; or selling, offering to sell, furnishing, offering to furnish, administering or giving any controlled substance to a minor;

§ 40162 (e) A felony conviction for drug trafficking with enhancements pursuant to Health and Safety Code sections 11370.4 or 11379.8;

§ 40162 (f) A violation of section 110620, 110625, 110630, 110760, 110765, 110770, 110775, 111295, 111300, 111305, 111440, 111445, 111450, or 111455 of the Health and Safety Code (Sherman Food, Drug, and Cosmetic Law) that resulted in suspension or revocation of a license, administrative penalty, civil proceeding or criminal conviction;

§ 40162 (g) A violation of Chapter 4 (sections 111950 through 112130) of Part 6 of Division 104 of the Health and Safety Code that resulted in suspension or revocation of a license, administrative penalty, civil proceeding or criminal conviction;

§ 40162 (h) A conviction under section 382 or 383 of the Penal Code; and

§ 40162 (i) A violation of law identified in subsections (f) or (g) committed by a business entity in which an owner was an officer or had an ownership interest is considered a violation that is substantially related to the owner’s qualifications for licensure.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26011.5 and 26057, Business and Professions Code.

§40165. Criteria for Evidence of Rehabilitation.

When evaluating whether a license should be issued or denied when an owner has been convicted of a criminal offense or committed a violation of law that is substantially related to the qualifications, functions, or duties of the business for which the application is made, the Department shall consider the following criteria in its evaluation of evidence of rehabilitation:

§ 40165 (a) The nature and severity of the act or offense, including the actual or potential harm to the public;

§ 40165 (b) The owner’s criminal record as a whole;

§ 40165 (c) Evidence of any act committed subsequent to the act or offense under consideration that could be considered grounds for denial, suspension, or revocation of a manufacturing license;

§ 40165 (d) The time elapsed since commission of the act or offense listed in Section 40162, or in section 26057(b)(4) of the Act;

§ 40165 (e) The extent to which the owner has complied with any terms of parole, probation, restitution, or any other sanctions lawfully imposed against the owner or licensee;

§ 40165 (f) If applicable, evidence of dismissal under Penal Code section 1203.4, 1203.4a, 1203.41, or a similar law in another state;

§ 40165 (g) If applicable, a certificate of rehabilitation obtained under Penal Code section 4852.01 or a similar law in another state; and

§ 40165 (h) Other evidence of rehabilitation submitted by the owner.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26011.5, 26055 and 26057, Business and Professions Code.

§40167. Appeal of License Denial.

§ 40167 (a) Upon denial of an application for a license, the Department shall notify the applicant in writing of the reasons for the denial and the right to a hearing to contest the denial.

§ 40167 (b) The applicant may request a hearing by filing a written petition for a license with the Department within 30 calendar days of service of the notice of denial. The written request for hearing must be postmarked within the 30-day period. If a request is not filed within the 30-day period, the applicant’s right to a hearing is waived.

§ 40167 (c) Upon receipt of a timely filed petition, the Department shall set the petition for hearing. The hearing shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26058, Business and Professions Code.

Article 5. Licensing

§40175. License Constraints.

§ 40175 (a) A manufacturer licensee shall not manufacture, prepare, package or label any products other than cannabis products at the licensed premises. For purposes of this section, the term “cannabis products” also includes packaged cannabis, pre-rolls, and products that do not contain cannabis, but are otherwise identical to the cannabiscontaining product, and are intended for use as samples.

§ 40175 (b) No licensee shall employ or retain an individual under 21 years of age.

§ 40175 (c) A manufacturer licensee shall only use cannabinoid concentrates and extracts that are manufactured or processed from cannabis obtained from a licensed cannabis cultivator.

§ 40175 (d) A manufacturer licensee shall not manufacture, prepare, package, or label cannabis products in a location that is operating as a retail food establishment or as a processed food registrant.

§ 40175 (e) A manufacturer licensee shall not manufacture, prepare, package, or label cannabis products in a location that is licensed by the Department of Alcoholic Beverage Control pursuant to Division 9 (commencing with section 23000) of the Business and Professions Code.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050 and 26140, Business and Professions Code.

§40177. Change in Licensed Operations.

