This is Sonia Luna over at Aviva
Spectrum and today I want to talk about the new California cannabis cultivation
regulations and today I’m just going to cover our quick overview of both the
state-level regulatory compliance needs in Cannabis
cultivation as well as some of the metropolitan city requirements that I’m
seeing in some large counties. Now let’s take a look at the actual State
Department “CalCannabis” you have the California cannabis cultivation licensing
department now this department actually has three different branches (at the “CalCannabis”) the first
of which is just dealing with licensing and they are responsible for your
initial and renewal process and also the appeals process another branch is
dealing with the (“CE”) compliance and enforcement so these are the individuals
that will be able to come on-site review your various documentation as you’re
operating. They interpret the rules regarding cannabis compliance and then there’s the administrative branch they are going to
be dealing mainly with cannabis regulatory fees and some other compliance requirements. I put
them in the “other” bucket here. Some wonderful news! There is actually
free help that this department offers. You can send your questions to the
department and here’s that email address I’ll have it in the link below
meaning the description of this video down below and there is actually
wonderful videos that they’ve done for licensing and it’s actual step-by-step
instructional videos for the temporary licensing process now I want you to
subscribe to our channel because of two main reasons I’m gonna have an update to
this because a lot of you have had some areas of concern when it comes to the
initial license process and I’m gonna highlight some key components of the
licensing criteria for you in a simplified manner but please subscribe
to our channel so that way you’ll get the latest information
on the licensing process and for cultivators in California now the
registration process also has its own step-by-step video I will also in this
YouTube video that I have I’ll put a link to this training video as well for
you. Now let’s talk about track and trace in
some of the free information items out there there is actually a frequently
asked question PDF file again you can get a link to it in the description of
this video it’s a pretty healthy 12 pages and it covers some of the basic
questions on the track and trace model and how it complies with the California Cannabis regulations I’ve attached a sample of the Cannabis sales and shipping manifest form that Cannabis Bureau “STATE” wants you to have I’ll have a link to this PDF
in the description of this video so you can take a look at it I’m going to cover
our little areas that I know that they are going to audit for regulatory and
obviously for tax purposes the first of which is you’re using the right
distributor right they want matching one for one what do I mean by that
specifically that your distributor ID and their process of tracking the tax
payments is matched up to what you have what I want to show you is other key
areas that they will look to audit when they look for your manifest and
shipping documentation. This “retail value” comes up in several parts of the form
they have already regulated this unit of measure. What is retail value for
cultivators? I want you to be very careful how you’re interpreting it, and
becoming a compliant with that specific numeric computation. Here it is again on
some of the product shipping details this retail value in the manifest this
is the actual bottom piece of their sales/manifest template and I’m stressing this because
it not only comes in one area but a couple of other areas within the form. You can attach other supporting details to this form if you have other
pertinent information to the products that you’re shipping out when your
cannabis is very much regulated. I’ve listed here from page 27 of 63 for the
state of California that your device has to be registered and there’s a specific
registration process #1 and #2 in terms of weighing your cannabis
using wet weight or net weight you’ll see here that they offer that you have a
choice as well as the type of measure whether using use US customary units or
international standards. The other part I want to make sure you’re aware of is that
you are licensed as a “weigh master” and they reference some of the professional codes that you have to comply with. I only mention
it as a point of reference. I’m sure your attorneys are kind enough to walk you
through, what that means. Here it is. I wanted to highlight that for you Cannabis cultivators just so you understand that weighing your cannabis doesn’t mean that
you just comply with the state you’re actually complying by reference here to
other regulatory compliance needs. Now I wanted to talk about what I’m seeing
trend wise with metropolitan areas for cannabis cultivators I’m noticing a very
consistent theme that the fire and police department get involved they get
involved in various capacities the fire department is checking you know
hazardous waste materials water related items safety in terms of exit and
entrance strategies in case an emergency or fire were to break out etc the police
it’s pretty obvious it’s a our security and alarm system and most metropolitan
