Initial Statement of Reasons: Group Tagging of Cannabis Plants

INTRODUCTION

The Department of Cannabis Control (Department) is responsible for administering and enforcing the provisions of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA, Bus. & Prof. Code § 26000 et seq.), including the track and trace program which monitors the movement of cannabis and cannabis products throughout the distribution chain.

BACKGROUND

Business and Professions Code (BPC) section 26067 requires the Department to establish a track and trace program for reporting the movement of cannabis, industrial hemp, and cannabis products throughout the distribution chain that utilizes unique identifiers (UIDs) to track cannabis and cannabis products. To that end, existing regulations require Department licensees to assign UIDs through the application of plant and package tags labeled with alphanumeric codes, which must be entered into the track and trace system. Existing regulations further require a plant tag to be attached to the base of each plant in a designated canopy area. Due to the labor costs and waste associated with individual plant tagging, licensees have long requested the ability to tag groups of mature plants instead, similar to the current practice for immature plants. The Department lacked the authority to allow group tagging until the following statutory amendments were made.

Senate Bill 622 (Chapter 496, Statutes of 2023) amended BPC section 26069, subdivision (a)(2) to remove the requirement that a tag be physically attached to the base of each plant and allow the Department to determine how to record the UID of each plant. However, these changes maintained the requirement in BPC sections 26069 and 26001, subdivision (bh) that a UID be issued for each individual cannabis plant. Assembly Bill 8 (Chapter 249, Statutes of 2025) removed the requirement that each plant have its own UID, thereby paving the way for the Department to explore alternate plant tagging options.

PROBLEM STATEMENT

Individually tagging each cannabis plant imposes significant economic and environmental costs without a commensurate regulatory benefit.

Individual plant tagging imposes excessive costs on cultivation licensees, primarily related to labor. Staff must first prepare tags by separating each one from a sheet and affixing each tag to a fastening mechanism, such as a zip tie, before physically attaching it to each plant by hand. Following harvest, tags must be removed and separated from plant material. In addition to the manual work of attaching and removing tags, individual plant tagging requires a considerable amount of staff time to update the track and trace system to ensure each plant is recorded accurately. Staff must locate and update each UID separately, creating a significant administrative burden as this process is repeated hundreds or even thousands of times.

Licensed commercial cannabis cultivators also incur non-labor costs to comply with the existing regulations, such as purchasing fasteners to secure tags. In addition, licensees also often have to absorb losses from plants destroyed during or as a result of tagging. Tagging requires staff to work in close proximity to delicate plants, which increases the risk of inadvertently contaminating soil, crushing stalks, or otherwise impairing plant growth. After tags are affixed, windy conditions can cause the tags themselves to damage young or small plants. When plants are harmed, licensees incur financial losses including the value of the lost plant, the cost of replacement, and the additional labor required to replant and update the track and trace system.

Individual plant tagging generates substantial amounts of plastic and metal waste, resulting in harmful environmental impacts. Tags are not allowed to be reused due to the potential for them to be misappropriated by illicit operators to falsely suggest licensure. Tags also cannot be recycled due to the adhesives and radio-frequency identification (RFID) components they contain, leaving general waste disposal as the only available disposition of used tags. Since the inception of the legal market, approximately 250 million plant tags have entered the general waste stream, ultimately ending up in landfills. While the tags themselves are a significant source of waste, they are also accompanied by millions of zip ties or other fasteners that also cannot be reused or recycled, compounding the environmental impact.

Through its investigations the Department has observed that individual plant tagging does not eliminate opportunities for inversion or diversion of plants or plant material during the growing phase. Tags can be easily removed or transferred to a different plant, undermining the integrity of the track and trace program. For example, a licensee could remove a plant and divert it to the illicit market while a new plant, sourced legally or inverted, is placed in its spot with the original tag attached. Even if tags are not removed or swapped, diversion can still occur as a tag does not prevent the valuable parts of the plant, the flowers, from being harvested and sent to the illicit market while the original tagged plant remains in the canopy.

