Law California

[Baron23]

It just appears to me that CA is a complete and utter sell out to large cannabis corporations at the expense of the small operators that were supposed to be protected. Another example of government telling the governed to go pound sand.


Small and medium-scale growers may be shut out of end-of-the-year sales events after bill was rejected last week

Growers who have previously participated at popular cannabis events such as the Emerald Cup will not be able to sell products to consumers after a bill was rejected last week.

Assembly Bill 2641 would have allowed the state Bureau of Cannabis to give out temporary licenses for businesses to sell products and allow on-site consumption at temporary events.

The bill was rejected for the year after being held in committee.

Following the passage of Prop. 64 which legalized recreational cannabis in 2016, direct sales are prohibited unless the business already has a retail sales permit. These permits are expensive and often unattainable for smaller growers who may not even qualify.

Supporters of the bill were the California Cannabis Industry Association and county governments such as Humboldt and Mendocino counties where the local economies rely heavily on small and medium-sized growers

Those opposed to the bill included major brands including large-scale producer Canndescent and the United Cannabis Business Association, representing retail dispensaries in Los Angeles and Orange County.

Without sales permits, small and medium-scale cultivators will not be able to participate in end-of-year sales events and other farmer’s market style events. As such, many smaller growers are likely to go out of business in the near future.

“For years, these types of events have been lifelines for small growers,” Hezekiah Allen, executive director of the California Growers’ Association, told Marijuana Moment last week.

There were other cannabis-related bills that were passed by the committee that will move forward to be voted on by the state Assembly and Senate.

These bills include:

SB 1294 – This will create an equity program across the state to help people of color and small operators to enter the industry.

SB 829 – This will create a new license that will allow for medical cannabis products to be given away for free.

AB 1863 – This will allow for certain tax deductions for cannabis businesses.

SB 311 – This will clarify the commercial cannabis distribution process.

Legislation that would have created state-chartered banks to serve the cannabis industry was also killed for the year when it was held for review last week.

“This is a serious public safety issue that deserves swift resolution,” said Sen. Bob Hetrzberg (D), the bill’s sponsor, in a press release. “We’ve got barrels of cash buried all over the state, businesses being ransacked and it’s clear that the federal government won’t act. It’s a shock to me that the state government may not act this year either – especially after this bill passed through nearly every step with bipartisan support and little to no opposition.”

 

[momofthegoons]

It just appears to me that CA is a complete and utter sell out to large cannabis corporations at the expense of the small operators that were supposed to be protected.

As states go legal (and especially in recreational states) I think we're going to see a lot more of this. Large grow corporations have been eyeing Michigan for a couple of years now. Some have already put down roots.

 

[CarolKing]

Meet the Crusaders for Clean Pot

Mar 1, 2018 · The marijuana industry is a vast, toxic and largely unregulated market – can a corporate ... I first met him in 2015, over beers at a dark bar near the state capitol, where he was meeting with a ...

This is From a Rolling Stone. Somewhat long so I didn’t include the whole article. A very interesting read.

 

[Baron23]

California weed delivery service raided by Bureau of Cannabis Control

California continues to crack down on weed delivery services.

California’s Bureau of Cannabis Control was forced into action on Monday, after a complaint pertaining to a cannabis delivery operation in southeast Sacramento.

According to a report by The Sacramento Business Journal, two state agencies—The Bureau of Cannabis Control, and the state Department of Consumer Affairs’ Cannabis Enforcement Unit, raided The Cannaisseur Club, a marijuana delivery service located on 7925 Butte Ave. The Sacramento Police Department provided the official search warrant.

The raid came on the heels of complaint submitted to the Bureau of Cannabis Control, which contended the operation was running without a proper permit, in addition to not paying the full amount of tax dollars to the state.

In a press release, the Bureau said they removed marijuana flowers, edibles, and concentrates from the club during the raid.

Per the report, the Cannaisseur Club was under operation prior to receiving a conditional permit to deliver cannabis throughout approved areas. In fact, the club was set to meet with the city’s Planning and Design Commission on Thursday to discuss their application for the proper license.

The meeting has since been canceled by the Commission.

The club failed to receive its proper permits because of a sudden shift from their original business model. According to the Business Journal, The Cannaisseur Club originally applied for a cultivation conditional use permit back in June 2017, before changing their application to reflect that of a delivery service.

The incident remains an ongoing investigation within the state’s Office of Cannabis Policy and Enforcement.

Weed Delivery Services In California
The delivery sector of California’s newly legalized recreational cannabis market has been subject to controversy as of late. The aforementioned Bureau of Cannabis Control proposed a change in law that restricts unauthorized cannabis delivery services in California.

The Bureau argued that cities cannot ban delivery services under California’s Proposition 64, which states “a local jurisdiction shall not prevent delivery of cannabis or cannabis products on public roads.”

However, the bill also gives local governments the power to veto any non-medicinal marijuana sales at their own discretion, making the situation very tricky for California lawmakers. Back in July, the League of California Cities wrote a letter urging the state to refrain from making any sudden changes to its policy regarding delivery services.

“An influx of unapproved local cannabis deliveries will decrease transparency of cannabis operations and increase public safety obligations and costs for local law enforcement,” the letter said.

 

[Baron23]

Over 500 charged in LA in connection to unlicensed marijuana businesses

In California, the crackdown on unlicensed or illegal cannabis businesses continues.

Authorities in Los Angeles continue cracking down on unlicensed marijuana businesses. The effort to weed out illegal business activities began picking up momentum earlier this year. And now, the crackdown has resulted in more than 500 criminal charges.

Numerous Unlicensed Marijuana Businesses in LA
Today, law enforcement authorities in LA announced the full extent of their efforts to decrease the number of unlicensed marijuana businesses in the city. Since May, the city has busted 150 businesses for operating without proper licensing or for other forms of illegal activity. As a result, authorities are charging 515 people for their participation in these illegal cannabis businesses. All told, the city has filed 120 criminal cases.

As reported by the Los Angeles Times, the illegal businesses have run the gamut, including everything from illegal or unlicensed grow sites to extraction labs, retail stores, and home delivery services. Courts have been hearing cases since May. Authorities said they expect to continue hearing cases through the end of October.

Everyone caught in the sweep has been charged with unlicensed commercial cannabis activity. This charge can come with as much as six months in jail and a fine of up to $1,000.

To date, there have reportedly been 21 people who have pleaded guilty or no contest to misdemeanor charges or infractions. One person was sent to a diversionary program, and there are still 10 people with outstanding warrants. Additionally, 11 cases were reportedly dismissed.

LA’s Ongoing Crackdown

The city of Los Angeles has been focusing on identifying and eliminating unlicensed or illegal marijuana businesses. In many cases, this includes cannabis shops that simply do not have proper licensing to operate. Similarly, this also includes businesses that are not fully complying with state and local regulations. This aspect of California’s legal cannabis industry has become increasingly important following a significant legislative overhaul earlier this summer.

Further, authorities have also cracked down on businesses that are not meeting security requirements. And in some cases, businesses have been cited or shut down for operating too close to schools or other restricted zones.

One way or another, authorities said the crackdown is ultimately aimed at protecting cannabis businesses that are following laws and regulations.

Legal Weed in California
It’s been a big year for legal weed in California. Most importantly, 2018 was the launch of full recreational retail cannabis sales throughout the state. Then, over the summer, lawmakers introduced a number of new rules and regulations. The changes introduced stricter laws on everything from packaging and labeling to store displays and product tracking protocols.

The changes were met with some controversy. In particular, many business owners were worried that they would not be able to sell all their inventory before the new laws went into effect. To avoid this, many shops in the state began selling products at huge discounts.

Despite these efforts, the new regulations forced dispensaries to dispose of tons of product that did not meet the new set of retail requirements. In fact, reports showed that there was somewhere around $350 million worth of weed destroyed in the wake of California’s new laws.

 

[Baron23]

Well, they are at least formalizing what has indeed been happening. I know that @SamuraiSam told me that at SeaTac, the cops have absolutely ZERO interest in finding cannabis.


LAX’s policy states travelers can carry cannabis

Los Angeles International Airport will allow travelers to carry cannabis at the airport, news that is both shocking and exciting for medical patients and recreational consumers.

The LAX policy reads, “While federal law prohibits the possession of marijuana (inclusive of federal airspace,) California’s passage of proposition 64, effective January 1, 2018, allows for individuals 21 years of age or older to possess up to 28.5 grams of marijuana and 8 grams of concentrated marijuana for personal consumption.

In accordance with Proposition 64, the Los Angeles Airport Police Department will allow passengers to travel through LAX with up to 28.5 grams of marijuana and 8 grams of concentrated marijuana. However, passengers should be aware that marijuana laws vary state by state and they are encouraged to check the laws of the states in which they plan to travel.

