Enforcement - - CA Business And Professions

Section § 26030

This law outlines reasons a cannabis business might face disciplinary action. Key issues include not following division rules, violating state laws such as tax requirements, and breaking local cannabis regulations. Disciplinary triggers also include selling cannabis to minors or without a doctor's recommendation, not keeping the premises safe for inspection, and not adhering to license and operating requirements. Any failure to uphold worker rights or protections also constitutes a serious breach.

Grounds for disciplinary action include, but are not limited to, all of the following:

(a) Failure to comply with the provisions of this division or any rule or regulation adopted pursuant to this division.

(b) Conduct that constitutes grounds for denial of licensure pursuant to Chapter 2 (commencing with Section 480) of Division 1.5 or discipline of a license pursuant to Chapter 3 (commencing with Section 490) of Division 1.5.

(c) Any other grounds contained in regulations adopted by the department pursuant to this division.

(d) Failure to comply with any state law including, but not limited to, the payment of taxes as required under the Revenue and Taxation Code, except as provided for in this division or other California law.

(e) Knowing violations of any state or local law, ordinance, or regulation conferring worker protections or legal rights on the employees of a licensee.

(f) Failure to comply with the requirement of a local ordinance regulating commercial cannabis activity.

(g) The intentional and knowing sale of cannabis or cannabis products by an A-licensee to a person under 21 years of age.

(h) The intentional and knowing sale of medicinal cannabis or medicinal cannabis products by an M-licensee to a person without a physician’s recommendation.

(i) Failure to maintain safe conditions for inspection by the department.

(j) Failure to comply with any operating procedure submitted to the department pursuant to subdivision (b) of Section 26051.5.

(k) Failure to comply with license conditions established pursuant to subdivision (b) of Section 26060.1.

cannabis business compliance disciplinary action grounds selling cannabis to minors violation of tax laws local cannabis regulations worker protections maintaining safe conditions A-licensee violations M-licensee regulations physician's recommendation requirements license conditions operating procedures commercial cannabis activity state law violations

(Amended by Stats. 2021, Ch. 70, Sec. 20. (AB 141) Effective July 12, 2021. Note: This section was added on Nov. 8, 2016, by initiative Prop. 64.)

Section § 26031

This law explains that the department in charge can take several actions against a cannabis business's license. These actions include suspending, revoking, putting it on probation, or disciplining the license holder if they break certain rules. If local authorities find the business violating state cannabis regulations, the department can investigate and take action like suspending or revoking their license. Also, if anyone associated with the business commits a violation, the business itself can be disciplined. Even if a license expires or is suspended for some reason, the department still has the power to deal with disciplinary issues during the time it can be renewed or reissued.

(a) The department may suspend, revoke, place on probation with terms and conditions, or otherwise discipline licenses issued by the department and fine a licensee, after proper notice and hearing to the licensee, except as provided in Section 26031.01, if the licensee is found to have committed any of the acts or omissions constituting grounds for disciplinary action. The disciplinary proceedings under this chapter shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the director shall have all the powers granted therein.

(b) The department may suspend or revoke a license when a local agency has notified the department that a licensee within its jurisdiction is in violation of state rules and regulations relating to commercial cannabis activities, and the department, through an investigation, has determined that the violation is grounds for suspension or revocation of the license.

(c) The department may take disciplinary action against a licensee for any violation of this division when the violation was committed by the licensee’s officers, directors, owners, agents, or employees while acting on behalf of the licensee or engaged in commercial cannabis activity.

(d) The suspension or expiration of a license issued by the department, or its suspension, forfeiture, or cancellation by order of the department or by order of a court of law, or its surrender without the written consent of the department, shall not, during any period in which it may be renewed, restored, reissued, or reinstated, deprive the department of its authority to institute or continue a disciplinary proceeding against the licensee upon any ground provided by law or to enter an order suspending or revoking the license or otherwise taking disciplinary action against the licensee on any such ground.

suspend revoke cannabis license disciplinary action commercial cannabis violation department investigation probation terms local agency license expiration officers and directors agents or employees commercial activities written consent renewal period

(Amended by Stats. 2021, Ch. 70, Sec. 21. (AB 141) Effective July 12, 2021. Note: This section was added on Nov. 8, 2016, by initiative Prop. 64.)

Section § 26031.01

This law allows a department to suspend a business license if it was obtained by dishonest means like lying or fraud. However, they can only do this within 90 days of issuing the license. If suspended, the person will be notified and has 30 days to request a hearing to contest it. The hearing must happen within 30 days of the request unless a delay is agreed upon. If these timelines aren't met, the suspension is canceled. The hearing follows certain government procedures.

(a) Notwithstanding Section 26031, the department may, before a hearing, suspend the license of a person who procured the issuance of the license by fraud, misrepresentation, deceit, or by the making of any material misstatement of fact in the application for such license.

(b) The department shall not order the suspension of a license pursuant to subdivision (a) 90 days after the date of issuance of the license.

(c) An order of suspension pursuant to subdivision (a) shall expire on the effective date of a decision of the department after a hearing conducted pursuant to this section.

(d)

(1) The department shall file and serve a person whose license is suspended pursuant to subdivision (a) the order of suspension and a statement of issues as defined in Section 11504 of the Government Code. The department may serve the person by regular mail addressed to the last known address of the person or by personal service.

