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Law California


California pot shops about to be on the hook for steep state fees, background checks


California sought to jump-start its marijuana industry in January by giving businesses temporary, 120-day permits that briefly waived big fees and other costly requirements, but that grace period is ending and many say the expense and red tape of getting a regular license is a headache.

Some pot shops face fees of $73,000 before they can get a regular annual license from the state Bureau of Cannabis Control. Costly upgrades to security and product testing also kick in soon, and sellers and growers will have to pass a background check that could disqualify anyone with serious criminal records.

Although the grace period technically ends Tuesday for those who received temporary licenses Jan. 1, the state bureau is allowing businesses that apply for annual licenses to continue operating with 90-day extensions while their applications are being processed.

"It's all a bit of a hardship right now," said Nicole Neubert, a San Francisco attorney who represents state-licensed cannabis businesses. "All of these costs of becoming regulated are hard for these businesses to incur, especially at a time when the market is so strange."

The state began licensing the growing, testing, transportation and retail sale of marijuana for medical and recreational use on Jan. 1. Voters approved Proposition 64 in 2016.

The bureau decided to issue temporary permits without fees and other costly requirements to allow cannabis businesses to get established and reduce the amount of marijuana being purchased on the illicit market.

So far, the bureau has issued just over 1,100 temporary licenses to sellers, distributors and testers, while there have been more than 120 applications for annual licenses for those operations. The state agriculture agency has separately issued 3,412 temporary licenses and has so far received more than two dozen requests for annual permits.

Some firms received temporary licenses after Jan. 1 so their temporary permits are not expiring this week.

"As long as their application is being processed, they may receive an extension of the temporary license," said Alex Traverso, a spokesman for the bureau.

Holders of temporary licenses have not been required to prepackage and label their product and buy it from a licensed distributor. Those are mandates for annual license holders and kick in on July 1.

Another big change is a requirement for license applicants to go through background checks that could disqualify some people if they have serious criminal records.

In addition, cities and counties have been slower to give the required local permission for cannabis businesses, which can result in the state delaying approval of annual permits, said Hezekiah Allen, director of the California Growers Assn.

"The agencies have done a solid job processing through several thousand temporary applications, and have set themselves up for success," Allen said. "Still, our members are definitely feeling some anxiety about the transition and are bracing for challenges."

The challenges include additional costs.

All businesses must pay a $1,000 application fee as well as license fees based on the value of marijuana products they expect to sell this year. In future years, the fees will be based on what actual sales were in the previous year.

The annual license fee ranges from $4,000 for a retailer expecting to handle pot worth up to $500,000. The highest fee is $72,000 for those handling more than $4.5 million in cannabis in the year.

Fees for distributors range from $1,200 to $125,000 based on the value of pot they expect to handle.

Other new costs for the industry include setting up a tracking and trace system for each marijuana plant, training for employees, heightened testing standards and additional security requirements.

"It's killing us," Joseph Tintari, owner of the Greenlight Discount Pharmacy in Sylmar, said of the costs and red tape. He said he needed to hire an attorney to help him comply with all of the new regulations.

Tintari also had to pay $34,000 in fees for a license to the city of Los Angeles. He recently had to lay off a friend who was his shop's manager because costs are high and demand is lower than expected.

The costs of regulation are on top of steep fees charged to distributors and a 15% state excise tax charged to customers.

"The patients rebel against the tax and they'll go to an illegal shop that isn't charging the tax, one that is at least 33 to 40 percent cheaper than I am, and I'm in the sort of neighborhood where $5 matters," Tintari said.

The Black Oak Gallery in Oakland expects to pay $73,000 in license fees, while the cost of upgrading systems to meet other license requirements may exceed $60,000, according to Arturo Sanchez, vice president of compliance at Terra Tech, which operates several cannabis businesses in California.

In addition to the state tax, Oakland charges a 10% tax on recreational marijuana sales.

Black market growers and sellers who don't get state licenses have a competitive advantage, Sanchez said.

"The industry is feeling the financial pressure of the regulatory environment," he said. "Combined with the tax rate's impact on prices, which may be leading to a decrease in customers, we are seeing numbers trending down when compared to the same time last year. The regulated market is hurting."

The tougher testing standards, which also begin July 1, could see a reduction in supply and more costs for distributors, according to William Waldrop, co-founder and CEO of EVIO, a firm providing cannabis testing and scientific research for the regulated market.

And he fears that when those costs are passed on to customers, they might just seek alternatives or buy elsewhere.
 
While I'm not a big fan of individual andecdotal stories regarding broad and far reaching social and political issues, I do applaud this. I indeed respect pushing many/most political decisions down the food chain to the most local political entity under the rationale that they will better reflect local desires (why I'm a pretty strong Federalist and state's rights supporter).

So, don't want dispensaries in your little burg? Well, I think that's being a bit breathless and hysterical but ok, your town/your decision. But MJ is legal now in CA and a delivery does NOT cross local zoning authority and should not, IMO, be restricted by these entities. All CA citizens are now legal under state law to possess and use MJ and therefore all CA citizens should have a right to exercise that prerogative and delivery services fit the bill to me.


California Bill May Stop Local Bans of Marijuana Delivery Services


Josh LaCroix was used to hard work, completing landscaping projects, and saving to eventually start his own computer repair business. In his spare time, he coached soccer, baseball, and basketball. He also raised two children with his wife.

Then in 2012, he nearly died. A massive amount of carbon dioxide (CO2) built up in his lungs, causing them to fail due to a condition called alpha1-antitrypsin deficiency, a lung and liver disease as a result of a genetic mutation that may cause shortness of breath, an increased risk of lung infections, complications that can include COPD, and cirrhosis.