Travelers at LAX have actually been allowed to carry up to 28.5 grams of cannabis and 8 grams of concentrated cannabis for personal consumption since the state fully legalized in January, according to LA Airport Police spokesperson, Alicia Hernandez.

“Based on our policy, we’re not going to arrest you or confiscate marijuana,” Hernandez said.

However, while the Airport Police are fine with travelers carrying their cannabis in the airport, they warn passengers that the U.S. Transportation Security Administration (TSA) may not feel the same way.

“We are two different entities. TSA can deny you coming through the checkpoint. The checkpoint is their jurisdiction.”

So should passengers risk trying to get their marijuana past TSA while it’s still illegal federally?

“TSA’S focus is on terrorism and security threats to the aircraft and its passengers,” TSA spokesperson Lorie Dankers said. “TSA’s screening procedures, which are governed by federal law, are focused on security and are designed to detect potential threats to aviation and passengers.”

Dankers added that when a TSA agent finds cannabis in a traveler’s luggage, they are required to tell law enforcement, even if the state the traveler is in or coming from has legalized cannabis. It’s then in the hands of law enforcement to decide whether or not to initiate a criminal investigation and what steps will be taken. Those officials will decide if the passenger will be allowed to travel with their marijuana.

According to Hernandez, if that law enforcement agency is the LAX police department, passengers will not face arrest.

“We’re not going to be taking any action against you for having that marijuana,” she said.

“Amnesty boxes” for passengers to drop their marijuana in before travelling have been proposed by LA City Councilman Mitch Englander, as a way for travelers to avoid any headaches before getting through TSA checkpoints.

 

[Baron23]

Gov. Jerry Brown blocks medical marijuana on school campuses

Voicing concern about exposing minors to marijuana, Gov. Jerry Brown on Friday vetoed a measure that would have allowed parents to bring medical cannabis to school campuses for their children in districts that sign off on the practice.

State Sen. Jerry Hill (D-San Mateo) had proposed the legislation to provide medical help for children who suffer from epilepsy and other illnesses whose symptoms might be helped through oral, non-smokeable doses of cannabis.

The measure, Hill said, “lifts barriers for students who need medical cannabis to attend school.”


But the governor said he was uncomfortable with the proposal, which comes the same year that California began licensing businesses to sell marijuana to adults for recreational use.

“This bill is overly broad as it applies to all students instead of limited cases where a doctor recommends medical marijuana for a student in order to prevent or reduce the effects of a seizure,” Brown wrote in his veto message.

“Generally I remain concerned about the exposure of marijuana on youth and am dubious of its use for youth for all ailments,” he added. “This bill goes too far —further than some research has — to allow use of medical marijuana for youth. I think we should pause before going much further down this path.”

 

[Baron23]

California drops ‘bombs’ in updated draft of permanent rules for cannabis businesses


California’s proposed marijuana business regulations continue to evolve, this time in an updated draft of permanent industry rules released Friday by state officials.

The proposed rules – from the state’s Bureau of Cannabis Control, Department of Food and Agriculture and Department of Public Health – touch on areas including marijuana delivery, packaging and events.

Regulators are slated to finalize the rules by early December, following input from the public.


If permanently adopted, the latest proposed rules would deliver a raft of significant changes for MJ businesses, according to Juli Crockett, compliance director for Los Angeles-based consultancy MMLG, and Omar Figueroa, a California marijuana attorney.
In particular, Crockett said, the BCC’s changes are “going to be the talk of the town, because there are some bombs they dropped.”

Among the biggest proposed changes, according to Figueroa and Crockett:

• Cannabis delivery would be prohibited by third-party companies that do not have state MJ commercial licenses, but the rules do allow for tech platforms to help facilitate deliveries as long as there’s no direct profit-sharing based on sales. The move could undercut business models of companies such as Eaze and Weedmaps when it comes to delivery, both Figueroa and Crockett said.
• The draft rules would reduce the amount of inventory allowed to be carried by a single delivery vehicle, from $10,000 to $5,000. And at least $2,000 of that inventory would have to have existing orders in place from customers before drivers leave a delivery hub.
• Licensed cannabis businesses would be required to disclose far more information about individuals and companies that hold ownership stakes – a move Figueroa said amounts to a “ban on silent partners.” Crockett added that the BCC “wants to know who’s standing to profit and who has a standing in each of these companies.”
• Packaging and labeling provisions would change dramatically, including one that would allow manufacturers to hold off on identifying THC and CBD content before having their products tested through distributors and laboratories. That would let distributors get edibles and concentrates tested for potency and then add that information to labels before products are sent to retailers.
• Child-resistant packaging requirements would shift and not be required for manufacturers until January 2020. That, Crockett said, would mean more onus would be placed on retailers to use child-resistant exit bags at storefronts through 2019.
• Licensed MJ events would no longer be confined to county fairgrounds, which means there would likely be a proliferation of cannabis events of various types.
• Licensing and branding agreements with legacy operators that were growing or manufacturing without a state permit would be expressly prohibited. Figueroa said such a move would likely cut off one more avenue for longtime MJ companies that have had a hard time obtaining the necessary permits to operate in the regulated market.
• Testing requirements would be modified to ease the previously strict mandates that have led to a number of product failures and recalls.

These are just some of the modifications proposed by regulators in the most recent draft of industry rules.

The latest draft regulations are available here. The first draft of permanent rules was released in July.

“It seems like they’re very sensitive to the needs of the industry,” Figueroa summarized. “What makes me happy is the certainty and knowing what we have to deal with, that the rules of the game are finally crystallizing.”

Eaze’s vice president of communications, David Mack, wrote in an email to Marijuana Business Daily that the company is “happy that the BCC is providing guidance for the best way that technology platforms can support delivery from local, licensed retailers.”

Friday’s publication of the draft rules kicks off a new, 15-day public comment period that will be open through Nov. 5.

The three state agencies that oversee California’s marijuana industry are required to complete all regulatory tweaks by Dec. 3.

A spokesman for the BCC said it’s possible another draft of the rules may be released before then, depending on feedback during the comment period.

 

[Baron23]

"Several factors — understaffing in the city manager’s office, the flawed partnerships Oakland forced general and equity applicants to form, and the lack of supportive resources provided by the city to equity applicants — led to the program’s demise."​

Wait...let me see...another government program to interject in the open markets and mandate some form of social justice engineering failed? Whoa....I'm so surprised. sigh


Oakland’s pot equity program withering on the vine

Oakland’s long-touted program to help black and brown pot entrepreneurs succeed alongside bigger marijuana businesses is dead.

Officially, it’s around still. But it may as well not be.

The program was crafted so Oakland natives and longtime residents, especially those arrested and jailed for marijuana-related offenses during the failed war on drugs, could get a stake in the legitimized cannabis industry.

For two years, the city sold a dream to hundreds of hopeful people: 616 applicants sought assistance under the equity program as of last month, city records show.

I’ve tracked several of those applicants and have watched them struggle as they’ve been misled and let down.

“Just about anybody you would ask — if you did a poll on the streets of Oakland — would say they believe in social, racial and economic justice,” said Robert Selna, an Oakland land-use attorney who represents marijuana businesses, including equity applicants. “Few can argue against the program that claims to promote those things, but the program only says those things. It doesn’t actually do those things.”

The equity program was born in May 2016 when the City Council unanimously approved laws to regulate the city’s medical cannabis industry, while promising to revisit the debate over the tacked-on program.

The cannabis ordinances required the city to give at least half of all available cannabis permits to equity applicants. To qualify for the equity program, applicants had to be city residents earning less than 80 percent of the city average. And they had to either live in a specified high-crime zone for at least 10 of the past 20 years or have been convicted of a cannabis crime in Oakland after Nov. 5, 1996.

General applicants could also apply under the equity program by agreeing to “incubate” equity applicants by providing 1,000 square feet of free space for three years.

Several factors — understaffing in the city manager’s office, the flawed partnerships Oakland forced general and equity applicants to form, and the lack of supportive resources provided by the city to equity applicants — led to the program’s demise.

Many equity applicants haven’t even moved into their spaces yet. Some are mired in disputes with their incubators about theft at their spaces. Several incubators blame city departments for the slow approval process of building plans and inspections.

The nails in the program’s coffin will be hammered in the coming weeks when a big part of the program expires. That’s the part that limits how many general pot business permits the city can hand out. The limits were designed to even the playing field for equity applicants.

“It makes me angry to think that across America people are calling out the Oakland model when the Oakland model isn’t what they think it is,” Matt Hummel, a member of Oakland’s Cannabis Regulatory Commission, said at the commission’s Oct. 4 meeting.

To me, the meeting felt like a vigil for the equity program. More than a dozen equity applicants pleaded for the limits to stay in place. It is painfully evident just how unprepared the city was to manage the program. No day-to-day data are available. What does the city know about the program beyond who has submitted an application? Not much at all.