Individual plant tagging similarly does not eliminate opportunities for inversion or diversion at the harvest and post-harvest phase. Following harvest, cannabis from multiple plants is combined into a single harvest batch, which presents an opportunity for inverted bulk cannabis plant material to be added to the harvested plant material. Because the plant material is commingled, it is impossible to identify which plant the flower, and eventual product, originated from. Even if a harvest batch only consists of cannabis from the same plant, as a cannabis batch moves throughout the supply chain, it loses traceability to a specific plant. For example, an edible can be made from multiple harvest batches that were combined prior to the manufacturing extraction process.

ANTICIPATED BENEFITS

This proposed regulation will reduce the economic burden on licensees and decrease environmental harm without negatively impacting the Department’s oversight capabilities. Department inspectors will still be able to confirm that the number of plants onsite aligns with the number recorded by licensees in the track and trace system.

Group tagging of plants will provide immediate financial relief and streamline administrative requirements for cultivation licensees. Currently, cultivation licensees must navigate different plant tagging requirements based on plant maturity or placement. Allowing for the group tagging of plants would establish a single, consistent tagging framework, which would reduce confusion and facilitate licensee compliance. In addition, allowing for the group tagging of plants will decrease licensee labor costs, as the time-intensive work of hand-tagging individual plants will be replaced with the assignment of a single tag to a group of plants. Moreover, licensees will benefit from reduced labor costs associated with recording planting activities within the track and trace system. For example, instead of updating 1000 individual UIDs for a group of 1000 plants, staff will update a single UID. These changes will free up the resources currently devoted to individual plant tagging and recordkeeping; easing administrative burdens in this manner will help incentivize continued participation in the regulated cannabis market.

Group tagging will reduce the environmental harm associated with tag disposal. Plant tags are fitted with electronic chips that carry proprietary coding and data about the plants that they are associated with. Such plant tags are considered one-time use and may not be used on other plants. Because the chips cannot be easily separated from the rest of the tag, they are treated as non-recyclable e-waste. By decreasing the volume of single-use tags and fasteners, the Department can reduce plastic and mixed-material waste entering the landfill stream.

SPECIFIC PURPOSE OF, AND RATIONALE FOR, EACH PROPOSED CHANGE

Global Amendments

Use of “shall.”

Shall. This word runs afoul of several basic principles of good drafting. The first is that a word used repeatedly in a given context is presumed to bear the same meaning throughout. (Shall commonly shifts its meaning even in midsentence.) The second principle is strongly allied with the first: when a word takes on too many senses and cannot be confined to one sense in a given document, it becomes useless to the drafter. (Shall has as many as eight senses in drafted documents.) The third principle has been recognized in the literature on legal drafting since the mid-19th century: good drafting generally ought to be in the present tense, not the future. (Shall is commonly used as a future-tense modal verb.) In fact, the selfsame quality in shall—the fact that it is a chameleon-hued word—causes it to violate each of those principles.

(Garner, Garner on Language and Writing (2009) p. 174.)

The Department is removing the word “shall” from its regulations for the reasons described above and to eliminate any potential for misinterpretation due to inconsistent or incautious drafting. These are non-substantive changes under CCR, title 1, section 100(a)(4). In every instance of its usage to indicate or impose a mandatory requirement, “shall” is being replaced with “must” or “may.” In every instance of its usage to disallow or prohibit an action, “shall not” is being replaced with “may not.” The meaning of each provision being amended as described is not being altered by the change in verbiage. In other words, existing mandatory provisions are not being made permissive or optional, and existing prohibitions remain in effect.

Chapter 1. All Licensees.

Article 1. Division Definitions and General Requirements

Amend §15000. Definitions.

Existing subsection (vvv), which defines “unique identifier,” is amended to conform to the definition set forth in BPC section 26001, subdivision (bh). AB 8 revised the statutory definition of “unique identifier” to reference a specific quantity of cannabis or cannabis products, rather than an individual plant and any cannabis or cannabis products derived from that plant. This change is necessary to align the regulatory definition with the updated statutory definition.