§ 40177 (a) At any time during the license period, a licensee may request to change the manufacturing activities conducted at the licensed premises. The following changes require pre-approval from the Department:

(1) The addition of any extraction method subject to the requirements of Section 40225;

(2) The addition of any other extraction method that necessitates a substantial or material alteration of the premises;

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26058, Business and Professions Code.

§40177. Change in Licensed Operations.

§ 40177 (a) At any time during the license period, a licensee may request to change the manufacturing activities conducted at the licensed premises. The following changes require pre-approval from the Department:

(1) The addition of any extraction method subject to the requirements of Section 40225;

(2) The addition of any other extraction method that necessitates a substantial or material alteration of the premises;

(3) The addition of infusion operations if no infusion activity is listed in the current license application on file with the Department;

(4) A substantial or material alteration of the licensed premises from the current premises diagram on file with the Department.

§ 40177 (b) For purposes of this section, a “substantial or material alteration” includes: the removal, creation, or relocation of an entryway, doorway, wall, or interior partition; a change in the type of activity conducted in, or the use of, an area identified in the premises diagram; or remodeling of the premises or portion of the premises in which manufacturing activities are conducted.

§ 40177 (c) To request approval for a change listed in subsection (a), the licensee shall submit the following:
(1) Any changes to the information and documents required under Section 40131 by email or through MCLS; and
(2) A non-refundable $700 change request processing fee for review of all documents.

§ 40177 (d) The request shall be evaluated on a case-by-case basis by the Department, and upon approval of the request by the Department, the licensee may begin conducting the additional manufacturing operation or make the requested change to the premises. The existing license shall be amended to reflect the change in operations, if applicable, but the date of expiration shall not change.

§ 40177 (e) Licensees that choose to cease operation of any activity identified in the current license application on file with the Department shall notify the Department within 10 days of cessation of the activity. License fees shall not be pro-rated or refunded upon cessation of any activity.

§ 40177 (f) A licensee shall notify the Department through MCLS of any changes to the product list on file with the Department and provide a new product list within 10 business days of making any change.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050 and 26055, Business and Professions Code.

§40178. Add or Remove Owner(s) and Financial Interest Holders.

§ 40178 (a) The licensee shall notify the Department of the addition or removal of an owner through MCLS within 10 calendar days of the change.

§ 40178 (b) Any new owner shall submit the information required under Section 40130 to the Department through MCLS or on a form prescribed by the Department. The Department shall review the qualifications of the new owner in accordance with the Act and these regulations to determine whether the change would constitute grounds for denial of the license. The Department may approve the addition of the owner, deny the addition of the owner, or condition the license as appropriate, to be determined on a case-by-case basis.

§ 40178 (c) An owner shall notify the Department through MCLS of any change in their owner information submitted pursuant to Section 40130 within 10 calendar days of the change.

§ 40178 (d) A licensee shall notify the Department through MCLS of any change in the list of financial interest holders, as specified in to Section 40129(a)(9) within 10 calendar days of the change.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050 and 26057, Business and Professions Code.

§40179. Death, Incapacity, or Insolvency of a Licensee.

§ 40179 (a) In the event of the death, incapacity, receivership, assignment for the benefit of creditors or other event rendering one or more owners’ incapable of performing the duties associated with the license, the owner or owners’ successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the Department in writing within 10 business days.

§ 40179 (b) To continue operations or cancel the existing license, the successor in interest shall submit to the Department the following:

(1) The name of the successor in interest;

(2) The name of the owner(s) for which the successor in interest is succeeding and the license number;

(3) The phone number, mailing address, and email address of the successor in interest; and

(4) Documentation demonstrating that the owner(s) is incapable of performing the duties associated with the license such as a death certificate or a court order, and documentation demonstrating that the person making the request is the owner or owners’ successor in interest such as a court order appointing guardianship, receivership, or a will or trust agreement.

§ 40179 (c) The Department may give the successor in interest written approval to continue operations on the licensed manufacturing premises for a period of time specified by the Department:

(1) If the successor in interest or another person has applied for a license from the Department for the licensed premises and that application is under review;

(2) If the successor in interest needs additional time to destroy or sell cannabis or cannabis products; or

(3) At the discretion of the Department.

§ 40179 (d) The successor in interest is held subject to all terms and conditions under which a state cannabis license is held pursuant to the Act.

§ 40179 (e) The approval pursuant to subsection (c) creates no vested right to the issuance of a state cannabis license.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26012, Business and Professions Code.

