Joint Legislative Audit

Okay. Good afternoon, everyone. Thank you for your patience. It's a joint legislative audit committee, so the Assembly was ready to go, and the Senate ran a little bit longer, but we appreciate Senator Cortese being here and our Vice Chair will be here shortly. But thank you for your patience.

Today, we will discuss the findings and recommendations in the recent audit report titled, "Department of Cannabis Control: Unclear Rules and Insufficient Enforcement Hamper Its Ability to Identify Packaging That Is Attractive to Children." The state of California legalized the use, cultivation, and sale of cannabis in 2016.

Five years later, in 2021, the Department of Cannabis Control was created to regulate the cannabis industry. To date, the Department has regulated the cultivation, manufacturing, labeling, packaging, testing, and transportation of cannabis.

A fact worth mentioning here for our discussion purposes today is that the number of calls to California Poison Control regarding the ingestion of cannabis by children has skyrocketed since 2016. And that's really the genesis of Assemblymember Irwin's audit request.

And want to thank you, Assemblymember, for being here and for really leading the charge on this issue, as you have year after year.

But, you know, the point is that since voters legalize cannabis, calls to Poison Control by children under the age of 5—5 years and younger, and I think we should pause and just take that in, this isn't five and older, this is five and younger, have increased nearly 500% fivefold. In 2016, Poison Control received 148 calls.

In 2023, there were 842 calls regarding cannabis ingestion by young children. And I think that's obviously startling and should make us all think about just how well we are enforcing and looking at what is enforcing the legal market and obviously enforcing the illegal market, but just how we're protecting our kids amongst this rapidly evolving space.

Late last year, several kids here in Sacramento were poisoned and sickened while at school. One kid brought what he thought was candy to school and shared it with friends. And the school said that the packaging looked exactly like candy and you would never know that there was THC or any cannabis in it.

And I think the school administrators were shocked by that. Similar events have occurred throughout the state of California, Alameda, Studio City, Northridge and other cities, and a doctor in Northridge actually recently told ABC7 that children are especially susceptible to gummies because of their size and weight.

And obviously, what could be a normal dose for an adult can be toxic to a child. The obvious fact worth mentioning here is that certain packaging and food shapes, colors, cartoon fonts and characters, and flavors can make these products more appealing to kids. I think that cannot be disputed by anyone here in this room.

And most folks have been down a cereal aisle in a, in a grocery store. A lot of kids are attracted by the colorful boxes and the cartoon-like figures and the fonts and we're seeing a similar trend with cannabis.

And I think that we want to make cannabis, I think, in terms of making sure we're protecting our kids more like the pasta aisle and less like the cereal aisle.

And I think that's something that hopefully we can all agree on as well, because when I take my kids down the pasta aisle, they don't want to buy anything. When I take them down the cereal aisle, they want five different boxes. And the State Auditor who is here—thank you, Mr. Parks, for joining us with your staff—has a number of recommendations in his report that the Legislature can consider.

And one of them is actually adopting Oregon's regulations that involve plain packaging for cannabis products. And in essence, cannabis packaging would look more like, again, the pasta or the flower aisle in a supermarket and not the candy aisle.

And that's something that we can all consider and discuss today. We're going to discuss the Audit Report and we will go through the findings and I think we will have a very fruitful discussion. I think this is exactly what the Joint Legislative Audit Committee is designed to do.

And I think that this particular subject matter and Audit Report is really opportune and the timing is perfect. We will—my Vice Chair is not here yet, but I will give him a chance to give an opening statement. But I am now going to kick it over to Assemblymember Irwin, who actually initiated this audit.

And again, just want to thank you for your leadership and any opening words, please.

There we are. Thank you. It's good to see everybody here today. I'd like to begin by thanking State Auditor Parks for the exceptional work that he and his staff did putting together this audit of the Department of Cannabis Control.

And I would also like to thank my colleagues, Chair Harabedian, Chair Berman, as well as Vice Chair Cabaldon and all your staff for your collective work in putting this hearing together. I would also like to thank Assemblymember Hart, who actually initiated the audit back when—during his tenure. When California passed Proposition 64, the message from voters was clear, legalization of cannabis should not come at the expense of our children.

And yet, as the State Auditor's report shows us, the industry and DCC have failed to uphold this core tenant of Prop 64. Child ingestions of cannabis products are not a theoretical problem.

As my colleague Harabedian stated, the data is clear and consistent. Poison Control calls have skyrocketed since the 2016 passage of Prop 64. The illicit market and hemp products unquestionably bear responsibility for many of these poisonings, but as the Auditor showed in this report, it is not debatable the legal market is responsible also.

A walk through a dispensary makes this reality impossible to ignore. Far too many legal cannabis products have packaging and features that are attractive to children. If we only blame the illicit market and the hemp industry, we fail to address the role of the legal market.

We guarantee that child poisonings will continue and we give consumers purchasing from franchise license dispensaries a false sense of safety. We must do more. Legal operators raise concerns that restrictions will prevent them from competing with the illicit market.

Yet, while we choose to delay action over these fears, children continue to end up in emergency rooms because of cannabis poisonings. Additionally, enforcement continues to be a varied and unclear industry reports—continues to report—that they themselves do not know what really constitutes whether a product is attractive to children.

It is incumbent upon the Legislature to address these shortcomings. I look forward to hearing more about the Auditor's recommendations on addressing this public health crisis, as well as hearing from the Department of—on the work that they are doing to ensure that we can better meet the intent of Prop 64 in protecting our children.

Thank you, Assemblymember, and yes, let me thank my predecessor, Chair Hart, for initiating this audit. And thank you for being here. Before we bring our State Auditor to the dais to start the first panel. Anyone else like to make any opening comments. And seeing none, Mr. Parks, please join us and I know you are being joined by Mr. Lewis, who is the Audit Principal, and when you're ready, please proceed with your testimony.

If you could keep it under 10 minutes as usual, that would be great and then we will open it up for questions.

So, good to see you and thank you for being here.

Good afternoon, Chairman Harabedian and Members of the Committee.

Last August, my office issued an audit report on the Department of Cannabis Control that was prompted by an audit request by Assemblymember Irwin and the audit request cited concerns with the packaging of cannabis products and their potential attractiveness to children, with the Assembly Member citing several local news reports of children at California elementary and middle schools becoming ill after consuming cannabis-infused gummies and other edibles.

The Department is tasked with regulating the legal cannabis market, which includes, among other things, establishing and enforcing regulations on product packaging to ensure they are not attractive to children.

Among the audit's various objectives, my office was directed to identify the processes the Department follows when evaluating product packaging and number two, identify what enforcement actions the Department has taken and whether or not those actions have been effective.

Our audit report highlights three key observations that may drive some of the discussion we have here today, the first being the Department's regulations on prohibited design elements are not always well defined or commonly understood, leading to subjectivity and, at times, inconsistent enforcement.

DCC's own response to the audit acknowledged that determining attractive to children and product packaging can be inherently subjective, while our discussions with DCC's own enforcement staff told us they wished their rules were clearer and easier to enforce, and many had their own ideas on improvements that could be considered for greater clarity.

To illustrate the subjective nature of product packaging evaluations, my audit team reviewed how DCC resolved 29 public complaints on packaging and 51 other packages identified by their own inspectors as potentially attractive to children or 80 products overall, and my staff ended up disagreeing with DCC's conclusions that certain products were not attractive when we thought they were, in 13 of those 80 instances, or just over 16% of the time.

And so, ultimately, that leads us to conclude that the Legislature may need to help the Department and licensees by further clarifying in law which design elements should be prohibited based on the legislature's policy preferences.

The second item I would raise is that the state relies on licensees to both understand and then follow product packaging rules, which, as I just noted, could be subjective since there is no prior review by the Department before products enter the marketplace.

It's not until DCC responds to a public complaint or conducts an inspection of a licensee that product packaging is scrutinized.

Ultimately, in an environment where the rules are unclear, subject to interpretation, or are incomplete, and where product packaging is not reviewed by the state beforehand, the result is increased risk that packages that are attractive to children will enter the marketplace. And fundamentally, the decision over how much risk to accept is for policymakers to decide.

Finally, a third factor noted in the audit is that DCC demonstrated weaknesses in the oversight activities it conducts. In addition to lacking the staff resources needed to inspect all licensees annually, which is an internal goal of the Department, DCC's practices make it difficult to identify repeat offenders that may warrant escalating sanctions.

The Department's Advertising, Products, Packaging, and Label Team, known as APPL, is tasked with reviewing product packaging that could be attractive to children, but it does not consistently determine whether a licensee has demonstrated a repeated pattern of the same violations, which, if known, could possibly lead to harsher penalties.

19 of the 48 licensees we reviewed had previously received multiple violations, several pertaining to product packaging, and the most common response from the Department to those repeat violations was issuing another notice to comply letter instead of more severe enforcement action such as a monetary fine, temporary suspension, or license revocation.

In one case, we noted a licensee received over—received—four notice to comply letters from the Department, all issued in 2024, including for repeated violations of product packaging that was attractive to children.