Article 6. Track and Trace Requirements

Amend §15047.1. Definitions.

Existing subsection (a), which defines “plant tag,” is amended to align the regulatory definition with the recent statutory changes to BPC section 26001, subdivision (bh), previously described above. Subsection (a) is further amended to remove the term “number” in reference to “UID.” “UID” is already defined as an alphanumeric code or designation. Including the term “number” is redundant and does not provide additional clarity.

Existing subsection (b) is amended to remove the requirement that a package tag be RFID-enabled. This revision provides the Department with flexibility to accommodate future changes in tag design and technology. As the subsection continues to require that package tags be issued by the Department or its designee, the Department retains full authority to determine the form and features of an acceptable tag. Subsection (b) is further amended to remove the term “number” in reference to “UID.” “UID” is already defined as an alphanumeric code or designation. Including the term “number” is redundant and does not provide additional clarity.

Amend §15048. Training and Credentialing.

Existing subsection (a) is amended to require the designated responsible party (DRP) to serve as the track and trace system account manager. The current regulation allows any owner to serve in this role; however, the Department has determined that it is most appropriate to identify the DRP as the system account manager, as this is the specific owner that has the authority to legally bind the business and serves as the primary contact for the license. This amendment does not limit the DRP’s ability to designate other owners or employees as system users. Requiring the DRP to act as the account manager is necessary to ensure that the owner responsible for track and trace compliance aligns with the individual assigned primary authority to act on behalf of the business.

Existing subsection (b)(2) is non-substantively amended to update the email address as the one currently listed is no longer in use. This revision ensures licensees have accurate and up-to-date contact information for requesting access to the track and trace system.

Existing subsection (c) is non-substantively amended for grammatical purposes.

Amend §15048.2. General Tag Requirements.

Existing subsection (a) is amended to clarify that plant and package tags must be ordered from the Department or its designee. Current law uses the phrase “provided and distributed by,” which may be interpreted as the Department being solely responsible for supplying tags, with no further action being required by the licensee. This amendment clarifies that licensees bear the responsibility of ordering tags directly from the Department or its designee.

Amend §15048.3. Ordering Tags.

This section is retitled “Receipt of Tags” to more accurately reflect its content and requirements.

Existing subsection (a)(1) is repealed as it is redundant of other requirements. Existing section 15048.2, subsection (c) already requires licensees to maintain a sufficient supply of tags to comply with tagging requirements, and amended section 15048.2, subsection (a) clarifies that licensees are responsible for ordering tags directly. Current regulation requires licensees to place an initial tag order within 10 calendar days of track-and-trace credentialing, which must occur within 10 calendar days of license issuance. In many instances, licensees do not begin operating until several weeks or months after license issuance. As a result, tags may be ordered and stored for extended periods before use, increasing the likelihood of misplaced tags, unnecessary reorders, and potential discrepancies in track-and-trace records that could be misinterpreted as diversion. Eliminating this timeline is necessary to align tag ordering with licensee operational readiness, thereby reducing the administrative burden on licensees, while allowing for more accurate inventory tracking.

Existing subsection (a)(2) is amended to extend the timeframe for recording the receipt of tags in the track and trace system from three to seven calendar days. This revision provides licensees with additional flexibility to accommodate typical business operations, such as limited operating hours and weekend closures. The Department determined seven calendar days to be a reasonable duration that will meet the needs of both the industry and the Department by reducing the risk of licensee noncompliance while maintaining timely and accurate track-and-trace reporting.

Existing subsection (a)(2) is further amended to replace the phrase “within” with “no later than” to provide greater clarity regarding the applicable timeframe. The term “within” is ambiguous as to when the timeframe begins, whereas “no later than” establishes a clear and definitive deadline for compliance.

