Time- Dated Material GAVIN NEWSOM, GOVERNOR OFFICE OF ADMINISTRATIVE LAW California Regulatory Notice Register REGISTER 2022, NUMBER 24-Z PUBLISHED WEEKLY BY THE OFFICE OF ADMINISTRATIVE LAW JUNE 17, 2022 PROPOSED ACTION ON REGULATIONS TITLE 2. FAIR POLITICAL PRACTICES COMMISSION Conflict–of–Interest Codes — Notice File Number Z2022–0607–02 ........................................ 677 AMENDMENT STATE AGENCY: Employment Training Panel Legislative Analyst’ s Office ADOPT STATE AGENCY: Department of Cannabis Control TITLE 2.

FAIR POLITICAL PRACTICES COMMISSION Cryptocurrency — Notice File Number Z2022–0607–07 ................................................. 678 TITLE 2. FAIR POLITICAL PRACTICES COMMISSION Duties of Filing Officers and Filing Officials – Statements of Economic Interests — Notice File Number Z2022–0607–08 ................................................................. 679 TITLE 2. DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING Consideration of Criminal History in Employment Decisions Regulations — Notice File Number Z2022–0607–01 ................................................................ 681 TITLE 2.

CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM Definition of Limited Duration Employment — Notice File Number 2022–0607–10 ............................ 683 TITLE 4. DEPARTMENT OF CANNABIS CONTROL Standard Cannabinoids Test Method and Standardized Operating Procedures for All Licensed Commercial Cannabis Testing Laboratories — Notice File Number Z2022–0606–02 ................ 686 TITLE 4.

DEPARTMENT OF CANNABIS CONTROL Conversion to Large and Medium Cultivation Licenses; Type 5, 5A and 5B Large Cultivation License Fees and Requirements — Notice File Number Z2022–0606–03 ........................... 692 (Continued on next page)

TITLE 4. DEPARTMENT OF CANNABIS CONTROL Equity Fee Waivers and Deferrals for Commercial Cannabis Licensing Fee — Notice File Number Z2022–0606–01 ................................................................. 698 TITLE 5. STATE BOARD OF EDUCATION Physical Fitness Test — Notice File Number Z2022–0523–05 ............................................. 704 TITLE 15. BOARD OF PAROLE HEARINGS Proceedings Conducted in Person and by Videoconference — Notice File Number Z2022–0607–06 ................................................................ 708 TITLE 16.

BOARD OF PSYCHOLOGY Psychological Associate Registration — Notice File Number Z2022–0607–09 ............................... 711 TITLE 16. PHYSICAL THERAPY BOARD OF CALIFORNIA Retired License and Fees — Notice File Number Z2022–0607–05 .......................................... 713 TITLE 23.

STATE WATER RESOURCES CONTROL BOARD Replacing, Removing, or Upgrading Petroleum Underground Storage Tanks Grant and Loan Program Regulations — Notice File Number Z2022–0607–03 ............................... 716 GENERAL PUBLIC INTEREST DEPARTMENT OF FISH AND WILDLIFE Consistency Determination No. 1653–2022–094–001–R3, Mindego Creek Fish Passage Project, San Mateo County ............................................................. 720

SUMMARY OF REGULATORY ACTIONS Regulations filed with Secretary of State .............................................................. 722 The California Regulatory Notice Register is an official state publication of the Office of Administrative Law containing notices of proposed regulatory actions by state regulatory agencies to adopt, amend or repeal regulations contained in the California Code of Regulations. The effective period of a notice of proposed regulatory action by a state agency in the California Regulatory Notice Register shall not exceed one year [Government Code § 11346.4(b)].

It is suggested, therefore, that issues of the California Regulatory Notice Register be retained for a minimum of 18 months. CALIFORNIA REGULATORY NOTICE REGISTER is published weekly by the Office of Administrative Law, 300 Capitol Mall, Suite 1250, Sacramento, CA 95814-4339. The Register is printed by Barclays, a subsidiary of West, a Thomson Reuters Business, and is offered by subscription for $205.00 (annual price). To order or make changes to current subscriptions, please call (800) 328−4880. The Register can also be accessed at https://oal.ca.gov .

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 677 PROPOSED ACTION ON REGULATIONS Information contained in this document is published as received from agencies and is not edited by Thomson Reuters. TITLE 2.

FAIR POLITICAL PRACTICES COMMISSION NOTICE IS HEREBY GIVEN that the Fair Political Practices Commission, pursuant to the authority vest - ed in it by Sections 82011, 87303, and 87304 of the Government Code to review proposed conflict–of– interest codes, will review the proposed/amended conflict–of–interest codes of the following: CONFLICT–OF–INTEREST CODES AMENDMENT STATE AGENCY: Employment Training Panel Legislative Analyst’s Office ADOPT STATE AGENCY: Department of Cannabis C o n t r o l A written comment period has been established commencing on June 17, 2022 and closing on August 1, 2022.

Written comments should be directed to the Fair Political Practices Commission, Attention Amanda Apostol, 1102 Q Street, Suite 3000, Sacramento, California 95811. At the end of the 45–day comment period, the pro - posed conflict–of–interest code(

s) will be submitted to the Commission’s Executive Director for his review, unless any interested person or his or her duly autho - rized representative requests, no later than 15 days pri- or to the close of the written comment period, a public hearing before the full Commission. If a public hear - ing is requested, the proposed code(

s) will be submit - ted to the Commission for review. The Executive Director of the Commission will review the above–referenced conflict–of–interest code(s), proposed pursuant to Government Code

Section 87300, which designate, pursuant to Government Code

Section 87302, employees who must disclose certain investments, interests in real property and income. The Executive Director of the Commission, upon his or its own motion or at the request of any interested person, will approve, or revise and approve, or return the proposed code(

s) to the agency for revision and re– submission within 60 days without further notice. Any interested person may present statements, ar - guments or comments, in writing to the Executive Director of the Commission, relative to review of the proposed conflict–of–interest code(s). Any written comments must be received no later than August 1, 2022. If a public hearing is to be held, oral comments may be presented to the Commission at the hearing.

COST TO LOCAL AGENCIES There shall be no reimbursement for any new or increased costs to local government which may re - sult from compliance with these codes because these are not new programs mandated on local agencies by the codes since the requirements described herein were mandated by the Political Reform Act of 1974. Therefore, they are not “costs mandated by the state” as defined in Government Code

Section 17514. EFFECT ON HOUSING COSTS AND BUSINESSES Compliance with the codes has no potential effect on housing costs or on private persons, businesses or small businesses. AUTHORITY Government Code Sections 82011, 87303 and 87304 provide that the Fair Political Practices Commission as the code reviewing body for the above conflict–of– interest codes shall approve codes as submitted, revise the proposed code and approve it as revised, or return the proposed code for revision and re–submission.

REFERENCE Government Code Sections 87300 and 87306 pro - vide that agencies shall adopt and promulgate conflict– of–interest codes pursuant to the Political Reform Act and amend their codes when change is necessitated by changed circumstances. CONTACT Any inquiries concerning the proposed conflict–of– interest code(

s) should be made to Amanda Apostol, Fair Political Practices Commission, 1102 Q Street, Suite 3000, Sacramento, California 95811, telephone (916) 322–5660.

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 678 A VAILABILITY OF PROPOSED CONFLICT–OF–INTEREST CODES Copies of the proposed conflict–of–interest codes may be obtained from the Commission offices or the respective agency. Requests for copies from the Commission should be made to Amanda Apostol, Fair Political Practices Commission, 1102 Q Street, Suite 3000, Sacramento, California 95811, telephone (916) 322–5660. TITLE 2. F AIR POLITICAL PRACTICES COMMISSION NOTICE IS HEREBY GIVEN that the Fair Political Practices Commission (the Commission), under the au- thority vested in it under the Political Reform Act (the Act) 1 by

Section 83112 of the Government Code, pro- poses to adopt, amend, or repeal regulations in Title 2, Division 6 of the California Code of Regulations. The Commission will consider the proposed regulation at a public hearing on or after July 21, 2022, at the offic- es of the Fair Political Practices Commission, 1102 Q Street, Suite 3000, Sacramento, California, commenc- ing at approximately 10:00 a.m. Written comments should be received at the Commission offices no later than 5:00 p.m. on July 19, 2022.

BACKGROUND/OVERVIEW The Act prohibits persons from making, and com - mittees from receiving, cash contributions of $100 or more. Committees are also prohibited from making expenditures of $100 or more in cash.

Section 84300 provides: “ (

a) No contribution of one hundred dollars ($100) or more shall be made or received in cash. A cash contribution shall not be deemed received if it is not negotiated or deposited and is returned to the contributor before the closing date of the cam - paign statement on which the contribution would otherwise be reported. If a cash contribution, oth- er than a late contribution, as defined in

Section 82036, is negotiated or deposited, it shall not be deemed received if it is refunded within 72 hours of receipt. In the case of a late contribution, as de- fined in

Section 82036, it shall not be deemed re- ceived if it is returned to the contributor within 48 hours of receipt. 1 The Political Reform Act is contained in Government Code Sections 81000 through 91014. All statutory references are to the Government Code, unless otherwise indicated. The regulations of the Fair Political Practices Commission are contained in Sec - tions 18104 through 18998 of Title 2 of the California Code of Regulations. All regulatory references are to Title 2, Division 6 of the California Code of Regulations, unless otherwise indicated. “ (

b) No expenditure of one hundred dollars ($100) or more shall be made in cash. “ (

c) No contribution of one hundred dollars ($100) or more other than an in–kind contribution shall be made unless in the form of a written instru- ment containing the name of the donor and the name of the payee and drawn from the account of the donor or the intermediary, as defined in

Section 84302. “ (

d) The value of all in–kind contributions of one hundred dollars ($100) or more shall be report - ed in writing to the recipient upon the request in writing of the recipient.” Additionally,

Section 85201 provides that all con - tributions or loans made to a candidate, or the candi - date’s controlled committee, shall be deposited into a single campaign bank account. This is typically, re - ferred to as the “one–bank account” rule.

The Commission voted to prohibit the making and receipt of cryptocurrency contributions with the adop- tion of Regulation 18215.4 in September 2018, which states “[n]o contribution may be made or received in cryptocurrency.” REGULATORY ACTION The Commission may review and consider all as - pects of the cryptocurrency contribution regulation, including, but not limited to, the repeal of the existing prohibition, and the adoption of regulatory language to allow a committee to solicit contributions in cryp - tocurrency as in–kind contributions.

The Commission may also consider all aspects of the new regulation that would allow cryptocurrency contributions. While the Commission may review and consider any as - pect of Regulation 18421.2, it is anticipated that the Commission will specifically consider each of the fol- lowing proposals made by Commission staff: Repeal 2 Cal. Code Regs.

Section 18215.4 which prohibits the making and receipt of contributions in cryptocurrency. Adopt 2 Cal. Code Regs.

Section 18421.2 It is anticipated the Commission will consider provisions: ● A llowing a person to make, and a committee to solicit, a contribution in cryptocurrency as an in–kind contribution. A committee must ensure that any cryptocurrency contribution be made and received through a U. S. based cryptocur - rency payment processor or other service amena- ble to a subpoena for records, which utilizes and rigorously enforces know your customer (KYC) protocols to verify the identity of the contributor for all contributors at any amount. These proce - dures must enable the payment processor to form

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 679 a reasonable belief that it knows the true identity of each contributor. ● R equiring committees to use a payment proces - sor that collects the name, address, occupation, and employer of each contributor at the time the contribution is made and transmit this to the committee within 24 hours of the time the contri- bution is made.

A committee may not accept any contributions form a contributor where the pay - ment processor has not verified the identity of the contributor and proved the required contributor information to the committee. ● R equiring that a committee utilize a payment processor which will immediately convert any cryptocurrency contribution to U.S. dollars at the prevailing rate of exchange at the time the contri- bution is made. The amount of the contribution is the fair market value of the cryptocurrency at the time the payment processor obtains posses - sion of the contribution.