For the past six years he’s been immobilized with failing lungs and liver problems, living off Social Security and disability payments. His wife, Mea, became his full-time caregiver while also raising their children, now ages 12 and 15.

LaCroix-in-Bed-1024x768.jpg

Josh LaCroix

LaCroix gets cannabis delivered once or twice a week to his home to help with pain, reduce inflammation and keep up his spirits. He wouldn’t be able to get cannabis without those deliveries. Neither he nor his wife, who can’t leave him alone in his condition, could have made it to a dispensary.

He’s one of the lucky ones.

In many communities around the US, getting cannabis delivered is difficult, if not impossible, due to local authorities prohibiting delivery. Cannabis is still a Schedule I controlled substance in the eyes of the federal government.

However, some potential good news for those wanting delivery in underserved California communities is wending its way through the Legislature in the form of a bill that would prohibit local governments from adopting or enforcing any ordinance that would prohibit a licensee from delivering cannabis within or outside of city or county limits.

SB 1302, authored by Democratic state Sen. Ricardo Lara recently passed the Senate Government and Finance Committee, and could be eventually headed to a floor vote.

The bill would allow licensed delivery services in California to navigate the state’s regulatory framework more easily by permitting them to service cities and counties that have banned dispensaries and other cannabis businesses.

“Delivery is very important for medical cannabis, but it it’s very important for legal cannabis as well,” said Heather Manus, a registered nurse and co-founder of the Cannabis Nurses Network.

Manus explained that dying hospice patients often don’t have the time to obtain a medical cannabis card, so their caregivers need to purchase it. These patients are often given a hospice home care kit when sent home from the hospital. The kits can include potent and potentially dangerous painkilling drugs, but they do not typically include cannabis.

“There is a demographic of patents that are not being represented,” Manus said.

Even in states where medical and recreational cannabis have been legal for a while, the issue of delivery is either cloudy, or outright illegal.

Marcie Cooper, a hospice nurse in Colorado, has been fighting to legalize cannabis delivery in her state, including testifying before the state General Assembly. A bill that would have created a pilot program allowing three Colorado cities to opt into marijuana delivery died in April. The bill was opposed by some local police departments and the Colorado State Patrol.

“Unfortunately, we cannot deliver cannabis because it still is a Schedule I drug,” said Cooper, who since 2008 has worked in the Denver metropolitan area with sick and dying patients in their homes.

While cannabis is widely available for purchasing, some Colorado counties don’t have dispensaries, leaving less mobile patients heavily reliant upon friends and family for assistance.

“So, when they send their families to go pick it up, then they may have an hour-and-a-half drive,” Cooper said.

Yet, patients can get drugs such as morphine or Dilaudid delivered to their homes.

“I’ve been in the house when they just knock on the door and hand the bag to whoever’s there and get them to sign their initials without asking for ID or anything,” she said.

Cooper has patients whose cannabis use helps with pain relief and reducing insomnia; those same patients were worse off on more potent medications.

“When we give morphine or Dilaudid for pain, we create lethargy, so the patients won’t eat, so we create constipation, so they refuse their medications because they’re constipated already, so the patient gets worse,” she said.

These pharmaceuticals may also knock people out, robbing them of precious hours with loved ones, she added.

“Cannabis can treat that pain, and they can actually stay awake and enjoy their family,” Cooper said.

LaCroix uses marijuana to reduce the number of drugs he takes. He has only been on just three medications, while others he’s heard of with his inherited condition are on several more medications.

Life has recently improved for the 43-year-old. He left his home and business in Maui, Hawaii, in 2014 to move to Palm Desert, California, to be as close as possible to University of California San Diego, where he was on the medical center’s waiting list for a double lung transplant.

Before and after the transplant, he avoided inhalants because of his lungs, but has used cannabis in edible and other forms, including Rick Simpson oil, to treat his kidney problems.

“Cannabis is what got me to my surgery,” LaCroix said. “I think, generally, it helped my feeling of well-being. I was bound to a wheelchair and I couldn’t walk more than 20 feet and I couldn’t even shower myself. It opened up my airways, I felt like.”

It also put him in a better mood.

“When you feel like that, it’s hard to feel happy,” he said
 


California updates regulations for recreational and medical cannabis industries


The temporary rules governing the Golden State’s marijuana industry have been extended until the end of the year, with only minor tweaks.

The relatively sudden growth of the country's cannabis industry has left local government officials scrambling to create the regulations necessary to govern businesses without federal oversight, and for many canna-legal states, a finalized set of marijuana rules has remained a moving target. In California, recreational cannabis sales became legal at the beginning of the year, but the industry is still operating under a set of emergency regulations which were set to expire this spring. Late last week, state officials decided to extend these temporary rules for another six months, with a few minor changes.

The three agencies designated to license and regulate the state's cannabis industry — the Bureau of Cannabis Control (BCC), the California Department of Public Health (DPH), and the California Department of Food and Agriculture (DFA) — have all proposed to re-adopt the current emergency regulations for an additional 180-day period, with a small number of revisions. “These proposed changes to our emergency regulations are based on feedback from our stakeholders, and information gathered over the first four months of implementation,” BCC Chief Lori Ajax said in a statement.

The state's medical cannabis industry, which was legalized back in 1996, has been operating under a different set of rules than the newly-minted recreational industry, but the revised regulations make it easier for canna-businesses to get involved in either aspect of the sector. The previous regulations required business owners to submit two separate applications (and pay two fees) if they wanted to apply for both adult-use and medical cannabis licenses, but now applicants will be allowed to submit a single application to receive both for only one fee. The BCC also lowered the annual license fee for all business operators.

