Ever since Californians voted in favor of the Adult-Use of Marijuana Act (a/k/a Prop 64), everyone has been looking to see how the regulated cannabis industry will develop in California. Last April, California’s state cannabis regulatory agencies (the Bureau of Cannabis Control, Department of Food and Agriculture, and Department of Public Health) released their medical regulations. Those regulations, issued under the Medical Cannabis Regulation and Safety Act (MCRSA), were in place for a little over two months before they were withdrawn when the state legislature passed the Medicinal and Adult-Use Cannabis Regulation Safety Act (MAUCRSA) in June of 2017. In November, California released its emergency regulations under MAUCRSA, which set out the rules for cannabis cultivators, manufacturers, distributors, laboratories, and retailers under the same regulatory regime.
Finally, on January 1st, 2018, California opened up its market to commercial cannabis businesses. So where does that leave us today? Last week I attended a meeting for members of the California Cannabis Industry Association in Sacramento where a lot of time was focused discussing the legislative landscape and priorities for California in 2018. There are a number of cannabis bills on the legislative agenda in 2018. Here are four to keep your eye on:
- Assembly Bill 1578: Introduced by Assemblyman Reginald Jones-Sawyer, this bill would prohibit a state or local agency from taking certain actions without a federal agent obtaining a court order signed by a judge and presenting that order to the state or local agency. The controlled actions include: using agency money, facilities, property, equipment, or personnel to assist a federal agency to investigate, detain, detect, report, obtain information, or arrest a person for commercial or noncommercial cannabis activity that is authorized or allowed under state and local law; transferring an individual to federal law enforcement; detaining an individual at the request of federal law enforcement or federal authorities for cannabis-related activity that is legal under state and local law, etc. Basically, this bill is a way of telling the federal government to mind its own business.
- Assembly Bill 1793: Introduced by Assemblyman Rob Bonta, this bill would state the intent of the Legislature to enact legislation to allow automatic expungement or reduction of a prior cannabis conviction. The rationale here is that a cannabis conviction should no longer be a scarlett letter, and should not preclude affected individuals from full participation in society.
- Assembly Bill 1863: Another bill introduced by Assemblyman Jones-Sawyer, this bill attempts to alleviate the unfair and unjust tax burden placed on cannabis businesses by the Internal Revenue Service. This bill would allow for the deduction of business expenses for a cannabis trade or business under California’s Personal Income Tax Law.
- Senate Bill 930: Introduced by State Senator Robert Hertzberg, this bill would address one of the biggest issues facing the cannabis industry: banking. The bill would state that it is California’s intent to enact legislation to create a state-chartered bank to service cannabis businesses.
When considering the evolving California regulatory scheme, it is important to note that aside from any pending legislation, the emergency administrative regulations currently in place are temporary. The state will have to issue permanent cannabis regulations this year, which will include a 45-day public comment period. On this point, we have been informed that the state plans on holding a number of forums throughout the year to garner public input.
If you have concerns about California cannabis regulation, whether it’s the cultivation acreage cap, the definition an “owner” of a cannabis licensee, or perhaps the disclosure requirements for financial interest holders, there is still time to contact your legislators and appropriate cannabis agencies. Now is not the time to rest: this year will be pivotal in the California cannabis story, and, by extension, in the cannabis industry throughout the United States.