The funds must be de - posited into the committee’s campaign bank ac - count within two business days of receipt. Any charge incurred or discount received in the pay - ment collection process must be reported in the same manner as credit card transactions. SCOPE The Commission may adopt the language noticed herein, or it may choose new language to implement its decisions concerning the issues identified above or any related issues. FISCAL IMPACT STATEMENT Fiscal Impact on Local Government. This regula- tion will have no fiscal impact on any local entity or program. Fiscal Impact on State Government.

This regula - tion will have no fiscal impact on any state entity or program. Fiscal Impact on Federal Funding of State Programs. This regulation will have no fiscal impact on the federal funding of any state program or entity. AUTHORITY

Section 83112 provides that the Fair Political Practices Commission may adopt, amend, and rescind rules and regulations to carry out the purposes and provisions of the Act. REFERENCE The purpose of this regulation is to implement, in - terpret, and make specific Government Code Sections 84300 and 85201. CONTACT Any inquiries should be made to Zachary Norton, Fair Political Practices Commission, 1102 Q St., Suite 3000, Sacramento, CA 95811; telephone (916) 322– 5660 or 1–866–ASK–FPPC.

Proposed regulatory lan- guage can be accessed at http://www.fppc.ca.gov/the– law/fppc–regulations/proposed–regulations–and– notices.html. TITLE 2. F AIR POLITICAL PRACTICES COMMISSION NOTICE IS HEREBY GIVEN that the Fair Political Practices Commission (the Commission), under the au- thority vested in it under the Political Reform Act (the Act) 1 by

Section 83112 of the Government Code, pro- poses to adopt, amend, or repeal regulations in Title 2, Division 6 of the California Code of Regulations. The Commission will consider the proposed regulation at a public hearing on or after July 21, 2022, at the offic- es of the Fair Political Practices Commission, 1102 Q Street, Suite 3000, Sacramento, California, commenc- ing at approximately 10:00 a.m. Written comments should be received at the Commission offices no later than 5:00 p.m. on July 19, 2022.

BACKGROUND/OVERVIEW Commission staff has identified a need to clarify the duties of filing officers and requirements for referrals to the Enforcement Division, as well as to clarify and increase transparency around the Commission’s prac - tices when responding to public requests for informa- tion and records concerning a pending Enforcement Division matter.

The proposed regulatory changes would provide a comprehensive list of information filing officers must include when making referrals to the Commission’s Enforcement Division, as well as steps filing officers should take to avoid submitting referrals missing criti- cal information. Additional amendments would short- en the delay period between providing notice to the 1 The Political Reform Act is contained in Government Code Sections 81000 through 91014. All statutory references are to the Government Code, unless otherwise indicated.

The regulations of the Fair Political Practices Commission are contained in Sec - tions 18110 through 18997 of Title 2 of the California Code of Regulations. All regulatory references are to Title 2, Division 6 of the California Code of Regulations, unless otherwise indicated.

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 680 subject of an Enforcement matter and making infor - mation and records available to the public; clarify when the Commission will comment on the specif - ics of a pending Enforcement matter; and make oth - er clarifying changes to make clear to the public and regulated community how the Commission responds to public requests for information and records. The proposed changes include amendments to Regulations 18115 and 18360. REGULATORY ACTION Amend 2. Cal. Code Regs.

Section 18115 – Duties of Filing Officers and Filing Officials – Statements of Economic Interests. The Commission may consider amendments to Regulation 18115, which defines the terms filing officer and filing official and sets forth the duties of both with respect to Statements of Economic Interests (“SEI”) submitted in paper or electronic format. Despite the duties laid out in Regulation 18115, referrals of state - ment of economic interests non–filers from filing offi- cers often lack information to process a referral.

Other issues with referrals include filing officers sending Leaving Office SEI notifications to non–filers’ agen - cy email addresses after the non–filer has left the po - sition and no longer has access to the email account.

Proposed amendments would require: ● Filing officers to send at least one notice to the fil- er’s personal email or personal mailing address and to obtain updated contact information includ- ing the filer’s personal email address, mailing ad- dress, and telephone number. ● A filing official notify the filing officer when a fil- er’s lack of filing has been due a leave of absence and when the filer’s expected return date would be. Amend 2 Cal. Code Regs.

Section 18360 – Complaints Filed with the Commission The Commission may consider amendments to all provisions of current Regulation 18360, which ad - dresses how the Commission handles the complaints and referrals it receives, as well as the matters it pur - sues proactively. The regulation’s provisions include how to file a complaint or referral, the procedural rights of a sworn complainant, handling of Commission– initiated cases, and handling of complaints rejected without notice to the respondents. Regulation 18360, subdivision (

a) details the re - quirements for filing a complaint or referral with the Commission’s Enforcement Division. Nevertheless, campaign referrals often lack information to process a campaign referral. Proposed amendments would pro - vide a comprehensive list of information filing offi - cers must include in both campaign and statement of economic interests (SEI) non–filer referrals, as well as steps filing officers should take to avoid submitting re- ferrals missing critical information. Regulation 18360, subdivision (

d) details how the Commission responds to public requests for infor - mation and records regarding a pending Enforcement Division matter. Generally, subdivision (

d) identi - fies the information and records the Commission can provide to the public and the circumstances in which it may be provided. In accordance with due process principles and the California Public Records Act, the Commission may consider amendments to increase transparency and specify the Commission’s practic - es when responding to public requests for informa - tion and records concerning a pending Enforcement Division matter.

At a minimum, Commission staff anticipates pro - posing the following: ● Requiring filing officers to include, as part of in - formation regarding attempts to obtain compli - ance, the email address, mailing address, and phone number at which the referred person or en- tity was contacted; ● Specifying what a filing officer must include in a referral to the Enforcement Division for both campaign and SEI referrals; ● Requiring a filing officer who receives a filing from a referred candidate, committee, or state - ment of economic interests filer to notify the Enforcement Division within 7 days of receipt of the filing; ● Shortening the period between providing notice to a complainant or the subject of a complaint and making information and records available to the public when notice is provided via email; ● Expressly providing that, aside from certain re - cords and general information or confirming the current step or result of a step in the administra - tive process, the Commission will not comment on the specifics of a pending Enforcement matter; ● Requiring Enforcement Division staff to include a request for a read receipt when sending notice via email.

SCOPE The Commission may adopt the language noticed herein or it may choose new language to implement its decisions concerning the issues identified above or related issues. FISCAL IMPACT STATEMENT Fiscal Impact on Local Government. This regula - tion will have no fiscal impact on any local entity or program.

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 681 Fiscal Impact on State Government. This regula - tion will have no fiscal impact on any state entity or program. Fiscal Impact on Federal Funding of State Programs. This regulation will have no fiscal impact on the federal funding of any state program or entity. AUTHORITY

Section 83112 provides that the Fair Political Practices Commission may adopt, amend, and rescind rules and regulations to carry out the purposes and provisions of the Act. REFERENCE

Section 83115. CONTACT Any inquiries should be made to Kevin Cornwall or Toren Lewis, Fair Political Practices Commission, 1102 Q St., Suite 3000, Sacramento, CA 95811; telephone (916) 322–5660 or 1–866–ASK–FPPC. Proposed regulatory language can be accessed at http://www. fppc.ca.gov/the–law/fppc–regulations/proposed– regulations–and–notices.html . TITLE 2. DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING CONSIDERATION OF CRIMINAL HISTORY IN EMPLOYMENT DECISIONS REGULATIONS The Fair Employment and Housing Council (Council) of the Department of Fair Employment and Housing (DFEH) proposes to amend

section 11017.1 of Title 2 of the California Code of Regulations after considering all comments, objections, and recommen- dations regarding the proposed action. PUBLIC HEARING The Council will hold a public hearing starting at 1:00 p.m. on August 10, 2022 , at the following location: 1515 Clay Street, Second Floor, Room 11 Oakland, CA 94612 At the hearing, any person may present statements or arguments orally or in writing relevant to the pro - posed action described in the Informative Digest.

The Council requests but does not require that persons who make oral comments at the hearing also submit a written copy of their testimony at the hearing. The meeting facilities are accessible to individu - als with physical disabilities. Anyone who requires an auxiliary aid or service for effective communication, or a modification of policies or procedures to partic - ipate in the meeting, should contact Brenda Valle– Balderrama, DFEH ADA Coordinator, at (844) 541– 2877 (voice or via relay operator 711) or TTY (800) 700–2320 or via email: Brenda.

Valle–Balderrama@ dfeh.ca.gov or accommodations@dfeh.ca.gov as soon as possible or at least 72 hours before the meeting. WRITTEN COMMENT PERIOD Any interested person, or their authorized represen- tative, may submit written comments relevant to the proposed regulatory action to the Council. The writ - ten comment period closes on August 10, 2022 at 5:00 p.m. The Council will consider only comments received by the end of that day.

Written comments can be mailed to: Fair Employment and Housing Council c/o Rachael Langston, Senior Fair Employment and Housing Counsel Department of Fair Employment and Housing 2218 Kausen Dr. #100 Elk Grove, CA 95758 Telephone: (916) 478–7251 Comments may also be submitted by e–mail to FEHCouncil@dfeh.ca.gov. AUTHORITY AND REFERENCE Government Code

section 12935(

a) authorizes the Council to adopt these proposed regulations. The pro- posed regulations implement, interpret, and make spe- cific

section 12900 et seq. of the Government Code. INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW This rulemaking action clarifies, makes specific, and supplements existing state regulations interpret - ing the Fair Employment and Housing Act (“FEHA”) set forth in Government Code

section 12900 et seq. As it relates to employment, the FEHA prohibits ha - rassment and discrimination because of the race, re - ligious creed, color, national origin, ancestry, physi - cal disability, mental disability, medical condition, ge- netic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military and/or veteran status of any person. The Fair Chance Act (Gov. Code § 12952), which is part of FEHA, specifies limitations on employers who seek to consider criminal history information.

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 682 In compliance with the Administrative Procedure Act, the Council proposes to adopt these rules as duly noticed, vetted, and authorized regulations. The over - all objective of the proposed regulations is to provide clarity regarding compliance with the Fair Chance Act and other provisions of FEHA which may make it unlawful to consider criminal history in employ - ment decisions where such consideration has an ad - verse impact on persons based on characteristics pro - tected under FEHA.

This action has the specific ben - efit of ensuring that employees, applicants, and em - ployers better understand their respective rights and obligations with regard to the consideration of crim - inal history in the employment context, in turn re - ducing litigation costs and the burden on the courts. Ultimately, the proposed action furthers the mission of the DFEH by protecting Californians from employ- ment discrimination.

The proposed amendments specifically do the fol - lowing: (1) add an introduction providing an overview of the regulation and the intersecting laws discussed therein; (2) clarify that posting recruitment materi - als indicating that individuals with criminal histo - ries will not be considered for hire is prohibited by the Fair Chance Act; (3) add references to DFEH forms that provide additional guidance for employers in the process of considering conviction history following a conditional offer of employment; (4) provide addi - tional explanations and examples regarding evidence that an applicant or employee may provide an employ- er during the individualized assessment process to demonstrate rehabilitation and/or mitigation; (5) add further explanation regarding the meaning of “adverse impact”; (6) clarify that an employer applying for the Work Opportunity Tax Credit (“WOTC”) must nev - ertheless comply with this regulation and the FEHA, and provide guidance on how an employer can apply for WOTC while maintaining such compliance; (7) modify subheadings and reorganize subsections and paragraphs to ensure clarity and continuity through - out the regulation.

