October 17, 2019

Going into the end of the legislative session, many members of the cannabis industry were optimistic about the fate of cannabis-related bills as they crossed Governor Newsom’s desk. A leader of California’s Blue Ribbon Commission on Marijuana Policy and a strong proponent of Prop 64, Newsom has been a poster boy for the cannabis industry for several years now. Many hoped he would help relieve business owners from some of the red tape and restrictions that have plagued the industry since the beginning of Prop 64 implementation. So how did he do in his first legislative session as Governor? Some cannabis advocates believe he was not progressive enough, but overall Newsom proved that he is serious about helping the cannabis industry thrive, signing legislation that generally helps businesses operate more easily and increases some access to medical cannabis care. His actions have been a breath of fresh air in comparison to those of his predecessor. Among the new laws are the following:

  • Tax breaks for cannabusinesses (AB 37): Owners of licensed commercial cannabis businesses will be able to deduct business expenses. The new law only allows for such deductions between January 2020 and 2025, but expect advocates to push to make the law permanent in the next couple of years.
  • Retesting samples (AB 404): Eliminating a great deal of unnecessary waste, this new law allows for samples to be retested due to equipment failure or staff error. The Bureau of Cannabis Control may also specify other allowances to correct minor errors, but these will need to be defined later through regulations.
  • Vape cartridge warning symbol (AB 1529): Labeling will be slightly easier with this bill which authorizes the use of a smaller universal symbol (¼”x ¼” rather than ½”x ½”). Note this bill went into effect as soon as Newsom signed it, unlike most bills which typically go into effect on January 1.
  • Compassionate Care Act (SB 34): Licensees will be able to continue their compassionate care programs and provide cannabis and cannabis products free of charge to medicinal patients in need. These products will also be exempt from the state’s significant taxes.
  • Medical cannabis on school sites (SB 223): Schools will be authorized to implement policies that enable students who are qualified medical cannabis patients to receive their medicine on school sites.
  • No party buses (AB 1810): An omnibus transportation bill was amended late in the legislative session to prohibit passenger use of cannabis in limos, taxis, and buses.

Aside from the passage of AB 1810, one of the biggest disappointments to many in the industry was the veto of SB 305, which would have allowed terminally ill patients to use medical cannabis in hospitals, hospice, and other health care facilities. Newsom “begrudgingly” vetoed it, stating that the bill would create significant conflict between state and federal health care laws. Given Newsom’s tense relationship with federal leadership and the fact that his administration is seeking to renew waivers for billions of dollars in federal health care funding next year, the veto is no surprise. But it does mean that advocates will need to start over on this subject and find very creative ways to help increase access to some of the state’s most vulnerable medical cannabis patients.

A re-run of SB 305 is one of many things on the list of items for 2020. There are also several bills that never even made it to the Governor’s desk, e.g. cannabis banking, allowance for trade samples, and legalizing the sale of products with hemp-derived CBD. We can expect to see many of these bills resurface in some form next year. It is also reasonable to assume that cannabis-related subjects that have received negative press will also make its way into the legislative session in the form of a “fix-it” bill. Take, for example, the vaping crisis. Legislators are already discussing different ways to try and get a head of the problem. So as we wrap up the last couple months of 2019, it would be wise to start strategizing how to attack some of these issues, and if possible, meeting with your representatives or their staff in their district offices to help them understand how different policies might impact your business. Getting to them early is key, before they introduce new bills with language that takes substantial resources to change.

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

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