California Cannabis Bill Watch – Spring 2019

Final Regulations for cannabis businesses were released earlier this year, but there may be more changes coming.  Below are some of the bills being watched by the California cannabis industry this legislative session.  

AB 1530 reverses the policy adopted by the BCC allowing cannabis deliveries anywhere in the state regardless of local bans. This bill states that a ‘local jurisdiction may adopt an ordinance or resolution that permits, restricts, limits, or bans the delivery of cannabis or cannabis products to a location within its jurisdictional boundaries.’  PAN supports statewide delivery as an option for patients.  The bill would also establish a grant program to expand enforcement against unlicensed cannabis businesses and increase consumer education.

PAN is closely following these tax bills:

SB 34 is the re-filed ‘Compassionate Care’ bill that was vetoed by then Gov. Brown last year.  This amended version now called ‘Cannabis Donations’ exempts from the use tax cannabis products expressly intended for compassion programs.  Strict track and trace measures will apply.  

AB 286 is the ‘Taxation: cannabis’ bill and is currently in the Assembly Revenue & Taxation Committee. This bill is intended to offer temporary relief to cannabis businesses by lowering the excise tax from 15 to 11%, and eliminating the cultivation tax until July 1, 2022.  The bill also requires reports from the various departments involved on licensing and tax revenue numbers to measure the bill’s success. The legislature wants to see if lowing taxes gets more people to apply for licenses and gets more customers to the regulated shops.  

AB 37, the ‘Personal income taxes: deductions: business expenses: commercial cannabis activity’ bill would help offset the federal 280E tax burden by allowing business deductions in California’s personal income tax for state-licensed cannabis businesses.  The bill’s authors address tax equity for licensed cannabis businesses.

Other bills that would help cannabis businesses:

AB 1420 prohibits state regulators from raising application and licensing fees past what is already established.  The nice part of this bill is that it lists every fee for every license type together in one section.

SB 51 allows for the establishment of “cannabis limited charter banks and credit unions” to serve the cannabis industry.

AB 1525 codifies that financial institutions such as banks and credit unions that work with licensed cannabis businesses are not in violation of state law.

SB 67 extends temporary business licenses until the end of 2019, for those that have already submitted Annual License Applications.

AB 953 allows licensees to pay state and local taxes with a cryptocurrency method called “stablecoin.”

Some proposed inventory, track and trace changes:

AB 1288 requires additional sales data be uploaded into California’s track-and-trace system, specifically the date of every sale and whether each sale was conducted at a shop or via delivery.

SB 475 allows the sharing of free-trade samples of cannabis products between licensees exempt of the cultivation tax.

To look up and track any of these bills, visit https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml

and type in the bill number.

To find your California representatives, visit

http://findyourrep.legislature.ca.gov

Constituents can contact their representatives by phone or by using the contact page on the representative’s website to SUPPORT or OPPOSE any of these bills.

Contact PAN if you have any questions about contacting your elected representatives. Your voice matters.

California's Cannabis Taxes Drive Unregulated Market, Harms Patients And Providers

Earlier this month PAN reached out to each member of the California legislature, as well as department heads, seeking amendments to current cannabis regulations that will make medical cannabis more affordable for patients.

PAN has received some feedback from the legislature and at least one bill aims to reduce the excise tax but only temporarily.  There is still a lot of work to be done.  Below is PAN's letter to the California legislature.  We will continue to demand patient-friendly amendments.

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Patient Advocacy Network

Degé Coutee, President

P.O. Box 93845

Los Angeles, CA 90093

(323) 334-5282

patientadvocates@riseup.net

Office of the Governor

Governor Gavin Newsom

State Capitol, Suite 1173

Sacramento, CA 95814

RE: My letter to the California Senate and Assembly Regarding Medical Cannabis

February 4, 2019

I write to you regarding the current state of medical cannabis in California. Since 1992, I have advocated for safe, affordable access for medical cannabis patients, provided social services and education to patients and their caregivers, and became a compliance expert in the medical cannabis industry where I have worked with nearly 3,500 cannabis business operators since 2003.  

January of last year I began asking patients about their experiences at cannabis outlets as the new rules came into effect.  After several dozen inquiries I got the same answer from all of them. None of the patients I spoke with are purchasing medical cannabis from licensed cannabis businesses.  They all said they found more affordable options and could no longer pay the prices at the regulated shops.  