The Council has determined that the proposed amendments are not inconsistent or incompatible with existing regulations. After conducting a review for any regulations that would relate to or affect this area, the Council has concluded that these are the only regu- lations that concern the Fair Employment and Housing Act. DISCLOSURES REGARDING THE PROPOSED ACTION The Council has made the following initial determinations: Mandate on local agencies and school districts: None. Cost or savings to any state agency: No addition- al costs or savings beyond those imposed by existing law.

Cost to any local agency or school district, which must be reimbursed in accordance with Government Code sections 17500 through 17630: None. Other nondiscretionary cost or savings imposed on local agencies: No additional costs or savings be - yond those imposed by existing law. Cost or savings in federal funding to the state: None. Cost impacts on a representative private person or businesses: No additional costs or savings beyond those imposed by existing law.

Therefore, the agency is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action. Results of the economic impact assessment/anal - ysis: The Council anticipates that the adoption of the regulations will not impact the creation or elimination of jobs within the state, the creation of new business - es or the elimination of existing businesses within the state, or the expansion of businesses currently doing business within the state.

To the contrary, adoption of the proposed amendments is anticipated to benefit the health and welfare of California residents and busi - nesses and improve worker safety by clarifying and streamlining the operation of the law, making it eas - ier for employees and employers to understand their rights and obligations, and reducing litigation costs for businesses. These regulations would not affect the environment.

Statewide adverse economic impact directly af - fecting businesses and individuals: The Council has made an initial determination that the proposed action will not have a significant statewide adverse econom - ic impact directly affecting businesses, including the ability of California businesses to compete with busi - nesses in other states. Significant effect on housing costs: None. Small Business Determination: T h e C o u n c i l a n- ticipates that the regulations will not create addition - al costs or savings beyond those imposed by existing regulations.

Similarly, the Council has determined that there is no impact on small businesses as a result of this proposed action because these regulations pri - marily serve to clarify existing law. Business Report: The Council has determined that the proposed regulations do not require a report to be made. CONSIDERATION OF ALTERNATIVES In accordance with Government Code sec - tion 11346.5, subdivision (a)(13), the Council must

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 683 determine that no reasonable alternative it consid - ered or that has otherwise been identified and brought to the Council’s attention would be more effective in carrying out the purpose for which this action is pro - posed, or would be as effective and less burdensome to affected private persons than the proposed action, or would be more cost–effective to affected private per - sons and equally effective in implementing the statu - tory policy or other provision of law.

The Council has thus far not become aware of a bet- ter alternative and invites interested persons to present statements or arguments with respect to alternatives to the proposed regulations at the scheduled hearing or during the written comment period.

CONTACT PERSONS Inquiries concerning the proposed administrative action may be directed to: Rachael Langston, Senior Fair Employment and Housing Counsel Department of Fair Employment and Housing 2218 Kausen Drive, Suite 100 Elk Grove, CA 95758 Telephone: (916) 478–7251 E–mail: rachael.langston@dfeh.ca.gov The backup contact person for these inquiries is: Mariel Block, Senior Fair Employment and Housing Counsel Department of Fair Employment and Housing 2218 Kausen Drive, Suite 100 Elk Grove, CA 95758 Telephone: (916) 478–7251 E–mail: mariel.block@dfeh.ca.gov Please direct requests for copies of the proposed text (express terms) of the regulations, the Initial Statement of Reasons, any modified text of the proposed regula- tions, or other information upon which the rulemaking is based, should other sources be used in the future, to Rachael Langston at the above address.

AVAILABILITY OF STATEMENT OF REASONS, TEXT OF PROPOSED REGULATIONS, AND RULEMAKING FILE The Council will have the entire rulemaking file available for inspection and copying throughout the rulemaking process at its office at the above Elk Grove address. As of the date this notice is published in the Notice Register, the rulemaking file consists of this notice, the proposed text of the regulations, and the Initial Statement of Reasons. Copies may be obtained by contacting Rachael Langston at the address or phone number listed above.

AVAILABILITY OF CHANGED OR MODIFIED TEXT After holding the hearing and considering all time - ly and relevant comments received, the Council may adopt the proposed regulations substantially as de - scribed in this notice. If the Council makes modifi - cations that are sufficiently related to the originally proposed text, it will make the modified text (with the changes clearly indicated) available to the public for at least 15 days before the Council adopts the regu - lations as revised.

Please send requests for copies of any modified regulations to the attention of Rachael Langston at the address indicated above. The Council will accept written comments on the modified regula - tions for 15 days after the date on which they are made available. AVAILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, the Final Statement of Reasons will be available on the Council’s webpage: http:// www.dfeh.ca.gov/fehcouncil/. Copies also may be obtained by contacting Rachael Langston at the above address.

AVAILABILITY OF DOCUMENTS ON THE INTERNET Copies of the Notice of Proposed Action, the Initial Statement of Reasons, the text of the regulations, any modified texts, and the Final Statement of Reasons can be accessed through the Council’s webpage at http://www.dfeh.ca.gov/fehcouncil/. TITLE 2.

CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM NOTICE IS HEREBY GIVEN that the Board of Administration (Board) of the California Public Employees’ Retirement System (CalPERS) propos - es to take the regulatory action described below in the Informative Digest after considering public com - ments, objections, or recommendations regarding the proposed regulatory action. I. PROPOSED REGULATORY ACTION In this filing, the Board proposes the adoption of

section 574.1, “Definition of Limited Duration Employment,” of

Article 4 of Subchapter 1 of

Chapter 2 of Division 1 of Title 2 of the California Code of Regulations (CCR). By proposing this regulation in this Article, CalPERS seeks to clarify what is con - sidered “limited duration” employment as stated in

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 684 Government Code (GC) sections 7522.56, 21224, and 21229 for retired persons serving after retirement, and CCR

section 571(a)(3) for employees required by their employer or governing board or body to work in an upgraded position or classification. The California Public Employees’ Retirement Law (PERL) and the California Public Employees’ Pension Reform Act of 2013 (PEPRA) do not explicitly define “limited dura - tion” employment for either situation. By proposing this regulation, the Board seeks to explicitly define “limited duration” employment and provide clarity and uniformity for CalPERS, its members, CalPERS– covered employers, and other stakeholders by ensur - ing consistent use of the term “limited duration.” II.

WRITTEN COMMENT PERIOD Any interested person, or his or her duly autho - rized representative, may submit written comments relevant to the proposed regulatory action. The writ - ten comment period has been established as com - mencing on June 17, 2022 and closing at 11:59 p.m. on August 1, 2022. The Regulation Coordinator must receive all written comments by the close of the com - ment period. Comments may be submitted by e–mail to Regulation_Coordinator@calpers.ca.gov or mailed to the following address: Andrew White, Regulation Coordinator California Public Employees’ Retirement System P.O.

Box 942720 Sacramento, CA 94229–2720 Telephone: (916) 795–3038 III. PUBLIC HEARING A public hearing will not be scheduled unless an in- terested person, or his or her duly authorized represen- tative, submits a written request for a public hearing to CalPERS no later than 15 days before the close of the written comment period. Notice of the time, date, and place of the hearing will be provided to every person who has filed a request for notice with CalPERS. IV.

ACCESS TO HEARING ROOM The hearing room will be accessible to persons with mobility impairments, and the room can be made ac - cessible to persons with hearing or visual impairments upon advance request to the CalPERS Regulation Coordinator. V. AUTHORITY AND REFERENCE Under GC

section 7522.02(j), the Board has the authority to adopt regulations or resolutions to com - ply with the requirements of PEPRA, and under GC

section 20121, the Board has authority to make rules as it deems proper. GC sections 7522.56, 21202, 21220, 21224, and 21229 govern post–retirement employment, among other statutes. GC sections 20636 and 20636.1 require the Board to promulgate regulations explaining what constitutes “special compensation” as used in those sections. CCR

section 571 defines special compensa - tion, including temporary upgrade pay. The proposed regulation clarifies the meaning of “limited duration” employment for purposes of GC sections 7522.56, 21224, and 21229, and CCR

section 571(a)(3). VI. INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW Working After Retirement The PERL and PEPRA allow retired persons to work for CalPERS–covered employers after retirement without reinstatement or loss or interruption of ben - efits under certain conditions. GC sections 7522.56, 21224, and 21229 allow retired persons to work af - ter retirement either during an emergency to prevent the stoppage of public business or because the retired person has specific skills needed to perform work of limited duration.

All working–after–retirement ap - pointments under these provisions are limited to 960 hours in a fiscal year, but the authorizing statutes do not specify how long appointments of a “limited du - ration” can be. GC

section 21224 applies to appoint - ments with the State of California and public agencies and GC

section 21229 applies to appointments with school employers and the California State University. GC

section 7522.56 applies to specified appointments with public employers in public retirement systems in California effective January 1, 2013. By proposing this regulation, the Board seeks to ex- plicitly define “limited duration” employment as stated in GC sections 7522.56, 21224, and 21229 for retired persons serving after retirement and set forth process- es to extend an appointment of a retired person serv - ing after retirement if the CalPERS–covered employ - er determines the appointment requires an extension beyond the period of time defined as a “limited dura - tion” in the proposed regulation.

This proposed regu - lation only defines “limited duration” employment as it pertains to working–after–retirement appointments with CalPERS–covered employers. This proposed regulation does not define “limited duration” employ- ment for purposes of administering working–after– retirement statutes for any public retirement system in California other than CalPERS. Currently there is variation in the duration of working–after–retirement appointments. This pro - posed regulation is intended to benefit CalPERS, its members, CalPERS–covered employers, and other

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 685 stakeholders by providing a clear definition of and en- sure consistent use of the phrase “limited duration” for working–after–retirement appointments. Special Compensation In 1994, CalPERS promulgated CCR

section 571 to delineate an all–inclusive list of special compensation to be reported to CalPERS to comply with Senate Bill 53 (Stats. 1993, Ch. 1297, operative 7/1/1994). CCR

section 571(a)(3) identifies temporary upgrade pay as reportable special compensation paid to employ - ees “who are required by their employer or governing board or body to work in an upgraded position/clas - sification of limited duration.” CCR

section 571(a)(3) does not define “limited duration” employment. This proposed regulation is intended to benefit CalPERS, its members, CalPERS–covered employers, and oth - er stakeholders by providing a clear definition of and ensure consistent use of the phrase “limited duration” for temporary upgrade pay reportable to CalPERS as special compensation. Consistency Evaluation CalPERS conducted a review for any related state regulation and found that there are no other state regu- lations concerning the definition of “limited duration” employment for purposes of CalPERS’ administration of GC sections 7522.56, 21224, and 21229, and CCR

section 571(a)(3). Therefore, CalPERS has determined that the proposed regulation is not inconsistent or in - compatible with existing regulations. VII. PRENOTICE CONSULTATION WITH THE PUBLIC No prenotice consultation with the public was done, as all public comments and hearing requests can be submitted during the written comment period. VIII. EFFECT ON SMALL BUSINESS The proposed regulatory action does not affect small business because it applies only to CalPERS, Cal PERS – covered employers, and Cal PERS members. IX.

DISCLOSURES REGARDING THE PROPOSED REGULATORY ACTION The Board has made the following initial determinations: A. MANDATE ON LOCAL AGENCIES AND SCHOOL DISTRICTS: The proposed regulatory action does not impose mandates on local agen - cies and school districts. B. COSTS OR SA VINGS TO ANY STATE AGENCY: Costs estimated to be incurred by CalPERS, a state agency, will be absorbed in its existing budget and resources. C. COST TO ANY LOCAL AGENCY OR SCHOOL DISTRICT: The proposed regulatory action will not result in any costs on any local agency or school district. D.

NONDISCRETIONARY COSTS OR SA VINGS IMPOSED ON LOCAL AGENCIES: The pro - posed regulatory action does not impose any non- discretionary costs or savings on local agencies. E. COSTS OR SA VINGS IN FEDERAL FUNDING TO THE STATE: The proposed regulatory action will not result in costs or savings in federal fund- ing to the State of California. F. ADVERSE ECONOMIC IMPACT: The pro - posed regulatory action will not have a signifi - cant statewide adverse economic impact affect - ing businesses including the ability of businesses in California to compete with businesses in other states. G.

