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State Cannabis Licensing Up and Running — on Paper

California’s online pot licensing systems are up and running, but a key electronic tracking component mandated by lawmakers has yet to be fully implemented.

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California’s online pot licensing systems are up and running, but a key electronic tracking component mandated by lawmakers has yet to be fully implemented.

That’s because the industry — the growers, manufacturers and distributors — is operating on state-issued temporary licenses, and the requirement to electronically track and trace marijuana from seed to dispensary sale does not apply to them until they have an annual license.

“I want us to think creatively,” Assemblyman Rob Bonta, D-Oakland, told state regulators Tuesday at an oversight hearing. “I think you can hear people want track-and-trace up as soon as possible.”

The state began licensing recreational cannabis on Jan. 1, but it is doing so under emergency regulations issued in November — crafted to comply with the voter-approved Proposition 64 that legalized recreational marijuana starting in 2018.

So far, the state Bureau of Medical Cannabis, the Department of Food and Agriculture, and the Department of Public Health have issued 3,356 licenses for the cultivation, transport, manufacture, distribution and sale of marijuana, state officials told lawmakers.

An electronic track-and-trace program is at the heart of the state’s regulatory framework to ensure that marijuana is legally grown, safe for consumers and not diverted to the lucrative black market.

The state has contracted with Franwell Inc. to deploy Metrc, a cloud-hosted online software reporting system that uses RFID tags to track cannabis from “seed to sale.” All growers that have an annual license will be required to tag each cannabis plant with a unique RFID so that it can be followed throughout the supply chain. Manufacturers will be required to tag all packages.

But the system requires training, as well as the requirement to charge fees, which wasn’t feasible before the Jan. 1, 2018, date when recreational marijuana became legal under Proposition 64, said Richard Parrott, director of the CalCannabis program at the Department of Food and Agriculture.

So, for now, any pot plant or product must have paper documentation that shows it’s legally licensed. And the state has established a 24-hour hotline for law enforcement to call and check the validity of licenses until an electronic verification system is in place.

“I would say the paper manifest system, it’s requiring the same elements that the track-and-trace system will require, but obviously without it being in an integrated electronic system that multiple agencies have access to, it does limit us a bit during this paper process,” Parrott said.

City officials worry the delay in implementing the track-and-trace system is limiting the state’s ability to ensure that the product hasn’t been tampered with and with law enforcement’s ability to fight illegal diversions into the black market, as well as illegal product finding its way into the legal market, said Tim Cromartie, senior advisor at HdL Companies, a cannabis consulting firm that works with cities and counties. To complicate matters, many operators stocked up on marijuana product last year — meaning that product won’t be subject to track-and-trace when it does come online.

“We respectfully urge that the state get it up and running as quickly as possible,” Cromartie said.

Parrott said the state entities charged with licensing would meet and discuss ideas to speed up the implementation, including whether any additional money from the Legislature would help.

Law enforcement is also working to train its officers to detect impaired drivers because technology — like a breathalyzer or blood test used for drunken driving — does not yet exist to detect impairment in pot users, Richard Desmond, legislation coordinator for the California Highway Patrol, told lawmakers.

Other states that have legalized recreational marijuana have seen a spike in drug-related collisions, and California expects the same. For example, the number of drivers involved in fatal crashes who tested positive for marijuana rose by 88 percent in Colorado between 2013 and 2015, Desmond said.

The CHP plans to use the $3 million set aside in Proposition 64 to study best practices and protocols to detect and apprehend impaired drivers, he said. The CHP is also developing a system so it can better capture data about impaired driving in collisions.

“Right now, there is no consistent way that law enforcement agencies report data related to impaired driving,” Desmond said.

The state intends to issue permanent regulations governing the cannabis industry later this year. And the industry — which is operating under temporary four-month licenses — will transition to annual licenses.