The previous regulations established a transition period enabling any adult-use cannabis licensees to contract with medical cannabis licensees, and vice versa, until July. The new regulations will make this policy permanent, allowing businesses to better integrate their supply chains without having to designate every single individual pot product as reserved solely for recreational or medical sales. “I can’t overestimate how big of a deal that would have been if that change had not been made permanent,” Max Mikalonis of K Street Consulting said to Marijuana Business Daily.

The BCC has also updated its rules for cannabis deliveries, increasing the total amount of cannabis goods allowed in one vehicle at a time from $3,000 worth of product to $10,000. However, the new rules are putting an end to what has been referred to as the “ice cream truck model” of delivery, where a delivery vehicle stocked with every variety of product would drive around servicing online deliveries. Now, a truck must return to stock their vehicles at a physical establishment before delivering them.

The regulations also make a number of minor tweaks to certain parts of the industry. The DFA has revised its methods for measuring canopy areas for indoor, mixed-light, and outdoor grows; while the DPH changed its regulations on shared-use facilities, and decided that cannabis tinctures do not have to be classified as products containing alcohol.

The public will have five days to give feedback on these new regulations, after which they will be formally adopted. At that time, the three agencies will have another 180 days to draft final regulations for the industry — that is, if they’re ready.
 

California: DEA marijuana busts dropped by almost 40% in 2017


Nearly three-quarters of all of the marijuana plants seized by the feds last year came from California, the country's largest supplier of black market weed.

Last year, the Drug Enforcement Agency (DEA) seized 37% fewer cannabis plants than they did in 2016, according to the agency's annual Domestic Cannabis Eradication/Suppression Program Statistical Report. In 2017, the DEA busted over 4,000 outdoor cannabis grows and almost 1,400 indoor grows, seizing over 3 million cannabis plants. In the previous year, the agency busted around 5,500 outdoor grows and 1,900 indoor grows, destroying over 5 million cannabis plants.

Nearly three-quarters of all of the marijuana plants seized last year came from California, the country's largest supplier of black market weed. The feds busted 1,514 illegal grow-opsin the Golden State last year, destroying nearly 2.5 million plants and seizing over $2.5 million in assets. The total number of seized plants fell 35% since 2016, when recreational cannabis was still illegal in the state. California still supplies the country's cannabis black market with over 11 million tons of weed annually, much of it harvested in illegal grow-ops that are poisoning the environment with pesticide runoff.

Conservative Midwestern and Southern states were also popular targets for federal pot raids, although significantly less so than California. The DEA confiscated 472,927 cannabis plants in Kentucky last year, along with 74,599 in West Virginia, 62,323 plants in Arkansas, and 60,658 in Indiana. Idaho, Delaware, and Kansas had the lowest number of federal pot busts, with only 10, 56, and 66 plants seized, respectively.

DEA seizures of marijuana increased 20% from 2015 to 2016, but the extensive decrease seen last year is hopefully indicative of a shift in federal drug enforcement policy. Despite Attorney General Jeff Sessions' constant threats to crack down on all forms of marijuana, the Department of Justice is under pressure from bipartisan politicians to back off from its war on weed. There are currently a number of bills in Congress that would protect states' rights to legalize cannabis, which President Trump has even promised to support.

The DEA will also have to keep its hands off state-legal medical marijuana operations for the near future. Earlier this month, Rep. David Joyce got the House Appropriations Committee to add an amendment to the 2019 fiscal year budget that will prevent the DoJ from spending any of its funds prosecuting state-legal cannabis.

Further protections for states' legal pot industries may come from a recent Supreme Court ruling that found that it was unconstitutional for the government to force states to adhere to federal prohibition policies, which could apply to cannabis as well as gambling.
 
WTF. Its full rec legal but they won't give work place protection to MMJ patients? The more I read about the actions of our professional political class, the more I think they all need to be tarred and feathered.

California spikes proposed workplace marijuana protections


California lawmakers on Friday shelved legislation that would have offered employment protections to qualified medical marijuana users.

The bill died without debate in the Assembly Appropriations Committee. Advocates had sought to bring California in line with a handful of other marijuana-legal states that require employers to provide reasonable accommodations to medical cannabis users so long as the employees don’t come to work impaired or cause an undue hardship on business operations.

The bill, AB 2069, faced opposition from businesses and trade groups, including the state Chamber of Commerce, drug-tester Quest Diagnostics and the Personal Insurance Federation of California. They argued that the proposed worker protections were too broad and threatened employers’ statutory authority to maintain a drug-free workplace.

California employers still enjoy broad discretion to make hiring and firing decisions based on their workers’ now-legal marijuana use. The state Supreme Court in 2008 held in Ross v. RagingWire Telecommunications that businesses are not required to accommodate medical cannabis users.

The Legislature decided the fate of several other marijuana-regulating bills on Friday. Here’s the latest:

AB 3157, which would have temporarily reduced the 15 percent cannabis excise tax to 11 percent and suspended a by-the-ounce cultivation tax, also died in the appropriations committee. The bill was an effort to encourage more black-market marijuana operators to get licensed. Lower-than-projected tax revenues suggest some growers are shunning the new regulatory system.

Although the bill sailed out of two policy committees with bipartisan support, the appropriations committee on Friday rejected numerous bills offering tax cuts and tax credits.

The bill’s author, Assemblyman Tom Lackey, R-Palmdale, said in an email that the state’s illicit cannabis market will continue to thrive “until legal businesses are put on a more level playing field. The next round of state tax collection numbers will be released in early August and that will be a time to reassess whether the current system is working.”