“If something goes awry, unless the applicants reach back out to us, we don’t necessarily know what’s taking place,” Greg Minor, an assistant city administrator, said at the meeting.

Selna told me the city should have done better.

“If this was a priority for the city, then put some real leadership and resources behind it,” he said. “If it was a priority, the city should’ve demonstrated some leadership and prioritized it and they haven’t.”

And if this really was about reparations for the war on drugs, the city should have incubated equity applicants itself, because it was the city’s Police Department that perpetuated the war.

I don’t want to tap-dance on the program’s grave, but two years ago I wrote that the program was a half-baked plan.

“In reality, these programs are giving the people of underserved communities false hopes of self-empowerment,” said Alexis Bronson, an equity applicant whose uphill journey I’ve followed. “Some will persevere, but the majority will not.”

Yes, businesses fail. But at least most businesses get a chance to succeed first.

 

[Baron23]

Hat's off to Judge Cohn who shoved it up Fontana's city admin's ass and broke it off. There is an earlier article in this thread about Fontana when they first issued these regs. This has nothing to do with properly administering cannabis legalization and home grow and everything to do with Fontana still fighting against a proposition which they lost. Cannabis is legal under state law, Fontana....deal with it.

Judge: California City That Banned Home Growing “Has Gone Too Far”
As cities across the state continue to draft their own rules for home cultivation, this ruling in Fontana could serve as a precedent.

In a battle between a southern California cannabis consumer and city regulators, the consumer has won. On Friday, a judge struck down the bulk of a local ordinance that would’ve sharply limited indoor personal cultivation in a suit waged by the American Civil Liberties Union and Drug Policy Alliance against Fontana.

During a hearing in early October, attorneys with the ACLU and the Drug Policy Alliance requested that a court in San Bernardino County order the city of Fontana to cease what they deemed to be illegal behavior. The separation of powers doctrine, they argued, calls on courts to invalidate local legislation that conflicts with California’s general law.

After weeks of deliberation, Judge David Cohn ruled in favor of the plaintiff. “The issue in this case,” he said, “is how far a city can restrict the category of persons who are entitled to grow marijuana plants and the circumstances under which they may grow the plants without running afoul of the [state’s] requirement that regulations be reasonable. The City of Fontana has gone too far.”

Though the city of Fontana is a small locality in California, Judge Cohn’s ruling has significant implications for the rest of the state and, perhaps, even others that have legalized the recreational use of cannabis. As Cannabis Wire previously reported, local officials throughout the country have undercut access to legal cannabis through municipal code. In California, the majority of localities have banned outdoor cultivation, and dozens of cities require their residents to either register or obtain permits for personal use.

Hundreds of localities, including Fontana, have banned both adult-use and medical cannabis sales. For these residents, indoor cultivation is often the only legal way for them to secure cannabis locally.

SUBSCRIBE TO CANNABIS WIRE'S MORNING NEWSLETTER
Original news and analysis from veteran journalists—straight to your inbox every weekday morning. (This newsletter is free now, but will soon be available only to subscribers.)

Email Address

Under the Adult Use of Marijuana Act (AUMA), California residents are allowed to grow up to six plants in a private residence. However, because the legislation allows local governments to regulate home grows, how that plays out from locality to locality varies widely.

For instance, a Los Angeles resident who wishes to grow cannabis for personal use need only be twenty-one, go to a licensed cannabis retailer, buy some seeds and plant them at home. (Renters, of course, may subject to their landlord’s policies.)

But in Fontana, a city of about 200,000 residents located some 60 miles to the east, those who wished to partake in indoor cultivation were obligated to undergo a far more complicated process.

First, they needed a permit. However, in order to apply for it, residents could not have any pending code enforcement actions or outstanding payments due the city (like an unpaid parking ticket). They also couldn’t have any felony convictions for the possession of a controlled substance within the last five years.

If they met the requirements, Fontana residents then had to pay for a Live Scan of their fingerprints (anywhere from $11 to $70) and then another $25 for the California Department of Justice to review their record. If they’re renters, they also needed to provide a signed, notarized affidavit to the city, in which their landlords granted permission for cannabis cultivation on the property.

Next, applicants had to pay a $411 fee and agree to an inspection of their home by a city employee tasked with ensuring that all utilities in the house or apartment are up to code. Upon receiving the permit, Fontana residents had to pay a $253 renewal fee every year.

Mike Harris, a retired ironworker and registered nurse, has lived in Fontana since 1987. Following his decades-long and physically demanding careers, he was injured several times and required significant medical procedures, including a prosthetic hip and shoulder reconstruction. In 2010, one of his physicians recommended that he try cannabis to for his pain and arthritis, so he got a medical-marijuana identification card.

The plant, Harris told Cannabis Wire, proved to have fewer side effects than any other treatment he tried. His experience compelled him to see cannabis in a different light, and he went on to join The Human Solution International, an organization self-described as “focused on restoring the rights of those negatively affected by cannabis prohibition.”

When AUMA legalized personal cultivation of cannabis in 2016, Harris thought it would be both convenient and economical for him to grow his own plants. He did not do so, however, due to the restrictive regulations adopted by the city. In fact, to date, no Fontana resident has applied for a Residential Indoor Marijuana Cultivation permit.

In its suit on Harris’s behalf, the ACLU and Drug Policy Alliance pointed out that state law, unlike the city of Fontana, does not bar those with felony convictions from growing six cannabis plants for personal use. Moreover, under Fontana’s ordinance, applicants who owed a library fine or failed to update a pet license would be denied a permit. Additionally, they argued, residents who could not afford to pay a $411 fee, plus the cost of paperwork with the Department of Justice, were also prevented from cultivating, as were residents who could not dedicate an entirely separate room in their home to six or fewer plants. (This includes renters living in studios, single rooms, or one-bedroom apartments.)

The ACLU and Drug Policy Alliance also argued that the permit and renewal fees for cultivation, which cost $411.12 and $253.00, respectively, were “out of proportion to other, smaller fees imposed in connection with far more hazardous activities.” For instance, every “High Hazard Permit” issued by the City of Fontana costs less than $400, including annual permit fee for “Explosives” ($297) and “Radioactive Material” ($358). And to obtain a gun dealer’s license, they underscored, city residents pay $123 for the initial application and $75 for the renewal. They also pay much less—$285 for the initial permit and $25 for the renewal—to obtain the city’s permission to carry a concealed weapon.

The pre-permit inspection, they added, is tantamount to a warrantless and, therefore, unconstitutional search. Fontana’s approach to regulating personal cannabis cultivation, they said, is not based on the reality of what is required to grow six plants, but rather on risks relating to large-scale, illegal cultivation of hundreds of plants. Additionally, alcohol is also intoxicating and cannot be sold to minors, yet the city has not required that residents store their liquor in a single-purpose, locked room. Other provisions of the ordinance, they concluded, are “nonsensical,” such as restricting the use of carbon dioxide and oxygen for growing cannabis.

In court, Fontana’s attorneys contended that preventing “individuals [who] are not compliant with the city and owe the city money” from growing six cannabis plants was reasonable because “these are the type of individuals most likely to flaunt the requirements.” They also insisted that a separate, locked room is necessary to protect minors from the plants.

“People on the other side may want this unfettered access, but the kids go wherever they want,” said Fontana lawyer Jeffrey Dunn. If the court strikes down the ordinance, he warned, “kids [will be able to] play with [cannabis], touch it—whatever they want with it.”

Dunn also said that the signed affidavit was necessary “so we don’t have landlords who think they are leasing to an individual only to find out the individual is going to create a growhouse there.”

“How does six plants equal a growhouse?” asked Judge Cohn during the hearing.

“If for no other reason, your honor,” said Dunn, “that this is still an illegal activity under federal law.”

Judge Cohn also took issue with the city’s application fees. “You’ve got many residents of Fontana who are living at or below the poverty line,” he said. “The average resident in Fontana doesn’t have the financial wherewithal to do that and is deprived of the ability to grow six plants.”

The city’s attorneys explained that the application feeswere based on estimated costs associated with performing the pre-permit inspection and related services. Judge Cohn suggested fee waivers for applicants, much like the court provides to people who cannot afford to pay filing fees for litigation. Dunn resisted. “We’re talking about two different types of activities here,” he said. “The one the court is addressing is the constitutional right to come to the court and to seek redress . . . [Personal cultivation] is something different.”

Throughout the hearing, Judge Cohn asked the defense to demonstrate the nexus between the provisions in Fontana’s ordinance and the cultivation of cannabis, such as plumbing being up to code.

“Indoor cultivation is going to use electricity, it’s going to use plumbing,” said Dunn, before adding: “I just don’t understand how there could be a concern with this ordinance, or any other ordinance, that there’s a provision that forces people to be in compliance with plumbing and the electrical and other utility approvals. . . My own personal opinion is that they just put that in there because it should be in there.’”