Although the Department asserted to us that it is now transitioning to an enforcement focus and away from educating licensees on program rules, the Department could not demonstrate that it has policies and practices that position it to consistently take more aggressive action against repeat violators.

For the rest of my presentation, we have various pictures from our audit report that I will share with you as some examples of what my audit team found when reviewing cannabis products for sale in California and the gaps that exist in the criteria, which hopefully helps the Legislature illuminate some opportunities that we may have for greater clarity in the law.

During the audit, we reviewed a total of 120 different products, 29 complaints from the public, 51 referrals from DCC's own inspection staff indicating that products potentially could be attractive to children, and 40 products that my staff just reviewed on their own online.

And our work also entailed reviewing cannabis products that inspectors looked at while we accompanied them on tours of dispensaries. So, in this first poster, what we have here is we have a cartoon face with colorful illustrations.

In this first example, the Department reviewed several versions of packaging for this product due to a complaint coming in from the public. DCC's regulations prohibit cartoon images and likenesses to images or characters or phrases that are popularly used to advertise to children.

This product obviously has a cartoonish smiley face with a tongue sticking out against the backdrop of a dizzying swirl that you might see in a cartoon advertising "Sour Grape Ape Gummies."

The Department concluded that the brand's packaging was not attractive to children and did not consider the cartoonish characters in its analysis, choosing to focus instead on whether the image of fruit was allowable.

And when we questioned the Department about the cartoonish figure, DCC's team that evaluates product packaging stated that the package could be attractive to children, but we didn't receive any documentation from DCC that it was indicating it would follow up with the licensee.

In our next poster, we found this package for sale when we accompanied DCC inspectors as part of a retail—as part of a routine inspection of a retail licensee. This product advertises "Fruity Crispy Rice Bars" and depicts colorful images of rice cereal.

DCC's regulations prohibit a picture of the actual product if it's inedible, but it does allow images of the underlying ingredients and DCCs regulations further allow images of candies or sweets.

In this case, DCC told us that the packaging was appropriate and not attractive to children because only the ingredients, the rice cereal, was displayed and not the product itself. However, we believe the colorful rice cereal is essentially the same thing as the product. It's just a magnified view.

And this is really an example in our minds about how subjectivity over what's allowable in product packaging in terms of the ingredients or the actual product can lead to ambiguity in terms of enforcing rules designed to ensure products are not attractive to children.

In the next poster, we see a product packaging for crispy marshmallow treat, a "Fruity Blast" product in colorful font. We found this package on a poster available for sale online. DCC regulations prohibit labeling that is attractive to children, but the regulations do not prohibit fonts or colors that could be appealing to youth.

In this example, we're focusing on the colorful text of "Crispy Marshmallow Treat Fruity Blast." But again, we also see images of ingredients which are allowable per DCC regulations that include marshmallows and fruity rice cereal pieces, reminiscent of children's products.

When we discussed this product with DCC, they agreed that the package could be attractive to children due to the font used on the packaging and after a formal review by DCC, they did issue a notice to comply letter to the licensee saying that the package and the images could be attractive to children.

And in this example of the product, in our view, this is an example where products can enter the marketplace and be available for sale without the upfront review, where licensees are not expressly prohibited from using certain attractive fonts, colorful images, or images of candies and sweets.

In the following poster, we have a product for blue raspberry flavored cannabis gummies with the cartoon character in the center of the package with the tagline of "Snatch, Bite, and Soar," and we found this package available for sale online.

It has several design elements I've discussed before with colorful fonts and cartoon-like characters, but DCC regulations are silent when it comes to images or text indicating flavor.

And during the audit, we found other examples of flavors being advertised in edible cannabis products that could be attractive to children, such as cannabis-infused chocolate bar advertising a birthday cake flavor. In the next example, we have a licensee using bubble and cartoonish fonts on the packaging for orange soda pop.

We found this product available for sale in a retail store while accompanying DCC staff during an inspection. As noted earlier, DCC's regulations do not prohibit specific colors or fonts on cannabis packaging and this stands in contrast to the State of New York that does prohibit bubble or cartoon like fonts and bright colors that are neon in appearance.

And when we asked DCC about this product, staff concluded it was not attractive to children because it did not violate the state's regulations. And moving away from packaging in our next slide, cannabis-infused beverages also caught our attention during the audit, specifically because we could not find any guidance within the Department's rules pertaining to serving size requirements for beverages.

Current regulations broadly pertain to edibles, and those regulations limit products in general to 100 milligrams of THC per package with 10 milligrams serving sizes, thus 10 servings per package.

But in this poster, you see a variety of beverages ranging from 4-ounce sizes similar to energy shot drinks, to 12-to-16-ounce cans, but each of these products contain the same maximum of 100mg of THC or 10 serving sizes.

For these drinks, we found no way to measure serving size and it seems unlikely that someone would drink just 1/10 of a can of root beer or 1/10 of a 4-ounce energy shot drink.

The following poster, coming back to our orange soda pop can example, this shows the backside of that can and it shows that although the labeling shows 1/10 increments, the can itself is opaque and there is no way to see through the can and know how much has been consumed.

The audit notes that Canada and the State of Washington have specific limits on THC content in beverage containers. Canada limits edibles and THC to 10 milligrams per package and Washington requires a measuring device if you exceed 10 milligrams.

But DCC explained that it lacks the regulatory authority to add further specificity to packaging requirements for cannabis beverage containers. And the final poster that I'll share with you, before I wrap up, is this poster is meant to convey that certain cannabis strain names themselves, which are the names of different breeds of cannabis plants that have been cultivated to have specific properties, can also be attractive to children.

DCC's regulations do not include any specific requirements or prohibitions regarding the use of strain names in advertising or packages. For example, we identified products with strain names like "Root Beer Float," where the logo was somewhat reminiscent of A&W Root Beer, Tropicana Punch, Cherry Pie.

So, we ended the audit with recommendations for the Legislature's considerations, such as increasing the specificity of prohibited design elements, which could include certain fonts such as bubble or cartoonish fonts, bright colors or images implying flavor, such as images of candy or desserts, consider limiting the use of strain names that imply flavors that could be attractive to children, such as root beer float.

The Legislature may also wish to consider putting a maximum amount on the level of THC found in beverage containers to a single serving size unless there's a measuring cap associated with that product.

And more broadly, if the Legislature desires some form of upfront review before packaging hits the market, they could look potentially to other states like Oregon, which requires licensees to use pre-approved packaging unless they choose to have their specific designs evaluated by the state for a fee.

And finally, for the Department, we made recommendations that they improve their rubric tool to ensure staff more consistently evaluate packaging that may be attractive to children and where that rubric is both shared with DCC staff but also with the public.

DCC has actually started work developing such a tool during our audit and it indicated in its response it would publish that tool and its regulations pending further guidance from the Legislature.

And we also recommended that the Department develop policies and practices to ensure licensees who repeatedly violate packaging rules are identified so that the Department is able to impose more severe sanctions when warranted.

With that, I have John Lewis, the Audit Principal with me who managed the audit, and we'd both be happy to answer any questions that you have.

Thank you very much, Mr. Parks, as always, for your work and for the testimony. And before we get into questions, I do want to recognize my Co-Chair of this hearing, Assemblymember Berman, who is the Chair of the Assembly Business and Professions Committee, which has done a number of different bills in this area historically.

And I just wanted to give him an opportunity to make a few— make an opening statement and to the extent that he has questions, he can go into them. But Chair Berman, the floor is yours.

Thank you, Chair Harabedian, and first, thank you to Chair Harabedian, Vice Chair Cabaldon, for the invitation to participate in this hearing today and thanks to all the panelists on our agenda.

As Chair of the Assembly Committee on Business and Professions, I've overseen the consideration of many, many bills intended to strengthen our cannabis laws, to support lawful operators, and protect consumers.

This year will mark 10 years since the passage of Prop 64, but it has only become more clear that our state licensing scheme is struggling to achieve the expectations of California voters for a robust, well-regulated cannabis marketplace. Californians were told that an unsafe, unregulated, illegal market would be replaced with tested products from licensed businesses, but illicit cannabis cultivation and sale is still rampant.

Californians were promised significant tax dollars for our communities, but that revenue has struggled to meet initial projections, and Californians were promised that cannabis products would be kept out of sight and out of the hands of our children and our young people.

But as the State Auditor's report makes clear, the state is falling short on this promise as well. As legislators, it is our responsibility to advance legislation that furthers the intent of Californians who voted for Prop 64.

So, I want to thank the Auditor for the presentation you just gave and for the audit, and look forward to hearing both from the Auditor and stakeholders on how we can all work together to enhance our laws so that good actors can succeed in the cannabis industry while families can feel assured that cannabis products are not encouraging underage consumption.

And with that, Chair, I'll pass it back to you.

Thank you, Mr. Chair. And before we get into questions, and I will throw to Assemblymember Irwin to start us off, I just want to welcome our new Vice Chair, Senator Cabaldon, who—this is his first hearing, and he is following Senator Laird's great service to this Committee.

