Navigating the Newly Proposed Track-and-Trace Requirements

Written June 2023

Introduction

The cannabis industry is a rapidly evolving topic, with new regulations constantly being introduced to ensure consumer safety and maintain compliance. One such development is the California Department of Cannabis Control (DCC) proposed emergency rulemaking action and implementation of the track-and-trace requirements under Assembly Bill 195 (A.B. 195). This legislation aims to increase tracking and “would allow the department to collect more detailed data regarding the purchase of cannabis goods through delivery. This data will likely be useful in making decisions related to the proper regulation of cannabis businesses within California.” In this blog post, we will explore the critical aspects of A.B. 195. We will also discuss how cannabis businesses can navigate these new requirements effectively, which all retailers must follow beginning April 1, 2023.

Understanding A.B. 195

A.B. 195 is designed to enhance accountability, transparency, and regulatory oversight within the cannabis industry. It requires all licensed cannabis businesses, including cultivators, manufacturers, distributors, and retailers, to adopt a robust track-and-trace system to monitor the movement of cannabis products throughout the supply chain. The primary goal is to prevent diversion, unauthorized access, and the circulation of illicit products in the market.

New Record-Keeping Key Requirements for Deliveries

Under A.B. 195, the regulations require that delivery-specific information be entered into the California Cannabis Track and Trace system (CTT) beginning April 1, 2023. Before these changes, the regulations allowed retailers flexibility to record delivery sales. We can probably infer that the previous “flexibility” contributed to rather than reduce the risk of illicit cannabis products entering the legal market.

Inventory Delivery Ledger

Cannabis retail businesses with deliveries must generate a delivery inventory ledger in CTT for each delivery trip. The ledger must be created before the delivery employee leaves the licensed retail establishment for that trip. Creating a delivery ledger within the CTT system demonstrates compliance with regulatory standards. The detailed information entered will generate an electronic delivery inventory ledger containing inventory, sales, transfers, and disposal of cannabis products, if applicable. Compliance with reporting requirements is crucial to maintaining a valid license and avoiding penalties or potential legal issues, such as providing a delivery inventory ledger upon request if a law enforcement officer asks to see one during a traffic stop. Another essential point, if an active internet connection is unavailable while conducting deliveries, maintain a physical copy of the delivery inventory ledger and update the CTT at the end of the calendar day.

How a Cannabis Attorney Can Assist

A knowledgeable cannabis attorney can help businesses understand the specific track-and-trace requirements imposed by A.B. 195 and ensure their operations align with these regulations. They can assist in setting up the necessary systems, processes, and controls to meet compliance standards, minimizing the risk of penalties or license revocation.

Audits and Inspections

Inevitably, cannabis businesses will be subject to audits and inspections to ensure compliance with A.B. 195. A cannabis attorney can provide:

- Guidance on preparing for these regulatory reviews,

- Help businesses compile the necessary documentation, and

- Ensure their operations are fully compliant with the track-and-trace requirements.

Legal Support

In the event of non-compliance issues or legal disputes related to A.B. 195, a cannabis attorney can provide expert legal representation. They can assist in negotiations with regulatory agencies, defend businesses against penalties or license suspensions, and navigate any litigation.

Conclusion

The emergency adoption and implementation of the new record-keeping track-and-trace delivery requirements under A.B. 195 marks an important milestone in regulating the cannabis industry. While complying with these requirements may seem challenging, partnering with a knowledgeable cannabis attorney can provide invaluable assistance. With their expertise in regulatory compliance, system implementation, and legal support, partnering with a cannabis attorney can help businesses successfully navigate the complexities of A.B. 195 and ensure ongoing compliance with the new record-keeping track-and-trace obligations for retail deliveries, ultimately safeguarding their operations in this ever-changing industry.

About Naulls Legal Group

Naulls Legal Group (NLG) is the premier law firm for enterprise compliance representing organizations and cannabis-based businesses based in Southern California. We are well-versed in helping clients navigate corporate compliance with intimate industry experience in the increasingly complex and heavily regulated cannabis industry. At NLG, we help businesses GROW!