(2) A person whose license is suspended pursuant to subdivision (a) shall have 30 days after service of the order of suspension and statement of issues in which to file with the department a written request for a hearing on the statement of issues filed against them.

(3)

(A) The department shall hold a hearing within 30 days after receipt of a request pursuant to paragraph (2) unless the person requests or agrees to a continuance. If the person does not request or agree to a continuance and a hearing is not commenced within 30 days after receipt of the request for a hearing, the order of suspension shall be vacated and set aside unless the person requests or agrees to a continuance.

(B) If the person requests or agrees to a continuance, the department shall hold a hearing on the date to which the department and the person agreed. If a hearing is not commenced on that date, the order of suspension shall be vacated and set aside.

(4) If the department does not render a decision within 30 days after completion of the hearing, the order of suspension shall be vacated and set aside.

(e) A hearing conducted pursuant to this section shall in all respects, except as otherwise expressly provided herein, conform to the substantive and procedural provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code applicable to a hearing on a statement of issues.

license suspension fraudulent application misrepresentation material misstatement 90-day limitation hearing request statement of issues continuance agreement vacate suspension government hearing procedures deceit in license application timely hearing suspension notice hearing timelines

(Added by Stats. 2021, Ch. 70, Sec. 22. (AB 141) Effective July 12, 2021.)

Section § 26031.1

This law says that if a person with a license violates certain rules, a judge can order them to pay for the costs of investigating and handling their case. The department will provide evidence of these costs, and the judge decides if they are reasonable. If the person doesn't pay, the department can take them to court to enforce payment. The person's license won't be renewed or reinstated until they pay these costs unless they can show financial hardship and agree to pay within a year. Any money collected this way goes to the Cannabis Control Fund. Also, these costs can be included in any settlement agreements.

(a) Except as otherwise provided by law, in an order issued in resolution of a disciplinary proceeding before the department, the administrative law judge, upon request, may direct a licensee found to have committed a violation to pay a sum not to exceed the reasonable costs of the investigation and enforcement of the case.

(b) A certified copy of the actual costs, or a good faith estimate of costs where actual costs are not available, signed by the department or its designated representative shall be prima facie evidence of reasonable costs of investigation and prosecution of the case. The costs shall include the amount of investigative and enforcement costs up to the date of the hearing, including, but not limited to, charges imposed by the Attorney General.

(c) The administrative law judge shall make a proposed finding of the amount of reasonable costs of investigation and prosecution of the case when requested pursuant to subdivision (a). The finding of the administrative law judge with regard to costs shall not be reviewable by the department to increase the cost award. The department may reduce or eliminate the cost award, or remand to the administrative law judge if the proposed decision fails to make a finding on costs requested pursuant to subdivision (a).

(d) If an order for recovery of costs is made and timely payment is not made as directed in the department’s decision, the department may enforce the order for repayment in any appropriate court. This right of enforcement shall be in addition to any other rights the department may have as to any licensee to pay costs.

(e) In any action for recovery of costs, proof of the department’s decision shall be conclusive proof of the validity of the order of payment and the terms for payment.

(f)

(1) Except as provided in paragraph (2), the department shall not renew or reinstate the license of any licensee who has failed to pay all of the costs ordered under this section.

(2) Notwithstanding paragraph (1), the department may, in its discretion, conditionally renew or reinstate for a maximum of one year the license of any licensee who demonstrates financial hardship and who enters into a formal agreement with the department to reimburse the department within that one-year period for the unpaid costs.

(g) All costs recovered under this section shall be considered a reimbursement for costs incurred and shall be deposited into the Cannabis Control Fund to be available upon appropriation by the Legislature.

(h) Nothing in this section shall preclude the department from including the recovery of the costs of investigation and enforcement of a case in any stipulated settlement.

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(Added by Stats. 2021, Ch. 70, Sec. 23. (AB 141) Effective July 12, 2021.)

Section § 26031.2

This law allows a county's superior court to step in when someone is breaking or about to break certain rules in this division. The court can issue an order to stop them or make them pay back people who got hurt because of their actions. If the court stops someone or makes them do restitution, it can also require them to cover the department’s investigation costs. This law adds more tools for dealing with violations, on top of other existing powers.

(a) The superior court for the county in which any person has engaged or is about to engage in any act which constitutes a violation of this division may, upon a petition filed by the department with the approval of the director, issue an injunction or other appropriate order restraining such conduct. The proceedings under this section shall be governed by Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure.

(b) The superior court for the county in which any person has engaged in any act which constitutes a violation of this division may, upon a petition filed by the department with the approval of the director, order such person to make restitution to persons injured as a result of such violation.

(c) The court may order a person subject to an injunction or restraining order, provided for in subdivision (a), or subject to an order requiring restitution pursuant to subdivision (b), to reimburse the department for expenses incurred by the department in its investigation related to its petition.

(d) The remedy provided for by this section shall be in addition to, and not a limitation on, the authority provided for in any other section of this division.

superior court county violation injunction petition director approval restitution reimburse expenses investigation costs additional remedy

(Added by Stats. 2021, Ch. 70, Sec. 24. (AB 141) Effective July 12, 2021.)