I asked cannabis business operators if they still saw their patient members and one operator stated, “before I got my ‘A’ license I had 8,000 patient members – after January (2018) I haven’t seen any of them.”  Another operator told me he can’t blame patients for finding other means because his low-income patients are suffering under the new rules.

There are numerous ways in which the current regulations make medical cannabis unaffordable.  The fees and over-taxation from seed to sale and every process in between is currently driving the underground market, and this market appears to be expanding as is the demand for it.  No amount of enforcement will alleviate this unless the prices in the regulated market can come down.  Prices have increased under the current regulations 28% - 36% more than patients were paying a little over a year ago, and many have taken their business elsewhere.

I ask the California State Legislature to please make reasonable amendments to our medical cannabis regulations so that the price can return to what the patient market will bear, $30 - $55 per eight of an ounce of flower after tax.  Please make the rules reasonable for businesses that want to provide free and low-cost medical cannabis products to indigent patients. 

During the 2016 Election patient advocates were told repeatedly that Prop 64 would NOT interfere with Prop 215.  The lack of affordability that is pushing  patients to the black market, and the lack of compassion programs were not the intent of Prop 64.  California can have a lucrative cannabis industry and still take care of patients; this is what the voters intended. 

I thank you for your time and consideration and look forward to working the California legislature to restore Compassion to our state’s medical cannabis regulations. 

Sincerely,

Degé Coutee

President, Executive & Program Director

Patient Advocacy Network

@PAN4Compassion

www.CannabisSavesLives.org

PAN is a charitable 501(c)(3) organization

Weed Sells, But Who's Buying? California's Unregulated Market Takes Over

California is experiencing a significant decrease in revenue from medical cannabis sales than what state officials originally predicted.  Some cannabis industry analysts point to adult recreational use as the primary factor.  However, patients and providers will tell you that over-taxation and the added costs of testing, packaging and licensing fees have pushed patients to seek unregulated sources for their medical cannabis.

Cannabis retail providers will tell you that it’s not only patients that have stopped coming in, but local adults, that frequented dispensaries a year ago, also stopped coming in after the new taxes went into effect January 1, 2018. So, who’s buying from licensed and permitted cannabis shops in California?  Tourists.

This benefits cannabis retailers fortunate and/or foresight-full enough to secure a permitted location in a major tourist thoroughfare, such as the Haight-Ashbury or the Venice Boardwalk.  Boutique providers in lesser known communities report that they are having a tough time business-wise – daily visits are low, unregulated options are plentiful, and the cost of doing business is too expensive – unreasonably so.  

Many boutique cannabis business owners see California’s current regulatory system favoring large, wealthy corporations over smaller, local mom-and-pop businesses. Investment money is nearly mandatory these days to keep up and stay afloat.  However, this has always been the way of capitalism and big money and business regulations.  Big money gets what it wants from the rule makers.  The little guy gets hit the hardest.  The consumer ends up paying more in the end.  

Except most California cannabis consumers refuse to pay more and there are plenty of more affordable options outside of the licensed industry.  If smaller cannabis businesses in California want to survive, they are going to have to demand more affordable rules and lower taxation.  The price out of the door has to match or beat the price on the street and right now “black market is king” according to social commentary.   

The $35 affordable eighth to the $65 premium eighth has been the standard on and off the streets for many years.  If regulations can’t meet this consumer demand, then the consumer is going to get it at that price elsewhere.  Does the legislature realize that the excessive taxation and cost of regulation has caused the unregulated market or ‘black market’ to explode?  Do they already know and this is by design? Why?

Always follow the money.

Patients, Advocates And Providers Partner To Reform 64 For Fair, Affordable Regulations

Dear Colleague in Compassion,

I need your help to ensure that medical cannabis patients and providers have a voice in Sacramento. Over-taxation has made patient access to medical cannabis unaffordable for many.  Business operators report unworkable, burdensome, and expensive rules.  As a result of these issues there is a significant drop in the projected revenue California expected from the licensed cannabis industry.

Better regulations are needed now.  We cannot hesitate to take action.  Together, we can improve regulations, and protect patients and providers from excessive taxation and other barriers.  

Patient Advocacy Network is prepared to coordinate this effort, a collaboration of constituents and stakeholders engaging the legislature for fair regulations.  Please become a monthly sponsor now so PAN can get started immediately.

You will be invited to attend statewide task force meetings via conference call.  

You will receive informational and educational flyers to share with patients and caregivers.

Your contribution helps sponsor free letter writing workshops and other pertinent patient trainings.  

