With the legalization of adult use cannabis in California, entities in the cannabis supply chain need to be aware that they may become attractive targets of Proposition 65 enforcement actions. As the new Proposition 65 warning regulations become effective later this year, Proposition 65 compliance and litigation risk management may become as challenging as the new marijuana regulatory structure now in place. These businesses should inform themselves of Proposition 65’s requirements and take steps to minimize their litigation risk.
The cannabis industry has expended, and continues to expend, substantial resources in complying with the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) and related regulations, which are now more complex than ever. Proposition 65, not being a cannabis-specific law, may fall off this emerging industry’s radar. This has implications beyond the burden and cost of defending a Proposition enforcement action: since the new MAUCRSA regulations require cannabis businesses to comply with other state laws, an alleged failure to comply with Proposition 65 could place a business’s cannabis license at risk.
The medical cannabis industry already has been the subject of enforcement activity. Dozens of California dispensaries have been sued for failure to provide Proposition 65 warnings for marijuana smoke, which is identified as a Proposition 65-listed carcinogen. In 2017, hundreds of dispensaries received Proposition 65 Notices of Violation for allegedly exposing individuals to pesticides in cannabis products. The new MAUCRSA regulations now address pesticide levels in cannabis products, but cannabis businesses need to know that compliance with those new pesticide action levels does not equate to compliance with Proposition 65.
Beyond that, non-cannabis products are, and will continue to be, fair game for private enforcers. To the extent that dispensaries sell such items or give them away as promotional products, those products present the compliance analysis as cannabis products. For example, listed phthalates and lead have been targeted in plastic accessory products such as backpacks, tote bags, and other plastic products. Lead and cadmium have been targeted in decorated glassware and ceramicware – mugs, cups and glasses.
Cannabis businesses should evaluate all products they sell for Proposition 65 enforcement risk, and examine whether their supplier agreements cover Proposition 65 compliance.
In other words: welcome to the world of doing mainstream business in California.
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