The WCIRB regularly receives questions on how to classify a wide range of industries and operations. Recently, many questions have focused on California’s transition to legalize adult use of recreational marijuana as business operations pertaining to recreational marijuana are expected to increase in 2018. The classifications applicable to medical marijuana growing, processing, and sales, and the manufacture of medical marijuana products are also applicable to similar operations pertaining to recreational marijuana. This is a rapidly growing and changing industry and it is possible that new operations or business models will emerge. However, the most common classification assignments applicable to medical cannabis operations also apply to equivalent recreational marijuana operations.
Cannabis or marijuana cultivation can occur indoors or outdoors, using conventional or hydroponic methods. Cannabis cultivation is assigned to Classification 0035, Florists – cultivating or gardening, as the cannabis buds are in fact flowers. Classification 0035 was amended effective January 1, 2016 to specifically include the cultivation of marijuana. Classification 0035 also includes initial trimming to prepare the harvested buds for sale.
In some cases, growers send the product to trimming specialists for processing and packaging. If the buds are only trimmed but not packaged for individual sale, Classification 0035 is assignable. If the trimming specialist also packages the product for individual sale, Classification 4611, Drug, Medicine or Pharmaceutical Preparations Mfg., is assignable because it includes the production (compounding, blending or packaging) of drugs.
The production of extracts and concentrates, including but not limited to hashish, hash oil, tinctures and products for vaporizing, is also assigned to Classification 4611.
The manufacture of cannabis-infused food products (“edibles”) that are not baked goods is classified as 6504, Food Products Mfg. or Processing. Examples include infused candies, butter for home baking and coffee mixes.
The manufacture of cannabis-infused baked goods such as cookies or brownies is classified as 2003, Bakeries and Cracker Mfg.
The manufacture of cannabis-infused beverages is classified as 2163, Bottling – beverages.
Retail marijuana dispensaries are classified as 8017(1), Stores – retail. This is consistent with other retail pharmacies and drug stores. Retail outlets may also perform packaging of individual orders, final trimming, cigarette rolling and similar operations to prepare the product for retail sale. Many marijuana retailers sell a minor amount of marijuana plants or clones in addition to marijuana and cannabis-infused products. Classification 8017(1) also applies to marijuana delivery sales companies that may not operate a walk-in retail store.
View the complete classification phraseology and footnotes for each of these classifications using the Classification Search tool in the Learning Center of WCIRB.com.
If you have a classification question that you would like covered in a future Classification and Test Audit Insight e-newsletter, email us at [email protected].