Setting Expectations for Inspections

California operators should expect a visit from the Department of Cannabis Control, eventually

One year ago, California’s Department of Cannabis Control announced that it would begin conducting random inspections of all state-licensed cannabis businesses.

Then … radio silence.

Most cannabis operators never heard a word from the DCC, let alone had an inspector visit the premises. Although most of the industry was left undisturbed as the relatively new governing body of California cannabis built out its staff and began to exert its wide-ranging authority, a few troubling accounts in local press and on social media of inspectors arriving unannounced at businesses created waves of uncertainty among Golden State license-holders.

With so many questions about the inspections left up to speculation, Marijuana Venture reached out to the DCC to get a better idea of what these inspections entail, where they are targeted and what operators should know about them. DCC deputy of director of compliance Jeff Merriman responded.

Crudely patched and evidently leaking ethanol extraction equipment. Photo courtesy of DCC.

Marijuana Venture: How much manpower is being dedicated to the DCC’s operator inspections?

 Jeff Merriman: The DCC has more than 100 field staff positions, with dozens of compliance operators in the field across the state on any given day working to support licensee compliance with California cannabis laws and regulations.

MV: Can you give any insight as to how cannabis businesses are selected for inspection?

JM: All DCC licensees go through routine inspections. DCC also uses its authority to prioritize inspections based on public health and community safety concerns, including, but not limited to, egregious complaint violations and a previous history of chronic noncompliance.

MV: Is the DCC inspecting all cannabis business types, including medical and recreational operators? How is the manpower split between the business categories? How are unlicensed operations handled?

JM: Yes, DCC inspects all license types. DCC compliance inspections are focused on the licensed cannabis market, including medicinal cannabis. Unlicensed cannabis activity is actively investigated by the department’s enforcement division.

MV: Does the department look for compliance with non-DCC requirements, such as labor violations? If a labor violation is found, how does the department proceed?

Illegal water diversion. Photo courtesy of DCC.

JM: DCC has investigative staff that are trained to identify and address labor exploitation in the field. These trainings are being expanded as the department grows. These efforts are meant to support and complement the DCC’s partnership with agencies and departments that are tasked with overseeing worker safety conditions, notably the California Labor and Workforce Development Agency, its departments, and a variety of federal agencies.

The DCC encourages those who believe they are working in unsafe or unsanitary conditions, are being exploited or experiencing wage theft to submit complaints to the Department of Industrial Relations, the state entity charged with administering and enforcing state laws governing wages, hours and breaks, overtime, retaliation and workplace safety and health, among other things.

MV: Some operators claim to have received 24 to 48 hours’ notice before inspectors arrive, and others claim inspectors arrived unannounced. How does the department determine how much notice an operator receives before inspection and who makes that determination?

JM: Section 17800 of the regulations state that the department and its authorized representatives, for purposes of inspection, investigation, review, or audit, shall have full and immediate access. Additionally, section 15000.3, subsection (d) specifies that licensees shall ensure the department has immediate access to the licensed premises. There is no requirement for notice. However, the department generally provides notice and schedules routine inspections during a licensee’s disclosed hours of operation.

Failure to maintain distillation equipment. Photo courtesy of DCC.

MV: What happens when a business is deemed non-compliant?

JM: The department has a progressive disciplinary policy. When licensees are not in compliance, they may be issued letters of warning, an embargo or a notice to comply, which identifies violations and gives operators a deadline to correct them. DCC can and does issue citations, orders of abatement, or fines when circumstances warrant.

The department provides technical assistance and educational resources to businesses working to come into compliance, however the department does not tolerate flagrant attempts to break the law or undermine the legal cannabis market.

For more detailed information on formal discipline please see Chapter 12 of the department’s regulations, including the disciplinary guidelines.

MV: If an operator receives a citation/violation/fine during an inspection, do they have any path to dispute it?

JM: Licensees that receive a citation may challenge it pursuant to the process in section 17803 of the department’s regulations. If an accusation is filed against an annual licensee, the process in section 17809 applies. Suspensions, revocations or denial of renewal of a provisional license are conducted under section 15001.3 of the department’s regulations.

This interview has been edited for length and clarity.