California's Department of Cannabis Control adopted emergency regulation DCC-2026-03-E, Modifications to A and M Designation, in direct response to the federal Final Order. The rule was approved and filed with the Secretary of State on June 4, 2026, took effect the same day, and expires on December 2, 2026 unless the Department readopts it or completes a permanent rulemaking. It amends sections 15000.1 and 15000.2 of Title 4 of the California Code of Regulations and adds section 15023.1.
Why the Department acted
Under Business and Professions Code section 26050(b), every nonlaboratory California license carries an adult use (A) designation, a medicinal (M) designation, or both. Many retailers hold a single license with both designations. The federal registration pathway in 21 CFR 1301.13(k) is available to holders of state medical marijuana licenses, and it does not authorize nonmedical activity. In its Finding of Emergency, the Department described the choice dual designated retailers faced as converting to medicinal only operations or forgoing federal registration. The rule gives them a third option, a medicinal license held by a separate but closely aligned entity that can pursue DEA registration while the adult use business continues. The Department estimated that about 1,600 retailers and microbusinesses are eligible.
What the rule allows
A licensee authorized to engage in retail activity that holds one license with both designations may modify it into an A license and a new M license at the same premises. The new M license may be issued to a different legal entity. The Department treats the two licenses as a single licensee for state purposes.
Conditions on separate licenses
Section 15000.2(b) sets four conditions for separate A and M retail licenses held by separate entities at the same premises. Both entities must share the same individual owners and designated responsible party. Cannabis goods must be physically separated by license and distinguished in inventory or tracking records. Business records must be kept separately for each license and identify which license they belong to. The two entities are jointly and severally liable for all obligations, debts, and violations under either license. The Department also requires that the two entities hold different federal employer identification numbers and seller's permits.
How to request the change
The designated responsible party submits Form 9207, Request to Separate M-designation Retail License, or emails the required information to licensechange@cannabis.ca.gov from the address on the license record. The request identifies the existing license, the legal name, FEIN, and seller's permit of the related entity, and its business formation documents. The licensee continues operating under its current designation until the Department approves the request.
Inventory remains under the existing license
The Department's guidance states that, under section 15023.1(d)(1), a licensee issued a separate M license must hold all inventory and conduct all sales through the existing license's track and trace account until further guidance or additional regulatory changes are made. For an operator pursuing DEA registration through the new M entity, the inventory and sales records a Diversion Investigator will reconcile currently sit under the adult use license. That arrangement should be explained in the registration file and in the operator's written procedures.
Designation changes for other license types
The emergency rule applies only to retail. Separately, the Department has streamlined designation changes for other licensees. Cultivation licensees may request a change of designation at any time using Form 27 instead of waiting for renewal, and the Department no longer requires new local authorization to change a license to M only or to add an M designation to an A license.
What it means for operators
A dual designated retailer considering DEA registration now has a state license structure built for it. Because both entities must share the same owners, the ownership disclosed to DEA will include owners who also operate the adult use business at the same premises. The Final Order does not state how DEA will weigh that in its public interest review under 21 U.S.C. 823, and the Department has reported that DEA plans to share implementation information publicly and all at once. Operators should also track whether the Department readopts the rule or makes it permanent before it expires on December 2, 2026.