Section § 26031.5

This law allows the department to issue a citation to someone with or without a license if they break rules related to cannabis. The citation, which explains the violation, can include fines up to $5,000 for license holders and $30,000 for those without a license, with each day counting as a separate violation. The severity of the violation, past behavior, and intention are considered when deciding fines. Actions like these are on top of any other legal consequences. People can challenge these citations within 30 days, but if they miss this deadline, the citation becomes a final order. The department can seek court help to enforce fines and compliance if necessary. It can also recover investigation costs and attorney fees. Fines must be paid within 30 days unless a citation is appealed, and not paying can lead to further penalties. The collected money goes into specific cannabis-related funds.

(a) The department may issue a citation to a licensee or unlicensed person for any act or omission that violates or has violated any provision of this division or any regulation adopted pursuant thereto. The department shall issue the citation in writing, and shall describe with particularity the basis of the citation and the notification described in subdivision (c). The department may include in each citation an order of abatement and fix a reasonable time for abatement of the violation. The department may, as part of each citation, assess an administrative fine not to exceed five thousand dollars ($5,000) per violation by a licensee and thirty thousand dollars ($30,000) per violation by an unlicensed person. Each day of violation shall constitute a separate violation. In assessing a fine, the department shall give due consideration to the appropriateness of the amount of the fine with respect to factors the department determines to be relevant, including the following:

(1) The gravity of the violation by the licensee or person.

(2) The good faith of the licensee or person.

(3) The history of previous violations.

(b) The sanctions authorized under this section shall be separate from, and in addition to, all other administrative, civil, or criminal remedies.

(c) A citation issued pursuant to this section shall include a provision that notifies the licensee or person that a hearing may be requested to contest the finding of a violation by submitting a written request within 30 days from service of the citation. The hearing shall be held pursuant to the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), unless held in accordance with the provisions of Chapter 4.5 (commencing with Section 11400) as authorized by regulation of the department. If the licensee or person cited fails to submit a written request for a hearing within 30 days from the date of service of the citation, the right to a hearing is waived and the citation shall be deemed a final order of the department and is not subject to review by any court.

(d) After the exhaustion of the administrative and judicial review procedures, the department may apply to the appropriate superior court for a judgment in the amount of the administrative fine and an order compelling the cited person to comply with the order of the department. The application, which shall include a certified copy of the final order of the department, shall constitute a sufficient showing to warrant the issuance of the judgment and order.

(e) The department may recover from the licensee or person who was the subject of the citation costs of investigation and enforcement, which may include reasonable attorney’s fees for the services rendered. If the department recovers costs from a licensee, the department shall recover the costs pursuant to Section 26031.1.

(f) Fines shall be paid within 30 days of service of a citation by the department. Failure to pay a fine assessed pursuant to this section within 30 days of the date of service of the citation, unless the citation is being appealed, shall constitute a separate violation under this division subject to additional action by the department. The department shall not renew or grant a license to a person who was the subject of the fine until that person pays the fine.

(g) All moneys collected pursuant to this section associated with the recovery of investigation and enforcement costs shall be deposited into the Cannabis Control Fund. Any administrative fine amount shall be deposited directly into the Cannabis Fines and Penalties Account and shall be distributed pursuant to subdivision (d) of Section 26210.

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(Amended by Stats. 2021, Ch. 70, Sec. 25. (AB 141) Effective July 12, 2021.)

Section § 26031.6

This law makes it illegal to use or have the universal cannabis symbol on any commercial product or advertisement unless it’s part of a licensed cannabis business. If you do use it, you must keep records proving it's for licensed cannabis activity and show these records if asked by law enforcement or tax officials. Each unauthorized use of the symbol is a separate violation. Items with an illegal use of the symbol can be taken by the state and forfeited, but you can challenge this in court within 10 days. This does not stop noncommercial, educational, or informational uses of the symbol.

(a) It is a violation of this division for a person to use or possess the universal symbol described in paragraph (7) of subdivision (c) of Section 26130 in connection with commercial activity other than commercial cannabis activity licensed under this division. For purposes of this section, use or possession of the universal symbol in connection with commercial activity includes, but is not limited to, possession of any package, label, or advertisement of any kind bearing the universal symbol, whether or not that package, label, or advertisement is affixed to, or otherwise associated with, cannabis or cannabis products.

(b) A person using or possessing the universal symbol in connection with commercial activity shall do both of the following:

(1) Maintain records establishing that the use or possession is in connection with commercial cannabis activity licensed pursuant to this division.

(2) Produce those records upon demand of a peace officer, an employee of the department, or an employee of the California Department of Tax and Fee Administration.

(c) Each individual package, label, advertisement, or other document or object of any kind bearing the universal symbol in violation of this section shall constitute a separate violation of this section.

(d)

(1) A package, label, advertisement, or other document or object of any kind bearing the universal symbol in violation of this section is contraband and shall be seized and summarily forfeited to the state, subject to subdivision (e). A peace officer or an employee of the department may summarily seize such contraband.

(2) Failure to maintain or produce records as required pursuant to subdivision (b) in connection with a package, label, advertisement, or other document or object of any kind bearing the universal symbol shall establish that the package, label, advertisement, or other document or object is contraband for purposes of this subdivision.

(e) A person from whom a package, label, advertisement, or other document or object is seized pursuant to subdivision (d) may petition the superior court of the county in which the seizure occurred within 10 days of the seizure to seek the return of the package, label, advertisement, or other document or object. The petitioner shall bear the burden of proving, by a preponderance of the evidence, that the package, label, advertisement, or other document or object was not used or possessed in connection with commercial activity other than commercial cannabis activity licensed pursuant to this division.

