AB1027 - Cannabis: testing: quality assurance.

Amended IN Senate June 18, 2025 Amended IN Assembly March 28, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1027 Introduced by Assembly Member Sharp-Collins (Coauthor: Assembly Member Hadwick) February 20, 2025 An act to amend Sections 26039.3, 26070, 26100, 26104, and 26110 of the Business and Professions Code, relating to cannabis. LEGISLATIVE COUNSEL'S DIGEST AB 1027, as amended, Sharp-Collins. Cannabis: testing: quality assurance. (1) Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, authorizes a person who obtains a state license under AUMA and any applicable local ordinances to engage in commercial adult-use cannabis activity pursuant to that license, if conducted as prescribed. Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities, and requires the Department of Cannabis Control to administer its provisions. Existing law prohibits cannabis or cannabis products from being sold by a licensee unless specified quality assurance standards and testing standards are met. Existing law requires representative samples of the cannabis or cannabis products in their final form to be tested by a licensed testing laboratory, and requires the department to develop criteria to determine which batches are tested. Existing law authorizes the testing laboratory to retest a sample if the testing laboratory notifies the department, in writing, that the test was compromised due to equipment malfunction, staff error, or another circumstance authorized by the department, and the department authorizes the retest of that sample. Existing law requires the testing laboratory to issue a certificate of analysis that the cannabis batch has passed the testing requirements, and authorizes the testing laboratory to amend the certificate of analysis to correct minor errors, as specified. This bill would specify that all cannabis or cannabis products are subject to test or retest, and would revise the retest requirements to instead authorize a testing laboratory to retest a sample of cannabis or cannabis products if either the testing laboratory notifies the department, in writing, that the test was compromised due to equipment malfunction or malfunction, staff error, or other circumstances allowed by regulation, if the department requires the retest, or if the department authorizes the request. This bill would require the licensee to allow the department to obtain or access any cannabis or cannabis products held or offered for retail sale for the purposes of conducting off-the-shelf laboratory testing. The bill would also require a retailer and any other licensee authorized to engage in the retail sale of cannabis or cannabis products to provide the certificate of analysis associated with any cannabis or cannabis product held or offered for retail sale to a customer upon request. This bill would also require a testing laboratory to be subject to blind proficiency testing performance testing, as specified, to ensure consistency of results across laboratories. (2) Existing law, upon the issuance of a certificate of analysis by the testing laboratory, requires a distributor to conduct a quality assurance review before distribution of cannabis or cannabis products to ensure the labeling and packaging conform to the requirements of MAUCRSA. Existing law also requires a quality assurance compliance monitor, who is an employee or contractor of the department, to conduct random quality assurance reviews at a distributor’s licensed premises before distribution to ensure the labeling and packaging of the cannabis and cannabis products conform to the requirements of MAUCRSA. This bill, beginning on March 1, 2026, would additionally require the distributor’s quality assurance review of each batch of cannabis or cannabis products to be properly recorded within the track and trace system. The bill would repeal the requirement that a quality assurance compliance monitor conduct random quality assurance reviews, and instead would require the department to conduct those reviews. The bill would expand those reviews to include a microbusiness or retailer’s licensed premises, and would require the department to additionally ensure the testing of the cannabis and cannabis products conform to the requirements of MAUCRSA. (3) Existing law authorizes a testing laboratory to receive and test samples of cannabis or cannabis products from state or local law enforcement, or a prosecuting or regulatory agency, as specified, and provides that the testing of that cannabis is not commercial cannabis activity for purposes of MAUCRSA and is not arranged or overseen by the department. This bill would require a licensed testing laboratory to comply with the department’s request to evaluate the laboratory’s testing practice. (4) Existing law, if the department finds or has probable cause to believe that cannabis or a cannabis product is adulterated or misbranded, or sold in violation of MAUCRSA, requires the department to affix a tag or other appropriate marking to the cannabis or cannabis product, and to give notice that the cannabis or cannabis product is in violation of MAUCRSA and has been embargoed. Existing law makes it unlawful to remove, sell, or dispose of embargoed cannabis or an embargoed cannabis product without written permission of the department or a court, and subjects each violation to a fine. This bill would remove the requirement that the department affix a tag or other appropriate marking to the cannabis or cannabis product, and instead would require the notice to reasonably identify the cannabis or cannabis product subject to the embargo. The bill would also require the licensee, within one business day of receiving a notice of the embargo, to physically separate all embargoed cannabis and cannabis products from all other inventory, as specified. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 26039.3 of the Business and Professions Code is amended to read: 26039.3. (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 give notice in writing or electronically 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. The notice shall reasonably identify the cannabis or cannabis product subject to the embargo. (b) (1) Within one business day of receiving a notice of embargo from the department, the licensee shall physically separate all embargoed cannabis and cannabis products from all other inventory and place the embargoed cannabis or cannabis products in a limited access area on the licensed premises until the licensee receives further instruction from the department. (2) 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). (3) Notwithstanding paragraph (2), 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. SEC. 2. Section 26070 of the Business and Professions Code is amended to read: 26070. (a) State licenses to be issued by the department related to the sale and distribution of cannabis and cannabis products are as follows: (1) A retailer shall have a licensed premises which is a physical location from which commercial cannabis activities are conducted. A retailer’s premises may be closed to the public. A retailer may conduct sales exclusively by delivery. (2) A distributor licensee shall be bonded and insured at a minimum level established by the department. (3) (A) Microbusiness or combined activities licenses that authorize cultivation of cannabis shall include the license conditions described in subdivision (b) of Section 26060.1. (B) The department shall establish a process by which an applicant for a microbusiness or combined activities license can demonstrate compliance with all the requirements under this division for the activities that will be conducted under the license. (b) The department shall establish minimum security and transportation safety requirements for the commercial distribution and delivery of cannabis and cannabis products. Except as provided in subdivision (d) of Section 26110, the transportation of cannabis and cannabis products shall only be conducted by licensed persons authorized to engage in distribution under this division or employees of those persons. Transportation safety standards established by the department shall include, but not be limited to, minimum standards governing the types of vehicles in which cannabis and cannabis products may be distributed and delivered and minimum qualifications for persons eligible to operate such vehicles. (c) The driver of a vehicle transporting or transferring cannabis or cannabis products shall be directly employed by a licensee authorized to transport or transfer cannabis or cannabis products. (d) Notwithstanding any other law, all vehicles transporting cannabis and cannabis products for hire shall be required to have a valid motor carrier permit pursuant to Chapter 2 (commencing with Section 34620) of Division 14.85 of the Vehicle Code. The Department of the California Highway Patrol shall have authority over the safe operation of these vehicles, including, but not limited to, requiring licensees engaged in the transportation of cannabis or cannabis products to participate in the Basic Inspection of Terminals (BIT) program pursuant to Section 34501.12 of the Vehicle Code. (e) Prior to transporting cannabis or cannabis products, a licensed distributor shall do both of the following: (1) Complete an electronic shipping manifest as prescribed by the department. The shipping manifest shall include the unique identifier, pursuant to Section 26067, issued by the department for the cannabis product. (2) Securely transmit the manifest to the department and the licensee that will receive the cannabis product. (f) During transportation, the licensed distributor shall maintain a physical copy of the shipping manifest and make it available upon request to agents of the department and law enforcement officers. (g) The licensee receiving the shipment shall maintain each electronic shipping manifest and shall make it available upon request to the department and any law enforcement officers. (h) Upon receipt of the transported shipment, the licensee receiving the shipment shall submit to the department a record verifying receipt of the shipment and the details of the shipment. (i) Transporting, or arranging for or facilitating the transport of, cannabis or cannabis products in violation of this chapter is grounds for disciplinary action against the license. (j) Licensed retailers, microbusinesses, and combined activities, and licensed nonprofits under Section 26070.5, shall implement security measures reasonably designed to prevent unau [Text truncated for display. Full text available on Congress.gov.]