And I will say that tough shoes to fill, but if anyone can do it, it is you, and we're so excited to have you here and we look forward to working with you. So, thank you for joining us. And Assemblymember Irwin, the floor is yours for any questions.

Thank you. And really an excellent job on this report. I think one of the key takeaways of the report and of the speech you just gave is that there is real inconsistency in enforcement. So can you talk a little bit? You mentioned the rubric. Can you talk about how that might add consistency?

And then secondly, when you're talking about getting preapproval for labeling, how would you do? What Department would you think should be in charge of that?

As far as the rubric goes, that was a tool that the Department began working on after we started our audit, if I remember correctly. And it was really in response to observations that DCC enforcement staff at the field weren't always being consistent in how they evaluated packaging.

And so if there is some tool that staff Members can follow to make sure that they're evaluating projects consistently, that was the impetus for that tool.

I think I shared an example earlier where we had a. I think it was the first poster where we had the cartoonish face, and we had the observation that DCC staff didn't even consider the cartoon. They were instead focusing on whether or not it was okay to have the fruit on the box.

And so we think having a tool better positions the Department to know and approach packaging in a consistent manner. And we think both making that available to staff, but also to licensees so that they have a better understanding of what the rules of the road can help everybody.

I think more communication on what the expectation is from the state of California is ultimately where we need to be. And the way it is now, it just seems like it's open to interpretation.

And there's also some opportunities to close some gaps, whether it's ingredients of products that perhaps by themselves could be attracted to children, whether it's marshmallows or other candies. In response to your second question, who should be in charge of deciding prepackaging? That's not one that we really contemplated in the audit.

You could leave it with the Department of Cannabis Control. But before you do that, I think there's value in the Legislature providing more clarity on what design elements do you want to make sure that you prohibit so you better position the Department to enforce those policy preferences as expressed by the Legislature.

And some of the characteristics you're talking about that they're not explicitly looking for right now is the font and the cartoon characters that those are not explicitly prohibited. So it would make sense, in your opinion, for the Legislature to weigh in on that effort? Again, I believe it is weighed in on.

I think the more the Legislature can evaluate Risk and say these are things we don't want to live with. These are things we want to prohibit. On packaging, to the chairman's point, I want the products to be more like the pasta aisle than the cereal aisle.

It's going to require the Legislature providing more specificity in what you don't want to see on these posters that I shared before.

All right, thank you.

Any other questions for the auditor? I guess while folks contemplate questions, my, you know, my takeaway is I do think that the Department, obviously there's probably a resource issue if they're only able to examine 50% of the licensees a year. It's hard. It's hard to know what's in the market. And obviously they're responding to complaints.

You have put forward a recommendation on the. On the pre approval program and process for or that Oregon has implemented. And I guess realistically, do you think that that is something that, that we could even do in California given the size of the state relative to Oregon, the size, you know, the number of licensees that we have.

And I guess. Can you just walk us through the pros and cons?

So I think you hit the nail on the head. The size of the market in California is very large and potentially that could very well impose a resource issue. But by also charging fees to licensees, you create a revenue opportunity where you would then have the staff, the funding to hire the staff to do these evaluations.

And so I think at the end of the day, whether or not you want to impose a prepackaging regime or you want to go somewhere in between, where we're not going to do that, but instead we're going to be very clear and explicit about what is allowed and what's not allowed.

There's a spectrum of options here, I think, for the Legislature to consider, and I think an element that needs to be considered as part of that is cost. Our audit did not evaluate an and nor were we asked to evaluate the costs to the Department if they were to implement such a program.

I think we were approaching it from the standpoint of how do we give the Legislature maximum options in terms of what we're seeing in other states and how other jurisdictions are trying to control the cannabis packaging on products in their jurisdictions.

But I think the Department would probably be able to speak more clearly on cost implications of a prepackaging approval protocol. Appreciate that.

Do you have a follow up? Go ahead. I am done. I appreciate that.

I just wanted to. This issue of just continuing to put out notices to comply and not looking at vendors that have multiple times put these products out that are attractive to children. Why is it that you can figure out that somebody has multiple notices to comply and the Department can't?

I'll turn it over to my colleague, John Lewis.

So the few reasons there DCC in the Department, in coming together in 2001, came together from three different entities, different data systems. They are still in the process of putting all of that together. We pulled data from several different sources to try to get that information, and I think we were pretty successful in identifying that.

The other issue is that the Department had different. Different ways of investigating certain licensees. Some of them did look at, for example, repeat offenses. Others did not explicitly look at those. They are in the process of creating a system where that will always be a consideration.

Okay, so we. And then I guess when they come up, maybe they can let us know if there's going to be fines or increased penalties, as you recommended.

Yeah, I believe we made recommendations that there needed to be greater clarity among staff about when to escalate penalties in the face of repeat violations. And so the Department didn't disagree, so they agreed with that recommendation. My understanding is that they're in the process of developing those policies and they're keeping us informed.

And I expect that they'll share with us a copy of what those new policies and guidelines are as soon as they're available. And I believe it's August. I could be wrong on the date, but I believe it's either August or the spring that they plan to have that in place.

But. But there's one thing is the escalating penalties, and the other thing is how difficult is it to track licensees and whether they have had, you know, multiple times. Have multiple times allowed these attractive to children products?

Yeah, I believe one of the things that they're working on with their staff is requiring them when they do an inspection. And again, I'm.

The Department can mention this when they come up, but they've been talking to us about including it on templates, on forms, making sure each of their inspectors, when they do an inspection of a licensee, that they are researching the compliance history of that licensee so that they know and understand where that licensee has had problems in the past.

It helps inform what they're looking at now. And if they have a repeat violation, then they have the history where they can decide, is this another notice to comply letter, or do we need to escalate this to a citation or something worse? And so that's the trajectory that I.

That I'M told that they're on, but we just haven't seen that in formal policy documentation yet.

Thank you.

Thank you. Well, appreciate you both. We're now going to bring up the Department and hear from them and we would like to welcome up Christina Dempsey is the Deputy Director of Government Affairs for the Department of Cannabis Control and Zara Ruiz, or Zarha Ruiz, excuse me, Branch Chief Compliance Inspection Branch of the Department of Cannabis Control.

Welcome to you both and Mr. Lewis and Mr. Parks, you can stay there as well while they testify. And if you guys can keep it to 10 minutes, that's great. Obviously, if you go over, we're not going to cut you off, but thank you for being here and we appreciate your time. So whenever you're ready, go ahead.

Chair and Members, thank you for the opportunity to appear before you today to discuss the state auditors review of the department's oversight of cannabis packaging and labeling standards intended to protect children. My name is Christina Dempsey. I'm the Deputy Director of Government affairs and this is Sarah Ruiz, who is our head of our inspection branch.

We appreciate the legislature's continued focus on youth protection. Preventing youth access to cannabis and reducing the risk of accidents. Accidental ingestion are core public safety responsibilities and they remain among the department's highest priorities. We also want to express our gratitude and respect for the state auditor's work.

We view this audit not simply as an evaluation of past practices, but as an opportunity to strengthen our operations and improve our approach going forward. In that spirit, the Department has taken the findings seriously and has moved quickly to implement changes that improve consistency, coordination, and accountability in this area.

Since the audit period, the Department has made operational improvements. We have strengthened our centralized review structure to ensure that determinations about whether packaging may be attractive to children are made uniformly across the state. We establish a specialized internal review process.

We redirected staff to form a team dedicated to labeling review, and we deployed enhanced technology tools to assist staff in the evaluation of product imagery and identification of potential youth. Appealing design elements. The Department has also strengthened our approach to repeat violations.

Our compliance division has developed new procedural standards for inspection and investigative case files that require staff to identify and document prior compliance actions and incorporate a licensee's history into enforcement decisions. This supports a more uniform application of the progressive discipline framework.

In addition, the Department has enhanced its license database to track labeling actions and allow staff to more effectively retrieve compliance history as they evaluate potential disciplinary measures. We have also expanded proactive field oversight through market surveillance activities.

Finally, the Department is incorporating performance metrics related to these priorities into its next strategic plan to ensure ongoing accountability and transparency regarding our progress consistent with the audit recommendation. Taken together, these efforts reflect operational maturation and a sustained commitment to strengthening this regulatory oversight function.

As we continue our work to improve in this area, we are also thinking about some larger dynamics that shape youth exposure risks. First, the size of the illicit market presents unique regulatory and enforcement challenges, and the most egregious examples of youth oriented labeling are often found outside of the licensed market.

Enforcement activities continue to identify products and illicit cannabis channels and in the unregulated intoxicating hemp market that feature copycat packaging of popular children's snacks, cartoon imagery and other clearly youth appealing designs. These products exist outside of the regulatory system and outside of the safeguards that apply to licensed businesses.

The Department has a Law Enforcement division dedicated to disrupting and dismantling the illicit cannabis market and we co lead the state's Unified Cannabis Enforcement Task Force, a coordinated, multi agency public safety effort responsible for seizing a total of $1.2 billion worth of cannabis and cannabis products since its founding in 2022.