Legislation to create a closed-loop, state marijuana banking system survived a spending committee vote. SB 930 would allow limited-charter banks and credit unions to accept deposits from marijuana businesses and to provide restricted check-writing ability for those customers, who are typically shunned by traditional banks.

Lawmakers also approved a bill to allow cannabis operations to deduct business expenses from their state taxes in the same way other companies do. That practice is banned at the federal level, creating a major tax expense for cannabis businesses in marijuana-legal states. The bill is sponsored by the California Cannabis Industry Association.
 
Shortsighted IMO. But like politicians everywhere (damn their black little shriveled souls) its always first about getting the $$, everything else is secondary.

Well, indeed I agree....they just guaranteed the black market will stay healthy.



Proposal to cut California cannabis taxes is dead in the water

A plan that would have cut taxes on commercial cannabis in California is on hold indefinitely after the bipartisan legislation failed to pass out of an Assembly committee last week.

The bill, AB 3157, would have temporarily reduced the state excise tax on cannabis from 15% to 11% and suspended a separate tax on cannabis cultivation. The bill’s proponents said the measure, which would have reduced taxes for a period of three years, was meant to speed the transition away from the state’s thriving illegal market and into state-regulated sales.

“Today was another big win for the black market,” Assemblyman Tom Lackey, who co-authored the measure, said after Friday’s vote. “All we wanted to do is to level the playing field financially.”

The bill’s co-authors include Assemblymembers Rob Bonta (D-Oakland), Ken Cooley (D-Sacramento), Reggie Jones-Sawyer (D-Los Angeles), and Jim Wood (D-Healdsburg).

Cannabis growers and sellers in California, which launched the nation’s largest legal market at the start of the year, have complained that taxes are too high. They argue many consumers are shopping in the underground market to save money.

In some areas, combined state and local taxes can approach 50%.

But according to Lackey, opponents of the measure said it was too soon to slash taxes without further evidence they were driving consumers to the illicit market. He said he hopes to see the bill revived later this year despite being shelved by the Assembly Appropriations Committee.

Last week’s vote came shortly after reports that state cannabis tax revenue from the first three months of legal sales had fallen short of state budget forecasters’ estimates. The state expects to make $175 million in excise tax revenue in 2018, but the first quarter of the year saw just $34 million. If sales were to continue at that pace, the state would see about $39 million less than expected by the year’s end.

Prior to those reports, the tax-cut bill had passed through two other Assembly committees unopposed.

Cutting taxes could risk lowering state revenues, but it could also encourage more consumers to purchase their cannabis from licensed retailers rather than sellers on the illegal market who pay no tax at all. Analysts disagree over the best way forward.

At the local level, some officials are already taking action to cut taxes.

Monterey County slashed its marijuana tax rate last week, after hearing complaints from local growers. An attorney for the growers said the decision will help a struggling industry take root in the farming region about 120 miles south of San Francisco.

At the state level, all California cannabis is subject to sales tax, a 15% cannabis excise tax, as well as a $9.25-per-ounce cultivation tax. Cities and counties can impose further taxes, in some cases up to 20%. (Medical cannabis patients can avoid paying state sales tax, but they must pay up to $100 to obtain a state-issued ID card.)

In February, the city of Berkeley—which boasted one of the highest tax rates in the state, 34.25%, when commercial sales went live on Jan. 1—voted to cut its local 10% tax in half, down to 5%.

“We’ve been screaming at these guys for three or four years to really watch out for the tax rate, because it’ll make the difference between the success of this regulatory environment or its failure,” Matt Kumin, a San Francisco-based cannabis business attorney. “If [Berkeley’s move] is not a trend, the black market is going to win. And the regulations will fail.”
 



Here’s where California’s next governor stands on cannabis


At a debate among California’s top six gubernatorial candidates earlier this year, the backdrop read El Momento de la Verdad – The Moment of Truth.

“Just for the record,” asked moderator Jorge Ramos, anchor for the Spanish-language news network, Univision, “will you raise your hand if you’ve ever used pot?”

Up went the hands. Former Los Angeles mayor Antonio Villaraigosa made sure he was out of the gate fastest and boldest. He shot his hand high in the air and kept it there. John Chiang, the state treasurer, inched his hand up to his chin. Then Delaine Eastin, the former state superintendent of public instruction, belatedly raised her arm.

The two leading Republicans, San Diego businessman John Cox and Huntington Beach Assemblyman Travis Allen, didn’t raise their hands. Neither did leading Democratic contender Gavin Newsom, the lieutenant governor and former San Francisco mayor who successfully championed California’s Proposition 64 adult use legalization measure in 2016.

Villaraigosa, who had endorsed Proposition 64 late in the campaign, excitedly claimed victory on the question.

“And unlike some,” Villaraigosa said, enticing cheers and laughter from the crowd, “I inhaled.”

Gavin vs. Everybody Else

Villaraigosa won the moment, but it’s Newsom who appears to be breathing in the most support from cannabis voters in race to replace retiring Jerry Brown as California governor.

His campaign says he has never consumed cannabis, and Newsom once told The Sacramento Bee, “I hate the stuff. Can’t stand it.” But he got out ahead on the issue with Proposition 64 and his anti-Drug War oratory that “the legalization of marijuana is a social justice issue.”

Newsom currently leads in the polls during the run-up to California’s June 5 primary, in which the top two candidates advance to the November general election regardless of party. (NYT reporter Adam Nagourney ran a handy explainer on that recently.) He has raised the raised the most money – $26 million to $10 million for Villaraigosa. In 2017, he took in more than $300,000 in cannabis industry contributions to just $5,000 for Villaraigosa and little or none for other opponents, according to a Los Angeles Times analysis.

