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What's New: Advocacy

SFAA Advises California Agencies on the Legal Exposures for Cannabis Businesses

Friday, September 21, 2018  

SFAA Advises California Agencies on the Legal Exposures for Cannabis Businesses

SFAA wrote to three agencies in California proposing regulations with a bond requirement for cannabis businesses to advise the agencies of our concerns with the legal exposures for sureties given the conflicts between state and federal law regarding marijuana. The Department of Food and Agriculture proposed regulations for commercial cannabis cultivators, the Department of Public Health proposed regulations for cannabis manufacturers, and the Department of Consumer Affairs proposed regulations for commercial cannabis businesses to implement a new law. These entities must be licensed a post a minimum $5,000 surety bond to secure payment for the cost of destroying cannabis product when such destruction is required due to a violation of the applicable law or regulations. SFAA noted that the risk of the legal exposure in the current environment could impact the availability of the bonds. We also recommended that the Department of Food and Agriculture clarify its regulations by including the bond condition contained in the law’s requirements. The California Department of Public Health and the California Department of Consumer Affairs included the bond condition in their regulations. The rules previously were adopted on an emergency basis and now have been proposed for permanent adoption.

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