This is removing dangerous products from the state and preventing illicit sellers from reaching consumers and especially youth. Additionally, Assembly Bill 8, authored by Assemblymember Aguiar Curry and signed into law last year, closed loopholes around intoxicating hemp products and provide state agencies, including the Department, with stronger tools to address bad actors who continue to bypass regulatory protections.

Second, youth exposure risks differ across age groups and occur through different pathways. For young children, the primary concern is accidental ingestion, most often involving edible products accessed in the home. For adolescents. The concern is early initiation and patterns of use.

Understanding how different age groups obtain cannabis and which products are associated with those risks is critical to ensuring that policy interventions are targeted appropriately and grounded in evidence. The Department is committed to working with the Legislature on thoughtful, targeted solutions.

We support efforts to increase clarity where appropriate, to strengthen oversight tools and ensure that enforcement resources are aligned with the highest risk markets and behaviors. In closing, the Department views this audit as a constructive opportunity. We have already taken meaningful steps to strengthen our processes and we remain committed to continuous improvement.

Most importantly, we look forward to partnering with the Legislature to advance policies that meaningfully reduce youth exposure and strengthen the integrity of California's regulated cannabis market. Thank you and I look forward to your questions.

Thank you very much for that. I will now open it up to questions. Senator Irwin, would you like to start us off?

I'll start again. When you talked about thank you for that. When you talked about progressive punishments or escalation Are you going beyond then notice to comply? What would be step two? Would it be a fine as the auditor recommended, or Right?

So we implement a progressive discipline approach and we harness all of our enforcement tools that we have. So you talked about a notice to comply. That's probably the lowest level of notice that we have for a licensee.

As you stated earlier, we do have systems in place now to allow us to take a look at compliance history as well as previous egregiousness that could have occurred. And so we've got citation, we've got embargo authority.

If something is egregious enough where we'd need to remove it from a retail space, for instance, that we're observing it at, and then be able to trace it back to all of the other locations that it's located in, we have orders of abatement. And when egregious enough, we would take license action.

So notice to comply is the lowest bar of response from the Department for noncompliance.

Have you issued any of those accelerated disciplinary processes yet? You have done since the audit came out. You have. Okay. And I know in the report, your response, your response to the audit was that hemp and illicit cannabis are significant contributors to child poisoning.

You do believe, I assume, that the legal market has some role also in this.

Certainly it's not one or the other. It has to be all of those done well together. And certainly we are very conscious of what is being sold in the regulated market and we want to strengthen the protections that are available there.

We highlight the illicit market and the unregulated hemp market because those markets are very large in the state of California. And in thinking about the protections for youth specifically, one of the. A couple of the core protections that are in the license market are that stores are age gated, where, as in the other markets, they aren't.

There are advertising restrictions and we can strengthen all of the requirements that we have for the license market. We certainly don't dispute that. But we also have to consider that there are a lot of avenues where youth are accessing products and fairly readily accessing products that also must be addressed.

Zero, and absolutely. I haven't heard anybody in the Legislature not talk about enforcement in the illicit market. I think that that is really critical. But all these pictures that we saw today, even if a store is age gated, if this is in, you know, somebody's home, it certainly to me seems that could contribute to youth ingestion.

Especially as Assemblymember Harabedian mentioned, the ingestion under age 5, which is really that the numbers have, you know, I had mentioned this before, have increased since legalization. This, this rapid increase. So, so there might be a lot of parents that are bringing these, these type of products into the house.

So I, I think it is really important to be more clear on what's attractive to children. If the auditor comes in and has a lot of disagreements with how, how these products were categorized, I hope that you're open to working with the Legislature about being more clear. Certainly in other states, they don't allow cartoon fonts.

Why is that necessary? Why are cartoon characters necessary? It seems like we need to be more clear. Unless you think that this is going to affect the legal market.

We're certainly interested in working with the Legislature to strengthen the protections in the legal market. I do want to touch on the poison control data because it was highlighted in the audit and you phrased this here. Legalization was passed with Prop 64 in 2016.

And we did start to see, even as soon as 2016, the poison control center calls start to increase. And they increased after 2018, when the regulated market launched. Some of the steepest increases also come after 2019, when hemp was descheduled at the federal level and this intoxicating hemp market that we see today started to come into existence.

And it's really difficult in the poison control data to differentiate which market people are obtaining products from, whether it is someone who bought in the regulated market, brought it home and then, and then a child accessed it in the home, or whether it was purchased from somewhere else.

And so in thinking about the poison control data, I do just want to caution that it is a mixture of sources where someone might be getting products.

I certainly appreciate, and I appreciate that you're bringing that up. I just don't think that in the legal market it is helpful to the problem that we're trying to address to have the labels that we have that the auditor showed us today. But thank you very much. Appreciate your answers, Mr. Hart.

So I'm a little confused because it sounds to me like you do have the regulatory authority to keep these products from entering the legal market, but that there is a resource constraint that you're not able to get after all of them.

And then in addition to that, there's the illegal market that poses another challenge that you have to use your resources to go after. So in that context, what is the problem? Does the Legislature need to tell you explicitly what is appropriate and not appropriate for children?

Do you need more funding to be able to execute the mission that you have is your focus more appropriately on the illegal market. We get three pieces of this puzzle that are competing for resources and attention, including ours. I'd just like to know more from your perspective. What is the most effective use of our resources?

In all candor, it's a little bit of everything. So we, like many other state agencies, operate under resource constraints. And so we would love to have more inspectors to be able to go out on site to our licensees where this audit is concerned and being able to review labels.

We did redirect some of our staff to do this work specifically to at least address that resource constraint. But there's a number of priorities that, you know, we have to. We have to deal with and would love to have more inspectors.

We do have some budget proposals under consideration this year for additional legal staff to review some of the decisions that. That we're making and to be able to issue those notices and citations, recalls things like that more timely and more rapidly.

And then we do have a budget request to get more officers to address some of the illicit market issues. Incidentally, since we're talking about our systems, we also have a budget request to consolidate our licensing systems because as the auditor noted, we do. We.

When DCC was formed, there were separate databases that were used by the three programs. We've now merged at least one of them in and. But we still operate under two databases, which can make it more challenging to do licensee research or to do some of the work that our staff needs to do.

So we do have budget requests in to try and address the resource challenge and again, would like to work with the Legislature on solutions on the policy side as well.

Do you think there is a failure in the definition of what should be allowed and what isn't allowed, or is it the enforcement of that that is the problem?

I think the audit happened during a period where we were going through operational maturity. We formed just under five years ago as a Department, and it happened during a period where our staff were still being combined from three different programs and we were organizing the work of the Department.

And so some of that, some of the auditors finding, as I noted, we've moved quickly to operationalize within the Department and to try and organize that work and prioritize that work, as noted. But additional clarity is needed in this area.

And one of the things that we've been trying to do, at least internally, is we've spent time developing a technology tool that can Scan images of labels and then advise staff, highlight issues that staff might miss.

So There are some where it might be more obvious what is on a label and what they should be paying attention to. And there are some where young people, I mean, we're not young people.

And so there are some things where it might point out things that are popular to today's youth that an older state staff crowd might not be aware of.

And so part of what we're trying to do with that technology tool is to flag more consistently whether something might be attractive to children or not, so that our staff can then take that and actionize that. And we're getting ready to roll that out to licensees this summer as well.

All right. Well, thank you. That's very helpful.

Yeah.

Vice Chair Cabalda.

Yeah, thank you, Mr. Chair, and thank you for the thanks to the Department and to the auditor.

So on the scope of the definition, does the Department have the ability under existing law, through its regulatory determination of what the definition of child attractive is, essentially to respond to some of the issues that are raised in the auditor's report?

Some of our regulatory authority does cover that, and we've been discussing ways that we can refine our regulations, and there probably are some spaces where statutory clarity would also be helpful. So I think it's a little bit of both.

And when in the governor's Veto message on AB 1207, he indicated he was directing the Department to strengthen and expand the protections that he said at the time were pretty close to adequate, including measures to enhance enforcement of the restrictions. Where, where, where are we now? Two and a half years after that in terms of that expanded.

Like how, how has enforcement and the protection changed since the, since the governor's direction?

Well, so part of that is the formation of, of our team that reviews labels. So we now have four staff who are dedicated to that work.

Some of it was training of field staff that we've been doing, again, partly in response to the governor's direction, partly in response to the auditor's recommendations and really training staff how to elevate labels that they're finding even on routine inspections.

We also have staff who are proactively monitoring the market and who elevate labels to that team as well. So what we're doing is trying to create more of a pipeline where these cases of more egregious labels are coming through a team and action is being taken in a centralized way.

Right. Because what the Governor said was he was directing the Department to enhance enforcement of the protections, but also to strengthen, expand the protections themselves. And so curious about issues like the department's regulations, ban the use of the word candy or candies or what have you.