“So, in your view,” responded Judge Cohn, “it doesn’t have to have anything to do with the cultivation of marijuana. You can put anything in this ordinance that regulates health and safety as a condition of getting a permit for marijuana, even if it has no connection?”

“Absolutely,” said Dunn. “I make no hesitation. You bet they do. They can do that in the absence of any connection.”

Fontana’s lawyers repeatedly pointed to federal prohibition during the hearing, arguing that this preempts state law. (This isn’t a first: just last month, an Oregon judge tossed a lawsuit from Josephine County, which tried to argue that federal law banning cannabis preempted state law allowing sales.) Judge Cohn, however, adhered to California state law, which stipulates that though cities and counties can regulate personal indoor cultivation, it cannot completely prohibit it.

“These restrictions,” he wrote, “on who may cultivate cannabis for personal use in Fontana are arbitrary and capricious because they disallow certain persons from doing what state law specifically allows them to do.”

“Very significantly,” said Judge Cohn during the hearing, the ordinance “excludes everyone who does not have a room in their house that they are able to devote exclusively to this purpose . . . I don’t know anyone who’s got an extra room that they don’t need for some purpose. I’m also suspicious of that justification, given that the city hasn’t taken other action with respect to activities that are more dangerous than growing six marijuana plants.”

Fontana, he added, is free to draft another, “less onerous” ordinance.

 

[Baron23]

“I remember that quote [from Hunt]”, says William Freeman, who fought the law in his capacity as senior counsel for the American Civil Liberties Union of California. “It was very clear from the start that they were saying ‘we don’t really care what the voters say.’”​

And there is the crux of the matter.

Judge Rules in Favor of California Cannabis Home Growers

Right at the start, the city of Fontana, CA., might have doomed its own effort to enact a harsh ordinance governing the personal cultivation of cannabis.

Just before the city council held its vote in January 2017, city manager Ken Hunt told council members, right out in public, “It is our intent . . . that this ordinance is not a permissive regulation, it is a restrictive regulation.” He added: “By adopting this, you are placing more restrictions on the personal growth of marijuana.”

He might as well have said, “we intend to break state law.”

“Localities can’t do what Fontana did, and if they do, they'll be sued.”
Tamar Todd, director, office of legal affairs, Drug Policy Alliance
On Nov. 2, state Superior Court Judge David Cohn agreed, striking down most of the ordinance, including its extraordinarily restrictive provisions that included high permit fees and, perhaps most remarkably, a requirement that anyone who wanted to grow cannabis for their personal use must agree to allow city officials inspect their homes.

“I remember that quote [from Hunt]”, says William Freeman, who fought the law in his capacity as senior counsel for the American Civil Liberties Union of California. “It was very clear from the start that they were saying ‘we don’t really care what the voters say.’”

Nor, apparently, did Fontana officials care very much what state legislators say when they pass laws.

The text of Proposition 64, called the Adult Use of Marijuana Act, is clear: Unlike the state of Washington, personal cultivation is allowed, throughout the state. Adults can grow up to six plants in a private residence for personal use. Localities can enact “reasonable” restrictions, but Fontana’s were so unreasonable as to effectively outlaw personal cultivation, Cohn ruled, saying the ordinance went “too far.”

The ordinance required permits, and disallowed them for people who owed the city money in fines and who had a felony conviction for possession of a controlled substance —including cannabis—in the last five years.

And to get a permit, residents had to agree to allow a city employee inspect their home to determine whether utilities were up to local codes. They also had to pay to have their criminal backgrounds checked through Live Scan—which can cost up to $70—plus pay another $25 for a state review of their records. The state law, AUMA, doesn’t mention any of that.

Then there were the permit fees, which were outlandish. The cost was $411 for the first year, and $253 every succeeding year. Almost needless to say, Fontana has never issued a single permit, which was the point all along.

“They were trying to have a dry city, but that’s not what’s contemplated under state law,” says Joe Rogoway, an attorney who represents clients in the cannabis business. He says that Fontana’s effort, like similar (if less severe) efforts around the state, was a purely “ideological” exercise—the city government is anti-cannabis.

Cities Will Think Twice
It’s unclear what effect the judge’s ruling will have on other efforts by local governments to restrict cannabis, either for private citizens or for businesses. Legally, it likely will have no effect at all, Rogoway says, because the ruling happened in a lower court, so it can’t be used as precedent for any future rulings. It can’t even be cited by lawyers in other cases.

However, it might get at least some local officials to think twice about going too far to thwart the will of both the state government and the majority of Californians, says Tamar Todd, director of the office of legal affairs for the Drug Policy Alliance, which together with the ACLU represented the plaintiff who sued the city of Fontana, Mike Harris, a local resident and longtime medical cannabis patient.

Cohn’s ruling, Todd says, “is a clear indication that localities can’t do what Fontana did, and if they do, they’ll be sued.”

Cities Lag On Legalization
That doesn’t mean the fight is over. Not by a longshot. Thanks largely to restrictive local laws governing permitting, zoning, and other aspects of cannabis, the marijuana business is still absent from about 65% of the state’s localities. Cities and counties have proven to be the weak link in implementing reform.

Mainly, this takes the form of cities and counties simply refusing to issue commercial permits, which they are allowed to do under AUMA. Sometimes, it takes the form of local governments, perhaps trying to have it both ways, technically allowing cannabis businesses to set up shop while also enacting ordinances making it difficult for them to do so.

And finally, there are the cities that, like Fontana, are trying their best to circumvent AUMA’s explicit provisions allowing personal cultivation—for example, by requiring permits (even if not for such high fees). Hundreds of cities have banned outdoor cultivation altogether. The ACLU’s position, says Freeman, is that “there shouldn’t be any application or permit process at all.” AUMA simply says it’s legal to grow up to six plants, he notes, and anything localities do to restrict that right goes against the intent of the law.

“Cities can't enforce federal law. They are not an arm of the federal government.”
Joe Rogoway, attorney, California
Fontana had argued that it was within its rights to enact such heavy restrictions because cannabis is still a felony under federal law. Cohn dispensed with that argument by citing California’s rules governing state-local legal interaction: essentially, local governments can’t do anything that thwarts state law. “It was a non-sensical argument,” Rogoway says. “Cities can’t enforce federal law. They are not an arm of the federal government.”

It’s not clear what might happen next. Fontana officials declined to comment. They might “tinker” with the ordinance to make it as strong as possible, Rogoway says, but it’s unlikely they’ll enact anything like the ordinance that was struck down. Legally speaking, that will affect only Fontana. What will happen in the rest of the state remains to be seen.

Todd, of the Drug Policy Alliance, says it will likely take a while before the state reaches a tipping point, and most localities are fully on board with legal cannabis, and the business can really thrive.

“People say, ‘Oh, we’re ten months in and it’s not working,’” she says. “But legalization requires a long transition time.”

How long? “At least ten years,” she says.

 

[Baron23]

Well, maybe there goes Willie's Tour Bus and all of the Marley stuff. Hmmm?

Never ending story: sudden changes to California's proposed cannabis regulations

With only two months until the January 1 implementation of the final State Cannabis Regulations, the California agencies given licensing authority under the Medicinal and Adult-use Cannabis Regulation and Safety Act posted last minute changes that are causing quite a buzz in the cannabis community.

The announcement was made by the Bureau of Cannabis Control (BCC) on their California Cannabis Portal webpage. While many of the changes are simple clarifications, there is one particular proposed change that is getting a lot of attention, which we will discuss in more detail below.

No More Co-Packing/Licensing Arrangements

From the feedback within the industry, it is safe to say that this is one of the most significant proposed changes. Section 5032 of Title 16 Section 42 of the CA Code of Regulations would be amended adding a new section (b) that states:

“(b) Licensees shall not conduct commercial cannabis activities on behalf of, at the request of, or pursuant to a contract with any person that is not licensed under the Act. Such prohibited commercial cannabis activities include, but are not limited to, the following:

1. Procuring or purchasing cannabis goods from a licensed cultivator or licensed manufacturer.
2. Manufacturing cannabis goods according to the specifications of a non-licensee.
3. Packaging and labeling cannabis goods under a non-licensee’s brand or according to the specifications of a non-licensee.
4. Distributing cannabis goods for a non-licensee.”

Currently there are quite a few cannabis brands in the California marketplace that do not operate as a licensed cannabis business, but provide specifications to licensed cannabis businesses to develop and sell their products. These companies were set up to be intellectual property companies that develop formulas and brands, and use a licensed manufacturer or grower to act as an entry into the marketplace. Most of the contract terms were structured as royalty payments or revenue sharing agreements. Some of the largest brands in the state operate under this model and replicate the concept as a means to enter multiple states that have commercial or medical cannabis markets in place. All they need is a contact within the supply chain and their brands can grow on a national scale without having to own a license in any state.