Existing subsection (a)(3) is repealed. The current provision requires cultivation licensees to order and apply new tags when their license designation changes (e.g., from medicinal to adult-use). However, this requirement serves no practice purpose because tags are not differentiated by designation, i.e., they are not labeled as “A” or “M.” Eliminating this provision removes an unnecessary administrative burden without impacting the integrity of the track-and-trace system or the Department’s ability to audit licensee commercial cannabis activities.

Finally, the section’s numbering has been eliminated, given the repeal of existing subsections (a)(1) and (a)(3).

Amend §15048.4. Tagging of Cannabis Plants.

This section is amended to repeal current immature plant tagging requirements and to uniformly apply plant tagging requirements to both immature and mature plants. The Department determined that establishing a single, consistent tagging framework reduces confusion and promotes compliance by eliminating the need for licensees to navigate different tagging requirements based on plant maturity or placement. Moreover, as described above, these changes are necessary to minimize licensee administrative burdens related to individual tagging and recordkeeping, and to minimize licensee-generated waste.

Throughout this section, the term “group” has replaced the term “lot” and is used to refer to multiple plants assigned to a single plant tag, whether immature or mature. The terms “lot” and “batch” have specific meanings under statute and regulations, neither of which refers to a group of plants. Accordingly, the use of the word “group” is necessary to improve clarity by reducing confusion and promoting consistency in terminology.

Although the existing immature plant tagging requirements limit the number of immature plants under a single tag to 100 (existing subsection (a)(1)), this restriction has been eliminated under the proposed regulation. The Department determined that plant groups, whether composed of immature or mature plants, should not be subject to a maximum size. During inspections, Department staff count individual plants on the premises for verification with track and trace, regardless of whether they are grouped or individually tagged. As such, imposing a maximum size would be arbitrary and would not enhance oversight or enforcement. Allowing flexibility in group size enables licensees to structure plant groupings in a manner that aligns with their operational needs. However, the Department still needs an efficient method to identify such plant groups during inspection. The examples identified by the Department are common methods the Department has observed licensees utilize to identify and distinguish groups of plants recorded under a single plant tag.

Proposed subsection (a) requires all immature and mature plants to be assigned a plant tag, either individually or as part of a group. While group tagging is permitted for both immature and mature plants, licensees retain the option to tag plants individually. This preserves operational flexibility by allowing licensees to implement the tagging method most conducive to their business practices while still meeting regulatory requirements. Proposed subsection (a) also clarifies to licensees that in order to assign a plant tag to a group, the group must satisfy certain criteria which are further enumerated in subsection (b).

Proposed subsection (b)(1) requires that, in order to be tagged as a group, all plants within the group to be uniform in strain or cultivar, if the strain or cultivar is identified in the track and trace system. Strain name is of limited regulatory value to the Department; however, many licensees prefer to capture strain names in the track and trace system for their own internal tracking purposes. In such cases, it is necessary for all plants to be the same strain so that the data contained in the track and trace system is accurate.

Proposed subsection (b)(2) requires all plants within the group to be uniform in the application of pesticides or other agricultural chemicals. This is necessary to ensure that harvest batches resulting from such plant groups align with the statutory definition of harvest batch in BPC section 26001, subdivision (e)(1).

Proposed subsection (b)(3) requires that an entire plant group be planted within three calendar days of the first plant. Establishing a defined planting timeframe reduces the period during which plants remain untagged on the premises or unrecorded in track and trace system. The Department selected the three-calendar-day timeframe to align with existing section 15049.1, subsection (a), which requires updates to the track and trace system within three calendar days of cultivation activities. Aligning these requirements ensures plants are not untagged or unrecorded in the track and trace system for more than three calendar days. Additionally, the Department determined that defining a timeframe reduces the risk of inversion and diversion; absent a defined timeframe, a single plant tag could be reused to cycle multiple plant groups over an extended period, resulting in inaccurate track and trace data.