But, but other terms that are for candy, that are the proper names of the candy, for example, or this Rice Krispies treat versus Crispy rice treats situation.

I mean, are those issues that do require changes to the statute or is there something preventing the Department from recognizing even the clear intent of its own regulations, which is you shouldn't be marketing milk chocolate, caramel Ayes cream cones and that sort of thing to children.

But also given the Governor committed to, in vetoing AB 1207, committed that there would be in addition to enforcement, that there would be expanded and more effective protections underlying that.

Yeah, I think our teams have gotten a lot better at making those interpretations of the rules that are in the statute and the regulation.

And part of the reason that we wanted to form this centralized team to do those reviews was so that it wasn't a lot of different field staff making what were potentially different decisions or inconsistent decisions. We really wanted to create a team that was making clear decisions and then the same decisions across labels.

The how to refine policies is an area that we continue to talk about. And so that's. It's part of why we're interested in working with the Legislature on ways to refine statute and then are also looking at ways that we can refine our own policies as well.

We'll pause here. I'm going to ask a question. If anyone else has questions, just flag me. But I guess I understand on the need for clarification on certain items, especially packaging.

I'm really hung up on the drink issue where you have a four ounce drink called Strawberry Lemonade, Blue Razz, Watermelon, and then the 16 ounce, that's called just, just called Root Beer. And they're being sold, I assume legally and the Department somehow didn't take these off the market, allowed them to be sold.

And I don't know if they're still sold, but obviously if any of our kids, I mean I have three kids under the age of 11. These look like regular drinks to me. And if any of my kids drank these, they'd probably die.

So I guess where's the clarification that needs to be made to make sure that things like this don't go on the market. I mean they're clearly illegal. Like you. You shouldn't be able to have even a 16 ounce drink, let alone a 4 ounce drink with 100 milligrams of THC. Correct.

All of those products have warning statements on them and all of them are sold in Child Resistant Packaging. So, I mean, we could debate whether or not beverages should be allowed at all. But something being root beer does not necessarily make it attractive to children. Or at least, like, raises the question, like, is this attractive to children?

I mean, so, yeah, it's a challenging area because there's some subjectivity here. And so there are adult consumers who would be interested in a beverage like that. And just the nature of them having an interest does not necessarily mean a child would be attracted to it.

Do you agree? I mean, I'd like to go to the enforcement person. Do you agree with what you just said that it's root beer in and of itself is not necessarily attractive to children? My kids love root beer. I mean, it's one of their favorite drinks.

And if I show them this can that said root beer, they would be attracted to it. Maybe my kids are not the norm, but you had me up until you just tried to convince me that somehow something called root beer is not objectively attractive to children.

So do you agree from an enforcement perspective, do you agree with the testimony that you just gave?

Well, from an enforcement perspective, it's about what our statute and regulations seem to. Be attractive to children. So root beer is a strange.

We can't hear you on the microphone. Sorry.

Root beer is a strength. I'll start all over again. From an enforcement perspective, it's about narrowing down what our rules say is allowed or not allowed. And so currently, our regulations do not list root beer as the definition or part of the definition of being attractive to children.

Compounding that is that you've got strain names that have some of Root beer is a strain name as well. So when our inspectors, when our enforcement team goes out, we're taking a look at the specifics in the regulations and whether that product is compliant.

So you've got a product with the appropriate warnings on it, you've got the serving sizes on it, and you've got it under the maximum for a container on it. The rest of it would be personal opinion.

And as Christina stated, we're interested in finding that specificity in future regulations so that things that perhaps are more widely the sentiment is that something is attractive to children can be addressed there.

Yep. Yeah. Appreciate it. I mean, I think we have a huge problem if that's the answer. So I'm going to kick this over to Assemblymember Barakahn. Thank you.

Thank you, Mr. Chair. And my kids are slightly older than the chair's children, but I too, am the parent of children, and I will say I don't remember the Last time that my husband or I consumed root beer, and yet my children drink root beer all the time.

So I'm with the chair that I think root beer is generally attractive to children, objectively. So I guess I agree that we have a real problem. And thank you to the auditor's office, as always, for their incredible thorough work. You bring me joy with your audits, truly. And.

I sit on business and professions, which is why I'm here. And I think it is incredibly important that we support the legal cannabis market and that we are safer for it.

On the other hand, one of the things that Californians have been very, very clear about is that that is for adults and that children should not be getting their hands on cannabis and we should not be marketing cannabis to children.

And when I see this and our regulators believe that there is some ambiguity in what the auditor has set forth here, we've missed the mark.

And so I do think it is incumbent on us as lawmakers, on those that the people have elected to ensure our kids are safe to take action here, because this is not what the people want. And I honestly think that keeping the legal cannabis market strong means drawing a line where our children are safe.

They are not marketed to. They cannot get their hands on this. And I don't think that that has been achieved by the Department. And so, you know, I do think that.

I appreciate, I think it was Irwin that requested this audit and now we have this information and if we do not act upon it to actually draw a better guardrail so that the regulations of the Department speak to what California Californians want, which is not a can of root beer that looks like what my children drink being marketed and attractive to children, then we are failing Californians.

And so out of this, I hope we will see action and appreciate the recommendations of the auditor.

Thank you for that. Chair Berman.

Just a quick follow up to a. Point that Ms. Ruiz made, which is around strain names and things that are using strains. And the audit points out that various child attracting words and phrases are often used in cannabis strain names like cherry pie and Tropicana punch.

How much of a risk would you say this directly poses to children given that strain names, that strain name labels are usually describing raw cannabis plant material and not manufactured product, which in some cases could literally be edible products like. Pie or a beverage.

So it seems like a kind of glaring loophole that is being taken advantage of.

And I think something important to point out is that we've got a spectrum and a prioritization that we take into account so when we're looking at something that may have some elements that are attractive to children, and then you compound that with perhaps a strain name that inherently is attractive to children, and then on top of that you've got something that's an edible, so that's going to be really easy to consume for a small child.

Yeah.

Those are the types of situations where we are taking that higher level enforcement action. So we talked about our resource constraints. The Department is being strategic about how we respond to things that have that layered attractiveness to children. So Christina spoke about this earlier, but we have an Apple library now, so that's an internal electronic database.

We have uploaded all of our compliance history for all of our licensees in there, as well as all of the images that have been analyzed thus far. And so we're really able to take a comprehensive look at a licensee's intention when they put out these products on top of whether or not they're violating the regulations.

So we're being strategic about responding to something that you just described or you have something that has layers and layers of attractiveness to children and we need to pull, pull it from the market.

We will. Thank you very much. Appreciate the testimony and the answers that you give. And we're going to move on to the third panel, third and final panel. And so you guys can adjourn to the audience if you'd like. I'm going to bring up now three different panelists.

Lynn Silver, the Director of Getting It Right from the Start, Karen Woodson, who's the President of California Cannabis Industry association, and Amy Jenkins, the Executive Director of California Cannabis Operators Association. Thank you very much to all three of you for being here.

And Lyn, we can start with you and you, three to five minutes each if you can. And again, we're not going to cut you off, but I assume there will be questions after as well, so please start whenever you're ready.

Thank you Mr. Chair. Thank you.

First, if you hit that button, the microphone will turn on. Thank you.

Sorry thank you Mr. Chair. Thank you for holding this urgently needed session and for the Auditor's important work. I'm pediatrician Dr. Lynn Silver, Senior Advisor at the Public Health Institute, professor at UCSF and I co chaired the 2024 CDPH convened high potency Cannabis Scientific Committee. We carry out research and provide technical assistance on cannabis policy nationwide.

Sadly, since 2017, the legally required balance between eliminating the illicit market and protecting youth and public health has not been faithfully pursued. The words health, children, adverse effects and poisoning are completely missing from DCC's current strategic plan and priorities and beleaguered in its regulatory decision making and structure.

I was pleased to hear Christina's comments before me and hope that that changes. Since 2017, public health organizations have submitted formal comments to each regulatory proceeding on how to better achieve this balance, including ideas like plain packaging and addressing these issues.

But with few exceptions such as checking age on delivery recommendations have been systematically ignored in favor of the false thesis that any public health regulation or will favor the illicit market rather than increasing consumer confidence.

Yet how is our legal market safer if legal products can be 94% THC apple fritter vapes with cartoon characters in neon colors or 100 milligram THC? Actually 2 ounces Mr. Chair, not even 4 ounces. Mango Magic Mango Friends Forever shots or celebrity Snoop Dogg onion rings or Nino Brown wrapper flour.

How will this solve a persistent illicit market driven by overproduction and export? Even efforts to include budget and organizational structure to address these health and child protections at DCC were stymied in the past. Unfortunately. In 2023 we worked with Assemblymember Irwin to pass the Cannabis Candy Child Safety act which was unfortunately vetoed.

Yet many of the child appealing products which whose sale we documented at the time and submitted to the agency remain in stores today. I purchased all of these yesterday at Stizia Oakland and some of them were on our list from 2023.