COST IMPACT ON REPRESENTATIVE PRIVATE PERSONS OR BUSINESSES: CalPERS is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed regulatory action because the pro - posed regulatory action only applies to CalPERS, CalPERS–covered employers, and CalPERS members and does not impose costs on CalPERS members who are in compliance with the pro - posed regulatory action. H.

RESULTS OF THE ECONOMIC IMPACT ANALYSIS: The proposed regulatory action is not intended to create or eliminate jobs with - in California; and will not (1) create new busi - nesses or eliminate existing businesses within California; (2) affect the expansion of businesses currently doing business within California; and (3) affect the health and welfare of California res- idents, worker safety or the State’s environment. The proposed regulatory action serves only to de- fine certain terms used in the PERL and PEPRA. I. EFFECT ON HOUSING COSTS: The proposed regulatory action will have no effect on housing costs. J.

COST TO ANY LOCAL AGENCY OR SCHOOL DISTRICT WHICH MUST BE REIMBURSED IN ACCORDANCE WITH GC

SECTION 17500 THROUGH

SECTION 17630: There are no costs to any local agency or school district which must be reimbursed in accordance with GC

section 17500 through

section 17630. X. CONSIDERATION OF ALTERNATIVES In accordance with GC

section 11346.5(a)(13), the Board must determine that no reasonable alternative

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 686 considered by the Board, or that has otherwise been identified and brought to the attention of the Board, would be: ● more effective in carrying out the purpose of the proposed action, ● as effective as, and less burdensome to affected private persons than the proposed action, or ● more cost–effective to affected private persons and equally effective in implementing the statu - tory policy or other provision of law.

The Board invites interested persons to present statements or arguments with respect to alternatives to the proposed regulation at a public hearing or during the written comment period. XI. CONTACT PERSON Inquiries concerning the proposed administrative action may be directed to: Andrew White, Regulation Coordinator California Public Employees’ Retirement System P.O. Box 942720 Sacramento, CA 94229–2720 Telephone: (916) 795–3038 Regulation_Coordinator@calpers.ca.gov The backup contact person for the proposed action is: Andrea Peters, Regulation Coordinator California Public Employees’ Retirement System P.O.

Box 942720 Sacramento, CA 94229–2720 Telephone: (916) 795–3038 Regulation_Coordinator@calpers.ca.gov Please direct requests for copies of the proposed text of the regulation, the Initial Statement of Reasons, the modified text of the regulation, if any, or other infor - mation upon which the rulemaking is based to the Regulation Coordinator at the contact information listed above. XII.

AVAILABILITY OF THE INITIAL STATEMENT OF REASONS AND TEXT OF PROPOSED REGULATION, AND RULEMAKING FILE The Board will have the entire rulemaking file available for inspection and copying throughout the rulemaking process at its office at 400 Q Street, Sacramento, CA, 95811. As of the date this notice is published in the Notice Register, the rulemaking file consists of this notice, the proposed text of the regula- tion, and the Initial Statement of Reasons. Copies may be obtained by contacting the CalPERS Regulation Coordinator at the contact information listed in

Section XI. For immediate access, the regulatory material re - garding this action can be accessed at CalPERS’ website at https://www.calpers.ca.gov/page/about/ laws–regulations/regulatory–actions . XIII. AVAILABILITY OF CHANGED OR MODIFIED TEXT After receiving comments from the public and con - sidering all timely and relevant comments received, the Board may adopt the proposed regulation substan- tially as described in this notice.

If the Board makes modifications which are sufficiently related to the originally proposed text, it will make the modified text (with the changes clearly indicated) available to the public for at least 15 days before the Board adopts the regulation as revised. Please send requests for cop- ies of any modified regulation to the attention of the CalPERS Regulation Coordinator at the mailing ad - dress listed in

Section XI. The Board will accept writ- ten comments on the modified regulation for 15 days after the date on which it is made available. XIV. AVAILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, copies of the Final Statement of Reasons may be obtained by contacting the CalPERS Regulation Coordinator at the contact information listed in

Section XI. TITLE 4. DEPARTMENT OF CANNABIS CONTROL Subject Matter of Proposed Regulations: Standard cannabinoids test method and standardized operating procedures for all licensed commercial can- nabis testing laboratories. Sections Affected: Title 4, California Code of Regulations (CCR), sections 15712.1 and 15712.2. Notice is hereby given that the Department of Cannabis Control (Department) proposes to adopt the proposed amended regulations, described below, after considering all comments, objections, and rec - ommendations regarding the proposed action.

The Department, upon its own motion or at the request of any interested party, may thereafter adopt the propos - als substantially as described below, or may modify such proposals if such modifications are sufficient - ly related to the original text. With the exception of technical or grammatical changes, the full text of any modified proposal will be available for inspection and copying 15 days prior to its adoption from the per - son designated in this Notice as contact person and

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 687 will be mailed to those persons who submit written or oral testimony related to this proposal or who have requested notification of any changes to the proposal. All the proposed text sections are proposed to be added to the California Code of Regulations (CCR), under Division 19 of Title 4. PUBLIC HEARING The Department will hold a virtual public hearing at the following date and time listed below: Tuesday, August 1, 2022 9:00 a.m. to 12:00 p.m. Attendees may participate via WebEx online meet - ing platform or telephone conferencing.

To partici - pate via WebEx online meeting platform please email Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or (916) 465–9025 by 4:30 p.m. July 29, 2022 to request a link to the meeting. A link to the meeting will also be posted on the Department’s website no later than 9:00 a.m. the day of the hearing. As a reasonable accommodation, limited in– person seating may be available at the hearing in the Department Hearing Room, 2920 Kilgore Road, Rancho Cordova, CA 95670. Attendees must comply with all COVID–19 safety protocols.

Please contact Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or (916) 465–9025 by 4:30 p.m. on July 29, 2022, if an accommodation is necessary. Participants will be given instructions on how to pro- vide oral comment once they have accessed the hear - ing. The hearings will proceed on the dates noted above until all testimony is submitted or 12:00 p.m., which- ever is later. At the hearing, any person may present oral or written statements or arguments relevant to the proposed action described in the Informative Digest.

The Department requests, but does not require, that persons who make oral comments at the hearing also submit a written copy of their testimony via email. WRITTEN COMMENT PERIOD Any interested person, or the interested person’s authorized representative, may submit written com - ments relevant to the proposed regulatory action to the Department. Written comments, including those sent by mail or e–mail, can be submitted to the address - es listed below. Comments submitted must be re - ceived by the Department at its office by 5:00 p.m. on August 2, 2022.

Submit comments to: Department of Cannabis Control Legal Affairs Division 2920 Kilgore Road Rancho Cordova, CA 95670 E–mail: publiccomment@cannabis.ca.gov AUTHORITY AND REFERENCE Business and Professions Code

section 26013 autho- rizes the Department to adopt these proposed regula - tions. Pursuant to Business and Professions Code sec- tion 26100, the Department shall establish a standard cannabinoids test method, including standard operat - ing procedures, that shall be utilized by all testing lab- oratories, on or before January 1, 2023. The proposed regulations implement, interpret, and make specific the requirements for the standard cannabinoids test method to be used by all licensed laboratories pursu - ant to Business and Professions Code

section 26100. INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW The purpose of these regulations is to implement, interpret, and make specific requirements for a stan - dard cannabinoids test method, including standard operating procedures, that shall be utilized by all li - censed testing laboratories. Existing Law Pursuant to the Medicinal and Adult–Use Cannabis Regulation and Safety Act (MAUCRSA), the Department regulates commercial cannabis license holders in California including testing laboratories.

MAUCRSA prohibits cannabis and cannabis products from being sold unless a representative sample of spec- ified batches has been tested by a licensed testing lab- oratory. MAUCRSA requires the testing laboratory to issue a certificate of analysis to report specified infor- mation, including the content of specified compounds and contaminants. Requirements for testing laborato - ries are contained in

Chapter 6, Division 19, of Title 4 of the CCR. Business and Professions Code

section 26100, subsection (f)(2) requires the Department to es- tablish a standard cannabinoids test method, including standard operating procedures, on or before January 1, 2023. All licensed laboratories will be required to use the method established by the Department. Policy Statement The purpose of these regulations is to implement and make specific Business and Professions Code sec- tion 26100(f)(2) pertaining to the establishment of a standard cannabinoids test method, including stan - dardized operating procedures, that shall be utilized by all testing laboratories.

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 688 The rulemaking action would specify the standard - ized cannabinoids test method to be used by all li - censed laboratories. The proposed regulations would specify that testing laboratories must use the standard operating procedure for the determination of cannabi - noids concentration by high performance liquid chro - matography (HPLC). The proposed regulations would specify the equipment to be used and the procedures to follow for the determination of cannabinoid con - centration.

The proposed regulations would clarify the requirements for method validation and method ver - ification by the licensed laboratories. The proposed regulations would specify the method verification procedures and documentation requirements and the submission of documentation to the department. The proposed regulations would also inform licensed lab - oratories of the timeline for laboratories to commence utilizing the cannabinoid test method.

Regulation Objectives and Anticipated Benefit of the Proposed Regulations The objective of proposed regulations is to imple - ment and make specific Business and Professions Code

section 26100(f)(2) pertaining to the establish - ment of a standard cannabinoids test method on or be- fore January 1, 2023. Through the proposed regula - tions, the Department aims to ensure all licensed lab - oratories are using the same standardized cannabinoid test method which will ensure consumers receive ac - curate and consistent information regarding the can - nabinoid content of the cannabis and cannabis product they use or consume.

An inherent challenge in regulating an industry that has not been federally regulated is the lack of stan - dardized, generally accepted and validated methods for the testing of cannabis and cannabis products. If a standard test method is not available for an analy - sis, new methods must be developed and validated. Accordingly,

section 15712 of the Department’s ex - isting regulations require licensed laboratories to de - velop, validate and implement test methods for the required analyses and, to the extent practicable, re - quires the test methods developed to comport with established guidelines such as those from the U.S. Food and Drug Administration, the Association of Analytical Communities (AOAC) International, and United States Pharmacopeia. Due to the lack of gen - erally accepted standardized methods, each licensed laboratory has developed and implemented its own test method for cannabinoid content analysis.

The use of different methods by individual licensed labora - tories can produce inconsistent analytical results be - tween the laboratories, thus resulting in inconsistent reporting of cannabinoid content of cannabis and can- nabis products among licensed laboratories. The proposed regulations implement the require - ment that the Department develop a standardized test method for cannabinoids for use by all licensed labo - ratories. The proposed regulations establish and make specific the standardized cannabinoids test meth - od that all licensed laboratories must use.

The pro - posed regulations inform the licensed laboratories of the standard operating procedures that they must fol - low and the instructions for the determination of can - nabinoid concentrations using high performance liq - uid chromatography systems (HPLC). The proposed regulations also inform licensed laboratories of the timeline to commence utilizing the cannabinoid test method. The proposed regulations are expected to benefit the health and welfare of California residents.

The spe - cific benefits anticipated are increased protection of the public from the harms associated with inconsis - tent laboratory testing methods for cannabinoids that can result in inconsistent reporting of the cannabinoid content of cannabis and cannabis products by licensed laboratories. The proposed regulations aim to provide uniformity and transparency for cannabinoid testing by establishing standard operating procedures and in - structions for licensed laboratories to determine can - nabinoids concentration.

More specifically, the stan - dard operating procedures provide instruction on sam- ple preparation, sample extraction, proper dilution, necessary apparatus and materials, reagents, calibra - tion standards, instrumental parameters, instrument analysis, method limit of quantification and reporting limit, quality control, acceptance criteria, and meth - od verification. These factors can affect testing results, thus standardization of all these factors within a stan - dard operating procedure will result in more accurate and consistent reporting of cannabinoid content by li - censed laboratories.

