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Medical Cannabis Regulations – Proposed Text Changes

medical cannabis regulations

Canna Legal, a Division of Beck Law, P.C. submitted the following comment to the Bureau of Medical Cannabis Regulation regarding the proposed text of medical cannabis regulations.

Medical Cannabis Regulations Section 5006. Application Requirements, Subsection 16

Issue: Applicants should not be required to submit sensitive financial information such as account number, account type, or details about funds a bank account.

Suggested Changes: Eliminate this subsection.

Reasoning to Support Suggested Changes: The status of banking for cannabis operators is very tricky. While some operators may be able to get a bank account, they are frequently removed from banks if there is any suspicion of being part of the cannabis industry.

How will the Bureau of Medical Cannabis Regulation (BMCR) insure that bank account information is protected and not part of the public record? A requirement to disclose banking institution information, account details and funds available may draw unwanted attention or threats to businesses, which are perceived as dealing with a high cash and high value commodity like cannabis.

The proposed medical cannabis regulations from DPH and CDFA do not require cultivators or manufacturers to disclose this sort of financial information. These departments did not need such information to evaluate the nature of ownership of an applicant. This section is a major invasion of a business’ privacy and potentially exposes the business to risk of removal from the banking system or worse.

Given the exposure to applicants and the lack of a similar requirement by the other regulatory departments, this section is unreasonable and should be removed.

Medical Cannabis Regulations Section 5051. Licensee’s Responsibility for Acts of Employees and Agents

Issue: The enforcement of employee actions, omissions or failures should be qualified to allow licensees to address any issues by employees and agents.

Suggested Changes: Add qualifying language that allows licensees to immediately address any enforceable acts, omissions or failures by employees and agents.

Reasoning to Support Suggested Changes: Like any business, cannabis operators will likely have employees or agents who act against their policies and expose the business to potential loss of licensure. To obtain a cannabis license, a business will have expended much money, effort and time. A licensee should be given the opportunity to immediately address any problematic actions, omissions or failures by employees. We strongly urge the BMCR to adopt additional language that would give licensees the opportunity to address any issue within a set amount of time so long as it is reported, if necessary.

Medical Cannabis Regulations Section 5178. Customer Samples

Issue: Dispensaries should be permitted to provide free samples, in limited amounts, to customers.

Suggested Changes: Allow a licensed dispensary to provide a limited number of free samples to any person per day.

Reasoning to Support Suggested Changes: Like patients using pharmaceutical drugs, samples help a patient understand the nature and effect of a medical cannabis product. Doctors are freely allowed to give free samples of prescription drugs, and cannabis patients have many reasons to want to sample unfamiliar products. For example, patients might not have the funds to try a new product or cannabis strain.

The BMCR’s stated reason for this proposed regulation is largely based on testing. However, every cannabis product will be tracked and traced from seed to sale. Each cannabis product will have to pass testing before the distributor can release it to the dispensary. Samples of products can easily be tracked, traced and tested prior to being packaged as “samples – not for resale” or some similar packaging.

For patients, samples are an important part of their understanding of the medicine, and for cannabis operators samples are critical to earning customers’ trust. Eliminating samples will damage business and will hurt patients.

Article 1. § 5000(n):  The proposed regulations define “nonvolatile solvent” as “any solvent used in the extraction process that is not a volatile solvent. For purposes of this division, a nonvolatile solvent includes carbon dioxide used for extraction.”

The definition for “volatile solvent” means any “solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures. Examples of volatile solvents include but are not limited to, butane, hexane, propane, and ethanol.”

Issue:  The definitions of “nonvolatile solvent” and “volatile solvent” will severely impact the cannabis industry. Classifying ethanol as a volatile solvent will cripple medical cannabis manufacturers, and it will effectively make the Type 6 license useless.

Suggested Changes:  Define “nonvolatile solvent” and “volatile solvent” based on the flash point of the solvent, and specifically permit ethanol as a nonvolatile solvent allowable under a Type 6 manufacturer license.

Reasoning to Support Suggested Changes:  Although the BMCR is not tasked with regulating manufacturing, the proposed regulations definition of “nonvolatile substances” necessitates feedback. The BMCR and OMCS should take a more nuanced approach in the definition and regulation of “nonvolatile” and “volatile” solvents. The definition of “nonvolatile” should be based on the flash point of the solvent, which would better align with standards from National Fire Protection Association (NFPA) and the Occupational Safety and Health Administration (OSHA) as well as CAL-OSHA. This sort of definition would provide important clarity for manufactures, state inspectors as well as local fire and safety officers.