So what does the change mean in practical terms?
If approved, almost all licensing deals and other co-packing or co-manufacturing relationships would come to an end. This shift could signal a huge disruption in the marketplace as unlicensed brands scramble to secure licenses (which can be very difficult and take many months), merge with existing license holders or sell their intellectual property. The biggest impact will be seen in the edibles market due to the lack of licensed commercial kitchens that are capable of manufacturing edible cannabis products. A manufacturing license can be obtained within the state, but finding a building that is both licensed and a functional kitchen can be difficult in California. And, the cost to build the type of kitchen necessary can be significant and not within the plans of many licensed businesses.

It is unclear why this change was suggest, especially considering how much investment and activity has taken place over the last 10 months under the presumption that the “co-manufacturing” model would be permissible. If transparency is a concern, it could be address through other methods, like the proposed change to require persons who share in revenues (but are not actual owners) share in revenues to be disclosed and subject to background checks.

It also isn’t clear how this change would impact general corporate planning, as many cannabis operators have intellectual property held in separate IP holding companies and license the IP back to their subsidiaries that are licensed cannabis business. The regulations did not clarify what ownership levels or connection through corporate organization would qualify an IP holder as being a licensee, and significant reorganization may be necessary to address these changes.

Links to the amended text and summaries of the regulations proposed by the BCC are included in the announcement.

For now the BCC will accept comments on the proposed changes until November 5, and will release the final draft later this year. As with our announcement around this time last year when the proposed regulations were first proposed, we expect another hectic holiday season as these emergency regulations go through the formal adoption process.

 

[momofthegoons]

California advances plan to allow home deliveries of cannabis in cities that ban pot shops

Cities and law enforcement leaders say a state proposal to allow pot delivery to homes would increase crime. (Mathew Sumner / Associated Press)


State officials on Friday moved ahead with a plan to allow marijuana deliveries to homes throughout California, including in cities that have outlawed pot shops.

The state Bureau of Cannabis Control said it sent the proposed rules to the state’s Office of Administrative Law, which has 30 days to conduct a routine review of their legality before the regulations become final in January.

The proposed rule has been vigorously opposed by the California Police Chiefs Assn. and the League of California Cities.



“The delivery provisions contained in these regulations seek to subvert the intent of the voters who approved Proposition 64,” league Executive Director Carolyn Coleman said in a recent statement to the group’s members. “By removing local governments’ reasonable regulatory authority on cannabis deliveries, the BCC is imposing a ‘one size fits all’ form of cannabis regulation.”

In a statement in response to the criticism, the bureau said that cities can still adopt regulations on how deliveries are made, but that existing state law “provides that a local jurisdiction shall not prevent delivery of cannabis goods on public roads.”

Police chiefs have voiced concern that marijuana delivery people could become the target of robberies. The new rules prohibit delivery vehicles from carrying more than $5,000 worth of cannabis products and bans the vehicles from having any markings that indicate cannabis is being carried.

“This new restriction is intended to reduce the risk of the delivery vehicle becoming a target of theft or other crime,” the bureau said in a statement.

 

[momofthegoons]

One year of legal pot sales and California doesn’t have the bustling industry it expected. Here’s why

When Californians voted in 2016 to allow the sale of recreational marijuana, advocates of the move envisioned thousands of pot shops and cannabis farms obtaining state licenses, making the drug easily available to all adults within a short drive.

But as the first year of licensed sales comes to a close, California’s legal market hasn’t performed as state officials and the cannabis industry had hoped. Retailers and growers say they’ve been stunted by complex regulations, high taxes and decisions by most cities to ban cannabis shops. At the same time, many residents are going to city halls and courts to fight pot businesses they see as nuisances, and police chiefs are raising concerns about crime triggered by the marijuana trade.

Gov.-elect Gavin Newsom, who played a large role in the legalization of cannabis, will inherit the numerous challenges when he takes office in January as legislators hope to send him a raft of bills next year to provide banking for the pot industry, ease the tax burden on retailers and crack down on sales to minors.

“The cannabis industry is being choked by California’s penchant for over-regulation,” said Dale Gieringer, director of California NORML, a pro-legalization group. “It’s impossible to solve all of the problems without a drastic rewrite of the law, which is not in the cards for the foreseeable future.”

After voters legalized marijuana two years ago under Proposition 64, state officials estimated in there would be as many as 6,000 cannabis shops licensed in the first few years. But the state Bureau of Cannabis Control has issued just 547 temporary and annual licenses to marijuana retail stores and dispensaries. Some 1,790 stores and dispensaries were paying taxes on medicinal pot sales before licenses were required starting Jan. 1.

(Los Angeles Times)
State officials also predicted that legal cannabis would eventually bring in up to $1 billion in revenue a year. But with many cities banning pot sales, tax revenue is falling far short of estimates. Based on taxes collected since Jan. 1, the state is expected to bring in $471 million in revenue this fiscal year — much less than the $630 million projected in Gov. Jerry Brown’s budget.

“I think we all wish we could license more businesses, but our system is based on dual licensing and local control,” said Alex Traverso, a spokesman for the state Bureau of Cannabis Control, referring to the requirement that cannabis businesses get permission from the state and the city in which they want to operate.

Less than 20% of cities in California — 89 of 482 — allow retail shops to sell cannabis for recreational use, according to the California Cannabis Industry Assn. Cities that allow cannabis sales include Los Angeles, Oakland, San Francisco and San Diego.


Eighty-two of Los Angeles County’s 88 cities prohibit retail sales of recreational marijuana, according to Alexa Halloran, an attorney specializing in cannabis law for the firm Solomon, Saltsman & Jamieson. Pot shops are not allowed in cities including Burbank, Manhattan Beach, Alhambra, Beverly Hills, Inglewood, Compton, Redondo Beach, El Monte, Rancho Palos Verdes and Calabasas.

“While some cities have jumped in headfirst, we've taken a deliberate approach,” said Manhattan Beach Mayor Steve Napolitano, “to see how things shake out elsewhere before further consideration. I think that's proven to be the smart approach.”

Voters have also been reluctant to allow cannabis stores in their communities.

Of the 64 California cities and counties that voted on cannabis ballot measures in the November midterm election, eight banned the sale of cannabis or turned down taxation measures, seven allowed sales and 49 approved taxes on pot businesses, said Hilary Bricken, an attorney who represents the industry. Among them, voters in Malibu approved pot shops while Simi Valley residents voted for an advisory measure against allowing retail sales.

Javier Montes, owner of Wilmington pot store Delta-9 THC, says he is struggling to compete with a large illicit market unburdened by the taxes he pays as a licensed business.

“Because we are up against high taxes and the proliferation of illegal shops, it is difficult right now,” Montes said. “We expected lines out of our doors, but unfortunately the underground market was already conducting commercial cannabis activity and are continuing to do so.”

Montes, who received his city and state licenses in January, says his business faces a 15% state excise tax, a 10% recreational marijuana tax by the city of Los Angeles and 9.5% in sales tax by the county and state — a markup of more than 34%.

He says there isn’t enough enforcement against illegal operators, and the hard times have caused him to cut the number of employees at his shop in half this year from 24 to 12.

“It’s very hard whenever I have to lay people off, because they are like a family to me,” said Montes, who is vice president of the United Cannabis Business Assn., which represents firms including the about 170 cannabis retailers licensed by the city of Los Angeles.

DELTA-9 faces a 15% state excise tax, a 10% recreational cannabis tax by the city of Los Angeles and 9.5% in sales tax by the county and state, the shop owner says. (Marcus Yam / Los Angeles Times)
Sky Siegel, who operates a cannabis business in Studio City, said he recently gave up trying to open another store in Santa Monica because of its restrictions on such businesses.

“It turns into this ‘Hunger Games’ to try to get a license,” said Siegel, who is general manager of Perennial Holistic Wellness Center, which has a dozen employees in Studio City and also operates a delivery service.

He says his firm is up against thousands of unlicensed delivery services going into cities where storefronts are banned.

“To me, it doesn’t make sense” that many cities have prohibited shops, he said. “Banning does nothing. It’s already there. Why not turn this into a legitimized business, which is what the people want.”

California has also issued fewer cultivation licenses than expected in the first year of legalization, with about 2,160 growers registered with the state; an estimated 50,000 commercial cannabis cultivation operations existed before Proposition 64, according to the California Growers Assn. Some have given up growing pot, but many others are continuing to operate illegally.

The trade group hoped to see at least 5,000 commercial growers licensed in the first year, said Hezekiah Allen, the group’s former executive director who is now chairman of Emerald Grown, a cooperative of 130 licensed cultivators.