The proposed regulations will also increase the Department’s ability to effectively regulate licensed laboratories. A well organized, clearly written set of procedures will allow the Department to better educate licensees regarding the testing method as well as pro - vide consistency in enforcement. Effective education and enforcement regarding the requirements found in the regulations are essential to the Department’s goal of ensuring that California’s licensed laboratories op - erate in a manner that benefits the state of California while reducing or eliminating the risks of harm to the people of the state.

The increased clarity and ef - ficiency obtained by the proposed regulation will fur - ther increase the Department’s ability to carry out this mission.

Section 15712.1. Test Method for Cannabinoids. This proposed

section would specify the cannabi - noids test method that must be used by licensed lab - oratories. The

section would specify that testing lab - oratories must use the standard operating procedure developed by the Department and incorporated by

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 689 reference for the determination of cannabinoids con - centration by HPLC. The

section would specify the equipment to be used and the procedures to follow for the determination of cannabinoid concentration. The proposed

section would clarify that a licensed labora - tory does not need to perform method validation but must perform method verification. The proposed sec - tion would clarify the requirement for submission of the standard operating procedures to the Department. The proposed

section would also inform testing labo - ratories that they must commence using the specified test method no later than July 1,

Section 15712.2. Verification of Test Methods for Cannabinoids. This proposed

section would specify the procedures and documentation requirements for method verifica - tion by the licensed laboratories. The proposed sec - tion would require the licensed laboratories to perform method verification prior to use of the method for reg- ulatory compliance testing and submit the verification documentation to the department. Incorporated by Reference Determination of Cannabinoids Concentration by HPLC, Standard Operating Procedures (New 05/15/2022) Evaluation of Inconsistency/Incompatibility with Existing State Regulations: As required by Gov. Code

section 11346.5(a)(3) (D), the Department has conducted an evaluation of these proposed regulations and has determined that they are not inconsistent or incompatible with exist - ing regulations. Evaluation of Inconsistency with Federal Regulation Statute The United States Drug Enforcement Administration (DEA) under the Controlled Substances Act lists can - nabis as a

Schedule 1 Drug. This means that com - mercial cannabis activity is illegal under federal law. However, California, through the MAUCRSA and other laws, has decriminalized the cultivation, sale, and possession of cannabis and cannabis products for persons aged 21 or older and for medicinal patients. Plain English Requirement Department staff prepared these proposed regula - tions pursuant to the standard of clarity provided in Government Code

section 11349 and the plain English requirements of Government Code sections 11342.580 and 11346.2, subsection (a)(1). The proposed regula - tions are written to be easily understood by the per - sons that will use them. DISCLOSURES REGARDING THE PROPOSED ACTION The Department has made the following initial determinations: Local mandate: There will be no local mandate. Cost to any local agency or school district requiring reimbursement pursuant to Gov. Code

section 17500, et seq: None. Any other non–discretionary cost or savings im - posed upon local agencies: None. Cost or savings to any state agency: None. Cost or savings in federal funding to the state: None. Effect upon housing: There is no effect on housing. Significant Statewide Adverse Economic Impact Directly Affecting Businesses: The Department has determined there will not be a significant, statewide adverse economic impact directly affecting business - es, including the ability of California businesses to compete with businesses in other states.

Small Business Determination: The proposed regu - lations would affect approximately 48 licensed labora- tories. The businesses impacted by the regulation all meet the criteria for being classified as small business- es. The cost associated with the proposed regulations for a small business is anticipated to be minimal for most licensed laboratories as most laboratories cur - rently use similar testing methods and are in posses - sion of all relevant apparatus and materials necessary to comply with the proposed regulations.

However, if a licensed laboratory needed to purchase the required equipment and supplies the upper range of initial costs would be $108,300. The annual ongoing costs would amount to approximately $11,300. Cost Impacts on a Representative Private Person or Business: The Department is not aware of any cost im- pacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action. ECONOMIC IMPACT AND FISCAL IMPACTS Business Impact The Department of Cannabis Control has 48 li - censed laboratories as of May 13, 2022.

The businesses impacted by the regulation are all li- censed testing laboratories. Estimated Costs to Businesses The proposed regulations require licensees to com - mence utilizing the Department established canna - binoid test method no later than six months follow - ing the Department’s adoption of the test method through these proposed regulations. Many of the li - censed laboratories currently use an HPLC sys - tem consisting of a column module, solvent delivery

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 690 module, photodiode–array detection module and sam- pling module that is capable of separating the canna - binoids of interest to achieve a minimum resolution of 1.3 because the system is a basic instrument that is used to separate cannabinoids effectively and effi - ciently. The cost of a an HPLC system that meets the proposed regulatory requirements is approximately $60,000.

Additionally, the grinding and homogeniza - tion procedures in the proposed regulations would re - quire licensed laboratories to have a grinder capable of grinding samples to less than 1 mm. If the licens - ees do not have an existing grinder that is sufficient, the cost of a grinder would range from approximate - ly $20,000 to $35,000. Further, the proposed regula - tions would also require the licensed testing laborato - ries to freeze grind edible samples and the associated cost for the liquid cryogens is approximately $10,000 per year.

Licensed laboratories also purchase solvents and standards in the ordinary course of business, but in varying quantities depending on the volume of sam- ples being processed. On average, a licensed labora - tory may spend $800 for standards and $500 for sol - vents in a year and $2,000 for a column. However, the costs of standards, solvents, and columns would be in- curred even if the proposed regulations were not in effect as they are necessary supplies to operate a li - censed laboratory.

It is anticipated that the cost for most licensed lab - oratories to comply with the proposed regulations are minimal as most laboratories currently use sim - ilar testing methods and are in possession of all rel - evant apparatus and materials necessary to comply with the proposed regulations. The lowest range of initial costs for a licensed testing laboratory to comply with the proposed regulations would be approximately $1,300.00 reflective of purchasing $800 for standards and $500 for solvents, assuming the licensed laborato- ry already possessed a LC column, adequate grinder, and HPLC system.

However, if a licensed laboratory needed to pur - chase the required equipment and supplies the approx- imate costs are as follows: a new HPLC system for $60,000, a grinder for $35,000, liquid cryogens for $10,000, standards at $800, solvents for $500, and a LC column for $2,000.00, the upper range of initial costs would be $108,300. The annual ongoing costs would amount to approximately $11,300 including $800 for standards, $500 for solvents, and $10,000 for liquid cryogens though costs may vary depending on the volume of samples a particular licensed laboratory processes each year.

To calculate the approximate total statewide costs a business may incur to comply with this regulation over its lifetime, the upper range of costs is approximately $108,300 added to the annual ongoing costs of $11,300 yields a sum of $119,600.00. $119,600 multiplied by ten years results in a grand total of $1,196,000.00. The proposed regulations will not have a significant adverse economic impact on businesses because the cost of compliance described above is anticipated to be absorbable by existing licensees.

Results of the Economic Impact Assessment Based on the analysis below, the Department con - cludes that it is (1) unlikely that the proposal will elim- inate any jobs, (2) unlikely that the proposal will cre - ate an unknown number of jobs, (3) unlikely that the proposal will create an unknown number of new busi- nesses, (4) unlikely that the proposal will eliminate any existing businesses, and (5) unlikely that the pro - posed regulations will result in the expansion of busi - nesses currently doing business within the state.

The proposed regulations will not have a significant adverse economic impact on businesses. The Department does not anticipate the creation or elimination of jobs as a result of the proposed regula - tions. The proposed regulations are standardizing an HPLC cannabinoid test method which is already used by a majority of licensed laboratories, thus it is antic - ipated that existing laboratory personnel can perform the procedure proposed by the regulation and there will be no creation or elimination of jobs. The pro - posed regulations would not affect worker safety.

The proposed regulations would affect approximate- ly 48 licensed laboratories. The businesses impacted by the regulation all meet the criteria for being clas - sified as small businesses. The cost associated with the proposed regulations for a small business is antic - ipated to be minimal for most licensed laboratories as most laboratories currently use similar testing meth - ods and are in possession of all relevant apparatus and materials necessary to comply with the proposed reg - ulations.

However, if a licensed laboratory needed to purchase the required equipment and supplies the up - per range of initial costs would be $108,300. The an - nual ongoing costs would amount to approximately $11,300. The Department does not anticipate the creation or the elimination or expansion of existing businesses, as a result of the proposed regulations. The proposed reg- ulations would not affect the ability of businesses in the State to compete.

The proposal does not benefit or negatively impact the State’s environment because the proposed regu - latory action does not involve any topic that induces harm or benefit to the environment in the State. Benefits of the Proposed Regulation The total statewide economic benefit of this regula- tion is difficult to quantify in dollars because many of the benefits are fiscally intangible. The primary bene - fit of the proposed regulations is to protect the health and welfare of California residents by ensuring that

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 691 licensed laboratories are properly testing cannabis and cannabis products and reporting accurate results. This will allow consumers to receive accurate infor - mation regarding the level of cannabinoids in canna - bis and cannabis products, while ensuring that the la - beling of cannabis and cannabis products is accurate. Additionally, the proposed regulations reduce the abil- ity to select licensed laboratories to achieve more fa - vorable testing results.

The proposal does not benefit or negatively impact worker safety or the State’s environment because the proposed regulatory action does not involve any top - ic that induces harm or benefit to worker safety or the environment in the State. Fiscal Effect on State Government The proposed regulations govern licensed laborato - ries while implementing the statutory requirement for the Department, on or before January 1, 2023, to es - tablish a standard cannabinoids test method, including standardized operating procedures that shall be uti - lized by all testing laboratories.

There is no impact on the Department’s workload created by the proposed regulations. Thus, there is no fiscal impact on state government resulting from the proposed regulations. CONSIDERATION OF ALTERNATIVES In accordance with Government Code

section 11346.5, subdivision (a)(13), the Department must de- termine that no reasonable alternative it considered or that has otherwise been identified and brought to the attention of the agency would be more effective in car- rying out the purpose for which the action is proposed or would be as effective and less burdensome to affect- ed private persons than the proposed action or would be more cost–effective to affected private persons and equally effective in implementing the statutory policy or other provision of law.

The Department invites interested persons to pres - ent statements or arguments with respect to alter - natives to the proposed regulations at the scheduled hearing or during the written comment period. The first alternative considered by the department was to not adopt the proposed regulations. This al - ternative was rejected because SB 544, as codified in Business and Professions Code

section 26100(f)(2), re- quires the Department to establish a standard canna - binoids test method, including standardized operating procedures, that shall be utilized by all testing labora - tories. If the Department does not adopt the proposed regulations, there will be no standardized test meth - od for licensees to follow to test cannabinoids and the Department will not have complied with its statutory mandate. The second alternative considered was develop - ing a method that uses liquid chromatography/mass spectrometry (LCMS or LCMSMS).

These methods use the separating power of liquid chromatography but use a different detector called mass spectrometry that is highly sensitive. The LC method specified in the reference method can be used with the LCMS or LCMSMS method. The advantage to this method is that it can uniquely identify compounds by mass or a mass fragment spectrum. The disadvantage is the cost as these instruments are approximately $200,000 to $800,000. The Department did not adopt this meth - od because only a small number of licensed laborato - ries currently utilize this method and it would be very costly for licensees.

The third alternative considered was developing a method that uses gas chromatography/mass spectrom- etry (GCMS). This method is rarely used for canna - binoids as the heating routine used by GCMS causes chemical changes of the cannabinoids. These chem - ical changes will give inaccurate results for canna - binoid analysis. There are variations to this meth - od that allow derivatization of the sample to protect it from degradation in analysis.