Proposed subsection (b)(4) requires plants in a plant group to be contiguous from one another to facilitate identification by the Department. This requirement has been maintained from existing subsection (a)(1) and is necessary to ensure that the Department can identify the plants that are associated to a tag to facilitate efficient Department inspections and aid the Department’s verification of plant counts against track and trace records.

Proposed subsection (b)(5) requires plant groups to be clearly separated from other plants by a physical indicator. This requirement was maintained from existing subsection (a)(1) and is necessary to ensure that the Department can identify separate plant groups. This requirement has been modified from the existing text to be a physical indicator, rather than a physical barrier. The term barrier has unintended implications that could cause confusion about the nature of the requirement and the modification is necessary to clarify the Department’s intent. Further modifications to this subsection include examples of acceptable physical indicators.

Proposed subsection (c) establishes requirements for tag placement and maintenance. The first and third provisions, requiring tags to be easily visible to an individual standing next to a plant or group and kept free of dirt and debris, are carried forward from existing immature plant lot provisions in existing subsection (a)(1) and extended to all tags whether assigned to an individual plant or group. These requirements ensure that each tag and its corresponding UID are readily visible and legible for inspection and verification purposes.

Subsection (c) also establishes a new requirement that tags be clearly associated with the plant or group of plants they identify. Senate Bill 622 (Stats. 2023, Ch. 496) amended BPC section 26069(a)(2) to remove the requirement that a tag be physically attached to the base of each plant and instead authorized the Department to determine how a plant’s UID is recorded. Consistent with this statutory change, the Department no longer requires tags to be physically affixed to the plant, provided the tag is clearly visible and readily associated with the corresponding plant or group of plants for purposes of identification and matching with track and trace records. For example, a tag may be placed on a stake adjacent to a plant or group of plants or affixed to a post or other structure at the boundary of a clearly defined planting area so long as the tag unambiguously corresponds to the group of plants it identifies. This change provides additional flexibility and reduces the labor and time associated with tagging by allowing tags to be placed in proximity to plants rather than physically attached. It also addresses practical challenges with individual tagging efforts, as well as potential harm to plants, such as when plants are unable to support the weight of a tag at early growth stages.

Proposed subsection (d) requires a new plant tag be assigned when immature plants located outside the canopy are moved into the canopy. A single tag is not permitted to follow plants through harvest if those plants were initially planted outside the canopy. This requirement is necessary to preserve the integrity and accuracy of track and trace data. Immature plants may transition to flowering at different times, resulting in only a portion of a group being moved into the canopy at any given time. Additionally, immature cultivation areas of a licensee’s premises may be larger than a licensee’s canopy areas, requiring plants from a single group to be divided among multiple, noncontiguous canopy locations. Allowing a single tag to follow only a portion of the original group could create inconsistencies and reduce the reliability of track and trace records. Requiring a new tag upon transfer to the canopy ensures accurate tracking of plant location and status throughout the cultivation lifecycle.

Proposed subsection (e) explicitly allows multiple groups of immature plants to be combined into a single group of mature plants, provided all requirements in subsection (b) are met. Provided that grouping criteria is satisfied, allowing consolidation of immature plant groups supports operational flexibility, while ensuring clear identification, consistency, and traceability.

Proposed subsection (f) is relocated from existing subsection (a)(2) and amended to clarify that immature plants transferred from a licensed nursery to another licensee must be transferred as a package with a package tag. The existing language references transfers “for retail sale,” which creates ambiguity as to whether the requirement applies only to retailers or to all licensees. This amendment clarifies that the requirement applies to all transfers of immature plants from a nursery, regardless of the receiving license type, thereby improving clarity and ensuring consistent application of track and trace requirements.

The second sentence of existing subsection (a)(2) is repealed. This provision requires a receiving licensee to assign a plant or package tag to immature plants within three calendar days. This requirement is redundant as the tagging requirements set forth in this section already apply when the receiving licensee plants the immature plants.

Adopt §15048.5. Transition to New Tagging Requirements.

