Protecting regional cannabis brands: McGuire’s SB 175 and appellations

McGuire's new bill would help protect local brands.

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MENDOCINO Co., 3/03/17 — Mendonesian cannabis farmers are experiencing growing pains in the transition from unlawful commerce to a highly regulated commercialized market. The decades of underground gardens allowed them to build an industry, build a stock of genetics, build a knowledge base and very importantly build an international reputation as part of the Emerald Triangle. But in the new world of potentially corporate cannabis, their ability to hold on to this legacy has come into question.

One strategy that may help small growers is one they are borrowing from their farmer cousins to the south: regional branding and appellations.

In the 1980s grape growers in Napa and Sonoma counties fought to establish legal protections for their regional brands. Now North Coast cannabis farmers are taking a page from their playbook, and trying to keep the Emerald Triangle’s reputation and brand from being used by businesses based outside the area.

On January 23 the North Coast’s state senator, Mike McGuire, introduced Senate Bill 175,  that would ensure transparency in cannabis branding, which he hopes will protect North Coast farmers seeking to use their county of origin’s international reputation as a branding tool. Current medical and recreational cannabis laws prohibit marijuana from being marketed as being from “Mendocino” unless it is grown here, but McGuire believes the law needs clarity.

“There needs to be truth in labelling,” he explained in an Feb. 10 interview, referencing the previous problem in California’s wine industry, where wine labels use to advertise themselves as containing Napa grapes without actually using any.

The cannabis company hmbldt caused a minor media flurry when its name was first announced, though it was later announced that the product is sourced from Humboldt county farms although its headquarters are based in Los Angeles. A number of local companies have developed branding that references Mendocino or Humboldt, but some fear that companies will use a small amount of cannabis grown in the region to legitimize their use of that the name while primarily sourcing their weed from other parts of the state.

Said McGuire, “I’m very concerned about this same fact relating to cannabis. We need to protect the north coast cannabis farmers in the years to come, and make sure there’s truth in labelling to make sure consumers know what they’re getting.”

If passed the bill would add a clause to state law forbidding cannabis companies from using “any similar name that is likely to mislead consumers as to the origin of the product” unless grown in that county. He added that there are “active discussions” happening about what percentage of cannabis needs to come from a particular county to be labelled as such, but that the details aren’t yet determined.

Current state law does provide some protections concerning the use of county names, and also allows for the creation of appellations in counties and regions. Mendocino supervisors have discussed creating a “Mendocino Grown” stamp of certification to be issued by county’s agriculture department to locally grown cannabis farms, that meet county-designated standards, similar to an organic certification. Humboldt County has created a “county of origin” seal as part of their pilot “track and trace” program established last year, which will track cannabis grown in the county starting from seed until it is sold to a patient.

Taking a more fine-grained approach, but also a tip from the wine industry, the Mendocino Appellations Project plans to create 11 different zones within the county that would restrict use of the name of regions such as Spyrock – Bell Springs or Potter Valley, to farmers cultivating in those areas. This would be similar to the appellations established in the 1980s for different “terroir” regions of grape cultivation — Napa Valley became the first California “American Viticultural Area,” or wine-growing region, in 1981, and there are several within Mendocino County. However, Prop 64 directs the state to establish standards to recognize appellations, which are typically approved on a federal level. Efforts are also underway to create appellations in Humboldt.

McGuire emphasized that the bill would help both North Coast cultivators market their products and protect consumers before in making their purchases, while increasing transparency in an important piece of state regulations. He pointed out that the bill has important benefits not only for farmers, but consumers and patients as well.  “To ensure the authenticity of the product, we need to demand transparency.”

Read the full text of SB 175 below:

An act to amend Sections 19332.5 and 26063 of the Business and Professions Code, relating to marijuana.

LEGISLATIVE COUNSEL’S DIGEST

SB 175, as introduced, McGuire. Marijuana: county of origin: marketing.

The Medical Cannabis Regulation and Safety Act (MCRSA) provides for the licensure and regulation of medical marijuana, which responsibility is generally divided between the Bureau of Marijuana Control within the Department of Consumer Affairs, the Department of Food and Agriculture, and the State Department of Public Health. The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure enacted by the approval of Proposition 64 at the November 8, 2016, statewide general election, provides for the licensure and regulation of commercial nonmedical marijuana activities, which responsibility is also generally divided between those same state entities. Both MCRSA and AUMA prohibit the use of the name of a California county in the labeling, marketing, or packaging of medical marijuana products or nonmedical marijuana products unless the marijuana contained in the product was grown in that county.

This bill would specify that those prohibitions include the use of any similar sounding name that is likely to mislead consumers as to the origin of the product.

AUMA authorizes the Legislature to amend specified substantive provisions by a majority vote if it is implementing those provisions, provided that the amendments are consistent with and further the purposes and intent of AUMA.

This bill would state that the Legislature finds and declares that this act implements substantive provisions of AUMA and is consistent with, and furthers the purposes and intent of, AUMA.

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 19332.5 of the Business and Professions Code is amended to read:

19332.5.

(a) Not later than January 1, 2020, the Department of Food and Agriculture shall make available a certified organic designation and organic certification program for medical cannabis cultivation, if permitted under federal law and the National Organic Program (Section 6517 of the federal Organic Foods Production Act of 1990 (7 U.S.C. Sec. 6501 et seq.)), and Article 7 (commencing with Section 110810) of Chapter 5 of Part 5 of Division 104 of the Health and Safety Code.

(b) The Department of Food and Agriculture may establish appellations of origin for cannabis grown in California.

(c) It is unlawful for medical cannabis to be marketed, labeled, or sold as grown in a California county when the medical cannabis was not grown in that county.

(d) It is unlawful to use the name of a California county county, including any similar sounding name that is likely to mislead consumers as to the origin of the product, in the labeling, marketing, or packaging of medical cannabis products unless the product was grown in that county.

SEC. 2.

Section 26063 of the Business and Professions Code is amended to read:

26063.

(a) The bureau shall establish standards for recognition of a particular appellation of origin applicable to marijuana grown or cultivated in a certain geographical area in California.

(b) Marijuana shall not be marketed, labeled, or sold as grown in a California county when the marijuana was not grown in that county.

(c) The name of a California county county, including any similar name that is likely to mislead consumers as to the origin of the product, shall not be used in the labeling, marketing, or packaging of marijuana products unless the marijuana contained in the product was grown in that county.

SEC. 3.

The Legislature finds and declares that Section 2 of this act implements substantive provisions of the Control, Regulate and Tax Adult Use of Marijuana Act and is consistent with and furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.

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