So I was disappointed to see that at the behest of the Governor, CDPH convened 13 respected cannabis and substance abuse researchers and medical experts. After extensive consultation, they presented 20 recommendations in fall of 2024 to the state. Almost none have been adopted to date.

Other states, countries and locales, as the auditor noted, have set more rigorous limits or taxes on product potency, required plain packaging or prohibited more child appealing elements in products, packaging and marketing.

Yet California national leader in reining in flavored tobacco when 80% of youth were starting with flavored tobacco failed from day one to put in place effective parallel guardrails for legal cannabis. The lack of enforcement of California's vague existing regulations on attractiveness to children facilitates continuing impunity. This has had serious consequences.

Poisoning as you all noted, nationally the number of people using cannabis daily skyrocketed from 1 to 8,18 million in 2023, now far exceeding the number using alcohol daily and including 1 in 10 of our young adults using daily in our research.

With half a million California teens, those who report using cannabis are twice as likely to be diagnosed with psychotic or bipolar disorders in subsequent years. Our ERs are full of youth with the violent vomiting of Cannabis Hyperemesis Syndrome.

Dr. Paden of our team here today found in her research on cannabis ads effects with teens using California cannabis ads that they increased interest in use and positive attitudes when containing features like food or flavor. References depictions of positive sensations, adventure psychoactive effects and illustrations such as those the auditor depicted having the strongest effects.

The High Potency Scientific Committee viewed reducing attractiveness to children as one of the most important ways to reduce the harm of high potency products because Those under age 26 are particularly vulnerable to adverse effects and obviously young children even more so.

Their specific recommendations included and I circulated them to the Committee in the Executive Summary prohibiting the use of added flavors in all products, whether natural or synthetic and related languages and images which would be needed to strengthen DCC's current weak and somewhat unenforced 2022 rule to require plain packaging for all cannabis products.

As the auditor and the Committee discussed, which I was surprised to see yesterday, Stizia is already using for some of their products in the dispensary although others not enforcing existing regulation prohibiting products attractive to children and strengthening those regulations with clear evidence based criteria for identifying and prohibiting products packag marketing and advertising characteristics that appeal to children and youth.

We would call for allocating funds to specifically establish a premarket packaging and product review team to screen new and existing products for compliance and attractiveness for children.

I was pleased to hear Christina noted that a start has been made on that and I would note that the Legislature diverted $70 million for from the Cannabis Tax Fund and the Youth Fund to DCC regulation and enforcement this year and a small part of that could be used to accomplish that goal.

They also recommended limiting edible doses as the Auditor did caps on THC content on THC based taxation. I provided some materials for your reference.

In summary, we urge the Legislature and DCC to take prompt action to address these critical regulatory gaps in protection of children and public health, and to lead the nation in how to build a safer legal cannabis market for the future and for our children. Thank you.

Thank you very much.

If you'd like to see any of these, I'm happy to pass them around.

Appreciate that. Thank you very much for your testimony. We'll save questions until all three go. And so you guys, I don't know if you've worked it out, but whoever wants to go first, thank you.

Good afternoon, Chair, Welcome, Vice Chairman and to the Members of the Committee, thank you for the opportunity to be here today. I am Caren Woodson and I'm here on behalf of the California Cannabis Industry Association. I want to start by saying protecting young people is a shared responsibility, one that transcends politics, policy and industry.

For California's legal cannabis operators, this is deeply personal. Like you, we are parents, neighbors, community Members, and we believe unequivocally that cannabis must remain for adults only. Our goal today is not to debate the audit's findings, but to support improvements that create clear standards, consistent enforcement and durable policy.

We view this audit as a diagnostic tool that highlights a fundamental truth. Compliance is a reflection of regulatory clarity. Today is not about defending an industry, it's about strengthening a system. CCIA Members share your commitment to protecting California's youth. Effective enforcement and the industry's ability to comply require objective, bright line standards rather than subjective interpretations.

To strengthen this system, it is important to recognize that we are addressing two distinctive youth protection challenges, each with different root causes and solutions.

The first is accidental exposure by very young children, and research in this market tells us consistently that these incidences occur primarily in residential settings and are most effectively addressed through child resistant packaging, safe at home storage practices and caregiver education. The second is preventing access.

Intentional access by teenagers and teen prevention requires strong retail controls, rigorous enforcement and youth prevention efforts. In this regard, it should be noted that the department's 2025 enforcement summary shows a 99.7% retailer compliance rate in minor decoy operations. Teens are not accessing these products from licensed and regulated operators.

Treating these issues as a single issue risks applying a broad solution that fails to address the root cause of either problem. A data driven approach is going to allow us to target real risk, strengthen protections, and deliver measurable safety outcomes.

And on that point, the Department recently awarded over $4 million in grants to investigate how elements like packaging, marketing and retail training shape how young adults view cannabis.

Results from these projects will no doubt ensure that we're taking the right action as opposed to reacting California's framework already provides a strong foundation certified child resistant packaging opaque designs for edibles restrictions on images, characters and phrases that appeal to children prohibited shapes and clear warning language that instructs users to keep these products out of the reach of children and pets.

The opportunity now is to enhance regulatory precision. Greater clarity around terms like cartoon and clear visual design standards will eliminate subjectivity, support consistent enforcement, and provide compliant operators with the predictable guidance needed to succeed. Strong rules are only effective when they are clear, and we also welcome continued collaboration with public health and prevention experts.

Cannabis tax revenues were supposed to Fund youth prevention and education programs, and we believe firmly that informed families and safe storage public education campaigns remain critical components of a comprehensive system that protects young people and strengthens public health. We're here today as technical partners.

Our goal is to help translate the auditor's findings into clear, enforceable standards that protect young people, support Department oversight and ensure California continues to lead the nation in both safety and integrity. Thank you.

Thank you Mr. Chairman, Vice Chairman and Members. My name is Amy O' Gorman Jenkins. I'm here as Executive Director and legislative advocate for the California Cannabis Operators Association, also known as CCOA. Let me begin with something we can all agree on, and it was shared by my colleague. Cannabis should always be kept away from kids. Hard stop.

Regulators, legislators and the licensed industry share that commitment. There is absolutely no disagreement there. The question before us today is not whether youth protections should exist. They should. The question is whether the regulations adequately explain how to tell when packaging crosses that line. The state auditor's report highlights a real issue. Unclear rules produce inconsistent enforcement.

Unlike other use protection rules, age gated advertising, child resistant packaging, school setbacks. This standard has no definitions, no threshold and no objective criteria. Instead, it relies on broad terms like cartoon or appealing to minors without defining what those words mean in practice.

To understand how this plays out in the real world, Kokoa reviewed 162 leading brands, brands that consumers are most likely to encounter when walking into a licensed storefront or browsing a license delivery menu.

We evaluated them against six specific design features that frequently circuit store surface in youth appeal debates, illustrated characters, anthropomorphized elements, bubbles and volumetric fonts, fantasy imagery, imageries of sweet treats and references to children's entertainment. Here's what we found. 68% of products of the 162 we evaluated were clearly compliant.

There was no obvious youth appealing features, 10% were clearly problematic and out of compliance, and the remainder fell within a somewhat gray zone. In response, Kokoa has developed A detailed white paper which we're prepared to share with all of you, outlining what we believe is an appropriate path forward.

It includes eight specific recommendations designed to clarify and operationalize the standard without imposing new prohibitions or broader categorical bans. The focus is not expansion of restrictions, but precision, defining observable design features, aligning guidance with regulation and prioritizing enforcement where risk is highest.

When similar products receive different treatment depending on who is reviewing them, compliance becomes uncertain and enforcement becomes inconsistent. Most licensed brands are operating responsibly. Here is the enforcement reality, and we've discussed this. The most blatant use targeted packaging is concentrated in the illicit market where bad actors are intentionally marketing to children.

Unlicensed operators directly imitate candy, cookies and other sugary sweets, use Cartoon Mascots, et cetera. When enforcement energy is consumed by debating these gray areas in the regulated market, fewer resources remain for the most egregious bad actors. And when standards remain undefined, pressure builds for blunt policy responses such as plain packaging mandates or categorical design bans.

We are not aware of any documented cases where cannabis has been purchased by youth in legal stores. So hence again, the solution in our mind is not broader bans. It is with precision. We recommend three steps. First, define observable design features and regulations. And we have some recommendations in this white paper. Not adjectives, but objective criteria.

Clarify what qualifies as a mascot. Restrict anthropomorphized elements, identify high risk topographical treatments like bubble or volumetric fonts. Second, align DCC guidance with regulation so businesses and inspectors are working from the same rule book.

And third, focus enforcement where risk is highest at the manufacturing level for clear violations and in unlicensed channels where use targeted packaging is most concentrated. This is not a request to weaken protections. It is a request to make them enforceable. Clear definitions protect children, clear definitions strengthen enforcement.

And clear definitions allow the regulated market to function as voters intended. The legal market has demonstrated it can operate responsibly when the rules are clear and consistently applied. The remaining task is not whether California should protect children. We all agree on that.

