By Dane Bitterlin
Neil, Dymott, Frank, McCabe & Hudson APLC
San Diego, California
Recreational use of cannabis is now legal in eleven states and the District of Columbia. Even wider adoption has occurred in the context of medical cannabis, where thirty-three states have legalized medicinal use. While there remains some uncertainty regarding the future of legalized cannabis in the United States, especially in light of its continued prohibition at the federal level, it would appear that inertia is on the industry’s side. However, the relatively rapid march toward legalization has resulted in a need to quickly and effectively address the regulatory needs of both consumers and the nascent cannabis industry. One of the states currently grappling with these issues is California, which is significant given its position as the country’s economic and agricultural powerhouse. So, while California may not have been the first to take on legalization, it is arguably the most significant of these early pioneers. For that reason, and perhaps because of some bias on the part of the author, this article will focus on California’s efforts to create a regulatory framework for management of its recreational cannabis industry and the potential implications in the product liability arena.
Licensing & Oversight
California has created a licensing process whereby both manufacturers and cultivators must apply for and be granted a license to operate in the state. The Bureau of Cannabis Control (BCC) is responsible for licensing retailers, distributors, testing labs, microbusinesses, and temporary cannabis events, whereas CalCannabis Cultivation Licensing, a division of the California Department of Food and Agriculture, is responsible for licensing cultivators of medicinal and recreational cannabis.
The Manufactured Cannabis Safety Branch, a division of the California Department of Public Health (CDPH), is responsible for all regulation of commercial cannabis manufacturing in California. Manufacturing in the context of cannabis includes extraction, infusion, packaging or repackaging of cannabis products, and labeling or relabeling of cannabis product packaging. The regulations promulgated by CDPH, which are set forth in California Code of Regulations, Title 17, Sections 40100-40570, provide fertile ground for potential product liability litigation.
Product Testing & Potency
Per statute, each licensee in California is responsible for implementing a quality control program to ensure that cannabis products are not adulterated or misbranded. §40235(a). Furthermore, a licensee may only sell cannabis goods that have been tested and passed all testing requirements in effect at the time of testing.
The testing is designed to ensure not only that potency of a cannabis product, measured by milligrams of tetrahydrocannabinol (THC), does not exceed predetermined acceptable levels, but also that retail products are free of harmful substances. Accordingly, the required testing must take place in a licensed laboratory and must include testing of a representative sample of the product for cannabinoid levels as well as various impurities, including heavy metals, mycotoxins, pesticides, and residual solvents and processing chemicals. Cal. Code Regs., tit. 16, §5714(b). Of course, this testing is of a representative sample and there remains the possibility that contaminated product will make its way to the consumer and that health-related claims may find their way to the courthouse.
The results of the laboratory testing of THC levels are of critical importance because regulators have determined that recreational cannabis cannot exceed certain predetermined levels depending on the product classification. For example, in the case of edible cannabis goods, there can be no more than 100 mg of THC per package. Cal. Code Regs., tit. 17, §40315(a). However, each serving of edible cannabis in a given package may not exceed 10 mg of THC. Id. Moreover, in cases where an edible cannabis product consists of multiple servings, each serving must contain the same concentration of THC. Id. at §40305(c). For non-edible (i.e. topical or concentrate) recreational cannabis products, the threshold is 1,000 mg of THC per package. Id. at §40315(a).
While the CDPH regulations appear to clearly state upper limits for THC content in edible and non-edible cannabis products, the BCC has promulgated rules that provide a 10% variance from between the actual THC content of a product and the THC content listed on the label. Cal. Code Regs., tit. 16, §5307.1. There is some concern that allowing for a 10% variance may open the door for litigation as the language used in the statute that legalized recreational use of cannabis products clearly states that edible cannabis products shall be “produced and sold with a standardized concentration of cannabinoids not to exceed ten (10) milligrams tetrahydrocannabinol (THC) per serving.” Cal. Bus. & Prof. Code, §26130(c)(2). This variance is also concerning from a legal perspective as the consumer is not guaranteed to receive a product that has a THC content consistent with the product’s labeling.