The Drug Policy Forum of California, in its election critique on cannabis issues, positively rates the four Democratic contenders, Newsom, Villaraigosa, Chaing and Eastin, as “pro-reform” on cannabis policy. Unlike California’s famously right-wing and pro-cannabis GOP Congressman Dana Rohrabacher, the Drug Policy Forum lists Republican candidates Cox and Allen as “anti-reform” for cannabis views the group called “nutty” or “dismal.”

“The race for governor features four strong Democrats and two Republican reactionaries,” the Drug Policy Forum said.

Here are the top contenders for California governor and their views on cannabis and other issues. They are listed, bottom to top, based on their chances of reaching the November election runoff according to a recent statewide poll by the University of California Institute of Governmental Studies.

6. Delaine Eastin, Democrat

Bio: The only woman among the top six contenders, Eastin, 70, served as California superintendent of public instruction from 1995 to 2003 and in the state Assembly from 1986 to 1994. She is currently chairwoman of Educate our State, which advocates for California schools.

Campaign: Eastin is calling for passage of single-payer health care in California, along with major state investments to offer universal preschool and tuition-free state university education for California residents.

Cannabis policy: Eastin supports cannabis decriminalization. She also backs creation of a public bank in California to handle cannabis industry deposits and transactions while providing loans for small businesses, cannabis and otherwise. She believes Proposition 64 should have included revenue investments in mental health programs.

Canna quote: “We must end the War on Drugs in California and begin to treat all addiction, not just alcohol and opioids, as a mental health issue.” That’s from Eastin’s campaign website.

5. John Chiang, Democrat

Bio: A son of Chinese immigrants, Chiang, 55, was elected as state treasurer in 2014, after serving two four-year terms as controller, California’s chief financial officer, and earlier as a member of the Board of Equalization taxation agency.

Campaign: Chiang is running as “the state’s banker,” citing his fiscal management and his work guiding California back from recession to its robust place as the world’s 5th largest economy. He supports universal health care in California, cutting college tuition rates, policies to fight climate change, vows to confront an anti-immigration “Trump deportation machine.”

Cannabis policy: Chiang took a major leadership role in advocating for banking solutions for California cannabis businesses last year when he headed California’s Cannabis Working Group. The policy panel recommended studies to create a state-regulated credit union or public-private consortium to coordinate financial services for licensed cannabis businesses.

Canna quote: “We are contending with…a multibillion-dollar cannabis industry that needs banking services…Until the slow, clunking machinery of the federal government catches up with the values and will of the people…states like California will continue to both resist and, more importantly, to lead.” That’s from a Chiang press release.

4. Antonio Villaraigosa, Democrat

Bio: Villaraigosa, 65, the first Latino mayor in Los Angeles since 1872, served two terms as mayor from 2005 to 2005. He was formerly a state Assembly member and, from 1998 to 2000, Assembly Speaker. The Los Angeles Timesrecently endorsed him for governor, praising him for reducing crime, investing in transportation and improving schools.

Campaign: Villaraigosa is running on a platform of addressing economic inequality in California. He pledges to lift the lives of residents left behind by the new economy by improving under-performing schools, building affordable housing, protecting “Dreamers” from deportation, and expanding the Affordable Care Act as a pathway to universal health care.

Cannabis policy: Villaraigosa cautiously endorsed Proposition 64 a week before the November 2016 election, declaring: “I took my time on this measure because I wanted to make sure it included protections for children and public safety.” At a May 8 gubernatorial debate, he said California needed to protect small cannabis businesses in the face of large conglomerates emerging in the cannabis economy.

Canna quote: “We need to be true to what we said we were going to do (in Proposition 64). We are going to focus on local businesses and not on what you see currently happening: A lot of private equity and big money interests…coming in and kind of boxing out local folks.” That’s from a May 8 debate in San Diego.

3. Travis Allen, Republican

Bio: Allen, 44, a financial planner and surfer from Dana Rohrabacher’s Huntington Beach-area congressional district, is a three-term state Assembly member. He is an outspoken conservative, with occasional bombast including a Pants on Fire claim that California legislation to protect vulnerable children from sex trafficking was legalizing child prostitution.

Campaign: With a MAGA-style campaign slogan – “Take Back California” –and web photos of menacing MS-13 gang members, Allen is running a nativist campaign against illegal immigration and sanctuary cities. He is championing the repeal of a gas tax for highway construction that was signed by Gov. Jerry Brown, while asserting that he is the California political heir to Donald Trump.

Cannabis policy: Allen was one of two Assembly members to vote against legislation – Senate Bill 94 – to license and regulate medical and adult use cannabis businesses in California. He isn’t a fan of cannabis legalization, particularly the adult-use kind.

Canna quote: “The voters of California voted for medical marijuana, and I think a lot of Californians can understand that. It helps you with your nausea from cancer or for your glaucoma. Whatever it happens to be, a lot of voters are okay with that. But this legalized recreational marijuana will have disastrous consequences in California, as we have already seen in Colorado.” That’s a quote from the May 8 San Diego debate.

2. John Cox, Republican

Bio: A transplant from Chicago who now lives in the Rancho Santa Fe community near San Diego, Cox, 62, ran for the United States Senate in Illinois and, in 2003, debated the eventual winner: Barack Obama. A millionaire businessman, he founded an Illinois law firm specializing in tax and corporate law and estate planning and was chief financial officer of the snack foods company Jay Foods.