But whether we will define the line clearly enough to ensure that protection without undermining the regulated market is possible and achievable. Thank you.

Thank you for that. Thank you to all three. Just really quickly, that white paper. And I think that those recommendations probably adhere to the recommendations from the auditor. Has the auditor seen the white paper or the Department?

Okay. No, we developed it pretty much in rapid response to this hearing, and we are prepared to distribute it. We have Shared it with the DCC this morning and we will be sharing it with the Committee.

Perfect. Well, thank you for that. Any Questions from Members, Mr. Vice Chair?

Thank you, Mr. Chair. So I don't have kids, but I don't like to eat kids stuff. It's too sweet. It's. I don't. And so for me, I applied the other lens which is, is this something that I would be attracted to?

And most of the things that we've seen in the audit report, I think I'm like, I'm not going to eat that. That's can't. That's candy. And so it's, I mean, you don't have to be an expert. And it's not about inflated fonts and all of that. In part, the words alone are enough.

You know, I represent the most of the wine industry in California, which has quite child resistant packaging. The vast majority of the package is not advertising at all. And although there are pictures on labels, they're not called. And we regulate the names. You can call it Cabernet Sauvignon, you cannot call it Cherry Pie.

The market works, for the most part isn't the children and teenagers don't drink wine. But we're not seeing this kind of issue there. You can have a thriving legal commercial market for cannabis that doesn't in all of these pictures try to find where the line is.

So that's part of the reason why the issue that we're talking about today is how do we be more precise and more consistent. But, but that's only because there seem to be producers that are trying to find where that exact line is.

Not because they're accidentally making the mistake of producing content that is child attractive, but they're looking. How far can I go before I'm going to get a notice from dcc? How far can I get to this before this happens?

And so it seems like if the goal for the industry is certainty and precision and the goal for DCC is to have something implementable within the resources that they have, that the simplest baseline is plain packaging. I'm not saying it's plain packaging is the absolute answer, but it seems like that's where you would start.

Like going beyond that. What are then some of the changes that you might make rather than starting what is the most attractive to children. And let's figure out how to write that down, but instead start with plain because then you don't need to have so many DCC webinars and seminars for their internal team.

You don't have to hire people up for that. You don't have to ask an AI image engine to look at something and determine whether it's appropriate for kids. You're starting with the very simple okay, I guess I get you don't want it to be in a and I don't either to just be in a brown paper bag.

But there's a lot more room on that end of the spectrum than there is trying to figure out the kids stuff. And you would be able to save enough resources in DCC in order to focus your your work on enforcement. So you, you talked, both of you mentioned a lot regulatory enforcement and precision.

So can you, but you didn't talk at all about why just plain packaging or something that's closer to plain packaging than it is to root beer and to Strawberry lemonade. Why something closer to plain packaging wouldn't be a smarter solution for both the industry and for enforcement. Could you, could you a response to that?

Unlike you, Vice Chair, I am a parent and in my experience if we're talking about toddlers and I think that we've highlighted that's the greatest risk here, My experience is that toddlers are not discerning. They get into everything. And that is why accidental exposures occur when parents leave these packages and these products accessible to children.

It's why parents are responsible for keeping over the counter drugs, vitamins, laundry pods, household cleaners and their wine and drink away and out of the reach of children. Plain packaging is a marketing and branding restriction, certainly open to constructive dialogue about what elements we can restrict. But these are not the same as at home access control.

We can have the strictest labels in the world, but if we aren't prepared to have parents educated about how to keep these things away from their children when they are in their home, plain packaging isn't going to solve the root problem. And so I think there are things that we can do.

But missing from this conversation, which is a comprehensive conversation about how we protect children, is is what we're doing in the home. These products are not available to children. They can't go down. They can't walk into a dispensary and see these products in the aisle.

So where these children are getting access to these products is a big part of this conversation and one missing from the auditor's report.

So maybe come at it from the angle I was talking about earlier then. So why is it necessary for any of these projects to be even child attractive adjacent? Like why. Why are we in that on the spectrum of a bottle of wine from Napa versus a Breakfast cereal.

Why are we debating over at the breakfast cereal and not trying to match the wine bottle or the prescription bottle or any of the other relatively plain packaged items that we're talking about? Why is that necessary? Why would any company feel like they need to have strawberry, banana, lemonade or cherry pie or any of these elements?

Is the point not marketing to teens and children or is that where the 40 year old market really and the 35 year old market, that's what they're looking for.

So I'll do my best to answer it in the context of our evaluation of products. The lion's share of the products we evaluated had no design elements or features. And I understand it's subjective. I do have, I have a graphic of all of the products that we evaluated.

Again, a very, very substantial majority, close to 70%, again had no appealing design features. We saw about 10% that did. And in fact, as I was looking at the pictures provided by the auditor today, we're in alignment. The recommendations that we've outlined in here would not allow for those products to be in the legal market.

So I think we're talking about a very small percentage. So I don't think that the problem is as vast as what you're thinking it might be, Senator. And I think we also have to recognize that there are a lot of brands.

We talked about the size of the legal cannabis market in California and brands need the opportunity to distinguish themselves. So I think relegating us to black and white packaging would be a disservice to cannabis brands.

I think again, providing some very clear lines and some very clear definitions so that operators are clear on what is permissible and what is not is something we can get to. And we came to that conclusion based on our independent evaluation.

Can I add, I'm sorry, Senator, because you do mention your experience with alcohol and control there. The vast majority of the current statutory language that we find in statute is almost a mirror taken directly from discus, which is the distilled council spirit of the U.S. right.

So we took that same language and, and that's what you see in statute. With all due respect, they've had 100 years of playing the game that you're talking about. There are a few bad actors in the industry and we should absolutely get them under control with some clarity in statute.

But the playfulness on alcohol labels, I would argue over time is where it is today, because you've had time, you've had the ability for regulators to take action. And we're, like they said, we're five years in to a formalized DCC with a coherent staff.

Thanks.

Mr. Chairman, may I add a data point? In our research with. I'm sorry, no.

Please go.

Yeah. Thank you. In our research with UC Irvine on this issue specifically, the majority of products that we saw being sold in California in the categories of concentrates, vapes and flowers, included at least some food flavor reference, which is certainly not the case for wine.

Speaking as a pediatrician, young children are unquestionably attracted to bright colors and more likely to accidentally consume a product that's got neon colors or other pictures of apples and strawberries and so forth than something in a white container. Although that's not sufficient. We'd also advise keeping them in a safe place. Thank you.

Thank you. Before I go to Assembly Member, Coloza. Okay. Senator Coloza.

Thank you, Chair Bedian, and thanks to the panelists. I just wanted to. And I apologize, I kind of got to the tail end of the last panel, and I didn't get to ask the Department of Cannabis Control this question.

I know it seems like a lot of the conversation right now has been focused on licensed cannabis businesses and the legal market. And I think what we haven't talked about is the illicit market and what's going on there around enforcement of these products. Are you seeing from what you're seeing in the market?

Can you tell me a little bit about these products and how they're advertising to children? How is that different from the legal market? Can you just give us some of that perspective?

Thank you for the question. We have seen the most egregious marketing and advertising in the illicit market, and we do have some examples in here where, again, blatantly advertising products that almost look almost identical to Chips Ahoy or Sour Patch Kids.

So I think we see the vast majority of, again, marketing and advertising in that illicit market, and that is, I think, where we also see access to children. I mean, it's very easy to purchase these products online. We've seen examples of these products being delivered without any age gates.

We've done our own investigations where we've had products sent directly to our homes and not requiring any sort of a signature. So I think we have maintained that the vast majority of the violations are occurring in the illicit market and will continue.

As I've said in previous discussions, the Legislature has made some investments in enforcement, some substantial investments last year. And in listening to the Department, I think there's some additional work that is going into addressing that, Though I think more is needed, particularly at the illicit retail level. It is very easy to access these products.

And there are plenty of unlicensed retail stores within walking distance of the swing space where you can easily access products that are directly marketed and advertised to children.

Thanks for sharing that. I just wanted to bring that to the fold of this conversation that we're having because, you know, there's two markets, right, that we're really working to get a better understanding of as it relates to, you know, these products are being advertised to children.

And I also did just want to reiterate that this also means that I'm also still concerned about the legal products that I'm seeing advertising to children. Some of these examples that we have here before us are very concerning to me. And I echo what my colleagues are saying.

And I think that more needs to be done in both regards. And so that's really my way of saying that I look forward to following up with the Department on really looking at both the illicit and the legal market and what can be done in both respects.

But I did just want to raise that because I didn't hear it. I'll follow up with you as well. But thank you to the panelists for your testimony.

Ms. Bauer-Kahan.

Thank you. I just wanted to follow up on a point that was made that I think Ms. Silver addressed briefly, which was the point around parents. The main mechanism to keep our kids safe is just parents keeping it away from their children.

Obviously, as a parent, and I hear you as a pediatrician, we need to be keeping these things as far away from our children as possible.