  1. Legal Basis for Changing the Definition of “Nonvolatile Solvent”

In September 2016, Governor Brown signed AB 2679, which amended Section 11362.775 of the Health and Safety Code to provide guidelines for collective or cooperatives that manufacture medical cannabis products. Rather than create a new standard for fire safety regulations, AB 2679 allows for the use solvents that are “generally recognized as safe pursuant to the federal Food, Drug and Cosmetic Act (21 U.S.C. Sec. 301 et seq.).” The OMCS should adopt a similar definition and use for solvents available to Type 6 nonvolatile manufacturing. The simplest way to achieve this, is to define “nonvolatile solvent” to include ethanol, because ethanol is generally recognized as safe according to federal guidelines and food grade ethanol is used in many forms of processed foods in which it is necessary to remove lipids from oils.

A definition that contemplates the flash point of the solvent would provide much needed clarity for licensees, inspectors and local emergency service providers. This has proven to be true in Colorado. Under the Colorado Revised Statues Section 18-18-406.6 defines “inherently hazardous substance” as “any liquid chemical, compressed gas, or commercial product that has a flash point at or lower than thirty-eight degrees Celsius or 100 degrees Fahrenheit, including butane, propane, and diethyl ether and excluding all forms of alcohol and ethanol.” Colorado’s definition of hazardous substance provides much more clarity for operators, inspectors and local emergency services providers. Importantly, Colorado’s definition allows for the use of ethanol, which is an important solvent for medical cannabis manufacturing.

  1. Impact on Industry

Defining ethanol as a “nonvolatile solvent” is critical to cannabis manufactures, because ethanol is the most effective and efficient solvent. Without ethanol, the Type 6 nonvolatile license type will become ineffective, because post-processing requires the use of some potentially flammable solvent to remove lipids from the concentrated oil.

During the extraction process, ethanol remains a liquid, it does not have added heat, and the process is completed in a closed loop system. In post-processing or refinement phase (which is commonly referred to Winterization), ethanol is used to remove lipids from the oil. Winterization involves taking the raw cannabis concentrated oil and mixing it with 95% pure food grade ethanol until it is homogenized. The mixture is then then covered and placed in a freezer and cooled to below freezing (at least 30 degrees Fahrenheit). After the concentrate has been cooled to the required temperature, it is filtered through an apparatus called a Buchner funnel. This step uses vacuum to assist in pulling the solution through a laboratory filter paper, which removes the unwanted lipids and fats. Finally, the solution containing alcohol and cannabinoids is placed in a piece of UL list equipment called a rotary evaporator or rotovap. The rotovap uses a heated water bath, a vacuum pump, and a chiller to reclaim the ethanol through evaporation – essentially a vacuum distillation. This is also a contained closed loop system. After the entire processes is completed, the reclaimed ethanol is then put back into a sealed container for further use.

Without ethanol, the Type 6 license type becomes less important, because even if a cannabis manufacture utilizes compressed carbon dioxide for extraction, they also use ethanol for post-processing concentrates. This is because CO2 extraction leaves more lipids in the concentrated oil than any other type of extraction. Therefore, almost all CO2 extractors must use the Winterization process to distill their cannabis concentrates for use in other products and for consumption. Essentially, as defined, the Type 6 license will be a default Type N or P, because manufacturers will not be able to post-process or refine raw concentrated oil without a solvent like ethanol. This will require most manufactures that produce concentrated cannabis to obtain a Type 7 license type, even though the activities are more aligned with the Type 6 license.

  1. Existing Controls for Ethanol

Because ethanol is commonly used in a wide variety of manufacturing, fire and safety regulators, inspectors and responders are well equipped with the tools they need to allow for ethanol use in medical cannabis manufacturing. Contrasted to the use of more flammable volatile solvents like hexane and butane, the use of ethanol, if properly stored and handled, can be controlled to a high degree of certainty and safety. For stability, ethanol can be stored in tightly closed containers in a cool, dry, well-ventilated area, in areas kept at 55-100 degrees Fahrenheit. Measures like these can easily be managed and inspected by state and local officials. OSHA has established procedures and protocols for employees’ use of and storage of ethanol.

The common use of ethanol for manufacturing and the ability to control safety risks, distinguishes ethanol from other more flammable solvents. Both Sonoma County and the City of Santa Rosa allow cannabis operators to extract and post-process cannabis with ethanol as nonvolatile manufacturers. Through the existing building and fire codes, the City of Santa Rosa and Sonoma County can require a cannabis manufacturing facility to be constructed and operate with the use of ethanol on site in a manner is safe for employees, the community and the environment. This is a logical and practical approach for local jurisdictions, as it can be for the state.

Recommendation: Change the definitions to the following:

“Nonvolatile solvent” means “any solvent used in the extraction process and any post-process that is not a volatile solvent. For purposes of this division, a nonvolatile solvent includes carbon dioxide and ethanol.”

“Volatile solvent” means any “solvent that is or produces a flammable gas or vapor, that has a flash point at or lower than thirty-eight degrees Celsius or 100 degrees Fahrenheit, including butane, propane, and diethyl ether and excluding all forms of alcohol and ethanol.”

Click here for public comment on the proposed California Medical Cannabis Regulations for Manufacturing submitted by Canna Legal, a division of Beck Law P.C., to the California Department of Public Health, Office of Manufactured Cannabis Safety.