A Rare Interview With California's Cannabis Director Nicole Elliott: Future Plans And The State Of The Industry

By Gaynell Rogers, Founder and Managing Partner of Treehouse Global Ventures. Published with permission from Valerie Costa, Special Publications Editor of The Union in Grass Valley.

Question 1: What are the principal duties of the Director of the Department? Can you explain to our readers your day-to-day? And do you integrate with other Directors from other states that have your position as well? 

DCC Response:  

The Department of Cannabis Control was formed in 2021 by merging the three state programs previously responsible for regulating commercial cannabis activity. 

As Director, I have the privilege of working with some incredible staff to develop and implement policies that enable us to support the creation of a safe, sustainable, and equitable cannabis market in California. Thanks to consolidation, DCC is now responsible for regulating the entire cannabis supply chain. In the last year, our team has accomplished a lot, including: 

Issuing more than 4,000 new cannabis licenses and transitioning nearly 1,000 provisional licenses to annual licenses. 

Developing and approving eight rulemaking packages that help streamline application, licensing, and compliance requirements for cannabis licensees. 

Conducting almost 200 enforcement actions throughout California in partnership with local law enforcement, and state and federal agencies to help curb the illicit market. 

Proposing the first state validated test method for cannabinoids to support laboratory compliance and ensure integrity in cannabis products. 

Implementing an equity fee waiver program and providing nearly 950 license fee waivers to eligible equity licensees totaling $9.8 million dollars to-date. 

As Director, I work with our team to create an environment that fosters integrity, fairness, innovation, collaboration, and support as we undertake the enormous task of working with our licensees to regulate a plant with medicinal value and with deep social and historic roots.  

In the coming months, I am excited to work with our newly-appointed Cannabis Advisory Committee members  - 17 appointees from across the state and representing the breadth of our stakeholder community – to discuss and identify recommendations on ways to improve our regulatory framework for commercial cannabis businesses, including policies necessary support our businesses while protecting public health and safety.  

Our leadership teams also work closely with members of the Cannabis Regulators Association (CANNRA), a nonprofit organization made up of government officials involved in cannabis regulation. CANNRA members represents more than 40 states and U.S. territories. This engagement allows us to share best practices, lessons learned, and update each other on rapidly evolving policies throughout the country.  

Question 2: How do you want industry folks to communicate with the Bureau (Department).  What is the best way to engage directly with you and your team? (Most common communications now in this 'pandemic' time, response time - how to approach? What makes it easy for you all to respond?)   

DCC Response: 

We want to have a productive and collaborative relationship with the businesses we license. As we continue to build out our team and the ways by which we engage with our licensees, there are several resources already available that I encourage industry folks to utilize.  

Cannabis licensees work closely with our licensing and compliance teams, and many have direct connections to our staff for questions that come up during the application, licensing renewal, or compliance process. We encourage applicants and licensees to view these individuals as resources and engage constructively with them.    

We also encourage cannabis business operators to stay informed about regulatory updates, cannabis news, educational resources and other forms of guidance by subscribing to our email list.  

Additionally, questions can always be directed to our customer service team via email at info@cannabis.ca.gov or by phone at 1-844-61-CA-DCC. The customer service line operates during regular business hours, but there are times where customer service telephone and email support is extended, such as recently we had a critical licensing deadline. 

We also just hired a public engagement manager who will serve as another important point of contact for cannabis industry groups, public health officials, environmental groups, local law enforcement, local cannabis regulators, licensees, and others. This individual will be tasked with better coordinating and maximizing our outreach and engagement. 

Lastly, I want to double down on my mention of the recently reconstituted Cannabis Advisory Committee. This body has an important role in proactively soliciting thoughtful, comprehensive and balanced feedback on regulatory efforts in the years ahead. Nevada County will be well represented through the appointment of a variety of members, but most notably through the representation of Jeff Merriman, Nevada County’s Cannabis and Code Compliance Division’s Program Manager.  

DCC staff have been intentional when increasing our presence in our community of stakeholders, particularly in our licensee community and we intend to continue and expand this direct outreach and engagement in the weeks and months ahead. Every one of these in-person, on-premises visits present an extraordinary opportunity for our team to learn, cross train, and build trust between state government, local governments and cannabis operators. 

Question 3: Can you talk a bit about the equity grants developed for minorities, women & BIPOC?   Posts on your website list grants in 2020 but are not currently updated? Is it stalled, being retooled?   Have the funds run out or just diverted through the cities and counties? 

DCC Response:  

The Cannabis Equity Grants Program for local jurisdictions are administered by the Governor’s Office of Business and Economic Development (GO-Biz). These grants aid local equity program efforts to support equity applicants and equity licensees by offering technical assistance, and assistance with securing capital necessary to begin a business. GO-Biz announced the fiscal year 2021-22 grant recipients for the Cannabis Equity Grants Program for Local Jurisdictions in February.  For a list of the jurisdictions awarded grant funds, please view its news release here.  

DCC supports equity cannabis businesses in a variety of ways, including through license fee waivers and enhanced technical assistance for equity applicants navigating the state licensing process. As mentioned, DCC provided nearly 950 license fee waivers to eligible equity licensees, totaling $9.8 million dollars in the last year. 

