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.

Getting To Know Patient Advocacy Network

Patient Advocacy Network has made a number of new friends recently that have questions about our work and in what direction we want to go.  Despite our long history in the medical cannabis movement, we know that there are many that are not familiar with our work.  We are excited to be engaging new friends.

PAN has relaunched the Compassion Flower Report as a show on Youtube.  President Degé Coutee did the Compassion Flower Report as a segment on the Hollywood Hemptress Hour with Tere Joyce, an online live radio show and podcast, until that show ended.  

In the inaugural episode of the relaunched show Degé talks about the history of the organization, the state of medical cannabis now and next steps.  The show will be posted by or before 4:20 p.m. PST on Fridays each week.

Compassion Flower Report - Inaugural Episode

https://youtu.be/JgDCNpi36sI

Some of PAN's new friends have asked for a flyer they can circulate among their colleagues.  We ask that you please share this flyer with your social networks.  There is a tremendous amount of work to be done to reform these detrimental policies. The more outreach and support helps us be more effective and move swiftly.  

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!

Los Angeles To Add Further Taxation On Medical Cannabis

LA City Hall

The Los Angeles City Council is considering a proposed resolution to be placed on the ballot for November 2018, to further raise taxes on commercial cannabis activities, including medical cannabis.  

The Council File number is 18-1800-S2 and can be tracked at:

https://cityclerk.lacity.org/lacityclerkconnect/

The 6/25/18 version of the Resolution is here:

http://clkrep.lacity.org/onlinedocs/2018/18-1800-S2_ord_draft_06-25-2018.pdf

You can contact Los Angeles City Council members here:

https://www.lacity.org/your-government/elected-officials/city-council/council-directory

Patients concerned that further taxation will only make medical cannabis less accessible can reach LA City Council members at the above information.  Even if you do not live in Los Angeles but use the dispensaries in LA, you are a stakeholder.  Please contact PAN if you have questions about writing a letter or making a phone call.  We are here to teach patients how to be effective self-advocates.  

LA City Council is on recess for a few more days. PAN will be visiting LA City Hall upon their return to submit this memo.

*****

To: All members of the Los Angeles City Council, the Los Angeles City Clerk and Los Angeles City Attorney

From: Degé Coutee, President, Patient Advocacy Network

P.O. Box 93845, Los Angeles, CA 90093

CannabisSavesLives.org, @PAN4Compassion, patientadvocates@riseup.net

(323) 334-5282

RE: Council File 18-1800-S2 – A Resolution To Tax Medical Cannabis Patients

I write to ask that you please reconsider any further taxation on Medical Cannabis and remove this tax from the proposed ballot resolution.  Any further taxation or fees on medical cannabis only harms Patients and pushes them further into the underground market where many have gone already.  

At this time the California legislature is considering SB 829 to incorporate Compassionate Care into the state regulations and help remove financial barriers to serving authentic patients.  Instead of using indigent patients, cancer sufferers and veterans as an ATM, I ask that you please support Compassionate Care and focus the Cannabis Reinvestment Act on adult use, smoke lounges, events and other canna-tourism, and not the sick and dying.  

I thank you for your time and consideration.

#####

LA To Decide On Collective Taxation

PAN President Degé Coutee with Councilmember Dennis Zine

On November 16, 2010, the Los Angeles City Council passed language that puts a Charter amendment on the March 2011 ballot allowing for a 5% gross receipts tax on all medical cannabis collectives in the City.

When collectives first began forming in LA, many patients agreed that paying our fair share to the City was reasonable. However, at the time Councilmember Dennis Zine had presented a reasonable motion seeking a temporary moratorium on new collectives while the Council drafted permanent regulations. In this September 2006 motion Zine writes,

“a legally existing medical marijuana dispensary is a retail establishment that is open for business in compliance with all applicable laws and regulations… has obtained all necessary licenses and permits and is conducted in a building… for retail occupancy.”

At the time it could not have been more clear that the intention of the Interim Control Ordinance and the future activity of collectives was going to be a retail model like other cities in California. Concurrently, Zine seated a Medical Marijuana Working Group to work on a draft ordinance that followed a retail model similar to that of the Los Angeles County’s ordinance.

Then, eventually comes the first draft from the City Attorney’s office. It could not be more opposite from Councilmember Zine’s motion or the input from the Working Group. The City Attorney, then Rocky Delgadillo and now Carmen Trutanich, argued that State law did not allow for sales but that patients were allowed to farm together and give it away to one another. After a year of arguing between Council and the City Attorney, nearly a thousand dispensaries operating, the moratorium expired and many angry citizens/patients– the Council finally caved and voted in what is called by many “The Worst Local Medical Cannabis Law In The Country.”

The current ordinance is so far from what the City Council mandated as a “legally existing medical marijuana dispensary” that collectives started to sue the City. Soon after the one-week registration period under the new ordinance, the City Attorney filed suit against 141 of these “legally existing” dispensaries citing a change in management as unlawful. The first ruling in these cases will be issued November 29, 2010.

A handful of councilmember’s are now starting to see what advocates had been stating during public comment. We attempted to point out that the ordinance was drafted with the intent of shutting down every collective in the City. We were treated as if we were irrational, didn’t know what we were talking about. The same people seated as advocates by a councilmember on the Working Group were falling on deaf ears.

The Council is now trying to amend the ordinance to stop the City Attorney’s attempt to shut down 141 “legally existing” collectives. As soon as the City Attorney sued these patient groups the City Clerk stopped the rest of the application process halting any other dispensary from moving forward in the licensing process. These collectives will be deemed illegal under the ordinance on December 6, 2010, if the Council does not act to protect them.

In the midst of all of this Councilmember Janice Hahn originally proposed a $500.00 fee on every medical cannabis plant grown by a collective. After hearing from patient advocates Hahn withdrew that motion and then proposed the 5% gross receipts tax, which passed Council vote 10-4. It will be on the ballot March 8, 2010.

The big question for the Medical Cannabis Community is do we support this tax in light of the current political and legal situation around LA’s collectives? How will you vote on this? PAN looks forward to hearing from you.

Image - Degé Coutee of PAN and LA City Councilmember Dennis Zine

copyright © 2010 Degé Coutee