“We are lagging far behind,” Allen said. “It’s woefully inadequate. Most of the people in California who are buying cannabis are still buying it from the unregulated market. There just isn’t a reason for most growers to make the transition.”



Assemblyman Jim Wood (D-Healdsburg), who has crafted cannabis regulations, said the licensing system had not yet lived up to its promise.

“The state licensing process this past year has been a painful one,” said Wood, adding that the complex rules are particularly difficult for small businesses. “I recognize that this has been a significant undertaking for the state, and you combine that with the cannabis industry learning how to navigate the process — it’s been difficult for them both.”

The legalization of recreational pot has also created tension in areas of the state where cannabis growers are operating close to residents.

Jesse Jones said he moved his family to Petaluma from Marin County six months ago so his three children could enjoy more open space, but he is now fighting a proposal for a cannabis farm to operate a few hundred feet from his home, in part because of safety issues.

“You are going to have what is still a [Schedule 1] narcotic being produced in line of sight of my kids’ trampoline, on a shared road that was never intended for this type of commercial operation,” said Jones, an energy industry executive.

Sanjay Bagai, a former investment banker who lives with his family next door to a new cannabis farm in Sonoma County, is a leader of a residents group called Save Our Sonoma Neighborhoods, which has obtained a preliminary court ruling against one cannabis-growing operation.

Bagai said his group was “not anti-cannabis” but added that pot cultivation “is not something that fits into our neighborhood here.”

“The smell is horrific,” he said of the marijuana plants. “It’s like rotting flesh. And the traffic is insane.”

Quality-of-life complaints have also surfaced in neighborhoods where cannabis sellers have set up shop.

Van Nuys Neighborhood Council President George Thomas said he had received about a dozen complaints in the last year from residents living near pot stores who were concerned about loitering, the smell of marijuana smoke and other issues. Thomas, who is the publisher of the Van Nuys News Press and is an LAPD volunteer, passes complaints on to police officers.

“If they are not in compliance,” Thomas said, “if they are within a thousand feet of a school or church, we are totally against them and we are happy to work with the neighborhood prosecutor in the city attorney’s office to shut them down.”

At the same time, he said, the neighborhood council has worked with licensed cannabis stores to get them involved in improving the community and has asked the Los Angeles City Council to devote some of the tax revenue from Van Nuys shops to solving local problems, including homelessness and crime.

Meanwhile, despite concerns from law enforcement, the state is finalizing a proposal to allow deliveries throughout California — including in cities that ban retail stores. The new rule by Lori Ajax, chief of the state Bureau of Cannabis Control, is expected to be implemented in January.

Ajax says she believes that as the system is refined and is shown to operate successfully in some cities, other local governments will allow retail pot sales. But opponents of pot legalization, including Kevin Sabet, president of Smart Approaches to Marijuana, are happy that most cities are saying “no” to selling the drug.

“The residents of Compton and these other cities have seen the ills that come with allowing marijuana in the door,” Sabet said, “including skyrocketing drugged driving; the promise, then failure of social justice; and the targeting of children through the use of colorful and deceptive candies, gummies and sodas.”

Even in cities that allow cannabis sales, businesses face big hurdles.

The various taxes and fees could drive up the cost of legal cannabis in parts of California by 45%, according to the global credit ratings firm Fitch Ratings.

There is less of a tax burden in Oregon, where voters legalized recreational pot in 2014, and state and local taxes are capped at 20%. With nearly a tenth of the population of California, that state has more licensed cannabis shops — 601. On a per capita basis, Alaska has also approved more pot shop licenses than California, — 94 so far. The state imposes a tax on cultivation, but there is no retail excise tax on pot.

Assemblyman Rob Bonta (D-Alameda) tried and failed this year to push for a temporary reduction in California’s pot taxes to help the industry get on its feet.

“It’s a work in progress,” Bonta said of the current regulatory system. “We knew we weren’t going to get it exactly right on Day 1, and so we’re always looking for ways to achieve the original intentions and goal.”

Bonta said he may revisit the taxation issue in 2019 and is exploring the idea of having the state do more to get cities to approve businesses, possibly by providing advisory guidelines for local legalization that address cities’ concerns.

California cannabis businesses, like their counterparts in Colorado and Oregon, also face costs to test marijuana for harmful chemicals.

“The testing costs are excessive — $500 to $1,000 per batch, and most crops involve multiple batches,” said Gieringer, the director of California NORML. “No other agricultural product is required to undergo such costly or sensitive tests.”

Another problem hampering the legal market is a lack of banking for cannabis businesses. Federally regulated banks are reluctant to handle cash from pot, which remains an illegal drug under federal law.

“Banking continues to be an issue in terms of creating a real public safety problem with significant amounts of cash being moved for transactions,” said Bonta, who co-wrote a bill this year that would have created a state-sanctioned bank to handle money from pot sellers. It failed to pass after legislative analysts said the proposal faced “significant obstacles,” including no protection from federal law enforcement.

Industry leaders and activists said they knew it would be a slow process to establish a strong legal market, noting other states with legal pot, including Colorado, Washington and Oregon, also faced growing pains and problems along the way.

But Ajax, the state pot czar, says her agency has had a productive first year, issuing initial licenses, refining the rules and stepping up action against unlicensed operations, including partnering with the Los Angeles Police Department to seize $2 million worth of marijuana products from an unlicensed shop in Sylmar in October.

“I am optimistic about the coming year, where our focus will be primarily on getting more businesses licensed and increasing enforcement efforts on the illegal market,” Ajax said.

 

[Diggy Smalls]

When I visited California in 2017, it was very easy to get a doctor recommendation even with my NY ID and get a delivery to the hotel room I was staying at. Even though prop64 was still unofficial, it seemed to make it a little easier for me to obtain. I was told I wouldn't be able to get a recommendation since I wasn't living in CA, but it wasn't true. My recommendation lapsed recently, and I only got to use it once.

 

[Baron23]

"Retailers and growers say they’ve been stunted by complex regulations, high taxes and decisions by most cities to ban cannabis shops."​

Ah, yes.....government at work yet again....sigh.

“The cannabis industry is being choked by California’s penchant for over-regulation,” said Dale Gieringer, director of California NORML, a pro-legalization group.​

NO!! Say it ain't so, Joe.....no shit, Sherlock. LOL

 

[momofthegoons]

‘Death by a thousand cuts:’ California’s first year of legalized pot is no smooth trip



The legal marijuana market, so long a twinkle in the eye of the cannabis cognoscenti, has hit hard times in California, where high prices, red tape and competition from the black market have cast a pall over what was supposed to be a triumphant first year of recreational sales.

The cost of legalization was so high in 2018 that hundreds of growers and retailers went out of business, the number of available products spiraled down, tax revenues from sales fell below projections and the black market revved up, according to industry officials and business representatives.

It was, said one insider, “death by a thousand cuts.” And the drip, drip continued this month with the recall of thousands of pounds of marijuana, extracts and products after a Sacramento laboratory was caught faking test results for 22 pesticides over a four-month period.

“The reality is, this isn't working out the way that anyone hoped,” said Hezekiah Allen, the chairman of Emerald Grown, a co-op made up of about 100 licensed growers mostly north of San Francisco. “It’s looking like some of the worst fears of the (cannabis) business community are being realized.”

Legal sales of recreational cannabis started with great hoopla on Jan. 1 as the state attempted to transform the semi-regulated medical marijuana market into a multibillion-dollar industry. But the costs of setting up, licensing, testing and packaging requirements have proved a heavy burden, and revenues haven’t flowed in as expected.

The year-end tax revenues haven’t been tabulated, but third-quarter figures show California falling well short of the $630 million from recreational marijuana sales that Gov. Jerry Brown predicted in budget documents. As of November, $234.2 million in taxes had been paid to the state in cultivation, excise and sales taxes, according to the California Department of Tax and Fee Administration.

There is reason for some optimism. Tax revenue from sales has improved over the year, jumping from $60.9 million in the first three months of the year to $80.2 million in the second quarter and $93.1 million in the third quarter. But, overall, cannabis sales have been lackluster.


It’s a problem for the state because the tax revenues are used to pay for cannabis research, addiction prevention and law enforcement, including the hoped-for eradication of the illegal market that is siphoning away money.

Many growers, retailers and consumers around the state believe it is a systemic problem, starting with the 15 percent excise tax and snowballing as cities and counties tack on charges.

When all the charges are added up, including cultivation taxes, they amount to about 40 percent of the cost of the goods, merchants say. Meanwhile, the wholesale price for marijuana has dropped over the past year, from around $2,000 a pound to about $500, further reducing profits.

Steve DeAngelo, CEO of Harborside Health Center in Oakland, cuts a ribbon to mark the first day of recreational marijuana sales in California on Monday, Jan. 1, 2018.
Photo: Amy Osborne / Special To The Chronicle


Steve DeAngelo, a co-founder of Oakland’s Harborside marijuana dispensary, said as many as 90 percent of the 500 growers he did business with last year and a dozen “legacy” dispensaries — longtime operators that formed the foundation of the medical marijuana industry — have gone out of business.

