California’s Department of Cannabis Control (DCC) issued notice of an emergency rulemaking action designed to help state licensees pursue federal registration with the DEA following the federal rescheduling of marijuana.

The DCC announced today that it intends to revise existing regulations to allow licensees that currently hold both medicinal and adult-use designations to be issued separate Medicinal and Adult-Use licenses. The change would create an expedited process for issuing those licenses, including in some cases to a different legal entity than the one currently holding the license, provided certain requirements are met.

Under California’s licensing structure, A-designations apply to adult-use marijuana activity, while M-designations apply to medicinal marijuana activity. The proposed emergency regulations would create a process for separating those designations into distinct licenses, while placing conditions on any new licenses issued through the process to ensure continued compliance with state requirements.

The proposal would apply to licensees authorized to engage in retail activity that currently hold a combined A- and M-designated license. Under the change, those licensees could modify the existing license into an A-license while receiving a new M-license, allowing the medicinal side of the business to pursue DEA registration without requiring the operator to abandon adult-use sales.

DCC says the emergency action is needed because California medical marijuana licensees were given only 60 days to apply for DEA registration through an expedited process. The department estimates that roughly 1,600 licensed retailers and microbusinesses with both medicinal and adult-use designations could be eligible to make changes under the regulations, though it remains unclear how many will submit requests.

The proposed rules would require separate A- and M-licensees operating at the same premises under separate entities to share the same individual owners and designated responsible party. They would also need to physically separate marijuana products by license, maintain separate inventory and business records, and remain jointly and severally liable for obligations, debts and violations under either license.

DCC says the change is intended to give California businesses flexibility as they prepare for potential DEA registration, while maintaining the structure of the state’s existing regulated marijuana system. The department says early registration could give California operators a stronger competitive position compared to businesses in other states, while helping medical marijuana licensees access benefits tied to federal recognition.

Public comments on the emergency rulemaking may be submitted between May 27 and May 31. Comments must be sent to the Office of Administrative Law, with a copy also sent to the Department of Cannabis Control.

According to the notice, comments must state that they concern an emergency rulemaking action currently under OAL review and must reference the topic: “Modifications to A- and M-designation.”