Campaign: Cox, who touts himself more as a Reagan Republican than a Trump disciple, nonetheless got Trump’s endorsement. He casts himself as an anti-abortion and pro-gun candidate who also “strongly opposes Jerry Brown’s ‘Sanctuary State’ and boondoggles like the High Speed Rail ‘Train to Nowhere,’” a major California transportation initiative.

Cannabis policy: Cox says he is against cannabis legalization for adult use and he drew headlines in a recent gubernatorial debate when he appeared to suggest that users should be hospitalized for treatment for substance abuse. In a follow-up interview with the San Diego Union-Tribune, he said he didn’t mean to imply that consumers should be institutionalized, just that people “addicted to substances…should get treated.”

Canna quote: “I’d like to go to the Portugal system, where they actually put people who use marijuana in hospitals and cure them of their substance abuse. I’m not interested in jailing recreational marijuana users, and I’m certainly for medical marijuana.” That’s from the May 8 debate.

1. Gavin Newsom, Democrat

Bio: Newsom, 50, the son of a state appellate court judge, William Newsom III, founded a boutique winery– PlumpJackWinery –before running for San Francisco County supervisor. He won election to the first of two terms as mayor in 2003 and was elected lieutenant governor in 2010.

Campaign: Newsom is asserting his “bold willingness to lead,” including getting out ahead on controversial social issues: opening the doors to San Francisco City Hall for same-sex marriage ceremonies in 2004, and championing successful ammo-control and cannabis legalization initiatives in 2016. He advocates single-payer health care in California, increased mental health treatment, and policies to protect worker’s rights, civil rights, and the environment.

Cannabis policy: A year before Proposition 64 made the ballot, Newsom became the most visible California politician embracing marijuana legalization as the face of the pro-cannabis Blue Ribbon Commission on Marijuana Policy. He later signed on with the initiative backed by investors, including former Facebook president and Napster co-founder Sean Parker. While some cannabis advocates complained that he exploited the measure for his gubernatorial aspirations, Newsom claimed credit for leading “the coalition to decriminalize cannabis, taking a bold step towards ending the failed war on drugs.”

Canna quote: “We moved towards legalization to get people into the day light and into the sunshine of a regulated environment, which means you’ve got to act maturely, you’ve got to play by the rules. You can’t play in the margins. There is no more black market.” That’s from a Newsweek interview.
 
California, US team up on an issue that divides them: pot


SACRAMENTO, Calif. (AP) — An alarming increase in the use of a highly toxic and banned pesticide at illegal marijuana farms hidden on public land in California is leading U.S. and state officials to team up on an issue that recently divided them: pot.

They announced Tuesday that they will use $2.5 million in federal money to target illegal grows even as they remain at odds over the drug and other issues. Federal law still bans pot, but U.S. Attorney McGregor Scott said he will prioritize illegal weed rather than going after the world’s largest legal recreational marijuana market, a decision U.S. Attorney General Jeff Sessions has left to the discretion of top federal prosecutors.

“The reality of the situation is there is so much black market marijuana in California that we could use all of our resources going after just the black market and never get there,” Scott said.

“So for right now, our priorities are to focus on what have been historically our federal law enforcement priorities: interstate trafficking, organized crime and the federal public lands,” said Scott, whom President Donald Trump appointed last year as U.S. attorney of inland California, from Bakersfield to the Oregon border.

Most of illegally grown California pot is destined for Midwestern and Eastern states where it is more profitable. California Attorney General Xavier Becerra and others referred to the illegal grows as California’s new Gold Rush, bringing both riches and environmental devastation.

“You’ve got to make it so crime doesn’t pay,” Becerra said.

The illegal grows, where the highly toxic pesticide Carbofuran is prevalent, pose an increasing threat to water, wildlife and ultimately people, officials said. Researcher Mourad Gabriel told The Associated Press that he and his colleagues found the chemical at 72 percent of grow sites last year, up from 15 percent in 2012.

About 60 percent of California’s water supply flows through national forests, and researchers found that 40 percent of water samples downstream from illegal grows are contaminated.

Gabriel’s research found that traces of the pesticide are now showing up in pot, though he did not attempt to quantify how much was in each sample or its effects on people. Such dangers have long been an issue in unregulated drug markets, something California’s new legal pot market intends to change.

Carbofuran, which can’t legally be used in the United States, is intended to be heavily diluted and used as an insecticide. But it is so powerful that a quarter of a teaspoon of concentrate can kill a 300-pound (136-kilogram) bear, said Gabriel, executive director and senior ecologist at Integral Ecology Research Center and one of the few researchers studying the ecological impact of illicit grow sites

It’s also being used on marijuana plants in barely diluted form. Carbofuran is being smuggled in from Mexico by drug cartels and laborers hired to clear forestland and replant it with illegal marijuana, Scott said.

Laborers, who must carry the plants, fertilizer, irrigation hose and camping supplies into faraway sites, tell Gabriel that the remoteness is one reason the highly toxic pesticide is so popular.

“What they are saying to us is this is extremely effective — it takes a little amount to kill a deer or a bear — so we don’t need to bring a lot of it to last a season,” Gabriel said.
 
Be interesting to see how this works out with FDIC insurance.

World’s first cannabis bank advances in California

California cannabis consumers and industry operators could enjoy a safer, more regulated legalized industry in the future, thanks to the passage of a bill to create the world’s first marijuana-focused bank.

