California’s Track-and-Trace Overhaul: What Operators Should Know

The California Department of Cannabis Control has opened a rulemaking that would reshape how every licensee records, transfers, and verifies cannabis goods. Operators have until July 20, 2026, to weigh in before the rules are finalized.

A New Push to Tighten the Track-and-Trace System

On June 5, 2026, the Department of Cannabis Control (DCC) published a Notice of Proposed Rulemaking for a package it calls DCC-2026-02-R: Track and Trace Updates. The proposal amends regulations in the California Code of Regulations, Title 4, Division 19, which implement the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), codified at Business and Professions Code section 26000 and following. The Department cites its general rulemaking authority under Business and Professions Code section 26013, and references a long list of MAUCRSA provisions governing the track-and-trace system, including sections 26067, 26069, and 26160.

At the center of the proposal is the California Cannabis Track-and-Trace (CCTT) system, the state’s seed-to-sale reporting backbone that every licensee is required to use. According to the Department’s Notice of Proposed Rulemaking Action, the changes are aimed at four objectives: preventing diversion of cannabis into the illicit market, preventing so-called “lab shopping” and potency inflation, improving the accuracy of data entered into the CCTT system, and giving consumers fuller access to laboratory test results. Taken together, the Department frames the package as a supply-chain integrity measure designed to protect the legal market and the operators who play by the rules.

Closing the Door on “Lab Shopping” and Potency Inflation

The most consequential operational change concerns how transfers of cannabis goods are recorded. Under the proposal, all parties to a transfer would need to approve that transfer in the CCTT system before a shipping manifest could be generated. Today, the system permits a single party to initiate and generate manifest documentation; the Department’s stated concern is that this can facilitate fraudulent transactions and abuse of the system.

The Department ties this change directly to “lab shopping,” a practice in which product is routed in a way that yields more favorable testing outcomes, and to potency inflation, where reported THC levels are higher than what is actually present in the product. In its informative digest, the DCC explains that requiring mutual approval before a manifest issues is intended to reduce distributor diversion and curb the volume of “adulterated and misbranded products that pass laboratory testing and end up on retail shelves.” For licensed distributors and the laboratories that test their product, this is a meaningful workflow change: transfers that once moved on one party’s entry would now require affirmative confirmation from both sides before goods can lawfully be in transit.

New Data, Tax, and Certificate-of-Analysis Duties for Retailers

Retailers shoulder several of the proposal’s most concrete new obligations. First, the rules would clarify and supplement existing data-entry requirements throughout the CCTT system, with the goal of improving the accuracy and quality of system data. Second, licensed retailers would be required to enter certain tax information when recording sales in the system. The Department notes that other regulators, including the California Department of Tax and Fee Administration (CDTFA), stand to benefit from improved recordkeeping and more accurate reporting of sales data.

Third, and notably for consumer-facing operators, retailers would be required to provide a Certificate of Analysis (COA) to customers upon request. A COA is the laboratory document summarizing a product’s testing results, including cannabinoid content and contaminant screening. The Department’s stated rationale is consumer transparency: giving buyers “immediate and full access to cannabis test results” so they can make better-informed purchasing decisions and place greater confidence in the regulated market. Operators should anticipate the practical implications of an on-demand COA obligation, from point-of-sale system configuration to staff training on how to retrieve and furnish the correct document for a given product.

What It Could Cost, and Who Bears the Burden

The Department does not present these changes as cost-free. In the Notice’s disclosures, the DCC estimates that a typical business, including a small business, would face one-time up-front expenses of approximately $2,130, and that typical retail businesses needing to upgrade their point-of-sale systems would face annual recurring expenses of roughly $7,800. The proposal would affect approximately 5,500 licensed businesses of all types, an estimated 97 percent of which the Department considers small businesses.

The Standardized Regulatory Impact Analysis paints a more sobering picture for the segment of the market handling noncompliant product. The Department’s Notice states the DCC believes the proposal could eliminate roughly 857 existing jobs and 47 existing businesses, while also concluding it would improve public health, worker safety, and the environment. The analysis candidly acknowledges that larger businesses, especially larger retailers, would generally hold a competitive advantage over smaller operators once the changes take effect. For smaller licensees already operating on thin margins, the compliance and technology costs embedded in this package deserve close attention.

These figures are the Department’s own projections and remain subject to revision as the rulemaking proceeds. They are nonetheless a useful signal of where the regulatory burden is expected to fall, and a reminder that supply-chain integrity reforms carry real operational price tags.

The Comment Window and How to Be Heard

The written comment period is open now and closes on Monday, July 20, 2026. To be considered, comments must be received by that date. Written comments may be submitted by mail or email to the DCC’s Legal Affairs Division in Rancho Cordova, with the Department directing public comment to its designated public comment address as set out in the Notice.

The Department has also scheduled a virtual public hearing for Tuesday, July 21, 2026, beginning at 10:00 a.m., with both online and limited in-person participation available. Attendees who wish to participate or who require accommodations are directed to contact the Department in advance using the details in the Notice. Operators, trade associations, and counsel who believe the mutual-approval manifest requirement, the retailer tax-data entry obligation, or the COA-on-request rule will create operational friction have a formal, time-limited channel to say so on the record before the rules are adopted.

What This Means for Operators

For distributors and laboratories, the headline change is procedural but significant: build in the extra step of confirming transfers from both sides before a manifest can be generated, and revisit internal handoff procedures so that goods are not staged for transit until both parties have approved in the CCTT system. For retailers, the proposal points toward investment in point-of-sale and data systems capable of capturing the required tax information and producing a Certificate of Analysis on demand. Across the supply chain, the through-line is data accuracy; the Department is signaling that sloppy or incomplete CCTT entries will draw heightened scrutiny.

Because the comment period closes July 20, 2026, operators who want to shape the final text, whether to flag implementation timing, cost concerns, or technical feasibility, should act now rather than wait for adoption. Even operators who support the policy goals may have practical refinements worth submitting. Reviewing the proposed regulation text and the Initial Statement of Reasons, both available on the Department’s rulemaking page, is the best starting point for an informed comment.

If your business wants help understanding how these proposed track-and-trace changes could affect your license, your compliance procedures, or your bottom line, Baghoomian Law assists cannabis operators and prospective licensees throughout California with licensing and regulatory matters. Contact our team to discuss your situation.

By the Baghoomian Law team

This post is for informational purposes only and does not constitute legal advice. Consult licensed counsel for advice on your specific situation.