February 21, 2017

February has been a bustling time for cannabis in Sacramento. This month was packed with hearings – oversight, informational, and budgetary – on cannabis. Some of the highlights? Colorado’s Governor Hickenlooper provided testimony at a cannabis tax collection hearing about his state’s tax structure, the difficulties of pesticides regulation, and local banking solutions, among other topics. Lori Ajax was confirmed by the Senate as the first chief of the Bureau of Medical Cannabis Regulation. Both the Assembly and Senate held oversight hearings to review the progress of implementation of medical and recreational laws; it turns out that many legislators are concerned that license applications will not be available by January 1, 2018, though Chief Ajax has stated they will be ready. The Senate Budget Committee discussed tax revenues and allocation, social justice, and community impacts of cannabis. Down in Los Angeles, Treasurer John Chiang held a second meeting for his Cannabis Banking Working Group and discussed legal issues with banking and how other states and companies are facing this challenge. In short, it’s been a whirlwind few weeks.

As if that wasn’t enough, February 17 was the deadline for bills to be introduced for review, negotiation, and debate this year, and it looks like everyone is trying to get a piece of the action in the cannabis world; there have been a record number of cannabis-related bills introduced. It’s important to remember that this doesn’t mean these are all the bills we’ll see in California – plenty of things can change with creative legislative maneuvers! For now, there are a few bills that are important to highlight that have been introduced since the last newsletter.

One of at least three bills that we will see on cannabis taxation is AB 963 by Assemblymember Gipson. Sponsored by the Board of Equalization (BOE), the bill changes the tax structure under Proposition 64 and moves it to the distributor, adds penalties and fines for tax evasion, and requires the state to develop magnetic coding for patient identification cards. It also extends a pilot program in Proposition 64 for combating criminal tax evasion. With the cannabis tax structure a hot topic of debate with industry groups, this is a bill to watch in the coming months.

Assemblymember Steinorth states his AB 238 is intended to prevent distribution monopolies throughout California. The bill prohibits distributors from denying employment solely because a prospective employee is not part of a collective bargaining agreement, and forbids the state from denying a distributor license because an applicant doesn’t hire individuals who are part of a collective bargaining agreement. Unions and cannabis trade associations will likely be very active on this one.

Senators Mitchell and Lara are fighting for reduced sentences for convicted criminals with their SB 180. Right now, if a person commits certain crimes related to controlled substances, the law requires a sentence enhancement to include a three-year term for each prior conviction of specific controlled substances crimes. SB 180 instead limits the enhancement to only prior convictions that involve using a minor in commission of offenses involving specific controlled substances. This is a big step in the battle to reform our justice system and is a good one to keep an eye on.

So, what’s next? March marks the beginning of committee hearing season for Sacramento. Bills will be referred to their first policy committee, and legislators, staff, and stakeholders will negotiate and debate the merits and drawbacks of each proposal. Which bills will overcome this first hurdle and move on in the legislative process? We’ll find out soon and will make sure to keep you updated!

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