§40180. License Renewal.

§ 40180 (a) To apply for a license renewal, the licensee shall submit any changes to their current license application information (as required by Section 40128) on a form prescribed by the Department or through MCLS; submit a document demonstrating the gross annual revenue for the licensed premises calculated pursuant to Section 40152, such as a copy of the licensee’s state tax return filed with the California Department of Tax and Fee Administration; sign the license renewal application under penalty of perjury; and submit the annual license fee as specified in Section 40150(b).

§ 40180 (b) To timely renew a license, a completed license renewal application and annual license fee pursuant to Section 40150(b) shall be received by the Department from the licensee no earlier than 60 calendar days before the expiration of the license and no later than 5:00 p.m. Pacific Time on the last business day before the expiration of the license if the renewal form is submitted to the Department at its office(s), or no later than 11:59 p.m. on the last business day before the expiration of the license if the renewal form is submitted through MCLS. Failure to receive a notice for license renewal does not relieve a licensee of the obligation to renew all licenses as required.

§ 40180 (c) In the event the license renewal application is not submitted by the deadline established in subsection (b), the licensee shall not conduct commercial cannabis activity until the license is renewed.

§ 40180 (d) A licensee may submit an application for license renewal up to 30 calendar days after the license expires. A late license renewal application shall be subject to a late fee of $500. A licensee that does not submit a complete license renewal application, including the late fee, to the Department within 30 calendar days after the expiration of the license shall forfeit their eligibility to apply for a license renewal and, instead, shall be required to submit a new license application.

§ 40180 (e) Any changes to owner and financial interest holder information shall be made in accordance with Section 40178.

§ 40180 (f) The Department shall notify the licensee upon approval of the license renewal application through email or MCLS. The Department shall notify a licensee of the denial of an application in accordance with Section 40167.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050, 26051.5 and 26180, Business and Professions Code.

§40182. Disaster Relief.

§ 40182 (a) If a licensee is unable to comply with any licensing requirement due to a disaster, the licensee may notify the Department of this inability to comply and request relief from the specific licensing requirement.

§ 40182 (b) The Department may exercise its discretion to provide temporary relief from specific regulatory requirements in this chapter and from other licensing requirements when allowed by law.

§ 40182 (c) Temporary relief from specific licensing requirements shall be issued for a reasonable amount of time in order to allow the licensee to recover from the disaster.

§ 40182 (d) The Department may require that certain conditions be followed in order for a licensee to receive temporary relief from specific licensing requirements.

§ 40182 (e) A licensee shall not be subject to an enforcement action for a violation of a licensing requirement in which the licensee has received temporary relief.

§ 40182 (f) For purposes of this section, “disaster” means condition of extreme peril to the safety of persons and property within the state or a county, city and county, or city caused by such conditions such as air pollution, fire, flood, storm, tidal wave, epidemic, riot, drought, terrorism, sudden and severe energy shortage, plant or animal infestation or disease, Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or similar public calamity, other than conditions resulting from a labor controversy, for which the Governor has proclaimed a state of emergency in accordance with Government Code sections 8558 and 8625, or for which a local governing body has proclaimed a local emergency in accordance with Government Code sections 8558 and 8630.

§ 40182 (g) Notwithstanding subsection (a) of this section, if a licensee needs to move cannabis or cannabis products stored on the premises to another location immediately to prevent loss, theft, or degradation of the cannabis or cannabis products from the disaster, the licensee may move the cannabis or cannabis products without obtaining prior approval from the Department if the following conditions are met:

(1) The cannabis or cannabis products are moved to a secure location where access to the cannabis or cannabis products can be restricted to the licensees, its employees, and its contractors;

(2) The licensee notifies the Department in writing that the cannabis or cannabis products have been moved and that the licensee is requesting relief from complying with the specific licensing requirements pursuant to subsection (a) of this section within 24 hours of moving the cannabis or cannabis products;

(3) The licensee agrees to grant the Department access to the location where the cannabis or cannabis products have been moved;

(4) The licensee submits in writing to the Department within 10 days of moving the cannabis or cannabis products, a request for temporary relief that clearly indicates what regulatory sections relief is requested from, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26012, Business and Professions Code.

§40184. Notification of Criminal Acts, Civil Judgments, and Revocation of a Local License, Permit, or Other Authorization after Licensure.