Senate Bill 930 to set up a state charter bank for the cannabis industry survived a crucial floor vote in the California Senate Thursday. Friday is the deadline for all California bills this year to clear their house of origin.
California’s cannabis industry is expected to generate an estimated $10 billion in retail sales per year at full capacity, but the industry struggles to maintain bank accounts due to federal marijuana prohibition. Federal regulators have told banks to proceed with caution when banking state-legal cannabis funds. The vast majority of the banking system refuses to serve the legal industries in nine states, leading to all-cash transactions and increased risk of robbery, among other problems like paying employees and taxes.

“The status quo for our growing legal cannabis industry is unsustainable,” said State Senator Bob Hertzberg (D—Van Nuys), the bill’s sponsor. “It’s not only impractical from an accounting perspective, but it also presents a tremendous public safety problem. This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue.”

The proposed state charter bank would be very limited compared to a major national bank like Chase or Bank of America. It would allow licensed industry operators to make deposits in order to pay state and local taxes and fees, as well as pay wholesale vendors, and landlords.

Not Perfect, but It’s a Start

Industry lobbyist Max Mikalonis for K Street Consulting in Sacramento said the bill lacks scope, but is a start. “No legislation is perfect, but in general we’re supportive of going in and fixing the problem.”

The best, most reputable cannabis dispensaries in California still struggle to keep their checking accounts open, as well as allow debit card payments at the register. Operators often leap frog from one bank to another, and face stiff fees often hundreds of times higher than other retailers. But where there are banking fees, there are bankers, and several hundred institutions nationwide are taking pot dollars, despite onerous federal scrutiny.

“California can’t wait to take action,” stated Fiona Ma, a member of the state’s former tax collector, the Board of Equalization. “With secure banking for cannabis through SB 930, the industry will benefit, the state will get a revenue boost, and pot cash will get off our streets.”

The bill passed the senate with bipartisan support 29-6, and now heads to the Assembly, where it must pass through several committees and an Assembly floor vote this summer on its way to the Governor’s desk. Supporters included the world’s largest cannabis market — the city of Los Angeles. No opposition is listed in the bill’s analysis (.pdf).

The bud banking bill is one of several dozen cannabis-related bills in California this session that aim to clean up regulatory language or advance human rights of cannabis users to work or clear their criminal records.
 
This is wonderful. The more infrastructure put in place, the more impossible it will be for Sessions and the Feds to unwind it all. Very cool.

California's cannabis companies can now obtain property and liability insurance


n the marijuana industry, insurance can be a high demand. Most insurers that do offer coverage are small-scale outfits not regulated by the state that are hesitant to enter the budding business.

In hopes to shift that mentality, California Insurance Commissioner Dave Jones approved a program to provide California’s marijuana dispensaries, warehouses, processors, manufacturers, distributors and other cannabis-related operations with property and liability coverage.

“Cannabis businesses need insurance coverage to help them recover when something goes wrong just as any other legalized business does,” said Jones in a statement on Monday. “This first-of-its-kind Cannabis Business Owners Policy, or CannaBOP program, will make it easier for more insurers to enter the market and fill coverage gaps for cannabis businesses.”

The American Association of Insurance Services (AAIS), an insurance advisory nonprofit, developed the policy following an initiative Jones spearheaded last year to encourage commercial insurers to cover the cannabis industry more extensively, reports the Cannifornian. The measure resulted in Golden Bear Insurance Co. becoming the first commercial insurer to file cannabis business insurance and be approved by the insurance commissioner.

Even still, comprehensive coverage beyond property and liability for those in the marijuana industry can be hard to come by. Ken King, vice president of commercial casualty for Stockton-based Golden Bear, told the Cannifornian that his company doesn’t provide auto or workers compensation coverage for marijuana businesses, though many smaller, non-regulated insurers do.

“A business would have to go somewhere else for that,” he told the Cannifornian. “But we offer property coverage, which includes the building, personal business property and business income and stock. We also offer general liability, product liability and some crime coverage for things like robbery and burglary. At this point, we have issued policies to over 100 marijuana-related companies.”
 
Well, so much for being "brothers in arms" in the MJ resistance. When it comes down to it, its all about money as always.

"Many blame California’s exorbitant tax rates, which can cost customers up to 45% of their purchase."

So that's why the black market is still thriving, eh? No shit, Sherlock. CA...sorry, but this is the government you wanted.




California’s legal cannabis businesses are turning in their illegal competitors


Consumers are going back to the black market amid high taxes.

Licensed cannabis businesses in California who are complying with the state’s regulations are growing increasingly frustrated with the thriving black market. As a result, some licensed dispensaries have filed complaints with the California Bureau of Cannabis Control to try and eradicate their illegal competitors.

The competition between legal and illegal cannabis businesses has resulted in significantly lower-than-expected cannabis revenues in the state. Many blame California’s exorbitant tax rates, which can cost customers up to 45% of their purchase.

Governor Jerry Brown has already moved to launch a special investigative team to eradicate California’s black market cannabis businesses. Brown has allocated $14 million to the initiative. California’s Bureau of Cannabis Control is also taking steps to try and minimize access to the state’s illicit cannabis market.

This year, California’s Bureau of Cannabis Control sent a cease-and-desist memo to Weedmaps, the online database of dispensary names, locations, and products, where many of these unlicensed businesses can be found. The bureau asked the site to stop listing unlicensed cannabis businesses and threatened to charge them with “criminal and administrative penalties.” Weedmaps, for their part, essentially refused.

Some have expressed concern that it’s too difficult to distinguish legally operating dispensaries from unlicensed, illegally operating stores. In some cases, unlicensed cannabis retailers are even reportedly using their lack of compliance with the state’s cannabis program as a selling point, advertising that customers can purchase cheaper products at their stores, according to Marijuana Business Daily.