(f) This section does not prohibit the educational, informational, or other noncommercial use or possession of the universal symbol.

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(Added by Stats. 2023, Ch. 563, Sec. 1. (AB 1126) Effective January 1, 2024.)

Section § 26032

If you've got a state license and any needed local permits, and you follow the rules, your activities won't be considered illegal under state law. This means you won't get arrested, fined, or lose your assets because of those activities. Plus, if someone lets you use their property in good faith for these activities and you've got all the right licenses, they're also protected from legal trouble.

(a) The actions of a licensee, its employees, and its agents are not unlawful under state law and shall not be an offense subject to arrest, prosecution, or other sanction under state law, or be subject to a civil fine or be a basis for seizure or forfeiture of assets under state law if they are all of the following:

(1) Permitted pursuant to a state license.

(2) Permitted pursuant to a local authorization, license, or permit issued by the local jurisdiction, if any.

(3) Conducted in accordance with the requirements of this division and regulations adopted pursuant to this division.

(b) The actions of a person who, in good faith, allows his or her property to be used by a licensee, its employees, and its agents, as permitted pursuant to a state license and, if required by the applicable local ordinances, a local license or permit, are not unlawful under state law and shall not be an offense subject to arrest, prosecution, or other sanction under state law, or be subject to a civil fine or be a basis for seizure or forfeiture of assets under state law.

state license local authorization civil fine seizure of assets legal protection good faith property use state law compliance local jurisdiction licensee actions employee conduct agent activities illegal under state law local permit forfeiture of assets following regulations

(Repealed and added by Stats. 2017, Ch. 27, Sec. 18. (SB 94) Effective June 27, 2017.)

Section § 26033

This law states that a qualified patient who grows or manages cannabis only for their own medical use, without selling or distributing it, doesn't need a commercial license. Additionally, a primary caregiver can provide cannabis for up to five patients without a license as long as they don't profit from it beyond covering costs, following certain rules.

(a) A qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who cultivates, possesses, stores, manufactures, or transports cannabis exclusively for his or her personal medical use but who does not provide, donate, sell, or distribute cannabis to any other person is not thereby engaged in commercial cannabis activity and is therefore exempt from the licensure requirements of this division.

(b) A primary caregiver who cultivates, possesses, stores, manufactures, transports, donates, or provides cannabis exclusively for the personal medical purposes of no more than five specified qualified patients for whom he or she is the primary caregiver within the meaning of Section 11362.7 of the Health and Safety Code, but who does not receive remuneration for these activities except for compensation in full compliance with subdivision (c) of Section 11362.765 of the Health and Safety Code, is exempt from the licensure requirements of this division.

qualified patient primary caregiver personal medical use cannabis cultivation no commercial license Section 11362.7 Health and Safety Code remuneration transport cannabis exempt from licensure non-commercial activity personal use exemption caregiver compensation

(Repealed and added by Stats. 2017, Ch. 27, Sec. 20. (SB 94) Effective June 27, 2017.)

Section § 26034

If someone wants to file a complaint against a license holder for breaking the rules, they have to do it within five years of the incident. However, if the complaint involves fraud or lying, the five-year countdown starts once the department finds out about the wrongdoing.

All accusations against licensees shall be filed by the department within five years after the performance of the act or omission alleged as the ground for disciplinary action; provided, however, that the foregoing provision shall not constitute a defense to an accusation alleging fraud or misrepresentation as a ground for disciplinary action. The cause for disciplinary action in that case shall not be deemed to have accrued until discovery, by the department, of the facts constituting the fraud or misrepresentation, and, in that case, the accusation shall be filed within five years after that discovery.

licensee disciplinary action five years fraud misrepresentation complaint filing department discovery accusations ground for disciplinary action time limit for accusations act or omission filing deadline complaint timing fraud discovery misrepresentation discovery

(Amended by Stats. 2021, Ch. 70, Sec. 26. (AB 141) Effective July 12, 2021.)

Section § 26035

This law section says that the director needs to appoint staff to help run and enforce the rules of this area. Importantly, some of these employees must be qualified as peace officers to make sure the laws are properly enforced.

The director shall designate the persons employed by the department for purposes of the administration and enforcement of this division. The director shall ensure that a sufficient number of employees are qualified peace officers for purposes of enforcing this division.

director employee designation administration enforcement sufficient number qualified peace officers employee qualification peace officer role division enforcement staff appointment law enforcement duties personnel selection department responsibility peace officer requirements

(Amended by Stats. 2021, Ch. 70, Sec. 27. (AB 141) Effective July 12, 2021.)

Section § 26036

This law section clarifies that no part of this division should be understood to stop or reduce the power of state agencies to enforce other existing regulations. It ensures that agencies can continue applying rules from different codes like Fish and Game, Food and Agricultural, Government, Health and Safety, Public Resources, and Water Codes.

Nothing in this division shall be interpreted to supersede or limit state agencies from exercising their existing enforcement authority, including, but not limited to, under the Fish and Game Code, the Food and Agricultural Code, the Government Code, the Health and Safety Code, the Public Resources Code, the Water Code, or the application of those laws.

enforcement authority state agencies Fish and Game Code Food and Agricultural Code Government Code Health and Safety Code Public Resources Code Water Code existing regulations application of laws

(Added November 8, 2016, by initiative Proposition 64, Sec. 6.1.)

