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Industry News


Delays for cannabis distributors may lie ahead

Distributors, like other cannabis business types, have an extensive set of regulations to satisfy in order to operate within the rules. In addition to meeting these standards, the state of California may face some delays as distributors work on getting licensed. 


Distributor regulations

Distributors have a bevy of regs to work through to remain compliant and legal — for starters, they need to obtain a "Distributor" or "Distributor Transport Only" license from the state of California. 

Distributors also have to satisfy certain rules about the physical nature of their business. Transportation of cannabis and cannabis products must take place in a vehicle or trailer (no bicycles!) and the product(s) cannot be visible from the outside. It must also be kept in a locked box, container or cage that is secured to the vehicle or trailer. 

The distribution vehicle must be equipped with an alarm and remain secured at all times. It cannot be left unattended in a residential area, nor be parked overnight in a residential area. 

Distributor challenges

While temporary licenses have been issued, there exists a potential for a bottleneck of sorts. Although many retail shops stocked up with cannabis products before January 1 rolled around and adult-use cannabis became legal, there are concerns that there aren't enough licensed distributors at this point in time to transport cannabis between licensed businesses. This can, understandably, result in less cannabis making its way to retail shop shelves. 

Additionally, California's Track-and-Trace System is not quite active yet, which makes distribution process far more cumbersome as much of the seed to sale tracking must be done manually, which also risks compliance failure.

And don't forget that distributors are responsible for not only transporting cannabis, but are responsible for collecting state cannabis excise taxes from retailers, and cultivation taxes from cultivators — and must file and pay these taxes on a regular basis.

However, as more licenses are approved, there will be more distributors available to move cannabis products from the farm to retail shops, but until then, there may be a bit of congestion in the supply chain. 

Check with CCA

CCA can be your guide as you work through state and local license applications, and can help make sure you meet and exceed all distributor regulations the state (and your municipality) requires. Contact us today.

Monica Beyer