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New Emergency Regulation for Cannabis Distributors and Retailers Requires California Cannabis Track-and-Trace

 

New Emergency Regulation for Cannabis Distributors and Retailers Requires California Cannabis Track-and-Trace

The California Department of Tax and Fee Administration (CDTFA) recently adopted emergency Regulation 3702, California Cannabis Track‑and‑Trace, which requires distributors and retailers to enter the wholesale cost and the retail selling price of cannabis or cannabis products into the California Cannabis Track-and-Trace (CCTT) system. The emergency Regulation 3702 is now in effect.

The Medicinal and Adult-Use Cannabis Regulations and Safety Act and regulations adopted by the Bureau of Cannabis Control (BCC) require all commercial cannabis activity be recorded in the CCTT system. Distributors and retailers that obtain an annual license with the BCC must begin recording commercial cannabis activity in the CCTT system. In addition to the existing requirements, each licensee must now enter the following information related to the cannabis excise tax.

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Emergency Regulation 3702
Text of California Code of Regulations, Title 18, Division 2, Chapter 8.7, Section 3702
(A new regulation to be added to Cal. Code Regs., tit. 18, div. 2)

Regulation 3702. California Cannabis Track-and-Trace.

A distributor or cannabis retailer that is required to record commercial cannabis activity in the California Cannabis Track-and-Trace system pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (commencing with section 26000 of the Business and Professions Code), shall enter into the California Cannabis Track-and-Trace system specified information as follows:

(1) Wholesale Cost. When cannabis or cannabis products are sold or transferred to a cannabis retailer in an arm’s length transaction, the distributor and cannabis retailer shall enter the cannabis retailer’s wholesale cost of the cannabis or cannabis products.
(2) Retail Selling Price. When cannabis or cannabis products are sold in a retail sale, the cannabis retailer shall enter the retail selling price of the cannabis or cannabis products.

Note: Authority cited: Section 34013, Revenue and Taxation Code. Reference: Sections 34010,
34011 and 34015, R

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Cannabis Distributors
A distributor is required to enter into the CCTT system the retailer’s wholesale cost of the cannabis or cannabis products that is sold or transferred to a retailer in an arm’s length transaction.

In an arm’s length transaction, the distributor is required to calculate the average market price of the cannabis or cannabis products, which is the retailer’s wholesale cost plus a mark-up established by the CDTFA. The wholesale cost used to calculate the average market price is the amount entered into the CCTT system.

Cannabis Retailers
A cannabis retailer is required to enter into the CCTT system:

  • The wholesale cost of the cannabis or cannabis products. The wholesale cost is the amount paid by the retailer for the cannabis or cannabis products in an arm’s length transaction and is the amount used to calculate the average market price.
  • The retail selling price of the cannabis or cannabis products when the product is sold at retail.

For More Information
This Special Notice is intended to give you an overview of some of the requirements for cannabis distributors and retailers and does not address all requirements for the Cannabis Industry. We encourage you to read our online Tax Guide for Cannabis Businesses at www.cdtfa.ca.gov/industry/cannabis.htm.

CalCannabis Cultivation Licensing (CalCannabis), a division of the California Department of Food and Agriculture administers the CCTT system. For more information visit CalCannabis at www.cdfa.ca.gov/is/mccp/ or call 1‑833‑CALGROW (1‑833‑225‑4769) with your specific questions regarding the CCTT system.

If you have additional questions regarding the excise or sales tax requirements, please call our Customer Service Center at 1‑800‑400‑7115 (TTY:711) Monday through Friday, 8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays.

 

Washington: Leaf Data Systems to Go Live February 1

Leaf Data Systems to Go Live February 1

Dear Marijuana Licensee:

Leaf Data Systems will be implemented as Washington’s traceability system in less than a week. As we approach the transition, there are some important things to know:

  • The best place to find information about the upcoming changes is at the Getting Started with Leaf Data Systems page on the LCB website. This page will continually be updated with the latest information.
  • To begin using Leaf Data Systems, you will need to upload your current inventory into Leaf Data Systems. This is the only system you should use for traceability reporting activities after your upload is complete. You can learn how to upload your inventory at the Getting Started with Leaf Data Systems page, and will be able to complete this task after the system goes live. If you have a third party software provider, check to see if your inventory uploads will be completed for you.
  • Weekly Contingency Reporting ends when Leaf Data Systems goes live at 12:01 a.m. February 1, 2018, however there will be a 15-day grace period where Contingency Manifest and Destruction reporting forms will be accepted as you shift to the new system.
  • If you use a third party software system, you will need to provide them with an API key. API keys are used as identifying credentials necessary for system integration. More information and directions about initial access to Leaf Data Systems and API key retrieval will come Wednesday, January 31. Be sure to check your email and the LCB website for updates.
  • Once Leaf Data Systems goes live, support will be available seven days a week, between the hours of 6 a.m. and 6 p.m. by calling 888-420-5813. You can also email Leaf Support at any time.

Important information regarding transition to Leaf Data Systems, Washington

Marijuana Licensees,

The “go live” date of the new traceability system from Jan. 1, 2018 to Feb. 1, 2018.

The Liquor and Cannabis Board’s (LCB) number one concern on this project is our licensees. Based on discussions with our vendor — MJ Freeway — and internally with our project steering committee, we have elected to extend the preparation period to ensure the system is ready and your transition is as smooth as possible. We shared our plan earlier today with the Traceability Advisory Group, made up of industry members, who have been part of this project from the beginning.

Key Dates for Third-Party Integrators and Licensees
Going forward, the LCB has set some key deadlines that will prepare the system and third-party integrators for the transition. With the exception of “go live,” each of these “days” are on a 24 hour cycle ending at 11:59 p.m.

  • Jan. 8, 2018
    Last day for third-party integrators to submit tickets for system changes for Release 1
  • Jan. 14, 2018
    Last day for LCB/Vendor changes to code, aka “Code Freeze”
  • Feb. 1, 2018
    Leaf Data Systems will go live as traceability at 12:01 a.m.
  • Feb. 15, 2018
    Last day for current plants and inventory to be added into system
  • March 2, 2018
    Last day for lab (QA) results to be added into system

Traceability on LCB Website
As we have from the beginning, your main source of information on the transition is the Traceability Section of the LCB website at lcb.wa.gov. Everything you need to prepare is available on this page including; the training manual, training webinars for all license types and labs, key dates, etc.

Validated Commercial Software Vendors
We have begun posting the business names of third-party commercial integrators who have met the technical requirements for access to the system. We will be updating this list regularly as integrators become validated. Thus far, three commercial third-party integrators have been validated. If you use a third-party commercial system for traceability reporting and your vendor is not listed, consider contacting them to gauge where they are in the implementation/validation process.

Please note that the ultimate responsibility for ensuring your data is transferred to Leaf Data Systems after go live is your own. 

For most licensees the transition will be seamless through your commercial integrator. However, LCB cannot require integrators to validate, nor will we be able to postpone our go live date in order for them to do so.

We remain committed to communicating with you throughout the implementation. As always, your best source of information is through the Traceability Section of the LCB website. If you have not already, please familiarize yourself with the tools available to you there. Thank you for your review and commitment to this effort

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