Further Regulation Details for Cannabis Distributors, Retailers and Microbusinesses
You've read the cannabis state regulations from front to back, but it's still vital that you really understand all the ins and outs so you can avoid enforcement actions that can result in the loss of your license. Here are a few more details, and as always, contact CCA for crucial compliance help that can assist with avoiding future enforcement activity on your license.
Distributors and excise tax
As we've discussed before, distributors are the focal point in the cannabis excise tax system. These are the only businesses that directly remit cannabis excise taxes to the California Department of Tax and Fee Administration (CDTFA) — this means retailers, cultivators and other business types cannot do so (don't forget that distributors must also collect a cannabis cultivation tax from cultivators and pay it to the CDTFA).
Since distributors bear the burden of this tax type, these businesses should make it clear up front (in their distribution contracts) that retailers must pay the cannabis excise tax at delivery. A retailer may want to pay the excise tax after they sell their product to a consumer; however, a distributor generally doesn't want to wait, as this could result in late payment penalties (for all parties).
Retailers and packaging
A point of concern for retailers is the regulations that require child-resistant packaging. During the transition period (from January 1 to July 1, 2018), cannabis goods not currently in child-resistant packaging that are in a retailer's inventory at the time their license is received may be sold — but only if the retailer places these products into a child-resistant package prior to or at the time of sale.
A note about microbusinesses
Microbusinesses are a unique business type. According to regulations, commercial cannabis businesses must engage in at least three different business activities to qualify for a microbusiness licence — these types include cultivation (less than 10,000 square feet), manufacturing (only non-volatile or no solvents), distribution, and retail sale to customers.
All of these business activities must take place on the same premises — that is, separate addresses are not only required, but they are also prohibited. Also, delivery is considered a retail activity under the microbusiness license.
Stay compliant with CCA
We're here to help your business stay compliant, no matter what type of cannabusiness you have. We offer advocacy at the state and local levels to help ensure regulators are confident our clients meet — and exceed — compliance standards.