California Community Reinvestment Grants, also administered by the Governor’s Office of Business and Economic Development, provide funding generated by cannabis tax revenue to local health departments and qualified community-based nonprofit organizations to support community activities for neighborhoods disproportionately affected by past federal and state drug policies. Nonprofit organizations throughout the state can apply through Sept. 15, 2022, for FY 2022-23 grant dollars and more information can be found on their website.  

Question 4: Everyone was relieved with the cultivation tax decision. What else is the department looking at to retool and refresh the industry? (Plus, a discussion of investors running away from the state to other states where costs are cheaper and reaching a profit is realistic.) 

DCC Response:  

We were proud to help amplify the voice of our licensees to help achieve significant tax reform. We know there is still more work to do to help support and stabilize the industry. 

Significant reforms are largely in the purview of the Legislature, and often require a supermajority vote to change policies enshrined by the voters in Prop 64. As we have seen during the last legislative session, big changes can take time and are more likely to occur when the industry engages rigorously and with one voice.  

DCC will continue to pursue policy modifications within our power to lower barriers to participate in the licensed market and support local jurisdictions in doing the same.  In this year’s budget, there is $20.5 million allocated to help support local jurisdictions establish retail access, and the DCC awarded almost $100M earlier this year to support local governments and licensees in transitioning from provisional to annual licensure.  

The Governor’s 2022-23 budget provides tangible support to help refresh industry supports. This includes $2 million for DCC to develop data collection and public sharing resources to inform market participants, policy makers and the public. This will build on the department’s recent data efforts, which aims to make public local jurisdictions participation, or lack thereof, in the regulated market. We anticipate these efforts will result in an open data portal that provides real-time, basic market information. Ultimately, we hope this information will support business forecasting and public understanding of market dynamics.  

Question 5: What is the Bureau (Department) doing specifically to bring the legacy market players into the legal marketplace? The media reports that 70% of the California market is the black market. Do you agree? Integration with law enforcement and an amnesty program being developed? (Last Prisoner Project work integration? Fair Trials.org work integration?) 

DCC Response: 

We are working to simplify regulatory processes and reduce burdens so legacy operators are incentivized to make the transition. This includes efforts to remove barriers to entry, remove duplicative applications and licensing requirements and streamline regulatory and compliance processes for licensees.  

Concurrent to this effort, DCC and its partner agencies work together to address illegal cannabis activity, particularly that which presents harms to consumers, the environment, communities, and presents unfair competition to the legal market. Illegal cannabis operations can have ties to criminal and cartel gangs that siphon precious water resources during droughts, engage in human trafficking, elder abuse, animal cruelty and other dangerous and harmful practices. We work with our local and state partners to share intelligence and coordinate enforcement actions that result in actions against unlicensed retail, distribution, manufacturing, and indoor cultivation. 

Next year we will launch a statewide consumer awareness campaign intended to help educate consumers on the benefits of purchasing from the legal market. This will include informing consumers of the benefits of supporting licensed operators the communities in which they operate, pay taxes and generate a workforce.  

Question 6: I came to this industry as a cancer patient in 2009 - and now am a 3-time cancer survivor. What, if anything, is the Bureau (Department) doing to protect patients who use cannabis as medicine, in regards to, costs, access, and, hopefully, in-state research? 

DCC Response: The Bureau of Cannabis Control (just prior to consolidation which created the DCC in July 2021) awarded nearly $30 million in research grants in 2020 to study the effects of cannabis legalization. This includes research about: 

Public health 

Criminal justice and public safety 

Economic impacts 

Environmental impacts 

Cannabis industry 

The funded research include several projects that would enhance understanding of how cannabis affects the body. This includes a $2 million project at UC San Francisco to study cannabis effects on the brain, immune, and sensory systems; nearly $1.4 million to study the effects on the heart and blood vessels; and more than $1 million to study the effects on the lungs. 

The Department will soon solicit proposals from public universities for a new round of grant funding. In this round, DCC will award up to $20 million to California public universities. Details are expected soon.  

Separately, the Department has adopted regulations that allow cannabis businesses to donate products to medicinal patients, a practice known as “compassion care.” This provides important, no-cost access for those who rely on cannabis products for medicine.  

Lastly, as mentioned earlier, the existing work DCC is doing to reduce barriers to licensure, and recent efforts outlined in the trailer bill (AB 195) to restructure/lower taxes as well as create some credits, are also going to positively impact medicinal cannabis patients. 

Question 7: Anything else you'd like to add to give the industry some guidance and hope?   

 DCC Response:    

DCC wants to be a valuable resource for the legal market. We have a mission to help support the development of a safe, sustainable, and equitable cannabis market and we believe these objectives are shared amongst the individuals and businesses we are tasked with regulating. 

California has the 5th largest economy with, arguably, the biggest cannabis market. We have an enormous task when you consider the scale and complexities. As the DCC looks to the work ahead, we believe there is an incredible opportunity to harness these shared objectives and work together to be a national leader on this issue. We are excited about this opportunity and look forward to making this vision a reality in partnership with the industry!

DCC is here as a resource for the cannabis industry. We have a mission to help support the development of a safe, sustainable, and equitable cannabis market and we believe these objectives are shared amongst the individuals and businesses we are tasked with regulating. This provides us with a lot of common ground to support safe, sustainable, and equitable access to the cannabis market. 

Director Nicole Elliott