Your contribution will help sponsor patients’ travel to Sacramento to meet with legislative officials and deliver their letters.  We will also delivery letters on behalf of patients that are unable to travel. 

You will receive action alerts and be informed of any upcoming legislative hearings.

You will receive regular updates on the progress of the campaign.  

This effort takes diligence, consistency and commitment.  PAN is ready to start right now.  Your monthly donation ensures we move swiftly and consistently until we achieve our goal of fair regulations, and reasonable taxation for medical cannabis providers and patients.  

Donations are always tax-deductible and monthly contribution set-up is easy when you make your donation at Cannabis Patient Voice. 

Please choose a monthly sponsorship level that is best.

Medical Cannabis Provider Sponsorships

$100.00/mo. --  $150.00/mo.  --  $250.00/mo. -- Other

Patient Sponsorships

$5.00/mo. --  $10.00/mo.  --  $15.00/mo. 

Friends of PAN

$25.00/mo. --  $50.00/mo.  

Other payment methods and in-kind donations also accepted. A tax-deductible receipt will be provided.  PAN is a charitable 501(c)(3).  

If you have ANY questions, please contact me directly at (323) 334-5282.  I look forward to working with you.

Thank you for your support!


Sincerely,

Degé Coutee
President, Patient Advocacy Network

Patient Coach From SoCal

California Capitol 

Some Of The Early Patient, Provider Survey Feedback

“The taxes are just too, damn high,” is the sentiment from most Californians and it’s now true for medical cannabis patients, too.  

PAN recently asked patients and providers how the new rules are affecting them.  Many patients reported no longer using retail outlets due to the cost and now use some other source, the un-regulated market.  

Shop owners are feeling this, too.  They report lower numbers of visits since the new taxes and fees took effect.   Some are frustrated with what they call rogue shops in their area, and state they know some of their patients have found growers to help supply them.  

Cultivators appear to be the most disgruntled with the licensing process, on both the local and state level.  In February of this year it was reported that only 0.78% of the estimated growers in California had been approved for a temporary license.  

The California Growers Association has filed a lawsuit against California Department of Food and Agriculture, the state agency that issues cultivation licenses.  The suit calls out new provisions in the regulations that allow a medium license holder to apply for an unlimited number of small cultivation licenses.  

The suit goes on to argue that Prop. 64 allowed a 5-year window for small growers to get established before the state issues what many refer to as the mega-licenses. This new policy of  “stacking” as the lawyers call it violates the intent of the voter initiative by basically creating a loophole to allow large-scale cultivation operations now.

California is not seeing the revenue it projected from the cannabis industry due to all of these issues.  

PAN continues take feedback, monitor the cannabis industry, work with the California legislature and help patients with Compassionate access.  

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Patient Advocacy Network is a charitable 501(c)(3) and needs your support.  

Please click the Donate button on this page and make a $25.00 donation.  You can also sign-up to be a monthly sponsor - $5 - $25 monthly donations go a long way!

All contributions directly benefit the programs and services of Patient Advocacy Network. A tax-deductible receipt will be provided.  

Thank you!

The Tedious Process Of Implementing Cannabis Laws In California

Since the 2016 Election, Patient Advocacy Network has watched the slow, steady process in Sacramento to combine MMRSA (the medical marijuana law of 2015) and AUMA (Prop. 64 of 2016).  As of this post 61 marijuana-related bills are active in Sacramento.  The unique and tedious situation in California is applying regulations to an extensive and thriving medical cannabis industry that has existed for decades.  The real test will be how the new rules affect the existing businesses. 

PAN communicates regularly with Sacramento officials about the affordability of medical cannabis mandated by the Compassionate Use Act.  One of the biggest threats to patients is a bureaucracy, and fees and taxes that will make medical cannabis too expensive for low and moderate income, and disabled patients.  The new rules make it very disadvantageous for dispensaries to provide free or greatly reduced medical cannabis to its most vulnerable patient members.   

Last few months PAN has also been extremely busy with medical cannabis providers preparing for local approval and state permitting.  Despite what seems like legislative chaos in Sacramento, the new regulatory bureau and associated departments state they will be ready to take applications January 1, 2018. 

We will not know what is working or not until full implementation.  PAN is seeking feedback from patients and providers as to how the new rules are impacting access and compliance, respectively.   Any grievances will be taken up with our state elected officials at that time.