However, licensed laboratories that have undergone method validations do not use this method, and the additional cost of a GCMS instrument, slower analysis time, and add - ed steps of derivatization make it unfeasible for rou - tine testing. Additionally, the Gas Chromatography Mass Spectrometry instruments cost approximately $170,000. The Department did not adopt this method as it is rarely used for cannabinoids testing and costly.

CONTACT PERSON Inquiries concerning the proposed administrative action may be directed to: Charisse Diaz Department of Cannabis Control Legal Affairs Division 2920 Kilgore Road Rancho Cordova, CA 95670 916– 465–9025 Charisse.Diaz@cannabis.ca.gov The backup contact person for these inquiries is: Kaila Fayne Department of Cannabis Control Legal Affairs Division 2920 Kilgore Road Rancho Cordova, CA 95670 916–251–4544 Kaila.Fayne@cannabis.ca.gov Please direct requests for copies of the proposed text (the “express terms”) of the regulations, the ini - tial statement of reasons, the modified text of the regulations, if any, or other information upon which

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 692 the rulemaking is based to the contact persons listed above. AVAILABILITY OF STATEMENT OF REASONS, TEXT OF PROPOSED REGULATIONS, AND RULEMAKING FILE The Department will have the entire rulemaking file available for inspection and copying, throughout the rulemaking process, at its office at the address above. As of the date this Notice is published in the Notice Register, the rulemaking file consists of this Notice, the proposed text of the regulations, and the Initial Statement of Reasons.

Copies of materials may be ob- tained by contacting the contact person at the address, email or phone number listed above. AVAILABILITY OF CHANGED OR MODIFIED TEXT After considering all timely and relevant comments received, the Department may adopt the proposed reg- ulations, substantially, as described in this Notice. If the Department makes modifications that are suffi - ciently related to the originally proposed text, it will make the modified text (with the changes clearly in - dicated) available to the public for at least 15 days be- fore the Department adopts the regulations, as revised.

Please send requests for copies of any modified regu - lations to the attention of the contact person at the ad - dress, email, or phone number indicated above. The Department will accept written comments on the modified regulations for at least 15 days after the date on which they are made available. AVAILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, copies of the Final Statement of Reasons may be obtained by contacting the contact person at the above address, email, or phone number indicated above.

AVAILABILITY OF DOCUMENTS ON THE INTERNET Copies of the Notice of Proposed Action, the Initial Statement or Reasons, and the text of the regulations can be accessed through the Department’s website at: https://cannabis.ca.gov/cannabis–laws/rulemaking/. TITLE 4. DEPARTMENT OF CANNABIS CONTROL California Code of Regulations Title 4, Division 19 Subject Matter of Proposed Regulations: Conversion to Large and Medium Cultivation Licenses; Type 5, 5A and 5B Large Cultivation License Fees and Requirements.

Section Affected: California Code of Regulations (CCR), title 4, sections 15014.2, 15027.1, 16201.1, and 16300.1. Notice is hereby given that the Department of Cannabis Control (Department) proposes to adopt the proposed regulations, described below, after consider- ing all comments, objections, and recommendations regarding the proposed action. The Department, upon its own motion or at the request of any interested par - ty, may thereafter adopt the proposals substantially as described below, or may modify such proposals if such modifications are sufficiently related to the origi- nal text.

With the exception of technical or grammati- cal changes, the full text of any modified proposal will be available for inspection and copying 15 days pri - or to its adoption from the person designated in this Notice as contact person and will be mailed to those persons who submit written or oral testimony related to this proposal or who have requested notification of any changes to the proposal. All the proposed text sections are proposed to be added to the California Code of Regulations (CCR), under Division 19 of Title 4.

PUBLIC HEARING The Department will hold a virtual public hearing at the following date and time listed below: Tuesday, August 1, 2022 1:00 p.m. to 4:00 p.m. Attendees may participate via WebEx online meet - ing platform or telephone conferencing. To partici - pate via WebEx online meeting platform please email Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or (916) 465–9025 by 4:30 p.m. on July 29, 2022, to re- quest a link to the meeting. Links to the meetings will also be posted on the Department’s website no later than 9:00 a.m. the day of the hearings.

As a reasonable accommodation, limited in– person seating may be available at the hearing in the Department Hearing Room, 2920 Kilgore Road, Rancho Cordova, CA 95670. Attendees must comply with all COVID–19 safety protocols. Please contact Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 693 (916) 465–9025 by 4:30 p.m. on July 29, 2022, if an accommodation is necessary. Participants will be given instructions on how to pro- vide oral comment once they have accessed the hear - ing. The hearing will proceed on the date noted above until all testimony is submitted or 4:00 PM, whichever is later. At the hearing, any person may present oral or written statements or arguments relevant to the pro - posed action described in the Informative Digest.

The Department requests, but does not require, that a per - son who makes oral comments at the hearing also sub- mits a written copy of their testimony via email. Written Comment Period Any interested person, or the interested person’s authorized representative, may submit written com - ments relevant to the proposed regulatory action to the Department. Written comments may be sub - mitted by mail or e–mail to the addresses listed be - low. Comments submitted must be received by the Department at its office by 5:00 p.m. on August 2, 2022.

Submit comments to: Department of Cannabis Control Legal Affairs Division 2920 Kilgore Road Rancho Cordova, CA 95670 E–mail: publiccomment@cannabis.ca.gov AUTHORITY AND REFERENCE Business and Professions Code

section 26013 autho- rizes the Department to adopt these proposed regula - tions. Pursuant to Business and Professions Code sec- tion 26061, subsection (c), the Department may begin issuing Type 5, 5A and 5B Large Cultivation Licenses (collectively referred to herein as Large Cultivation License) on January 1, 2023. The proposed regulations implement, interpret, and make specific the require - ments for obtaining a Large Cultivation License under the Medicinal and Adult–Use Cannabis Regulation and Safety Act (MAUCRSA). (Bus. & Prof. Code,

section 26000 et. seq.) INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW The purpose of these regulations is to implement, in- terpret, and make specific requirements for obtaining a Large Cultivation License under MAUCRSA. These regulations also provide a pathway for existing licens- ees to convert to a Large Cultivation License once the license type becomes available on January 1, 2023. Additionally, the regulations provide a pathway for existing licensees to convert to Medium Cultivation Licenses once the limitation on the number of such li- censes that may be held by the same owner expires.

Existing Law Pursuant to MAUCRSA, the Department regulates commercial cannabis license holders in California, in- cluding cultivators, retailers, manufacturers, distribu - tors, testing laboratories, microbusinesses, and tempo- rary cannabis events. Application requirements, fees, and other general requirements for all license types are contained in

Chapter 1, Division 19, of Title 4 of the CCR. Requirements for the cultivators are con - tained in

Chapter 7, Division 19 of Title 4 of the CCR. Business and Professions Code

section 26061, subsec- tion (

c) allows the Department to begin issuing Large Cultivation Licenses on January 1, 2023. Additionally, CCR, title 4,

section 16209 prohibits a person or own- er from holding more than one Medium Cultivation License until January 1, 2023. Policy Statement This rulemaking action would specify the rules governing Large Cultivation Licenses which the Department may begin issuing on January 1, 2023. The proposed regulations would provide applicants and licensees with the requirements for applying for a Large Cultivation License or converting small - er sized cultivation licenses into a Large Cultivation License.

Similarly, the proposed regulations would provide applicants and licensees with the require - ments for converting smaller sized cultivation licens - es into the Medium Cultivation Licenses. The prohi - bition of holding more than one Medium Cultivation License is set to expire on January 1, 2023. The pro - posed regulations would provide applicants and licensees with the application fees and annual licens - ing fees that must be paid in order to obtain and oper - ate under a Large Cultivation License.

The same pro - posed regulations would allow the Department to col- lect application and annual licensing fees that are re - quired in order to effectively issue and regulate Large Cultivation Licenses. Additionally, the proposed regu- lations would provide licensees with the requirements that must be followed when engaging in in cultivation under a Large Cultivation License.

Regulation Objectives and Anticipated Benefits of the Proposed Regulations The broad objective of the proposed regulations is to integrate the newly available Large Cultivation license into the Department’s existing commercial cannabis licensing system. The proposed regulations will allow the Department to issue Large Cultivation Licenses in accordance with Business and Professions Code sec - tion 26061, subsection (c). The proposed regulations provide specific guidance to applicants and licens - ees who are seeking to obtain a Large Cultivation License. The proposed regulations provide the specific

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 694 requirements for submitting an application for a Large Cultivation License, the requirements for converting smaller cultivation licenses into a Large Cultivation License or a Medium Cultivation License, the fees ap- plicable to a Large Cultivation License, and the regu - latory requirements that apply to any cultivation activ- ity occurring under a Large Cultivation License. Adoption of the proposed regulations will provide clear guidance to applicants and licensees seeking a Large Cultivation license.

The proposed regulations will provide applicants and licensees with specif - ic guidance regarding applying for Large Cultivation Licenses, payment of application and annual license fees for Large Cultivation Licenses, and the cultivation requirements for operating under a Large Cultivation License. Additionally, the proposed regulations will allow the Department to issue Large Cultivation Licenses, collect fees relating to Large Cultivation Licenses, and regulate Large Cultivation Licenses in a manner that is consistent with all other commercial cannabis license types regulated by the Department.

The regulations will also allow cultivators to convert smaller cultivation licenses into a Large or Medium Cultivation License with a cultivation area that is the equivalent of the combined smaller licenses, which will result in efficiencies and added flexibility for cul- tivation licensees, as well as increased efficiencies for the Department. The proposed regulations will allow the Department to issue Large Cultivation Licenses beginning January 1, 2023, as allowed under Business and Professions Code

section 26061, subsection (c). The proposed reg- ulations will clarify the requirements and the process for obtaining a new Large Cultivation License. Under the proposed regulations, licensees and applicants may obtain a new Large Cultivation either through ap- plication for a new license or through conversion of existing cultivation licenses. The proposed regulations clarify the requirements and the process for obtaining a Large Cultivation License using either method.

This will reduce the risk of confusion for licensees and ap - plicants who are seeking a Large Cultivation License beginning the January 1, 2023, date when Large Cultivation Licenses become available Under the proposed regulations, the Department would allow cultivators with multiple contiguous cultivation licenses to request to convert the exist - ing licenses to a Large Cultivation License, provid - ed the licenses have the same ownership. Cultivators may only convert existing licenses into an annual Large Cultivation License.

Cultivators may also ob - tain a new Large Cultivation License by preparing and submitting an application and one–time applica - tion fee. Large Cultivation Licenses would be subject to all existing Department cultivation regulations, as well as those applicable to all licensees. The proposed regulations additionally allow cultivators to convert multiple stacked licenses to a Medium Cultivation License. In contrast to Large Cultivation Licenses, the proposed regulations would allow conversion of pro - visional stacked licenses to a provisional or annual Medium Cultivation License.

The proposed regulations provide clear guidance re- garding the requirements that a cultivator must com - ply with to engage in the commercial cultivation of cannabis under a Large Cultivation License. This will reduce the risk of confusion regarding what require - ments are applicable to the newly available license. The introduction of the Large Cultivation license is likely to result in increased efficiency as well as pro - viding licensed cultivators additional flexibility in op- erating their businesses.

Prior to the introduction of the Large Cultivation Licenses, licensed cultivators who were engaging in cultivation activities on land that exceeded the maximum size of a small or medium license were required to obtain multiple cultivation li- censes. With the Large Cultivation License becoming available, cultivation licensees who in the past had to apply for and maintain multiple cultivation licenses may now conduct their cultivation activities under one license. This will result in an overall net direct cost savings to cultivation businesses that is estimated to be $8.041 million per year.