New section 15048.5 establishes requirements for existing licensees to transition into compliance with the new tagging provisions. This section is necessary to provide clear instructions to licensees on how to implement the revised tagging framework within the track and trace system and on-site operations.

New subsection (a) requires licensees to assign and label a unique location name for each canopy and immature plant area on the premises diagram and for those location names to correspond with the track and trace system. This requirement is necessary to maintain consistency between the premises diagram, track-and-trace records, and on-site conditions. This enables Department staff to verify that locations recorded in the track-and-trace system accurately reflect the physical layout of the licensed premises. This subsection is also necessary to implement proposed subsections 15049.1(b) and 15049.1(c), which require licensees to assign and record unique location names in the track-and-trace system and associate each individual plant or established group of plants with a specific location.

New subsection (b) designates the addition of location labels to the premises diagram, as required by subsection (a), as exempt from the submission and prior approval requirements applicable to other premises modifications under section 15027. This is necessary to avoid unnecessary administrative delays and disruption to licensee operations. Clarifying that prior Department approval is not required ensures that licensees may implement the new tagging requirements, including group tagging, without delay while still ensuring that updated premises diagrams are submitted and maintained by the Department.

New subsection (b) further requires licensees to submit an updated premises diagram reflecting the required labels at the time of the licensee’s next renewal. Allowing licensees to submit the labeled diagram at renewal will relieve any potential workload burden on the Department that would be caused by a large number of diagram submissions at the same time. Submitting the diagram with the next renewal application is a reasonable compromise that ensures the Department receives the updated information in a timely manner without unduly impacting other licensing-related workload.

Amend §15049.1. Additional Requirements for Recording Cultivation Activities.

Proposed subsection (a)(1) requires licensees to record the planting of individually tagged plants, and proposed subsection (a)(2) requires licensees to record the planting of established groups of plants. These changes ensure that all plant tagging activities are consistently captured in the track-and-trace system under the group tagging framework. Because tagging requirements now apply uniformly to immature and mature plants, distinctions based on plant stage or location are no longer necessary. Existing subsections (a)(1) and (a)(2) are repealed as they are no longer necessary. These subsections, which outline existing plant tagging requirements, are superseded by new subsections (a)(1) and (a)(2) that address all instances in which a plant tag must be assigned and recorded under the group tagging framework.

Proposed subsection (a)(2) requires licensees to record the planting of established groups of plants within three calendar days of the commencement of planting. This requirement aligns with proposed section 15048.4, subsection (b)(3), which requires established groups to be planted within the same three-day period. Aligning these timeframes ensures they run concurrently, minimizing the amount of time plants remain on the premises without an assigned tag or being recorded in the track and trace system.

Proposed subsection (b) requires licensees to assign a unique location name in the track and trace system to each canopy and immature plant area identified on the premises diagram and to capture the square footage of that area. This requirement is necessary to ensure consistency between track and trace records, the premises diagram, and actual site conditions. It is also necessary to implement proposed subsection (c), which requires licensees to record the unique location of each individual plant or established group of plants for the reasons outlined below.

Proposed subsection (c) requires licensees to record the unique location of each individual plant and established group of plants in the track and trace system. This requirement is necessary to support efficient inspection and compliance verification by enabling Department staff to readily identify and locate plants, including groups, on the premises. Associating each plant or group with a specific location improves the Department’s ability to verify plant counts, confirm the proper use of tags, and ensure track and trace records correspond to the physical layout of the premises.

Proposed subsection (d) requires licensees to record specific data points in the track and trace system for established groups of plants. This requirement is necessary to maintain the integrity of the track-and-trace system by ensuring data remains accurate, reliable, and verifiable following the adoption of group tagging, which allows multiple plants to be associated with a single unique identifier.

Proposed subsection (d)(1) requires licensees to record the number of plants assigned to a single tag for an established group in the track and trace system. This requirement ensures that track and trace data accurately reflects on-site conditions. Because group size is not limited and may vary across groups on the same premises, capturing the number of plants associated with each tag is critical to supporting effective compliance verification and accurate inventory tracking.

