Unwrapping California’s New Packaging Requirements

July 1st new packaging regulations for the cannabis industry came into effect in California. What does this mean for consumers and businesses?

Where did my favorite products go?

Are some of your favorite products missing from your usual dispensary or delivery service? Here’s why:

On July 1, 2018, California regulations regarding packaging and testing requirements for cannabis products came into effect. Prior to the law, retailers could sell any product into the market under two conditions: 1) through the requirements set prior to Jan. 1, or 2) through those falling under the emergency regulations that took place ON Jan. 1. Products sold after July 1 have no exemptions and must meet all new standards.

Product Testing

Products did not have be tested before going on the market prior to the July 1. However, many brands already followed the new testing procedures for the benefit of the whole market. Customers want transparency into products they buy, and honest brands are happy to supply those despite the hurdles that exist. There are not enough licensed laboratories in the state yet to keep up with demand, yielding long wait times up to weeks for manufactured goods such as beverages, vape oils and edibles. Labs are also having difficulty deciding what to test. Results are often inconsistent with different laboratories, and that can be the case even from the same one! This can be frustrating for a company trying to get their product on the market. Business owners realize these are growing pains and are collaborating with labs to alleviate these problems.

If a brand did not yet abide by the new testing standards, the state provided the following options: 

Untested cannabis goods could not be sold by a retailer and must be destroyed. They cannot be returned to the distributor for testing.

Untested cannabis goods manufactured or harvested before Jan. 1 in possession of a distributor that are owned by the distributor must be destroyed. (An estimate of 350 million products had to be destroyed in the California market. All destruction must be filmed and recorded for the state as proof. Destruction methods include composting in locked bins away from the public, incineration, wood chippers or smashing cartridges with a hammer a la Office Space.)

Untested cannabis goods harvested or manufactured before January 1 possessed by a distributor but owned by a manufacturer or cultivator may be returned to licensee who owns the goods. If they choose to sell the goods, they must be sent to a distributor for testing and meet all requirements before being sold on the market.

Product Packaging

Cannabis packaging is an entirely different issue and one that could affect any other industry such as food or beauty if similar regulations were implemented to them. As with testing, the state permitted a product that was packaged prior to Jan. 1 to be sold as is as long as retailers placed them in child-resistant packaging upon delivery or purchase at a dispensary. CRP stands for child resistant packaging, so remember that one.

The bigger problem with packaging requirements is that the regulations on July 1 were not final. On July 13, the state issued final regulations that clarified, and in some cases, modified what business owners were set to follow. These kinds of start-stop regulations, again, put business owners in difficult positions. For example, I’m working on launching a flower specific line of productsraw flower only, no oils, etc. As of July 1, flower product fell under the same requirements as anything else. Each unit must be sold in child resistant packaging. The old regulations required only exit packaging to be child resistant. However, the clarifications issued July 13 exempted flower from individual unit CRP but not until the new regulations go into effect. So for the next period of time, from July 13 until the regulations are implemented, we fall under old regulations. After that, we switch to the new regulations.

Packaging is a complicated business. There are minimum order units (MOQ), which is the smallest number of you can order for a company to process your order. Lead times on artwork and print mechanical builds add to need to order in advance, but without knowing the exact timing, it can be difficult for businesses. Sometimes all you can do is wait.

Cannabis sales are not rising as quickly in 2018 as predicted. Although most brands were ready to comply with the new packaging, like they did with testing requirements, they still hadn’t sold through the stock they were sitting on. Cannabis is a tight game and the “ingredient” is expensive. In regards to cash flow, most businesses rely on selling product in order to do bulk purchases of the raw product and additional supplies. This put some people in a sticky position of being unable to switch to new packaging with so much inventory still on hand.

In addition, moving a product from one set of packaging to another was not an option in most cases. Some products can be placed in an additional set of packaging (as wasteful as that is) but many cannot, especially edibles in the beverage categories or topicals, such as creams or sprays.

What can you do?

Although six months may seem like a long time, it isn’t enough to reshape all of the processes in an industry. If a piece of packaging has a four week lead time, that’s one-sixth of the entire time you have to get up to speed. If a testing facility has a four week line of people ahead of you, then there isn’t anything you can do about it.

Don’t see the products you’re looking for? Sometimes retailers won’t have an answer for you, so we suggest reaching out to the company directly. Ask them how everything is going, when you can expect to see their products again, and where you can find them! Tell them how much you love the product while you’re at it!

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Carolyn Kissick • Editor + Contributor

Carolyn is a hospitality and management professional based in San Francisco, California, currently serving as an analyst and consultant around legal cannabis for Big Rock, a family office focused on hospitality and wellness. Carolyn’s experience and passion for the spirits industry, most notably agave, lends a unique perspective to the dawn of the California medicinal and recreational cannabis culture. You can keep up to date with Carolyn by following her on twitter @runcarolnrun