The addition of the Large Cultivation License is expected to result in an increase of jobs within the state. Additionally, consolidating multiple smaller cultivation licenses into one Large or Medium Cultivation License is likely to result in in - creased efficiency for the Department as the adminis - trative and regulatory costs of issuing and maintain - ing one license for a single cultivation site on a single parcel of land is likely to be substantially less than the costs for issuing and maintaining multiple cultivation licenses on that same parcel of land.

After an initial increase in Department staff time needed in the first year to accommodate the initial shift to Large Cultivation Licenses, the annual staff time required to manage cultivation licenses will de - crease in subsequent years as there will be fewer culti- vation licenses overall. The proposed regulations would also provide ben - efits to the State’s environment that are not mone - tized. This may include encouraging more cannabis businesses to remain in the licensed market.

To the extent that unlicensed cannabis operations can cause negative environmental impacts, the proposed regu - lations would provide indirect benefits to the Sate’s environment. In addition, consumers could benefit to the extent that some of the producers’ cost savings are passed on to them.

Section 15014.2. Fees–Large Cultivation License. This

section would specify the fees for the Large Cultivation License. The

section would provide fees,

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 695 set in accordance with existing fees, for applications and would establish a base license fee with incremen - tal increases based on additional square footage of canopy.

Section 15027.1. Conversion to Large and Medium Cultivation Licenses. In recognition of existing license holders and cur - rent restrictions on Large and Medium Cultivation Licenses, this

section would provide a pathway for conversion. The

section would specify the require - ments for conversion, information to be submitted for a conversion, when a converted license becomes ac - tive, when the associated fee must be paid, and resolve issues with multiple expiration dates by prorating pre- viously paid license fees.

Section 16201.1. Large Cultivation Licenses. This

section would provide the general rules and re- quirements governing Large Cultivation Licenses.

Section 16300.1. Cultivation Requirements for Large Licenses. This

section would specify that the requirements for cultivating cannabis under a Large License are the same as those for other cultivation license types. This

section would also restate statutory prohibitions on specific license types that may not be held by Large Cultivators. Incorporated by Reference There are no documents incorporated by reference. Evaluation of Inconsistency/Incompatibility with Existing State Regulations: As required by Gov. Code

section 11346.5(a)(3) (D), the Department has conducted an evaluation of these proposed regulations and has determined that they are not inconsistent or incompatible with exist - ing regulations. Evaluation of Inconsistency with Federal Regulation Statute The United States Drug Enforcement Administration (DEA) under the Controlled Substances Act lists can - nabis as a

Schedule 1 Drug. This means that com - mercial cannabis activity us illegal under federal law. However, California, through the MAUCRSA and other laws, has decriminalized the cultivation, sale, and possession of cannabis goods for persons aged 21 or older and for medicinal patients. Plain English Requirement Department staff prepared these proposed regula - tions pursuant to the standard of clarity provided in Gov. Code

section 11349 and the plain English require- ments of Gov. Code sections 11342.580 and 11346.2, subsection (a)(1). The proposed regulations are writ - ten to be easily understood by the persons that will use them. DISCLOSURES REGARDING THE PROPOSED ACTION The Department has made the following initial determinations: Local mandate: There will be no local mandate. Cost to any local agency or school district requiring reimbursement pursuant to Gov. Code

section 17500, et seq: None. Any other non–discretionary cost or savings im - posed upon local agencies: None. Cost or savings to any state agency: Reduction of $4.5 million in license fees. Cost or savings in federal funding to the state: None. Effect on Housing Costs: The proposed regulations will have no fiscal or other effect upon housing in the state.

Significant Statewide Adverse Economic Impact Directly Affecting Businesses: The Department has determined there will not be a significant, statewide adverse economic impact directly affecting business - es, including the ability of California businesses to compete with businesses in other states. Small Business Determination: The proposed regu - lations would affect approximately 319 businesses. Of these businesses 300 are estimated to meet the crite - ria for being classified as a small business. The annual cost savings associated with the proposed regulations for a small business equal $2,600.

Cost Impacts on a Representative Private Person or Business: The Department is not aware of any cost im- pacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action. ECONOMIC IMPACT AND FISCAL IMPACTS Business Impact Licensed cultivators will now have the ability to choose to obtain a single large license instead of multi- ple smaller licenses to engage in cultivation on a larg- er parcel of land. This will result in the need for few - er individual cultivation licenses overall.

Additionally, licensees will have the opportunity to convert exist - ing licenses into a large or medium cultivation license. This provides licensed cultivators with added flexibil- ity in operating their cultivation operations. Estimated Costs to Businesses Costs to licensed cultivators include one–time con - version costs such as reviewing the new regulations and preparing a request for conversion which is es - timated to be $7,585 per Large Cultivation License. The estimated one–time cost for converting a Medium Cultivation License is approximately $1,385.

The esti- mated annual costs to licensed cultivators to maintain

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 696 a Large Cultivation License is approximately $3,000 for internal staff and legal/consulting resources used to maintain the license. The estimated annual cost of maintaining a Medium Cultivation License is roughly $1,500. The total annual gross direct costs to licensed cultivators is estimated to be $1.295 million annually.

Estimated Benefits of Regulation The reduction in the overall number of licenses due to the availability of Large Cultivation Licenses leads to a reduction in the amount of licensing fees paid by licensed cultivators and a reduction in the regulato - ry costs for the Department. It is estimated that un - der the proposed regulations 4,239 existing cultivation licenses will be consolidated into 319 Type 5 Large Cultivation License. Additionally, it is estimated that 103 existing medium cultivation licenses would be consolidated into 29 Medium Cultivation Licenses.

It is estimated that the reduction in total annual li - cense fees paid by cultivators will equal a total of $4.549 million a year. The estimated annual operat - ing cost savings per stacked license due to reduced owner time and reduced hours for consulting and/or legal services is roughly $1,102 per license. Multiplied over the total reduction in licenses, the estimated total gross cost savings for operational costs of cultivation businesses is approximately $4.787 million per year. Therefore, the total cost benefit to cultivation busi - nesses is estimated at $9.336 million annually.

When compared to the estimated cost to business - es, the direct net benefit to cultivation businesses from the proposed regulations is estimated to be $8.041 mil- lion a year. Economic Impact Assessment The proposed regulations will not have a significant adverse economic impact on businesses. In relation to jobs, the Department anticipates a to - tal net increase of 18.3 Full–Time Equivalent (FTE) jobs. The proposed regulations are expected to elimi - nate 21.9 FTE jobs and create 40.3 FTE jobs. All jobs are expected to be in cannabis cultivation or related industries.

The proposed regulations would affect approximate- ly 319 businesses. Of these businesses 300 are esti - mated to meet the criteria for being classified as a small business. The representative costs for a typical business to convert all licenses to a Large Cultivation License would be $7,625 in one–time costs, followed by $3,000 annually. The annual benefits would be $5,900 in reduced business expenses, as well as be - tween $0 and $6,480 in annual license fee savings, de- pending on the cultivation method. The annual cost savings associated with the proposed regulations for a small business equal $2,600.

The proposed regulations would neither create nor eliminate businesses. The proposed regulations are likely to encourage expansion of businesses in the State as there is an opportunity and incentive for cul - tivators to expand to realize economies of scale. The proposed regulations would not affect the ability of businesses in the State to compete. The proposed regulations are estimated to result in a total net increase of 18.3 FTE jobs, $9.014 million in labor income, $2.339 million in value added, and $4.424 million in total output.

Benefits of the Proposed Regulation The proposed regulations would not affect the health and welfare of California. The proposed regulations would not affect worker safety. The proposed regulations would also provide ben - efits to the State’s environment that are not mone - tized. This may include encouraging more cannabis businesses to remain in the licensed market. To the extent that unlicensed cannabis operations can cause negative environmental impacts, the proposed regu - lations would provide indirect benefits to the State’s environment.

Fiscal Effect on State Government There is likely going to be an increase in the Department staff time needed in the first year to ac - commodate the shift to Large Cultivation Licenses. However, the annual staff time required to manage li - censes will decrease in subsequent years as there will be fewer individual cultivation licenses. There is also expected to be an increase in cultivation license fee collected in the first year, followed by a decrease in cultivation license fees collected in subsequent years as there will be fewer licenses overall.

It is estimated that Department license fee revenue will decrease by $4.5 million annually. CONSIDERATION OF ALTERNATIVES In accordance with Government Code

section 11346.5, subdivision (a)(13), the Department must de- termine that no reasonable alternative it considered or that has otherwise been identified and brought to the attention of the Department would be more effective in carrying out the purpose for which the action is pro - posed or would be as effective and less burdensome to affected private persons than the proposed action or would be more cost–effective to affected private per - sons and equally effective in implementing the statu - tory policy or other provision of law.

The Department invites interested persons to pres - ent statements or arguments with respect to alter - natives to the proposed regulations at the scheduled hearing or during the written comment period. Set forth below are the alternatives which were con- sidered and the reasons each alternative was rejected: The first alternatives considered for the proposed regulations concerns the method for determining the

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 697 annual license fee for the Large Cultivation Licenses being introduced through the proposed regulations. The proposed regulations include a method for deter - mining the appropriate annual license fee for a large cultivation license based on the total canopy size of the cultivation. This method is consistent with the methods currently used for determining the licens - ing fees for all other existing cultivation license types.

The Department considered an alternative method of determining the licensing fees based on a measure of output rather than canopy size. The annual license fees for a number of commercial cannabis license types regulated by the Department are determined by the licensed business’ annual gross revenue. Another potential measure of output could be a measure of the physical amount of cannabis harvested as the basis for determining the annual license fee.

The Department considered applying a similar method using a mea - sure of output such as gross revenue or total pounds of cannabis harvested to determine the license fees for Large Cultivation Licenses. Currently, all cultivation license types regulated by the Department have annu - al license fees that are determined based on the cano - py size. At this time, it is not clear which of the meth- ods would be less expensive to implement or more ef- fective. The Department has determined that either method may be reasonably used to determine an effec- tive annual license fee for Large Cultivation Licenses.

To keep the annual license fee calculation or Large Licenses consistent with the calculation for annual li - cense fees for all other types of cultivation licenses, the Department has decided to determine the annu - al license fee for Large Cultivation Licenses based on canopy size as proposed in the regulations, rather than determining the annual license fee based on a measure of output.

By keeping the method for determining li - cense fees consistent among all cultivation license types, the Department hopes to reduce any confusion that may occur among licensees and applicants who are seeking a cultivation license. The second alternative considered by the Department was to not develop new regulations. The Department would not create new regulations to provide guid - ance for applicants and licensees who seek to obtain a Large Cultivation License. The Department would rely only on existing regulations.

The current regula - tions were not developed with the Large Cultivation Licenses in mind and do not currently contain any pro- visions that are specific to Large Cultivation Licenses. This alternative would be less costly than the method proposed within the regulations as it would not require to Department to take any action. However, this alter- native is much less effective than the proposed reg - ulations.

Failing to provide licensees and applicants with clear information regarding Large Cultivation Licenses prior to the January 1, 2023, date when the licenses become available will likely cause confusion for licensees and applicants. Additionally, failing to provide applicants and licensees with a clear process for obtaining Large Cultivation Licenses will likely result in none of these licenses being issued.

Failure to provide Large Cultivation Licenses will deny both the commercial cannabis industry and the Department the benefits intended by the statutory language by elimi - nating the net direct economic benefits of the proposed regulations. Any cost savings to both businesses and the Department due to the availability of the Large Cultivation License type will not be realized. For the stated reasons, the Department has decided not to im - plement this alternative to the proposed regulations.

CONTACT PERSON Inquiries concerning the proposed administrative action may be directed to: Charisse Diaz Department of Cannabis Control 2920 Kilgore Road Rancho Cordova, CA 95670 916– 465–9025 Charisse.Diaz@cannabis.ca.gov The backup contact person for these inquiries is: Kaila Fayne Department of Cannabis Control 2920 Kilgore Road Rancho Cordova, CA 95670 916–251–4544 Kaila.Fayne@cannabis.ca.gov Please direct requests for copies of the proposed text (the “express terms”) of the regulations, the ini - tial statement of reasons, the modified text of the regulations, if any, or other information upon which the rulemaking is based to the contact persons listed above.