Section § 26037

This law says that if you're doing something that's allowed under a proper state license and you follow all the rules, then you won't get into trouble with state law. This applies to license holders and anyone letting them use their property. As long as everything is above board with state and local rules, you won't face criminal charges, fines, or have your property seized.

(a) The actions of a licensee, its employees, and its agents that are (1) permitted under a license issued under this division and any applicable local ordinances and (2) conducted in accordance with the requirements of this division and regulations adopted pursuant to this division, are not unlawful under state law and shall not be an offense subject to arrest, prosecution, or other sanction under state law, or be subject to a civil fine or be a basis for seizure or forfeiture of assets under state law.

(b) The actions of a person who, in good faith, allows his or her property to be used by a licensee, its employees, and its agents, as permitted pursuant to a state license and any applicable local ordinances, are not unlawful under state law and shall not be an offense subject to arrest, prosecution, or other sanction under state law, or be subject to a civil fine or be a basis for seizure or forfeiture of assets under state law.

licensee actions state license local ordinances lawful activities seizure forfeiture state law civil fine asset protection regulations compliance property use permissions good faith allowance

(Added November 8, 2016, by initiative Proposition 64, Sec. 6.1.)

Section § 26037.5

To legally conduct cannabis business activities, you need a state license. However, this requirement doesn't apply if you're growing cannabis under the personal use laws or as a compassionate use provider, or if you have a specific license under a related regulation.

(a) A person or entity shall not engage in commercial cannabis activity without a state license issued by the department pursuant to this division.

(b) The requirement to obtain a state license for the cultivation of cannabis pursuant to this division does not apply to the cultivation of cannabis in accordance with Section 11362.1 of the Health and Safety Code or the Compassionate Use Act or to persons or entities licensed under subdivision (b) of Section 26070.5.

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(Added by Stats. 2021, Ch. 70, Sec. 28. (AB 141) Effective July 12, 2021.)

Section § 26038

This law penalizes people involved in unlicensed commercial cannabis activity in California. If you're caught without a necessary license, you could face fines up to three times the license fee for each day you operate illegally. Penalties also apply to those who help or allow unlicensed cannabis activities to happen on their property, with fines potentially reaching $30,000. Those who knowingly rent or provide space for such activities can be fined up to $10,000 per day. The law outlines how penalties should be assessed considering factors like the seriousness of the violation and if you've profited from it. Legal action has to start within three years of the violation, and only certain officials can bring these actions. Fines mostly go to the state's General Fund after costs are covered. Criminal penalties still apply alongside these civil fines for unlicensed activities. The law supports sensible local regulations on cannabis use and cultivation as per previous legalization acts.

(a)

(1) A person engaging in commercial cannabis activity without a license as required by this division shall be subject to civil penalties of up to three times the amount of the license fee for each violation. Each day of operation shall constitute a separate violation of this section.

(2)

(A) A person aiding and abetting unlicensed commercial cannabis activity shall be subject to civil penalties of up to three times the amount of the license fee for each violation, but in no case shall the penalty exceed thirty thousand dollars ($30,000) for each violation. Each day of operation of unlicensed commercial cannabis activity that a person is found to have aided and abetted shall constitute a separate violation of this section.

(B) For the purposes of this section, in order to prove that a person aided and abetted an unlicensed cannabis activity, all of the following shall be demonstrated:

(i) The person was an owner, officer, controlling shareholder, or in a similar position of authority allowing them to make command or control decisions regarding the operations and management of the unlicensed cannabis activity or the property in which the activity is taking place.

(ii) The person had actual knowledge that the cannabis activity was unlicensed and that the cannabis activity required a license.

(iii) The person provided substantial assistance or encouragement to the unlicensed cannabis activity.

(iv) The person’s conduct was a substantial factor in furthering the unlicensed cannabis activity.

(3)

(A) A person who has management or control of a commercial property, or a commercial building, room, space, or enclosure, either as an owner, lessee, agent, employee, or mortgagee, who knowingly rents, leases, or makes available for use, with or without compensation, the commercial property, building, room, space, or enclosure for the purpose of the unlicensed commercial cultivation, manufacture, storage, sale, or distribution of cannabis shall be subject to civil penalties of up to ten thousand dollars ($10,000) for each violation. Each day of violation shall constitute a separate violation of this section.

(B) For purposes of this paragraph, in order to prove that a person knowingly rented, leased, or made available the commercial property for unlawful commercial cannabis activity, it shall be demonstrated that the person had actual knowledge that the cannabis-related activity was for commercial purposes, required a license, and was unlicensed. The presence of a lawful amount of cannabis, cannabis products, or cannabis plants, subject to Sections 11362.1 and 11362.45 of the Health and Safety Code, shall not be evidence of actual knowledge.

(4) In assessing a penalty, a court shall give due consideration to the appropriateness of the amount of the civil penalty with respect to factors the court determines to be relevant, including the following:

(A) The gravity of the violation by the licensee or person.

(B) The good faith of the licensee or person.

(C) The licensee’s or person’s history of previous violations.

(D) Whether, and to what extent, the licensee or person profited from the unlicensed cannabis activity.

(5) Cannabis associated with a violation described in this subdivision may be destroyed in accordance with Section 11479 of the Health and Safety Code. The person in violation shall be responsible for the cost of the destruction of cannabis associated with their violation.