areas do have a registration process and a permit process not to mention a fee process for LA. I noticed that they had a process of reporting it says
here hazardous material business plans are required to be submitted annually by
March 1st. They want you to do it online. In terms of the annual
fee registration and renewals has a pretty convenient way it’s through the
office of Finance that you go to their website. I’ll have a link below for those
of you who are cultivating in the Los Angeles County. Remember you have to abide by the Los Angeles County rules and regs. I’ll have a link to this site as well as the California
environmental reporting system that the fire departments are using to submit
certain business plans. Now let’s talk about security and what
I’m seeing is a trend wise. Outside perimeters your basic entry exit
shipping receiving areas inside I’m seeing a very consistent trend that even
inside especially where things are being weighed where waste material might be
produced and even some limited or secured areas that you’ve designated in
your grow the limited areas I’m also seeing a requirement of having a
check-in log for those individuals that must be 21 and over in terms of their
age of them coming in and out of these quote very very sensitive let’s say
restricted areas most of you know what those areas are but this log this this
audit log that I see checking in and out of those let’s say guests that come in
needs to be provided if the regulatory local regulatory agencies were to be
knocking on your door and show up so check with your local authority about
the log and what needs to be on there we’ve seen it in a lot of public traded
companies when it comes to IT database like servers etc so we kind of know what
other regulators like to see what what is best-of-breed in terms of these quote
individual logs when contractors come in and out of a facility that that’s deems
very very sensitive and highly secure testing areas now when it comes to
testing I put out a LA County reg here that said that some of the labeling
provisions there they’re gonna kind of hold off on doing you know mandating
that everything be done by January 1st you can see that they know there’s a
period of time when you need to get your license but then they’re giving you a
little bit more wiggle room in terms of having an extra obviously set of days in
this case it’s it’s actually a few months to get this I point out that the
file. This alone on just labeling okay is a
serious violation and your attorneys have probably already talked to you
about what is you know a minor violation and a moderate and a serious. I only
point this out because it is a serious violation. I think people from a cultivators
perspective are wondering well when do I really need to get all these labels on
every single thing down pat and I listed one metropolitan area here from LA of
what the timeline is. Now I wanted to talk about just general business area
compliance requirements I’m seeing at some cities. I’m seeing a lot of loitering requirements. You either have a sign or fences to prevent
loitering. Even some training to tell your employees they can’t loiter on the
premises after hours. I’m also seeing graffiti removal. Cities want a healthy business environment and they want to make sure cannabis is
one of those great corporate citizens. Cities don’t want buildings looking shabby. Roof top equipment. This means keeping things aesthetically pleasing for everybody. Think about the impact to your neighbors. This is a common trend as well and then
the neighborhood liaison. I’m seeing this in much larger cities and where to
place that information is different city to city County to County. I I do see
a trend in terms of hey if someone’s got a problem in the neighborhood with your
business there should be a point person. Let’s say an issue or concern that they like to raise with your company. I’m going to state this again in a prior
video employee vs. contractor some cultivators believe that well even if I
have a contract or some of these rules and regs don’t apply just remember
according to the cannabis regulations the state of California and local
authorities don’t care if for payroll purposes you’re paying them as a
contractor. For the California cannabis regulations you have to treat those contractors as if
they’re employees. They (The Cal regulations”) may state employee throughout the Reg but but even
if you pay them as a contractor that that doesn’t matter to the state and
some of the local officials or they are saying that those contractors have to
act as if they’re an employee and follow all the cannabis regulations as well want to make sure that you understand that when orders take place your distributor must also be
compliant when they place these orders and they have to be compliant with their
own unique ID numbers and they have to match into your system now who’s doing
what when timing etc the track and trace you’ll start seeing in the FAQ document
as well as some other parts of the Reg that keeping track of who did what when
and the timing of what the process was so for example if an individual was
responsible for trimming and another one was you know doing drying and then also
helped with the weighing all of that should be tracked and you will start
seeing that more and more as the state starts firming up their intentions of
this track and trace it’s this individual you know accountability so