“I look back on this year and think of it as the agony and the ecstasy,” DeAngelo said. “On the one hand, it’s the culmination of my life’s work, but on the other hand we’ve seen the destruction of a very special, unique, eclectic and colorful culture.”


The focus now seems to be on making the recreational market viable, but efforts to ease the tax burden, including proposals to cut excise taxes from 15 percent to 11 percent, have gotten little traction.

Meanwhile, growers say, the cost of being in the business is astronomical. Business licenses cost anywhere from $1,205 for a permit to grow 25 outdoor plants to $77,905 for a 22,000-square-foot indoor plantation. Growers and manufacturers also have to pay for lab testing to assure regulators that the marijuana is free of pesticides, chemicals and toxins.

Packaging is another big expense. All smokable and edible cannabis must be in child-resistant containers and affixed with labels that outline potency and dosage amounts. There are also strict protocols on how to transport, distribute and dispose of excess or defective marijuana.

“Every farmer I know is struggling,” said Nikki Lastreto, who with her husband, Swami Chaitanya, grows their signature brand Swami Select on a remote farm near Laytonville (Mendocino County). “I’m really proud to say we are still in this game because it’s been tough.”

Co-founders Swami Chaitanya (left) and Nikki Lastreto, who together own Swami Select, harvest cannabis on their farm in Humboldt County on Sunday, Oct. 8, 2017.
Photo: Gabrielle Lurie / The Chronicle


Making matters worse is a statewide backlog in processing licenses. Industry officials estimate that only about 10 percent of growers who have applied for licenses have gotten them. This has led to a shortage in the number and variety of products on store shelves.

“I don't know any consumers who are satisfied with the prices or products compared to how it was a year ago,” said Dale Gieringer, the director of the California branch of the National Organization for the Reform of Marijuana Laws, or NORML.


It doesn’t help that almost all transactions have to be done in cash because most banks won’t take on a business that is still considered illegal by the federal government.

To avoid the hassle, as many as two-thirds of California communities have prohibited the cultivation, distribution and sale of the herb. Most of the 110 cities and counties in the Bay Area, including San Francisco, are in the business, but liberal Marin County joined their more conservative brethren and rejected storefront sales.

While the legal market contracts, the sale of bootleg marijuana is going strong, especially around Mendocino, Humboldt and Trinity counties, known as the Emerald Triangle, where as much as 80 percent of the illegal pot sold in other states is produced.

“Unfortunately, and contrary to the wishes of California, the unrolling of legal adult-use cannabis has reinvigorated the underground market rather than curtailed it,” DeAngelo said.

Law enforcement agencies have been trying to crack down on the illegal pot trade, but there are not enough resources in the state to track and bust every lawbreaker.


“It’s an increasing problem,” said Ruthann Ziegler, a Sacramento lawyer and member of the Cannabis Regulatory Committee of the League of California Cities. “The degree of enforcement varies from jurisdiction to jurisdiction.”

Complicating matters are online services like Weedmaps.com, which provide information about marijuana dispensaries and call-in order and delivery services, many of which are unlicensed. Lawyers for Weedmaps have so far thwarted efforts by the state Bureau of Cannabis Control to stop the website from promoting illegal retailers. They argue that the website has a First Amendment right to operate and that the state cannot regulate a website it doesn’t license.

The shakeout in the industry may not be all bad, say some stakeholders.

Lauren Fraser, the executive director with the Cannabis Distribution Association, said the recent closure of Sacramento’s Sequoia Analytical Labs for falsifying pesticide tests was an important signal to operators that they need to play fair.


“There have been a lot of growing pains this year, but these are the kinds of situations that need to be addressed,” Fraser said.

And even as small farmers are struggling, cannabis commerce as a whole is showing signs of picking up. Tobacco, alcohol and pharmaceutical companies have bought into or invested in marijuana products and businesses and are threatening to replace the old hippie tie-dye with white collars and tie clips.

The recently passed U.S. Farm Bill permits the industrial production of cannabis hemp, potentially opening up an entirely new marketplace for marijuana growers.

Erich Pearson, the founder of the San Francisco Patient and Resource Center, or SPARC, the largest cannabis retail shop in the city, believes cannabis commerce will eventually reach equilibrium and begin to look more like the beer and wine industries.


“If you look at alcohol, you see there is still an appreciation for small-batch products, so I think you’ll see that,” said Pearson, who also runs an organic pot farm in Sonoma County. “Unfortunately right now the regulations are just too much for the smaller businesses. A lot of them will have to go away and come back later.”

 

[Baron23]

"Now that the first year of legal cannabis sales has come to a close, however, it appears that reality has fallen short of the initial projections. And thanks to California’s proclivity for excessive regulation and taxation, the “green rush” that the state hoped for has yet to come to fruition."​

Wait...what? American politicians only interested in fleecing more money from the electorate that they can use to further their career by catering to their interest groups? Say it ain't so, Joe.

Wow, CA really fucked this up, I think.

Greedy Politicians Are Already Wrecking the Legalized Cannabis Industry
If legalization is just an excuse to increase regulatory burdens for entrepreneurs and excessively tax consumers, then no one stands to make any money at all.

On New Year’s Day 2018, California became the sixth state to end prohibition by legalizing the sale of recreational cannabis. In addition to striking a blow against the disastrous War on Drugs, the full-fledged legalization of marijuana was also expected to trigger an economic boom throughout the Golden State, as it did in other states like Colorado.

Now that the first year of legal cannabis sales has come to a close, however, it appears that reality has fallen short of the initial projections. And thanks to California’s proclivity for excessive regulation and taxation, the “green rush” that the state hoped for has yet to come to fruition.

The Green Rush That Never Was
Over the last several years, marijuana legalization has proven to be an idea whose time has come. As it stands today, ten states and the District of Columbia allow for recreational use of the plant and an additional 23 states allow for medicinal use. National polling also shows that 62 percent of the country now favors some form of legalization.

In 2018, cannabis sales only amounted to $2.5 billion, which is half a billion less than the total for 2017, when only medical cannabis was legal.

Most people now realize that the War on Drugs has been a complete disaster as well as a huge waste of resources, which has softened many hearts when it comes to the issue of legalization. But there are also economic incentives that have made ending prohibition exceedingly popular across the country. By legalizing cannabis, you open up the door for an entirely new industry with the potential to bring in billions of dollars in revenue each year and create a countless number of new jobs. This is appealing even to those who are personally opposed to recreational use of the plant.

California had high hopes that this would be the case with its own economy. On the eve of legalization, several state officials predicted that recreational cannabis would result in the creation of 6,000 new dispensaries across California. This certainly would have made a substantial impact on the economy, but unfortunately, the actual number of new stores fell far below the prior year’s generous predictions. According to the California Bureau of Cannabis Control, only 547 temporary and annual licenses were issued to new retail stores in 2018. As a result, the green rush that was expected to grow the economy never came. In 2018, cannabis sales only amounted to $2.5 billion, which on its own might not seem too shabby but is, in fact, half a billion less than the total number of sales for 2017, when only medical cannabis was legal.

So why has California failed to replicate the booming green economies of other states? Unfortunately, the answer to this question is the root of the majority of the state’s problems: too much regulation and taxation.

Taxed and Regulated to Death
Setting up shop in California’s heavily regulated economy is hard enough for regular businesses, but when a substance like cannabis is involved, the process becomes all the more complicated.

California currently has a ban on marijuana delivery services, which has made it more difficult for “potrepreneurs.”

For starters, business owners have to seek approval not only from the state but from local municipalities as well. Unfortunately, many cities have instituted their own bans on recreational cannabis. Of California’s 482 different cities, only 89 actually allow recreational dispensaries. Other states have faced this problem, but many dispensaries have taken advantage of a loophole in the system.

By offering product delivery, many dispensaries have been able to expand their services to cities where the dispensaries themselves have been banned, but the use of the plant is still legal. California currently has a ban on marijuana delivery services, which has made it more difficult for “potrepreneurs” to meet the demands of those living in cities where dispensaries are still illegal. However, the Bureau of Cannabis Control is looking at a proposal that would put delivery of the plant back on the table, which would help boost sales across the state.

Even those living in one of the 89 cities where retail is permitted are still subjected to layers of regulation that make it difficult to get a business up and running. Having to seek licenses from both the state and the city is difficult enough on its own, not to mention expensive. But prospective dispensary owners must also comply with rules and regulations handed down not only from the text of the Medicinal and Adult-Use Cannabis Regulation and Safety Act but also from the Bureau of Cannabis Control and any local governments as well. This makes the whole process extremely tricky to navigate.