AVAILABILITY OF STATEMENT OF REASONS, TEXT OF PROPOSED REGULATIONS, AND RULEMAKING FILE The Department will have the entire rulemaking file available for inspection and copying, throughout the rulemaking process, at its office at the address above. As of the date this Notice is published in the Notice Register, the rulemaking file consists of this Notice, the proposed text of the regulations, and the Initial Statement of Reasons. Copies of materials may be ob- tained by contacting the contact person at the address, email or phone number listed above.

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 698 AVAILABILITY OF CHANGED OR MODIFIED TEXT After considering all timely and relevant comments received, the Department may adopt the proposed reg- ulations, substantially, as described in this Notice. If the Department makes modifications that are suffi - ciently related to the originally proposed text, it will make the modified text (with the changes clearly in - dicated) available to the public for at least 15 days be- fore the Department adopts the regulations, as revised.

Please send requests for copies of any modified regu - lations to the attention of the contact person at the ad - dress, email, or phone number indicated above. The Department will accept written comments on the modified regulations for at least 15 days after the date on which they are made available. AVAILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, copies of the Final Statement of Reasons may be obtained by contacting the contact person at the above address, email, or phone number indicated above.

AVAILABILITY OF DOCUMENTS ON THE INTERNET Copies of the Notice of Proposed Action, the Initial Statement or Reasons, and the text of the regulations can be accessed through the Department’s website at www.cannabis.ca.gov/resources/rulemaking/. TITLE 4. DEPARTMENT OF CANNABIS CONTROL California Code of Regulations Title 4, Division 19 Subject Matter of Proposed Regulations: Equity fee waivers and deferrals for commercial cannabis li - censing fees. Sections Affected: California Code of Regulations, title 4,

section 15014.1. Notice is hereby given that the Department of Cannabis Control (Department) proposes to adopt the proposed amended regulation, described below, after considering all comments, objections, and rec - ommendations regarding the proposed action. The Department, upon its own motion or at the request of any interested party, may thereafter adopt the propos - als substantially as described below, or may modify such proposals if such modifications are sufficient - ly related to the original text.

With the exception of technical or grammatical changes, the full text of any modified proposal will be available for inspection and copying 15 days prior to its adoption from the per - son designated in this Notice as contact person and will be mailed to those persons who submit written or oral testimony related to this proposal or who have requested notification of any changes to the proposal. All the proposed text sections are proposed to be added to the California Code of Regulations (CCR), under Division 19 of Title 4.

PUBLIC HEARING The Department will hold a virtual public hearing at the following date and time listed below: Tuesday, August 2, 2022 10:00 a.m. to 1:00 p.m. Attendees may participate via WebEx online meet - ing platform or telephone conferencing. To partici - pate via WebEx online meeting platform please email Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or (916) 465–9025 by 4:30 p.m. on July 29, to request a link to the meeting. The link to the meeting will also be posted on the Department’s website no later than 9:00 a.m. the day of the hearing.

As a reasonable accommodation, limited in– person seating may be available at the hearing in the Department Hearing Room, 2920 Kilgore Road, Rancho Cordova, CA 95670. Attendees must comply with all COVID–19 safety protocols. Please contact Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or (916) 465–9025 by 4:30 p.m. on July 29, 2022, if an accommodation is necessary. Participants will be given instructions on how to pro- vide oral comment once they have accessed the hear - ing. The hearing will proceed on the date noted above until all testimony is submitted or 1:00 p.m., whichev- er is later.

At the hearing, any person may present oral or written statements or arguments relevant to the pro- posed action described in the Informative Digest. The Department requests, but does not require, that person who make oral comments at the hearing also submit a written copy of their testimony via email. WRITTEN COMMENT PERIOD Any interested person, or the interested person’s authorized representative, may submit written com - ments relevant to the proposed regulatory action to the Department. Written comments, including those sent by mail or e–mail, can be sent to the Department at the addresses listed below.

Comments submitted must be received by the Department at its office by 5:00 p.m. on August 2, 2022. Submit comments to:

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 699 Department of Cannabis Control Legal Affairs Division 2920 Kilgore Road Rancho Cordova, CA 95670 E–mail: publiccomment@cannabis.ca.gov AUTHORITY AND REFERENCE Business & Professions Code (BPC)

section 26249 authorizes the Department to develop and implement a program to provide equity fee relief in the form of waivers and deferrals of required licensing fees. These regulations will implement, make specific, or refer - ence BPC

section 26249. INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW The purpose of these regulations is to implement the Department’s program for providing equity fee relief in the form of waivers and deferrals of licensing fees. These regulations are necessary to implement the eq - uity fee relief program and clarify and make specific sections of the Medicinal and Adult–Use Regulation and Safety Act (MAUCRSA). (Bus. & Prof. Code,

section 26000 et seq.) pertaining to equity fee relief in the form of waivers and deferrals of licensing fees. Additionally, the regulations are necessary to provide assistance to the Department’s applicants and licens - ees that were harmed by the War on Drugs. Existing Law Pursuant to MAUCRSA, the Department regulates commercial cannabis license holders in California, including cultivators, retailers, manufacturers, dis - tributors, testing laboratories, microbusinesses, and temporary cannabis events. Application require - ments, fees, and other general requirements for all li - cense types are contained in

Chapter 1, Division 19, of Title 4 of the CCR. BPC

section 26012 authorizes the Department to collect fees in connection with its regulation of such commercial cannabis activities and BPC

section 26180 further establishes a scale of appli- cation, licensing, and renewal fees intended to cover the costs of administering MAUCRSA. Additionally, and notwithstanding BPC sections 26012 and 26180, BPC

section 26249 requires the Department to imple- ment a fee waiver program by January 1, 2022, and a fee deferral program by January 1, 2023. The present emergency regulations established the framework for the Department’s issuance of fee waiv- ers and were filed with the Office of Administrative Law (OAL) on December 10, 2021. The emergency regulations were approved on December 20, 2021 and filed the same day with the Secretary of State, making them effective immediately. Following the fee waiver program’s initiation in January 2022, the Department filed an action with OAL to readopt the emergency reg- ulations.

The readoption action was approved by OAL on June 6, 2022, and filed with the Secretary State the same day, keeping them effective immediately. Policy Statement This rulemaking action would make permanent fee waiver provisions and implement fee deferrals un - der the Department’s equity fee relief program. The rulemaking would provide an overview of the defini - tions that are applicable to the equity fee relief regu - lations.

The proposed regulations would also provide an overview of what types of Department applicants and licensees may qualify for equity fee relief and the form of equity fee relief qualified equity applicants and licensees may obtain. Further, the proposed regu - lation would provide an overview of what constitutes a complete request for equity fee relief. Consistent with BPC

section 26249, the proposed regulation would clarify the qualifying criteria that equity applicants and licensees must satisfy to obtain equity fee relief. The proposed regulation would provide clarification regarding the consequences of submitting an incom - plete request for equity fee relief. The proposed reg - ulation would clarify that the Department will pro - cess requests for equity fee relief in the order in which the application or renewal has been approved by the Department.

Moreover, the proposed regulation would clarify the Department’s process for considering mul - tiple requests for equity fee relief submitted by a com- mercial cannabis business. The proposed regulation would clarify that the issuance of fee waivers is sub - ject to available funding and indicate that where fund- ing is unavailable, qualified equity applicants may ob- tain a fee deferral. Finally, the proposed regulations would provide clarity on the terms and conditions of fee deferrals issued by the Department.

Regulation Objectives and Anticipated Benefits of the Proposed Regulations The broad objectives of these regulations are to pro- vide fee relief to eligible applicants and licensees that were harmed by the War on Drugs. Cannabis prohibi- tion and criminalization had a devastating impact to certain populations and communities in California. Individuals convicted of a cannabis offense and their families suffer the long–term consequences of prohi - bition and criminalization. Such individuals have a more difficult time entering the regulated commercial cannabis industry due, in part, to a lack of access to capital.

Accordingly, the overall objective of the pro - posed regulations is to provide the process for a com - mercial cannabis business applicant or licensee to re - quest equity fee relief in the form of waivers and de - ferrals of licensing fees in accordance with BPC sec - tion 26249. Designed to assist people and communi - ties that have been harmed by the War on Drugs, BPC

section 26249 facilitates the first statewide cannabis

CALIFORNIA REGULATORY NOTICE REGISTER 2022, VOLUME NUMBER 24-Z 700 equity fee relief program of its kind in an effort to help disadvantaged cannabis entrepreneurs. Both cannabis businesses in local jurisdictions with local equity pro- grams and those that operate in jurisdictions that do not have local equity programs are eligible for waiv - ers or deferrals of licensing fees from the Department. To be eligible for a fee waiver or deferral from the Department, BPC

section 26249 requires applicants and licensees to meet one of the following criteria: 1. The applicant or licensee has previously been convicted for a cannabis related violation; 2. The applicant or licensee has been arrested for a previous cannabis related violation; 3. The applicant or licensee resides in a household whose income is less than or equal to 60 percent of the area median income for the local jurisdic - tion; or 4. The applicant or licensee resides in an area with a population disproportionately impacted by past criminal system policy.

The proposed regulation would provide specific guidance to potential equity applicants and licensees who wish to obtain equity fee relief by defining “qual- ified equity applicant or licensee” and “locally veri - fied equity applicant or licensee”. The proposed reg - ulation would specify that commercial cannabis busi - nesses with at least one qualified equity applicant or licensee would be eligible for equity fee relief in the form of one fee waiver during each calendar year and unlimited fee deferrals if they satisfy certain criteria.

The proposed regulation would also specify the infor- mation that must be included in a request for equity fee relief. The proposed regulation would also spec - ify how an applicant or licensee can demonstrate el - igibility. Lastly, the proposed regulation would pro - vide specific outcomes for deficient requests, how the Department will process requests and issue fee waiv - ers and deferrals. Under the proposed regulation, the Department would be able to grant fee waivers or fee deferrals to certain qualified equity applicants and licensees.

The proposed regulation is necessary to provide clear guidance to qualified equity applicants and licensees seeking equity fee relief which will reduce the risk of confusion regarding whom may request equity fee re - lief from the Department. Additionally, the proposed regulation would pro - vide specific guidance regarding the submittal of re - quests for equity fee relief, as well as the types of ev - idence that will be accepted by the Department in support of requests for equity fee relief.

Including this information in the regulations will ensure that prospective equity fee relief requestors are aware of submittal requirements and that the Department ob - tains enough information to make an equity fee relief determination. Moreover, it reduces the risk of confu- sion for qualified equity applicants and licensees who seek equity fee relief. The proposed regulation would provide clarity re - garding the Department’s process for evaluating re - quests for equity fee relief and the order in which equi- ty fee relief will be considered.

The Department antic- ipates a large number of requests from qualified equi - ty applicants and licensees. Providing clarity regard - ing how the Department will process equity fee relief requests reduces the risk of confusion for equity fee relief requestors regarding the timing of review and availability of funding.

Offering equity fee relief in the form of waivers and deferrals of licensing fees will further the stated in - tent of MAUCRSA by reducing barriers to licensure in the regulated commercial cannabis industry by al - lowing prospective applicants to be able to seek li - censure without the need for obtaining large amounts of start–up capital required to pay for licensing fees. This, in turn, will aid the state in its goal of eliminat - ing or reducing the illicit cannabis market by bringing more people into the regulated marketplace.

Notably, through the budget process, the Department has al - ready received the budget allocations for the costs as - sociated with the administration of the program.

Section 15014.1 Equity Fee Relief The proposed

section would define the terms “qual- ified equit