Cannabis update

Beth Costa on Aug 29, 2018

CA ABC’s Cannabis Advisory – Not Just for Stoners (Important for Licensees & Customers)
By: John Hinman, Founding Partner Hinman & Carmichael

Cannabis legalization comes with some very big surprises for those who own and operate ABC licensed businesses. Suddenly, cannabis consumption practices that were common, but underground and usually ignored, have been brought to the forefront of the regulated alcohol system.

Ever been to a rock concert at an outdoor venue? How about in the smoking area of a venue (such as the open-air patio of a restaurant on a pretty summer day)? Can you tell what is inside that vape pipe? Can you control the inside of a hotel room where there is no smoking allowed but cannabis edibles are ingested by visiting tourists; usually in cities where dispensaries (or delivery services) have sprung up like (dare I say it?) weeds. These areas (including hotel rooms with minibars) are alcohol licensed premises where the smoking or “ingestion” of cannabis in any form is strictly prohibited.

Production facilities are not exempt. While most wineries, breweries and distilleries permit no form of smoking inside the production facilities, there are now informal wine and weed tasting dinners (usually involving edibles) on winery picnic grounds, or in the vineyards, or at private dinners inside the visitor’s center or in the cellar tasting area. Many of these areas are part of the winery licensed premises.

While the winery, restaurant or hotel seldom provide the cannabis, since legalization, many consumers think nothing of ingesting wine (or spirits, or beer), food and cannabis together while socializing and bring their own. That is not now permitted, never has been permitted on alcohol licensed premises and exposes the premises to license revocation.

This is not academic. We are now defending accusations (in more than one county) brought by the ABC seeking license revocation for allegedly permitting patron consumption of cannabis in otherwise legal smoking areas on licensed premises. The police come in, claim they smell cannabis, often cadge buds from cooperative patrons (to prove its cannabis), and turn their reports over to the ABC, who file the accusations against the bars or hotels, claiming a violation of the health and safety code.

Health & Safety Code 11362.3.
(a) Section 11362.1 does not permit any person to:
(1) Smoke or ingest cannabis or cannabis products in a public place, except in accordance with Section 26200 of the Business and Professions Code.

The Advisory
On July 25th the ABC put out a Trade Advisory explaining that even though cannabis use has been legalized in California, its sale and use on licensed premises is prohibited. This applies to licensees and customers. Click here for the Advisory.

As the Advisory puts it in the Q&A:
4. I have seen news articles talking about wine, food, and cannabis pairing events (or similar such activities). Are these types of events allowed?

Not in premises licensed under the ABC Act. As indicated above, public consumption of cannabis and cannabis products is prohibited. Even if one of the exceptions applies, alcoholic beverages are still not allowed to be sold or consumed. “Public consumption” is not limited to smoking; it also includes the consumption of edible cannabis products. As such, it would also be a violation for an ABC licensee to use cannabis or cannabis products in the preparation of food items for consumption on the premises.

Are you getting concerned yet? Cannabis is legal and is becoming a mainstream activity. Customers are confused and question the restrictions. This creates uncomfortable customer service situations because it is not the customer who is going to get cited but rather the venue and the licensee.

Compounding the problem, often premises operators (including servers, ticket takers and security) do not know what the patrons have consumed before they arrived, what is in that pipe they are smoking on the legal area of patio, what is in that tobacco they are rolling into a cigarette or what is in that lozenge they popped.

The investigations will come from complaints, from disaffected employees (this is a real problem), from competitors (social media anyone?), from visitors who observe the activity, or from ABC or police investigators visiting the premises that can find nothing else wrong.

Until ABC licensed premises are exempted from the health and safety code restrictions regarding on-premises consumption of cannabis, we advise educating staff and posting signs to the effect that smoking and ingesting cannabis anywhere in the facility is prohibited-then at least you can argue that you attempted to comply, the patrons were on notice and you did not permit the activity. Couple that with staff training, and maybe you can avoid the issue from occurring in the first place. Unfortunately, attempting to comply is not a defense to a “strict liability” offense so, regardless, licenses are now at serious risk unless the legislature changes the law.

Posted by Beth Costa