Proposed subsection (d)(2) requires licensees to record the date the planting of the group was initiated. This is necessary to ensure that the Department has the information needed to enforce the requirement that plants within a group be planted within 3 days.

All subsequent subsections have been renumbered accordingly.

Chapter 7. Cultivators.

Article 2. Cultivation Site Requirements

Amend §16300. Cultivation Requirements.

Existing subsection (a) is non-substantively amended to add a cross-reference to the relevant plant tagging requirements in section 15048.4. Subsection (a) is also amended to establish an exemption for nursery licensees from the requirements set forth in subsection (a). Subsection (a) requires that all flowering plants be located within a designated canopy area and, if a plant begins flowering outside the canopy, that it be moved, assigned a plant tag, and reported in the track-and-trace system. Nursery licensees do not maintain canopy areas as they are only authorized to cultivate mature plants for purposes such as seed production and research and development. This provision provides necessary clarity by exempting nursery licensees from requirements that are not applicable to their operations.

Existing subsection (d) is non-substantively amended for grammatical purposes.

Amend §16301. Seed Production Requirements for Nursery Licensees.

This section is non-substantively amended to incorporate subsections to improve organization and enhance usability, allowing users to more easily reference and locate specific provisions.

Newly numbered subsection (a) is non-substantively amended to update the applicable cross-reference to section 15048 to ensure accuracy and consistency with revisions to that section.

Amend §16302. Research and Development Requirements for Nursery Licensees.

This section is non-substantively amended to incorporate subsections to improve organization and enhance usability, allowing users to more easily reference and locate specific provisions.

Newly numbered subsection (a) is non-substantively amended to specify that the research and development area must be labeled on the licensee’s premises diagram, rather than the broader cultivation plan. The cultivation plan consists of multiple components, including the premises diagram, waste management plan, and pest management plan. Because the premises diagram is the specific document intended to capture this information, this amendment provides greater clarity and specificity.

Proposed subsection (b) is non-substantively amended for grammatical purposes.

ECONOMIC IMPACT ASSESSMENT

The Economic Impact Assessment for this proposed action was performed by ERA Economics, LLC and is included as Attachment 1 to this statement of reasons.

CONSIDERATION OF ALTERNATIVES

Alternative 1: Limit plant group size to 100 plants.

This alternative was considered but ultimately rejected as arbitrary. Existing law limits immature plant lots to 100 plants. However, this threshold was established prior to the development of the legal market and reflected the Department’s initial estimate of a manageable quantity for site inspections, verification of data entered into the track-and-trace system, and traceability to the source. The Department has since determined that maintaining a limit of 100 plants does not effectively serve these purposes. During inspections, staff count individual plants on the premises and will continue to do so regardless of whether plants are grouped or the size of any group. As such, imposing a numerical limit on group size does not meaningfully enhance compliance, oversight, or traceability.

Alternative 2: Require group plant tags to be ordered by licensees in pre-defined denominations (e.g., 1, 5, 10, 25, 50, and 100).

This alternative was considered but ultimately rejected as arbitrary. Requiring group plant tags to be ordered in fixed denominations (such as 1, 5, 10, 25, 50, or 100 plants) would not improve tracking or inspections and would substantially increase Department costs without providing additional economic benefits. This alternative could require cultivators to match their plant groups to arbitrary thresholds, rather than real-would plant group quantities. Pre defined denominations could also cause cultivators to over order tags. For example, a cultivator with a group of 30 plants would need to use a 50-plant tag, resulting in the Department overpaying for plant tags. This over ordering would also recreate the same data validation issues seen today with excessive purchasing of individual plant tags, including inaccurate harvest entries and unnecessary administrative burdens. Since inspectors still count plants individually during site visits, denominations provide no added compliance value, do not resolve the data entry issues that the proposed regulations are designed to fix, and do not create new benefits for licensees or the Department.