(b) An action for civil penalties brought against a person pursuant to this division shall not be commenced unless the action is filed within three years from the date of the violation.

(c)

(1) Actions for civil penalties pursuant to paragraph (1) of subdivision (a) may be brought by the Attorney General on behalf of the people, on behalf of the department, or on behalf of the participating agency, or by a city or county counsel or city prosecutor.

(2) Actions for civil penalties pursuant to paragraph (2) of subdivision (a) shall be brought exclusively by the Attorney General on behalf of the people, on behalf of the department, or on behalf of the participating agency, or by a city or county counsel or city prosecutor in a city or county having a population in excess of 750,000.

(3) Actions for civil penalties pursuant to paragraph (3) of subdivision (a) shall be brought exclusively by the Attorney General on behalf of the people, on behalf of the department, or on behalf of the participating agency, or by a city or county counsel, or city prosecutor.

(d)

(1) All civil penalties imposed and collected pursuant to this section by a court shall be deposited into the General Fund except as provided in this subdivision.

(2) If an action for civil penalties is brought against a person pursuant to this division by the Attorney General on behalf of the people or on behalf of the department or a participating agency, the penalty shall first be used to reimburse the Attorney General and the department or the participating agency for the costs of investigating and prosecuting the action, including expert fees and reasonable attorney’s fees, with the remainder, if any, to be deposited into the General Fund.

(3) If the action is brought by a county counsel, the penalty shall first be used to reimburse the county counsel for the costs of bringing the action for civil penalties, with one-half of the remainder, if any, to be paid to the treasurer of the county in which the judgment was entered and one-half deposited into the General Fund.

(4) If the action is brought by a city attorney or city prosecutor, the penalty collected shall first be used to reimburse the city attorney or city prosecutor for the costs of bringing the action for civil penalties, with one-half of the remainder, if any, to be paid to the treasurer of the city in which the complaining attorney has jurisdiction and one-half deposited into the General Fund.

(e) Notwithstanding subdivision (a), criminal penalties shall continue to apply to an unlicensed person engaging in commercial cannabis activity in violation of this division.

(f)

(1) This section does not limit, preempt, or otherwise affect any other state or local law, rule, regulation, or ordinance applicable to the conduct described in subdivision (a), or otherwise relating to commercial cannabis activities.

(2) This section is meant to further the intent of the Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), which allows local governments to reasonably regulate the cultivation of nonmedical cannabis for personal use by adults 21 years of age and older through zoning and other local laws.

civil penalties unlicensed cannabis cannabis activity fines aiding and abetting property rental penalties violation duration commercial property local regulation attorney general General Fund Control Regulate and Tax Adult Use of Marijuana Act AUMA reasonable regulation local zoning laws

(Amended by Stats. 2023, Ch. 843, Sec. 1. (AB 1448) Effective January 1, 2024. Note: This section was added on Nov. 8, 2016, by initiative Prop. 64.)

Section § 26038.1

This law allows licensed cannabis businesses to take legal action against unlicensed operators. To win the case, the licensed business must prove they were harmed by the unlicensed activities. If they win, the court can stop the unlicensed business from operating, and the winning business can choose either real financial compensation for damages or up to $75,000 in statutory damages, plus cover their legal fees. This law does not apply to violations of labor laws by unlicensed operators.

(a) In addition to other remedies permitted by law, a licensee under this division may bring an action in superior court against a person engaging in commercial cannabis activity without a license as required by this division.

(b) In order to prevail in an action brought pursuant to subdivision (a), a licensee shall demonstrate actual harm resulting from the unlicensed commercial cannabis activity.

(c) In an action pursuant to subdivision (a), the court may enter an order enjoining the defendant from engaging in commercial cannabis activity without a license as required by this division.

(d) A licensee that prevails in an action brought pursuant to subdivision (a) shall be entitled to both of the following:

(1) Either of the following damages, at the election of the prevailing licensee:

(A) Actual damages caused by the unlicensed commercial cannabis activity.

(B) Statutory damages not to exceed seventy-five thousand dollars ($75,000).

(2) Reasonable attorney’s fees and costs.

(e) This section does not apply to any violation of the Labor Code committed by a person engaging in unlicensed cannabis activity and shall not form the basis for a cause of action under the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2 of the Labor Code).

commercial cannabis activity unlicensed cannabis operations superior court actual harm injunction actual damages statutory damages attorney's fees Labor Code exclusion Private Attorneys General Act prevailing licensee legal action against unlicensed

(Added by Stats. 2023, Ch. 467, Sec. 1. (AB 1171) Effective January 1, 2024.)

Section § 26039.1

If cannabis or cannabis products are found to be mislabeled or unsafe, the department will notify the producer. The producer can either voluntarily recall or fix the problem with approval or must destroy the products. If there's an immediate threat to health, the department can force a recall and stop sales. The producer can discuss the decision within five days. The department can isolate or destroy products and may recover any costs from the producer, with funds going to the Cannabis Control Fund. It's illegal to move these products without department approval.

(a) When the department has evidence that cannabis or a cannabis product is adulterated or misbranded, the department shall notify the licensee. The licensee may conduct a voluntary recall of the affected cannabis or cannabis product and may remediate the cannabis or cannabis product, if approved by the department, or shall destroy the affected cannabis or cannabis product under the supervision of the department.