§ 40184 (a) A licensee shall notify the Department in writing of a criminal conviction of any owner, either by mail or electronic mail, within 48 hours of the conviction. The written notification to the Department shall include the date of conviction, the court case number, the name of the court in which the owner was convicted, and the specific offense(s) for which the owner was convicted.

§ 40184 (b) A licensee shall notify the Department in writing of a civil penalty or judgment rendered against the licensee or any owner in their individual capacity, either by mail or electronic mail, within 48 hours of delivery of the verdict or entry of judgment, whichever is sooner. The written notification to the Department shall include the date of verdict or entry of judgment, the court case number, the name of the court in which the matter was adjudicated, and a description of the civil penalty or judgement rendered against the licensee or owner.

§ 40184 (c) A licensee shall notify the Department in writing of the revocation of a local license, permit, or other authorization, either by mail or electronic mail, within 48 hours of receiving notice of the revocation. The written notification shall include the name of the local agency involved, a written explanation of the proceeding or enforcement
action, and the specific violation(s) that led to revocation.

§ 40184 (d) A licensee shall notify the Department in writing of an administrative order for violations of labor standards against the licensee or any owner in their individual capacity, either by mail or electronic mail, within 48 hours of delivery of the order. The written notification shall include the date of the order, the name of the agency issuing the order, and a description of the administrative penalty or judgment against the licensee.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Section 26031, Business and Professions Code.

Article 6. Shared-Use Facilities

§40190. Definitions.

For purposes of this Article, the following definitions shall apply:

§ 40190 (a) “Common-use area” means any area of the manufacturer’s registered shareduse facility, including equipment that is available for use by more than one licensee, provided that the use of a common-use area is limited to one licensee at a time.

§ 40190 (b) “Designated area” means the area of the manufacturer’s registered shared-use facility that is designated by the primary licensee for the sole and exclusive use of a Type S licensee, including storage of the Type S licensee’s cannabis, cannabis concentrates, and cannabis products.

§ 40190 (c) “Primary licensee” means the Type 7, Type 6, or Type N licensee that has registered and been approved to operate its licensed premises as a shared-use facility.

§ 40190 (d) “Shared-use facility” means a manufacturing premises operated by a Type 7, Type 6, or Type N licensee in which Type S licensees are authorized to conduct manufacturing operations.

§ 40190 (e) “Use agreement” means a written agreement between a primary licensee and a Type S applicant or licensee that specifies the designated area of the Type S licensee, the days and hours in which the Type S licensee is assigned to use the common-use area, any allocation of responsibility for compliance pursuant to Section 40196, and an acknowledgement that the Type S licensee has sole and exclusive use of the common-use area during the Type S licensee’s assigned time period.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26001, 26050, 26051.5 and 26130, Business and Professions Code.

§40191. Type S License.

§ 40191 (a) Applications for a Type S license shall:

(1) Be submitted in accordance with Section 40128;

(2) Include the license number and address of the registered shared-use facility at which the applicant will conduct manufacturing operations;

(3) Include a copy of the use agreement signed by both the Type S applicant and the primary licensee; and

(4) On the premises diagram submitted pursuant to Section 40131(i), indicate the designated area to be used by the Type S applicant and detail where the applicant will store its cannabis, cannabis concentrates, and cannabis products.

§ 40191 (b) A Type S license shall only be available to applicants with a gross annual revenue of less than $1,000,000 as calculated pursuant to Section 40152.

§ 40191 (c) A Type S licensee may conduct the following operational activities:

(1) Infusions, as defined in Section 40100(v);

(2) Packaging and labeling of cannabis products; and

(3) Extractions with butter or food-grade oils, provided that the resulting extract or concentrate shall be used solely in the manufacture of the Type S licensee’s infused product, and shall not be sold to any other licensee.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26050, 26051.5 and 26130, Business and Professions Code.

§40192. Registration to Operate a Shared-Use Facility.

§ 40192 (a) No licensee shall operate as a shared-use facility without prior approval by the Department.

§ 40192 (b) To register as a shared-use facility, a Type 7, Type 6, or Type N licensee shall submit the following to the Department through MCLS:

(1) A copy of the license, permit, or other authorization issued by the local jurisdiction that enables the licensee to operate as a shared-use facility. The Department shall contact the applicable local jurisdiction to confirm the validity of the authorization upon receipt of the application for registration. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid.