PAN is also extremely effective in helping patients get regulations on the local level.  We have stopped bans and assisted with crafting workable guidelines to protect patients and communities.  Please contact us if you have questions about getting (better) medical cannabis regulations in your community. 

A Look At Legalization & Legislation For California in 2016 – an update from PAN

2015 left us with one piece of good news.  A federal spending bill, the Rohrabacher-Farr Amendment, prohibits federal authorities from using its funds to prosecute medical marijuana dispensaries compiling with state/local rules.  In a recent court ruling, U.S. District Judge Charles Breyer decided in favor of the dispensary, which allows the Marin Alliance for Medical Marijuana to reopen.  If upheld on appeal, other dispensaries currently under federal prosecution may see similar rulings.

Soon after this court decision headlines over-stated that marijuana prohibition had ended and the ‘war is over.’  The war is not over and while federal interference is blocked for now the battles are here at home.   In the final hours of the 2015 legislative session the California legislature passed the state’s first set of medical marijuana regulations known as MMRSA, the Medical Marijuana Regulation and Safety Act. 

These three bills: AB 266, AB 243, and SB 643, by authors Bonta, Wood, and McGuire, respectively, along with other co-authors, create the bureaucracy for licensing and enforcement, strict environmental compliance, and multiple business licensing categories for the medical cannabis industry.   The issue of fees and taxation was left out of the bills intentionally due to the lack of time and votes.  ‘Clean-up’ legislation is already underway, and the first of such bills already sits on the Governor’s desk to deal with the first of many arbitrary dates in MMRSA.

This date, March 1, 2016, has spread fear and consternation among local legislatures across the state resulting in dozens of new bans on medical marijuana activities.  The wording of the state law indicated that local municipalities lacking any rules for medical marijuana cultivation by or before March 1, 2016, would default to the state’s rules.  The bill’s author told reporters the wording was a ‘mistake,’ presumably one of many mistakes in MMRSA to be cleaned up this session.

MMRSA by design pulls the rug out from under many authentic medical marijuana collectives and cooperatives in California, which is ironic because the driving force behind MMRSA, Governor Jerry Brown, was also the author of the AG Guidelines of 2008.  The AG Guidelines put into question the legality and compliance of storefront medical marijuana dispensaries and emphasized that a completely closed-loop, patient-to-patient, garden-to-distribution, non-profit business model as a way to possibly prevent diversion.  

All of this is turned on its head under MMRSA.  Under MMRSA the closed-loop is no longer allowed and dispensaries will have to be hands-off of some operations of the business and rely on a third party with the appropriate permits.  Producers, manufactures, transporters and other personnel are no longer required to be legally qualified patients or caregivers.  Businesses no longer have to be non-profit.   All of which appears to be fine for new applicants but MMRSA established another arbitrary date, July 1, 2015.  Any medical marijuana business operating prior to this date with local approval may seek grandfathering status with the state that allows the business to continue to operate as is until 2026. 

Consider upon release of the AG Guidelines, businesses wanting to operate in the spirit of the law created agreements and by laws to demonstrate a closed-loop, membership-based, not-for-profit organization of qualified patients and caregivers.  Some organizations chose to operate garden-direct and bypassed keeping a storefront dispensary altogether.   As a result there are a significant number of authentic medical marijuana producers and providers that have operated for years in the spirit of Prop. 215, the AG Guidelines, paid taxes, maintained good standing with the state, but never gained local approval because such a permit did not exist or was not required for non-storefront related activities.

While the veil of the necessary environmental protections in MMRSA keeps it looking shiny, there are many problematic provisions that could thin out the number of compassionate medical marijuana businesses in favor of a pocket of industry players with high-paid lobbyists in Sacramento seeking to drive the entire direction of California’s cannabis industry.  However, MMRSA is currently being challenged in court for violating Proposition 215, and there’s the effort to legalize cannabis in California in 2016.

PAN has always argued that the only way to legally broaden the Compassionate Use Act is through the voter initiative process.  PAN is supporting MCLR, the Marijuana Control, Legalization and Revenue Act of 2016. 

See the initiative’s proponents and read the initiative here: http://www.oag.ca.gov/system/files/initiatives/pdfs/15-0085%20%28Marijuana%20V3%29.pdf?