Packaging & Labeling
In California, each package for retail sale of cannabis product, cannabis flower, or “pre-rolls” (colloquially referred to as “joints”) must be labeled with the cannabinoid content on either the primary panel or an informational panel. Cal. Code Regs., tit. 17, §40409(a).
For an edible product or a cannabis concentrate for which the manufacturer has established serving designations, THC content must be expressed in both milligrams per serving and milligrams per package. Id. at §40409(a)(1). For a topical cannabis product or a cannabis concentrate without serving designations, THC content must be expressed in milligrams per package. Id. at §40409(a)(2).
Packages of pre-rolls or cannabis flower that do not include cannabinoids other than that naturally occurring in the plant material are not required to list cannabinoid content in milligrams but must identify the cannabinoid content expressed as a percentage. Id. at §40409(a)(3). Packages of pre-rolls that have been infused with added cannabinoid content shall be labeled with either the cannabinoid content in milligrams or the cannabinoid content of the dried flower expressed as a percentage along with the added cannabinoid content in milligrams. Id. at §40409(a)(4).
In addition to being labeled with the THC content, any package used to contain cannabis or a cannabis product meet the following requirements: (a) The package shall protect the product from contamination and shall not expose the product to any toxic or harmful substance; (b) The package shall be tamper-evident, which means that the product packaging is sealed so that the contents cannot be opened without obvious destruction of the seal; (c) If the product has multiple uses, the package shall be resealable; (d) The package shall not imitate any package used for products typically marketed to children; (e) If the product is an edible product, the package shall be opaque; and (f) The package shall be child-resistant. Id. at §40415.
Beginning January 1, 2020, any package transferred to a distributor for retail sale must be child-resistant for the life of the product if it contains an edible cannabis product, an orally-consumed cannabis concentrate, or a cannabis suppository. Id. at §40417(a)(1). Inhaled or topically applied cannabis products will be permitted to use packaging that is child-resistant only until first opened so long as the package label contains the statement “This package is not child-resistant after opening.” Id. at §40417(a)(2).
The areas of testing, labeling, and packaging are likely to be rife with potential for litigation. Edible cannabis products will be especially vulnerable to problems with testing and labeling given the difficulties inherent in controlling and homogenizing THC content and the often unpredictable manner in which individual consumers may respond to ingestion of edible cannabis products, which research suggests can vary depending on the concentration of THC and the presence or lack of CBD and other cannabinoids that have been demonstrated to moderate the intoxicating effects of THC.[1] While current regulations do require certain warnings to be included on packaging, these required warnings do not encompass all of the potential concerns attendant with the consumption of cannabis products, not the least of which is dosing and the disparate effects a recommended serving size may have on the end user.
Conclusion
California’s new gold rush is in full swing and while the recreational cannabis industry in many ways still resembles the wild west, there has been real progress in terms of creating a more stable and transparent regulatory scheme. However, the regulations outlined above are but a sampling of the voluminous regulatory scheme governing recreational cannabis in California and as with many new industries, there will be growing pains as regulators and market players encounter unanticipated issues and edge cases. Attorneys and insurance adjusters would be wise to follow these developments, as it is clear that recreational cannabis is going anywhere but up in smoke.
[1] Taming THC: potential cannabis synergy and phytocannabinoid-terpenoid entourage effects.
Russo EB, Br J Pharmacol. 2011 Aug; 163(7):1344-64.
Dane Bitterlin joined Neil Dymott as an associate in 2007 and became a shareholder of the firm in 2019. His practice areas include business and personal injury litigation, transportation litigation, general liability, professional liability, and the defense of medical malpractice claims. He is a member of the Association of Southern California Defense Counsel, Defense Research Institute, San Diego County Bar Association and the San Diego Defense Lawyers (SDDL).