(b) The department may issue a mandatory recall order and require the licensee to immediately cease distribution of cannabis or a cannabis product and recall the cannabis or cannabis product if the department determines both of the following:

(1) The cultivation, manufacture, distribution, or sale of the cannabis or cannabis product creates or poses an immediate and serious threat to human life or health.

(2) Other procedures available to the department to remedy or prevent the occurrence of the situation would result in an unreasonable delay.

(c) The department shall provide the licensee an opportunity for an informal proceeding on the matter, as determined by the department, within five days, on the actions required by the order and on why the cannabis or cannabis product should not be recalled. Following the proceeding, the order shall be affirmed, modified, or set aside as determined appropriate by the department.

(d) The department’s powers set forth in this section expressly include the power to order movement, segregation, isolation, or destruction of cannabis or cannabis products, as well as the power to hold cannabis or cannabis products in place.

(e) If the department determines it is necessary, it may issue the mandatory recall order, may conduct the recall, and may use all appropriate measures to obtain reimbursement from the licensee for any and all costs associated with these orders. All funds obtained by the department from these efforts shall be deposited in the Cannabis Control Fund, and shall be available for use by the department upon appropriation by the Legislature.

(f) It is unlawful to move or allow to be moved cannabis or a cannabis product subject to an order issued pursuant to this section unless that person has first obtained written authorization from the department.

cannabis adulteration misbranded cannabis voluntary recall mandatory recall order immediate threat to health licensee notification informal proceeding product destruction reimbursement for recall costs Cannabis Control Fund illegal movement of cannabis health threat unsafe cannabis products departmental supervision written authorization

(Added by renumbering Section 26132 by Stats. 2021, Ch. 70, Sec. 70. (AB 141) Effective July 12, 2021.)

Section § 26039.3

If the department suspects that cannabis or cannabis products are tampered with or improperly labeled, it can tag and embargo them, preventing their removal or sale until resolved. It's illegal to handle these embargoed products without permission, risking a hefty fine if violated. A cultivator can request permission to continue limited activities under the embargo. If mislabeling or adulteration can be fixed, the department might allow corrections. Products at unlicensed sites aren't fixable and must be destroyed. If deemed safe and compliant, tags may be removed. For products found faulty, they could be condemned and destroyed, with the responsible party covering the costs. There's a process for hearings and compliance under supervision, and costs for this oversight fall on the product owner.

(a) If the department finds or has probable cause to believe that cannabis or a cannabis product is adulterated or misbranded within the meaning of this division, or the sale of the cannabis or cannabis product would be in violation of this division, the department shall affix to the cannabis or cannabis product, or component thereof, a tag or other appropriate marking. The department shall give notice that the cannabis or cannabis product is, or is suspected of being, adulterated or misbranded, or the sale of the cannabis or cannabis product would be in violation of this division and has been embargoed and that the cannabis or cannabis product shall not be removed or disposed of by sale or otherwise until permission for removal or disposal is given by the department or a court.

(b)

(1) It is unlawful to remove, sell, or dispose of embargoed cannabis or an embargoed cannabis product without written permission of the department or a court. The removal, sale, or disposal of each item of embargoed cannabis or cannabis product without written permission of the department constitutes a violation of this subdivision. A violation of this subdivision is subject to a citation and fine of not more than ten thousand dollars ($10,000).

(2) Notwithstanding paragraph (1), a licensed cultivator may request permission for the continued cultivation or harvesting of the cannabis subject to embargo. The department may authorize, and may impose conditions on, the continued cultivation or harvesting of the cannabis subject to embargo.

(c) If the adulteration or misbranding can be corrected by proper labeling or additional processing of the cannabis or cannabis product and all of the provisions of this division can be complied with, the licensee may request that the department remove the tag or other marking to permit correction. If, under the supervision of the department, the adulteration or misbranding has been corrected, the department may remove the tag or other marking. Cannabis and cannabis products found at an unlicensed location, or cultivated, processed, produced, or manufactured at an unlicensed location, or derived from an unlicensed source, cannot be corrected and shall be destroyed.

(d) If the department finds that cannabis or a cannabis product that is embargoed is not adulterated or misbranded, or that its sale is not otherwise in violation of this division, the department may remove the tag or other marking.

(e) The cannabis or cannabis product may be destroyed by the licensee or product owner pursuant to a corrective action plan approved by the department and under the supervision of the department. The cannabis or cannabis product shall be destroyed at the expense of the licensee or product owner.

(f) The department may condemn cannabis or a cannabis product under the provisions of this section. A proceeding for condemnation shall be subject to appropriate notice to, and the opportunity for a hearing with regard to, the person or licensee affected in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

(1) Upon a finding by the administrative law judge that the cannabis or cannabis product is adulterated or misbranded, or that its sale is otherwise in violation of this division, the administrative law judge may direct the cannabis or cannabis product to be destroyed at the expense of the licensee or product owner and under the supervision of the department. The licensee or owner of the affected cannabis or cannabis product shall pay fees and reasonable costs, including the costs of storage, testing, and supervision, incurred by the department in investigating and prosecuting the action taken pursuant to this section.