PAN’s board members provided input and language to the initiative that protects low-income patient access and compassionate services.  Importantly, MCLR is the only initiative that provides communities with the tools to overturn the bans and start to undo the mess already being created by MMRSA.  Taxation, fees and the approval process under MCLR are fair and reasonable for all cannabis businesses, large and small, for profit or not.  Personal cultivation is lawful and there’s no jail time for pot.   Medical cannabis is protected, adult use is legalized, and industrial hemp agriculture is implemented under MCLR with reasonable regulations and safeguards.  MCLR is comprehensive and smart, and drafted as an open-source process with the input of over 1,200 people, most of which are patient advocates, industry experts, lawyers, political consultants and concerned citizens.   Several attorneys, specializing in various aspects of the law, have provided valuable input prior to the final filing with the Secretary of State.  I encourage you to read the initiative and get involved. 

Read the California Attorney General’s Title and Summary of MCLR here:

http://www.marijuanacontrollegalizationrevenueact.com/wp-content/uploads/2015/12/15-0085A1-Final-TS.pdf

There are many initiatives filed to ‘legalize’ marijuana in California in 2016.  Therefore, it’s vital that you stay informed.   The battle to protect California’s unique cannabis heritage will be on the ballot this year.   I urge you to not be fooled by the power of persuasion that really big money buys.  The initiative touted by the media, the AUMA (Adult Use of Marijuana Act) backed by Napster and Facebook billionaire Sean Parker, is the adult legalization companion piece to MMRSA and written by Sacramento and law enforcement.  AUMA is a ballot initiative disguised as a voter initiative and backed by very large donors to ensure its place on the November ballot.

California has a great history of grassroots efforts and activism, and right now it’s the only action that will protect the cannabis industry from misguided bills, local bans, and a possible mega-corporation take-over.  Please contact PAN for more information, to become a donor, or to volunteer. 

We need to gather 500,000 raw signatures to qualify MCLR for the ballot.  PAN has already coordinated a supremely qualified professional team to execute the signature gathering effort for MCLR.  The only thing we need is your financial support to hit the streets.  Contributions pay for petition printing and signature gathering.   Please don’t let the AUMA be the only initiative to make the ballot.  MCLR will force the debate on important issues like bans and jail time and give voters a choice.  

PAN is uniquely positioned as a non-profit to take advantage of little known code that allows 501(c)(3) organizations to contribute to a political campaign.  This type of fundraising effort is most effective when the organization takes in many smaller contributions.  Donations are still 100% tax-deductible and election authorities do not require your personal information.  Large contributions can still be handled through our PAC. 

I ask you to please make a one-time contribution of $35.00 - $5,000.00, and please ask your colleagues to do the same.  There is a donate button set up for the effort here: http://legalizeitcalifornia.org/donate/.  The donate button here: http://cannabissaveslives.org can take your donation as well, just type MCLR in the memo.

Please do not hesitate to contact me with any questions.  I look forward to making this happen with you.

Degé Coutee

President, Executive & Program Director

Patient Advocacy Network

It's Complicated

Bill info at:  https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520160AB243

Bill info at: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520160AB266

Bill info at:  https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520160SB643

The current status of the California state legislature's medical marijuana bills is complicated.  The 2015 session is ending in a few days and the legislature doesn't seem any closer to crafting a workable set of guidelines for authentic medical cannabis providers.

Just days ago Governor Brown weighed in on language and now all of that language is gone.  All of it.  PAN watched as each bill was updated with the entirety of each bill redlined.  The only language left is the intent of the original motion.  (The links with each image above will take you to the complete file on that bill.)

Also complicated is each bill now mentions the other..."This measure shall become operative only if.." the other bills become operative.  Click on the Today's Law As Amended tabs to see how the legislature has made this very confusing.

We are unsure if these bills have become placeholders for the next session or if amended language will fill these empty bills in the 11th hour before a final vote this session.  The Legislature has suspended the rules that require them to give notice to or take comment from the public - Joint Rule 62(a).  Providing any input at this point is almost impossible.

In years past when the legislature has done this, it has meant the death of that bill.  However, in years past the bills were not completely gutted prior to a full vote, nor did they have the Governor's attention while still on the floor.  We do not understand this strategy but we intent to ask many questions in the next few hours to find out.

While PAN supports equitable guidelines and regulations for medical cannabis operations, these bills  are egregious (favoring collectives with high-paid lobbyists) and expensive (lots of new fees and taxes), hence violating Prop. 215.  The Legislature is treating medical cannabis like adult social marijuana, effectively taking the Compassion out of the Compassionate Use Act and making it the Use Act For Cash.

PAN isn't going to stand for that.