(2) A registration form prescribed by the Department, which includes the following information:

(A) The proposed occupancy schedule that specifies the days and hours the common-use area will be available for use by Type S licensees and when the commonuse area will be used by the primary licensee. The occupancy schedule shall allow for maintenance and sanitizing between uses by individual licensees.

(B) A diagram indicating:

(i) Each designated area for Type S licensee(s).

(ii) The common-use area, including identification of any shared equipment.

§ 40192 (c) The Department shall notify the Type 7, Type 6, or Type N licensee upon approval of the registration to operate as a shared-use facility. Notification shall be made through MCLS.

§ 40192 (d) At least one business day prior to a Type S licensee commencing manufacturing operations at a registered shared-use facility, the primary licensee shall provide written notification to the Department. The notification to the Department shall include the Type S licensee’s business name, contact person, contact phone number, and license number. The primary licensee shall also provide an updated occupancy schedule that includes the Type S licensee and an updated diagram that specifies the Type S licensee’s designated area. Notification shall be provided by email or through MCLS.

§ 40192 (e) A primary licensee that wishes to discontinue operation as a shared-use facility may cancel its registration by providing written notice to the Department and each Type S licensee authorized to use the shared-use facility at least 30 calendar days prior to the effective date of the cancellation.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26051.5, 26055 and 26130, Business and Professions Code.

§40194. Shared-Use Facility Conditions for Operation.

§ 40194 (a) A primary licensee shall operate the shared-use facility in accordance with the conditions of operation specified in this section.

§ 40194 (b) Each Type S licensee shall be assigned a “designated area” that, at minimum:

(1) Is for exclusive use by the Type S licensee;

(2) Provides an area for storage that is secure, fixed in place, locked with a commercial-grade lock, and accessible only to the Type S licensee for storage of that Type S licensee’s cannabis, cannabis concentrates, and cannabis products.

§ 40194 (c) Any part of the premises used for manufacturing activities that is a common-use area shall be occupied by only one licensee at a time by restricting the time period that each licensee may use the common-use area. During the assigned time period, one licensee shall have sole and exclusive occupancy of the common-use area.

§ 40194 (d) The use of the shared-use facility shall be restricted to the primary licensee and the Type S licensees authorized by the Department to use the shared-use facility.

§ 40194 (e) Any cannabis product or other materials remaining after a Type S licensee ceases operation and discontinues use of its designated area shall be considered cannabis waste and disposed of by the primary licensee consistent with the
requirements of the Act and regulations.

§ 40194 (f) The shared-use facility shall meet all applicable requirements of the Act and regulations.

§ 40194 (g) The occupancy schedule shall be prominently posted near the entrance to the shared-use facility.

§ 40194 (h) The primary licensee may conduct manufacturing activities as permitted under its Type 7, Type 6, or Type N license and may use the common-use area during its scheduled time period.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26011.5 and 26130, Business and Professions Code.

§40196. Shared-Use Facility Compliance Requirements.

§ 40196 (a) As part of the use agreement, the primary licensee and the Type S licensee(s) may allocate responsibility for providing and maintaining commonly used equipment and services, including, but not limited to, security systems, fire monitoring and protection services, and waste disposal services. However, such agreement is not binding on the Department and the Department may take enforcement action against either the primary licensee or Type S licensee(s), regardless of the allocation of responsibility in the use agreement.

§ 40196 (b) A primary licensee or a Type S licensee is liable for any violation found at the shared-use facility during that licensee’s scheduled occupancy or within that licensee’s designated area. However, a violation of any provision of the Act or regulations may be deemed a violation for which each Type S licensee and the primary licensee are responsible. In the event of a recall or embargo of a cannabis product produced at a shared-use facility, the Department, in its sole discretion, may include any or all cannabis products produced at the shared-use facility.

§ 40196 (c) The occupancy schedule and designated area for a Type S licensee shall not be altered without prior notification to the Department. Prior to making any changes to the occupancy schedule or the designated area, written notification shall be submitted to the Department that includes the intended changes. Notification shall be submitted by
email or through MCLS.

Authority: Sections 26012, 26013 and 26130, Business and Professions Code.
Reference: Sections 26011.5, 26055 and 26130, Business and Professions Code.

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