As Dale Gieringer, director of California NORML told the Los Angeles Times,

The cannabis industry is being choked by California's penchant for over-regulation. It's impossible to solve all of the problems without a drastic rewrite of the law, which is not in the cards for the foreseeable future.

Another difficulty faced by cannabusinesses all across the state is finding a bank willing to do business with you. Since federal prohibition is still very much in effect, banking institutions are nervous to get into bed with the industry. Already, banks are overly scrutinized in an attempt to monitor potential criminal or terrorist activities. Doing business with dispensaries does put these financial institutions at risk, so the fear is justified.

Once all these regulatory and financial hurdles are overcome, there is still one major issue: the black market. Since marijuana sales are subject to a “sin tax,” consumers end up paying the government 35 cents for every dollar they spend on legal cannabis. This has made the black market ever more intriguing to consumers, who know they can escape excessive taxation by going through a street dealer. According to Fitch Ratings, when all is said and done consumers end up paying about 45 percent more for legal marijuana than they do on the black market.

Tom Adams of BDS Analytics, a company that tracks the cannabis market, said:

The bottom line is that there’s always been a robust illicit market in California—and it’s still there. Regulators ignored that and thought they could go straight into an incredibly strict and high-tax environment.

It’s actually rather shocking that California hasn’t been leading the way in the cannabis industry, considering how it has led the nation in ending prohibition.

California Should Be Leading the Way
It might not have been the first state to legalize recreational cannabis, but it has generally been ahead of the game when it comes to ending marijuana prohibition in general. In 1996, the state passed the Compassionate Use Act, which made the plant available to those seeking it for medical purposes. This was the nation’s first law of its kind, but it wasn’t the first time California had taken a jab at the drug war.

In 1972, it became the first state with a ballot initiative for the legalization of marijuana. Had Californians voted “yes” on Proposition 19, the law would have been changed to ensure that “no person in the State of California 18 years of age or older shall be punished in any way for growing, processing, transporting, or possessing marijuana for personal use, or for using it."

Government overreach has hampered the cannabis industry from raking in the revenues that many had hoped it would.

Of course, it would not be until 2016, when California voters passed the Adult Use of Marijuana Act, that the state would finally legalize recreational use. But considering that medical cannabis had already been a consumer good for over ten years, state regulators should have at least had some exposure to how a legal market might look.

But California is known for its overly-regulated and heavily taxed economy. And this climate of government overreach has hampered the cannabis industry from raking in the revenues that many had hoped it would. If California regulators are wise, they will take a lesson from other states.

As the Los Angeles Times reports:

There is less of a tax burden in Oregon, where voters legalized recreational pot in 2014, and state and local taxes are capped at 20%. With nearly a tenth of the population of California, that state has more licensed cannabis shops—601. On a per capita basis, Alaska has also approved more pot shop licenses than California,—94 so far. The state imposes a tax on cultivation, but there is no retail excise tax on pot.

Legalizing marijuana is about a lot more than money. At the core of the argument against prohibition is the belief that every individual has the right to determine what substance they choose to put into their bodies.

However, while not everyone is on board with the “I own me” philosophy, economic incentives have helped make legalization more appealing to those who may have traditionally been opposed to it. But as California is learning the hard way, if legalization is just an excuse to increase regulatory burdens for entrepreneurs and excessively tax consumers, then no one stands to make any money at all. This is an important lesson to keep in mind as more states finally move to put an end to prohibition.

 

[Baron23]

Dispute over rules riles California's legal cannabis market

California has finalized its rules governing the nation’s largest legal marijuana market, a milestone coming more than a year after the state broadly legalized cannabis sales for adults.

But a dispute over home deliveries into communities that ban pot sales could end up in court. And the hundreds of pages of dense regulations are unlikely to resolve other disputes, including how purity and potency tests are conducted for infused cookies and other products.

Even if imperfect, the rules were welcomed by many in the industry who have been contending with shifting temporary regulations since California kicked off broad legal sales last year.

“Love it or hate it, California has regulations for commercial cannabis. There are no asterisks,” said Hezekiah Allen, chair of cannabis growing co-operative Emerald Grown and former executive director of the California Growers Association, an industry group.
Meanwhile, the regulations that deal with the minutia of running a legal pot business do not address other broad challenges in the industry, from a lack of banking access for pot companies that will likely need to be resolved in Washington to what to do about a thriving illicit market that is undercutting legal sales.

“Do these solve every problem that exists in the cannabis business regulatory regime? Absolutely not,” said Assemblyman Ron Bonta, a Democrat from Oakland who said the rules nonetheless create a strong foundation for a market that has gotten off to a shaky start.

By far the biggest dispute focused on deliveries. The rules released Wednesday will allow home marijuana deliveries statewide, even into communities that have banned commercial pot sales.

The regulation by the state Bureau of Cannabis Control was opposed by police chiefs and other critics who predict it will create an unruly market of largely hidden pot transactions, while undercutting control by cities and counties.

The League of California Cities said the rule conflicts with Proposition 64, the law approved by voters in 2016 that opened the way for broad legal sales, which says local governments have the authority to ban nonmedical pot businesses.

“This decision puts the public safety needs of communities across the state at risk,” league executive director Carolyn Coleman said in a statement.

Many cannabis companies and consumers had pushed for the change, since vast stretches of the state have communities that banned commercial pot activity or not set up rules to allow legal sales. That means residents in those areas were effectively cut off from legal marijuana purchases.

“The public spoke loud and clear in favour of statewide delivery,” cannabis bureau spokesman Alex Traverso said in a statement.

Bonta said he supports statewide deliveries for medical patients, regardless of local bans, but not recreational users. He suggested legislation may be needed to deal with the dispute.

Kenny Morrison, president of the California Cannabis Manufacturers Association, said the state failed to examine the experience in other states, which in turn has created costly problems for California companies with labeling and testing.

Industry officials have complained that the state rules force growers and manufacturers to hit too tiny a target when gauging levels of THC in products, the psychoactive chemical that causes marijuana’s high.

Rules require the THC concentration come within 10 per cent of what is advertised on a product label. Company executives say some products are being rejected after landing outside the margin by tiny amounts, and that hitting that required range is even more difficult with low-dose products.

Colorado allows a more sensible 15-per cent range, Morrison said. He said the state also should be mirroring rules set by the federal government, which could eventually oversee the national pot market. Marijuana remains illegal at the federal level.

“Nobody cares more about the quality of the product than the manufacturer,” he said.

Ruben Honig, executive director of the United Cannabis Business Association in Los Angeles, said the state’s biggest challenges remain cutting hefty tax rates that can approach 50 per cent in some communities and cracking down on widespread illegal sales.

 

[ataxian]

Like I give a flying f*ck about how Michael "I'll tell you how big a soda you can buy" Bloomberg thinks I should live my life. Screw this guy (see Mom...I almost choked keeping the name I was going to call him inside....this is not healthy! I'm all vreklempt hahaha)

I mean, why would anybody listen to a guy ignorant enough to say: "incidentally, we are trying to legalize another addictive narcotic"

Michael Bloomberg: Legalizing marijuana ‘perhaps stupidest thing anybody has ever done’

Former New York City Mayor Michael Bloomberg, a potential 2020 Democratic presidential candidate, is not a fan of marijuana legalization. In a speech at U.S. Naval Academy in Annapolis, Maryland Tuesday, Bloomberg called the drive to legalize recreational cannabis “perhaps the stupidest thing anybody has ever done.”

“Last year, in 2017, 72,000 Americans OD’d [overdosed] on drugs. In 2018, more people than that are OD’ing on drugs, have OD’d on drugs, and today, incidentally, we are trying to legalize another addictive narcotic, which is perhaps the stupidest thing anybody has ever done,” Bloomberg told the crowd.

“We’ve got to fight that, and that’s another thing that Bloomberg Philanthropies will work on it in public health,” he added.

Bloomberg’s anti-legalization comments stand in stark contrast to most Democratic presidential candidates who have begun their 2020 campaigns. Current New York Gov. Andrew Cuomo has reversed his policy on cannabis legalization as well, pushing hard for adult-use marijuana legislation in 2019.

“The fact is, we have had two criminal justice systems: one for the wealthy and the well-off, and one for everyone else,” Cuomo said in a speech last December. “And that’s going to end. We must also end the needless and unjust criminal convictions and the debilitating criminal stigma, and let’s legalize the adult use of recreational marijuana once and for all.”

Though Bloomberg’s statements Tuesday night have drawn widespread media attention, this is not the first time the former governor has railed against cannabis legalization. As Marijuana Moment first reported, Bloomberg said that legalization “doesn’t make any sense at all,” during a speech at the University of Toronto last week.

Sounds like BLOOMBERG has lost touch with life? (Reality?)
He is out of touch!
MONEY does not make you wise?
What a knuckle dragging goof ball?