But I think it is shocking that one would make the claim that something that looks like a root beer is not more attractive, especially to a child that cannot read, than something that is in a less bright, colorful cookie looking package. Like, there's just no way that that passes the smell test.

Of course, a young child who cannot read is going to see something with an apple on it or a candy on it, or a marshmallow on it, as the example showed, and think, zero, this is like that cereal that mommy gave me this morning.

Grab it and try to consume it versus something that looks like a Tylenol bottle or whatever the case may be. And we do see that over the counter medication, other medications are in bottles that don't look like a breakfast cereal. That is not how these things are presented.

And that is in part because we don't want our children to confuse them. And so I just think it is critically important that we say not only is it the obligation of a parent who has this product in their home to keep it In a place that is out of reach of the children.

It is also incumbent upon the regulated market to be our partner in that and not putting it in packaging that looks like a breakfast cereal. So I appreciate the commentary about the illicit market because I. We have this conversation at BNP a lot.

The illicit market is absolutely a problem, and one I think we as legislators want to be your partners in cracking down on. We want to do more. We think it is absolutely unacceptable that it is so easy for kids to get their hands on illicit products, both in the cannabis market, but frankly in other markets.

I was talking to my kids about Kratom yesterday, so there are other products out there that are problematic as well. And. But I just think that this is egregious and these pictures are egregious, and I don't, you know, I want, you know, and I appreciate you, Ms. Jenkins. I always call you by your first.

Name, but that's not. You know, saying that you, you actually are willing to work with us on the auditor's recommendations because I don't think we should just be saying we're going to keep making it look like breakfast cereal and you need to keep it away from your kids.

That is insufficient and not, I think, where we as a Legislature are going to be.

Appreciate that. And I don't see any. Yep. Ms. Irwin, please.

No, I am very interested to see your white paper because I think you were. You agree very much with the auditor, at least in the way you're describing what we need, which is more precision.

And I think the, the board needs to be able to have precise language so it's not so difficult to discern what we all agree on is attractive to children. So very anxious to look at that and appreciate that the industry is trying to work collaboratively and hopefully we will get somewhere this year on it. Thank you.

I certainly hope so. Thank you.

Appreciate all three of you for being here. And we are now going to move to public comment before our closing statements. If anyone in the public would like to make a comment, please come forward to the microphone and limit your comments to a minute. There's thousands of people here, so we don't want to be here all night.

And if you go over a minute, it's okay. But any public comment, please come up now.

Thank you so much. I'm Dr. Elisa Payton. I'm a research scientist at the Public Health Institute. And for the past 16 years, I've studied how marketing affects adolescents. With DCC funding, we use the Content Appealing to Youth Index, which is a research based tool that identifies specific design elements shown to appeal to youth.

And as Dr. Silver noted, we found features such as food and flavor references and depictions of psychoactive effects increased youth interest in cannabis. We also identified features that reduced youth interest but were liked by adults. These are validated, measurable features, not matters of opinion.

The DCC did share out this research at 1.0 but it has not been reflected in regulations. Adult consumers do not need cannabis infused root beer or psychedelic packaging, but teens, especially novices, find these products and designs familiar and inviting and are more likely to initiate use with those products.

We've also found that use remains lowest in jurisdictions without retail sales where the market is entirely illicit or hemp only. So packaging and marketing in the legal market really do matter and the evidence is already there to do better.

Hello. Good afternoon. I'm Jim Keddie. I'm the Executive Director of Youth Forward. I want to thank Assemblymember Irwin for her leadership on this matter and also to the State Auditor for their excellent report. I run a youth organization. I have young people on my staff who work and our local Sacramento high schools.

And I can tell you that not only is this an issue about child poisoning and all the things we've been hearing, it's also a very disruptive problem in our schools in the sense that our high school staff and our middle school staff are confronting these products on a daily basis.

If you were to ask, it's usually the assistant principal over discipline to share with you what they collect off of students. They have drawers full of these products. Our high schools keep bathrooms closed. If you're a high school student, it can be very difficult to go to the bathroom and that's to prevent students from vaping.

And as we've been involved in this work in our local high schools, we have seen consistently that the vast majority of these products are from legal dispensaries and that young people are accessing these products from older siblings, older friends and their parents. So I know there's always this attempt to shift all the blame onto the illicit market.

And I can tell you that that is not what we are seeing in our local high schools. So thank you for your attention to this matter.

Good afternoon Members of the Committee, the Chair, Senators and Assembly Members. Great to see you. My name is Sam Rodriguez. I represent Good Farmers, Great Neighbors. We are based in Santa Barbara county, the other wine region. Many of our cannabis farmers are vertically integrated and we have labels that reflect the region as a building tourism.

So we reflect mountains and rivers and lakes and oceans, including surfers. So all we are fundamentally agree with you that we should protect all children under the age of 21 and we should go after the illicit market.

But please, please, please be prudent and don't overreach because many in the region, especially in the central coast, this is also part of promoting tourism for the county. Thank you very much.

See no other public comment. We'll bring it back. Vice Chair Cabaldon, any closing comments?

I just want to thank both Chairs for convening the hearing and thanks so much to the auditor for the product here. It is excellent work and also the department's responsiveness to the audit thus far.

We clearly do have a lot of work to do, including both here and in the committees and I know in the budget Subcommitee that I serve on as well, this is a significant problem for children and for children's health and safety. It's also a solvable one.

You know, on the long list of crises that we're facing right now, this is a solvable one. And want to particularly acknowledge some Irwin for leading the way on this before. If we ever Bill had been signed, we might not be in the same situation, but we can tackle this.

And I look forward to working with our colleagues in the other house, the governor's office, the Department and the community to try to try to get that done. Thanks so much for raising the flag.

On this one, Chair Berman.

Well, yeah, I want to absolutely express my appreciation for some Member Irwin and her leadership on the Bill that led to this audit and a lot of other legislation that she's done to try to make sure that we have a safe cannabis.

Safe legal cannabis marketplace that really, as I spoke about in my opening, accomplishes the goals and the promise of Prop 64 in the first place that we are falling very far short of. And you know, this was.

I'm glad this was on the top of the stack because I've been looking at it for the past hour and a half. This is not it. Right. This is indefensible.

And to claim that this does and you know, part of it's on the Legislature and the fact that we clearly need to provide a lot, you know, more, more strict of a rubric and a checklist for compliance so that everybody knows that this is could not be further from what we're. This is obvious. This is a.

It looks disgusting to your point, Senator Cabaldon, but it's also straight out of Alice in Wonderland, right? Like this is the Cheshire cat from Alice in Wonderland. And this is obviously trying to appeal to children. And so Anything that goes half this far should be illegal in California.

And it sounds like we might have some work to do as a Legislature to make sure that happens. But I think you heard it very clearly from all my colleagues from the Assembly and the Senate that we have missed the mark and that more needs to be done.

And I'm glad that the industry also is eager for more clear regulation on what we what what the Legislature expects from the industry. And I think that we're going to have that conversation and I look forward to the industry engaging on that. And as chair of bnp, I'm sure I'll be a part of those conversations.

And I'm glad that everybody's starting from the same page, which is that we need to solve this. And I'll be looking forward to all stakeholders who presented today to engage in very good faith on figuring out what that solution is.

Thank you, Mr. Chair. Senator Irwin.

I just want to thank all the chairs that joined today. Assemblymember Haribidian thought nobody was going to be showing up to the Committee hearing.

But no, I thought there would be many more. No.

But I appreciate everybody that spoke. The auditor really did an outstanding job. And I also appreciate the industry talking about working together to solve what is a big problem for that part of the legal market that is out of compliance. I certainly understand that we don't see this across the entire legal market.

We do see it in the illicit market. But we need to work on this issue because it is unacceptable the examples of what's going on in the legal market that the auditor found. So thank you to again to my colleagues for asking great questions.

And there's going to be some more work done this year and hopefully this time we can get a bill that's signed.

Senator Bauer-Kahan, would you like to make any closing? Well, thank you everyone who has participated in this. I couldn't have said it better myself. And so my close would just be to thank the staff of JLAC for making this possible and for coordinating many different schedules to get everyone here. And obviously, Mr.

Parks, you and your staff for your work. And I think that I'll just end by speaking directly to the Department. I do think that we expect more. We expect you to protect our children. And I think we need better results.

And I think if we don't see better results in the next year, if you don't take these recommendations seriously, I think we're gonna be back here next year. And I don't think we'll be as friendly or as kind. Not that we were completely unkind today.

But I think that we'll be a little bit more grumpy if we don't see some movement. And like any situation, you can have the Legislature figure this out. I think if that is the outcome, I think everyone involved will be less happy than if you figure it out on your own.

And it's like any situation, I expect that this can be worked out without the Legislature having to intervene. We deal with a lot of complicated issues. This is not one of them. It's just not. And I think we expect more from the Department. I really do. So I think that this has been fruitful.

I hope that we have been clear with, I think, the unanimity on the dais here where everyone stands. And I think we will look forward to the next coming weeks and months to see what comes of this. The meeting is now adjourned. Thank you to everyone.