May 26, 2021

California Legislative Update

May brought a rush of activity for cannabis policy in Sacramento. The Administration published its May revision of the Governor’s Proposed Budget, the state Cannabis Advisory Committee met several times, and the Appropriations Committees in both houses of the Legislature held their notorious suspense hearings, during which several bills were killed or forced to be two-year bills. The next month will be critical for the Legislature as they deal with not only an extraordinary $75.7 billion budget surplus, but also a new restriction on lawmakers – imposed by the Assembly Speaker and Senate President pro Tempore – that prohibits each legislator from having more than 12 bills pass to the opposite house. The reason for the limitation is unclear but it may be an effort to control the policy ambitions of legislators (and therefore the state’s workload) given the massive budget surplus. This will likely not impact all legislators, as some prefer to focus on a smaller bill package and others already had several bills die in the legislative process. However, others will need to prioritize issues that they would like to work on this year versus waiting until 2022. Two cannabis-related bills that are still alive and may need to fight for a shot in the second house this year are SB 519 (Wiener) on hallucinogenic substances, and SB 59 (Caballero) on provisional licenses.

  • SB 519 (Wiener) – hallucinogenic substances. While SB 519 survived the suspense file, the provisions that would have dismissed pending or prior convictions for crimes related to certain hallucinogenic substances were sacrificed and are no longer part of the legislation. The bill still decriminalizes possession and personal use and social sharing of psilocybin, psilocyn, dimethyltryptamine (DMT), ibogaine, mescaline, lysergic acid diethylamide (LSD), ketamine, and 3,4-methylenedioxymethamphetamine (MDMA), by and with persons 21 years of age or older. SB 519 has received solid support from democratic legislators thus far but the question will be whether or not it is one of the 12 bills that the Senator decides to move this year. As of the date this article was written, the bill was awaiting its fate on the Senate Floor.
  • SB 59 (Caballero) – provisional licenses. SB 59 avoided the suspense file and was eligible for a vote on the Senate Floor as of the date this article was written. It currently extends the lifeline of provisional licenses until 2028 but allows only new qualified equity applicants to be issued new ones after July 1, 2022. In the May Revise, the Newsom Administration acknowledged the problem with having a staggering 82% of the state cannabis licenses still be only provisional status. However, the Administration’s proposal conflicts with the provisions of SB 59, and suggests that the licensing authorities’ ability to issue provisional licenses be extended by only six months until July 1, 2022. It also proposes that requirements for environmental compliance be made explicit prior to annual licensure and would require the newly formed Department of Cannabis Control to pass regulations that outline the steps that provisional licensees must take to show progress towards attaining an annual license.

    The shorter extension proposed by the Administration may be a nod to environmental advocates concerned with continuous extensions for licensees to comply with the requirements of the California Environmental Quality Act. It is not uncommon for legislation to conflict with budget proposals, and the Legislature still has the power to make its own adjustments to the budget. Nevertheless, the Administration’s proposal appears to signal that 2028 is not part of the timeline the Governor is envisioning for provisional licenses and that the bill could be vetoed if it went to his desk as currently written. Given the 12-bill limit, it is possible that this issue will be negotiated through the budget rather than use one of Senator Caballero’s coveted bill spots. If the Senator chooses instead to push the bill forward this year, then SB 59 will likely be amended in an effort to negotiate with the Administration, perhaps with some language on some of the benchmarks that applicants must meet to show progress towards annual licenses.

Other bills that survived the suspense file included SB 235 (Allen) and AB 45 (Aguiar-Curry) on industrial hemp, AB 1138 (Rubio) on penalties for unlawful cannabis activity, and SB 544 (Laird) on testing. Bills that focused on delivery limits (AB 1014) and market expansion and taxes (SB 398) were made into two-year bills. But remember, even though some bills were officially held indefinitely or until 2022, that does not mean those issues are done for the year. It is still possible for legislators to incorporate various policies into the budget, so there may still be some hope for proponents of such issues. As a result, it will be important to keep eyes on the budget proceedings in the next few weeks as legislators work to come to a decision on how to allocate the state’s wealth.

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.