I’m seeing a lot of software companies adopt already right now
very sophisticated logging of who’s doing what when and then the timing of
it and then the tracking of the actual amounts ID badges I just want to stress
that your contractors need them as well and in terms of the employer information
there’s some basic stuff that you need to have on their invoicing in the
manifest I’ve already shared what a sample of what the state wants and there
are over nine plus different items there the name and address of various
employees you can see that that’s becoming a common trend I already
mentioned about some of the preparing delivering doing certain workloads
within the the cultivation process needs to start being honed in on dates
timings amounts etc of those people that are actually conducting that part of the
process and then fees taxes other area other amounts are being tracked I’ve
already shared with you some of the more important areas that they have regulated
and they’re telling you how to calculate the amount for cultivators so it’s very
important to be very conscious of this and the receipt signatures
record-keeping so make sure you’re aligning yourself with the right
accountants and advisers that understand you know who needs to sign what the
record-keeping process and where that is being securely stored for your cannabis business now another trend I’m seeing in terms of
hours of operations you know as business owners some of you are you know working
around the clock right it seems like it’s 24/7 weekend’s included I’m
noticing that at the local level they are hammering out when business can
actually be conducted for cultivators so be conscious of that and especially if
there’s any any changes at the local level as we are starting to hear that
that’s starting to change a little bit I wanted to leave you with our
complimentary analysis we have been in the business in both the outsourced
accounting practice but some of the compliance efforts related to highly
regulated industries. We have an intake analysis
it’s a listing for cannabis cultivators of 17 questions it takes about 45 minutes of
just the discussions and it’s with me personally. I go through those answers
and I review and I benchmark you to some of the state California Cannabis Regulations. Then I go through
some of your County regulations and I’m looking to see well where it’s going to impact
some of your financial accounting accounts but also some of the
documentation you’re going to need to be required to you know produce let’s say
quarterly some of it could be annually etc and then I give you kind of a
consultive report and this kind of gives you a list of ideas solutions some of
the areas of improvement for your growth in 2018 and beyond you can email me at
info at Aviva spectrum comm and put in the subject header accounting analysis
because I do this twice a month for those in the industry it’s my way of
giving back you can already connect with me on LinkedIn and you can even see some
written recommendations from master growers that have you know I’ve done
some consulting advice for them and you can see the nature of the advice that
I’ve been providing to this industry so I hope that I get to meet some of you
we get to collaborate and more importantly before you head out I want
you to be also also conscious of some of the best of breed items that we have to
offer our clients so we have actually built in our 14 years probably over 200
different types of compliance programs. It all starts with you know usually
the CEO or CFO and they have an idea of their operations and they believe they
have a pretty good grasp of some of the general compliance areas we like to
optimize a lot of those operations using Best of Breed equipment that integrates
into both your let’s say track and trace software but also plugs into the
accounting programs that we’ve been using and on the delivery side and
distribution side just know that just because the distributor is obligated to
collect those taxes and remit them to the state I want to make sure that you
understand that you are still technically legally liable if they don’t
make that payment okay that they’re supposed to on time so I hope you have
the right compliance programs and accounting personnel that understands
that getting that receipt tracking it and saving it for your records is very
critical in terms of your compliance and accounting program and security we have
been IT auditors for various systems huge systems like Oracle as ap just to
name a few. We’ve also audited some compliance
IT systems so our firm is uniquely placed in this cannabis cultivation hub
where we know how secure regulators are going to want in terms of your data I
hope that we get to connect in the next couple of months with this complimentary
analysis you can just hopefully you’ve you’ve heard my voice my passion into
this industry and I look forward to connecting with you soon! Let’s connect on LinkedIn, which is by far the best way to connect with me. You can also reach me at: [email protected] Let’s get together and connect! I do schedule twice a month these complimentary analysis. I look forward to connecting with you soon. Aviva Spectrum [email protected] Aviva Spectrum the BEST Cannabis CPAs Aviva Spectrum the BEST Cannabis CPAs

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