(2) Upon a finding by the administrative law judge that the adulteration or misbranding can be corrected by proper labeling or additional processing of the cannabis or cannabis product and that all provisions of this division can be complied with, the administrative law judge may direct the cannabis or cannabis products to be brought into compliance under the department’s supervision. The licensee shall pay fees and reasonable costs, including the costs of storage, testing, and supervision, incurred by the department in investigating and prosecuting the action. After the costs, fees, and expenses have been paid, the department may release the embargo and remove the tag or other marking and supervise the corrective action.

cannabis adulteration misbranded cannabis embargoed cannabis sale violation removal permission cultivator request destroy cannabis corrective action plan condemnation process licensee costs compliance supervision administrative law judge supervision costs product owner expense proper labeling

(Added by renumbering Section 26133 by Stats. 2021, Ch. 70, Sec. 71. (AB 141) Effective July 12, 2021.)

Section § 26039.4

A peace officer can take or seize cannabis and cannabis products if any of the following situations applies: the product is recalled or blocked by the department, it needs to be destroyed according to the laws, or it is part of an investigation or disciplinary action for breaking the cannabis regulations.

A peace officer, including a peace officer with the department, may seize cannabis and cannabis products in any of the following circumstances:

(a) The cannabis or cannabis product is subject to recall or embargo by the department.

(b) The cannabis or cannabis product is subject to destruction pursuant to this division.

(c) The cannabis or cannabis product is seized related to an investigation or disciplinary action for violation of this division.

peace officer seize cannabis cannabis recall cannabis embargo cannabis destruction investigation disciplinary action cannabis regulations product seizure cannabis law violation

(Added by renumbering Section 26135 by Stats. 2021, Ch. 70, Sec. 73. (AB 141) Effective July 12, 2021.)

Section § 26039.5

This law states that cannabis products are considered "misbranded" if they are made or handled in unlicensed locations, have misleading labels, or don’t meet specific labeling rules. It’s illegal to make, sell, or handle cannabis products that are wrongly branded. You can’t sell, receive, or distribute such products in the marketplace either.

(a) Cannabis or a cannabis product is misbranded if it is any of the following:

(1) Cultivated, processed, manufactured, packed, or held in a location not duly licensed as provided in this division.

(2) Consists of cannabis or cannabis product that was cultivated, processed, manufactured, packed, or held in a location not duly licensed as provided in this division.

(3) Its labeling is false or misleading in any particular.

(4) Its labeling or packaging does not conform to the requirements of Section 26120 or any other labeling or packaging requirement established pursuant to this division.

(b) It is unlawful to cultivate, process, manufacture, sell, deliver, hold, or offer for sale cannabis or a cannabis product that is misbranded.

(c) It is unlawful to misbrand cannabis or a cannabis product.

(d) It is unlawful to receive in commerce cannabis or a cannabis product that is misbranded or to distribute, deliver, or offer for delivery any such cannabis or cannabis product.

misbranded cannabis unlicensed locations false labeling misleading packaging unlawful sale cultivation regulations distribution prohibition packaging requirements commerce restrictions cannabis law compliance

(Added by renumbering Section 26121 by Stats. 2021, Ch. 70, Sec. 67. (AB 141) Effective July 12, 2021.)

Section § 26039.6

This law states that cannabis or cannabis products are considered "adulterated" if they are made or held in dirty conditions, contain harmful substances, include restricted substances beyond legal limits, possess incorrect or deceptively low quality or purity, or use harmful containers. It's illegal to grow, make, sell, or trade adulterated cannabis products. Additionally, you cannot legally receive or distribute these tainted products.

(a) Cannabis or a cannabis product is adulterated if it is any of the following:

(1) It has been produced, prepared, packed, or held under unsanitary conditions in which it may have become contaminated with filth or in which it may have been rendered injurious.

(2) It consists, in whole or in part, of any filthy, putrid, or decomposed substance.

(3) It bears or contains any poisonous or deleterious substance that may render it injurious to users under the conditions of use suggested in the labeling or under conditions that are customary or usual.

(4) It bears or contains a substance that is restricted or limited under this division or regulations promulgated pursuant to this division and the level of substance in the product exceeds the limits specified pursuant to this division or in regulation.

(5) Its concentrations differ from, or its purity or quality is below, that which it is represented to possess.

(6) The methods, facilities, or controls used for its cultivation, manufacture, packing, or holding do not conform to, or are not operated or administered in conformity with, practices established by regulations adopted under this division to ensure that the cannabis or cannabis product meets the requirements of this division as to safety and has the concentrations it purports to have and meets the quality and purity characteristics that it purports or is represented to possess.

(7) Its container is composed, in whole or in part, of any poisonous or deleterious substance that may render the contents injurious to health.

(8) It is an edible cannabis product and a substance has been mixed or packed with it after testing by a testing laboratory so as to reduce its quality or concentration or if a substance has been substituted, wholly or in part, for the edible cannabis product.

(b) It is unlawful to cultivate, manufacture, distribute, sell, deliver, hold, or offer for sale cannabis or a cannabis product that is adulterated.

(c) It is unlawful to adulterate cannabis or a cannabis product.

(d) It is unlawful to receive in commerce cannabis or a cannabis product that is adulterated or to distribute, deliver, or proffer for delivery any such cannabis or cannabis product.

adulterated cannabis unsanitary conditions poisonous substances quality standards purity discrepancies restricted substances cultivation practices harmful containers edible cannabis testing laboratory illegal distribution commerce harmful substitutes injurious to health product safety

(Added by renumbering Section 26131 by Stats. 2021, Ch. 70, Sec. 69. (AB 141) Effective July 12, 2021.)

Cannabis

Chapter 3Enforcement