While legally operating cannabis businesses are struggling to compete with the black market, the state is working to offer resources to people playing by the rules. Recently, California’s Senate passed a bill to help cannabis businesses gain access to bank accounts, which many have been unable to obtain due to the federal prohibition of cannabis. Without access to banks, cannabis businesses must often operate entirely in cash, making them an easier target for theft and prohibiting them from basic services like loans.

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Still, cannabis operators looking to join California’s legal program are often faced with setbacks of their own, such as a slower-than-expected licensing process. In Los Angeles, this slow licensing system has cost many would-be legal cannabis businesses money as they wait to turn leased spaces into functioning stores.

Currently, there are more than 5,000 cannabis operators with licenses to operate their businesses legally in California. Santa Barbara County is home to the highest number of licensed cannabis farms in the state, having already been awarded roughly 800 growing licenses. According to the Orange County Register, there are roughly 400 licensed cannabis dispensaries in California. But many more currently unlicensed cannabis businesses are still waiting to receive their permits in order to enter the state’s legal system. And in many cities, cannabis operators don’t even have the option to go legal yet.
 
I hope pricks like this make a mistake and pull this asset forfeiture robbery shit off on some billionaire. Someone with the deep pockets and savvy to sue them from the Mayor on down to the City Hall janitorial staff.

Three is a lot of bleating and hand wringing lately as to the state of democracy and rule of law in America this past almost two years. Anybody care to comment on this subject...asset forfeiture? I cannot imagine anything more Un-American and less democratic, than authorizing cops to just take your property and....well, that's it. They just take your property. Its happening all over the country and as far as I can tell nothing...I say nothing has happened to punish the responsible authorities.


‘Highway Robbery’: Drivers Allege Rohnert Park Police Illegally Seized Cannabis, Cash


Huedell Freeman was heading south on Highway 101 through Cloverdale and was just over the Sonoma County line when he said a police squad car flipped a U-Turn across a 25-foot grass median and pulled up behind him with lights flashing.

'He grinned and smiled at me and did not respond. At that moment I knew I'd been had. I knew that this was not a normal traffic stop.'Huedell Freeman
Freeman said he was carrying 47 pounds of marijuana in his rental car that day, Dec. 29, 2016, but said he wasn’t too worried about the weed because he had a permit to grow medical cannabis in Mendocino County. He was driving it down to his client, a licensed dispensary called The Higher Path in Sherman Oaks, near Los Angeles. And, he said, he had the paperwork to prove it.

It struck Freeman as odd, though, that the two police officers pulling him over weren’t from Cloverdale. They were from Rohnert Park, some 40 miles south on 101. Freeman said he’d been obeying the traffic laws, and the cruise control on the car was set at the speed limit. He expected the traffic stop to end quickly.

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He didn’t expect to lose a year’s worth of income.

As Rohnert Park Department of Public Safety Officer Joseph Huffaker approached the car, Freeman said he rolled down his window and asked why he’d been pulled over.

Freeman said Huffaker told him his vehicle had “touched the white line” on the side of the road.

“I had not, so I looked at him, and I said, ‘No I didn't,’ ” Freeman said. “And he grinned and smiled at me and did not respond. At that moment I knew I'd been had. I knew that this was not a normal traffic stop.”

Then Huffaker asked if he had any marijuana in his car, Freeman said.

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A Rohnert Park police squad car. (Sukey Lewis/KQED)
“Yes, I do,” Freeman remembered saying. He also carried a large battered black leather briefcase filled with documentation -- what he calls his “compliance briefcase” -- and he said he provided the officer with a grower’s permit issued by the Mendocino County Sheriff's Office, contact information for The Higher Path dispensary with which he had an agreement to both grow and transport marijuana, and his compliance lawyer’s information.

Essentially, Freeman was trying to be as legitimate as he could be.

Freeman said that as he and Huffaker talked, another Rohnert Park officer, Sgt. Jacy Tatum, stood off to the side, barely speaking except to ask Freeman at one point about the strains of marijuana he was carrying.

The two officers would go on to seize that marijuana, and Freeman hasn’t seen it since. But, an odd fact remains about this seizure: No case against Freeman was ever referred to the district attorney for prosecution.

Freeman’s account of his run-in with Rohnert Park police echoes those of eight other drivers who say a group of officers from the city conducted pretextual traffic stops -- those that enable authorities to detain suspects for investigation of other matters -- with the goal of unlawfully seizing marijuana and cash. Four people allowed us to share their stories publicly, while five others would tell us about their encounters only if we agreed not to name them, saying they feared police retaliation.

Their stories suggest a pattern of questionable and potentially illegal stops and seizures over the past three years by officers from a small city along a major marijuana transportation corridor.

'When I say highway robbery, I really mean it.'Izaak Schwaiger,
Attorney, former prosecutor
The city of Rohnert Park said in a statement that its police officers “joined other law enforcement agencies in drug interdiction efforts” along Highway 101 seeking drugs including “methamphetamines, opioids, cocaine, ecstasy and marijuana.” But the city says it ceased “most interdiction efforts” related to marijuana in 2017.

There is a financial benefit to the city for this work. Through a legal process called asset forfeiture, both the Rohnert Park Department of Public Safety and the Sonoma County District Attorney’s Office get to keep a cut of seized cash suspected to be the proceeds of a crime.

A report issued by the California Attorney General shows that from 2015 to 2016, the Rohnert Park Department of Public Safety received more than $1 million in seized cash. The Sonoma County District Attorney received $188,419 of the money from assets seized.

Tatum was responsible for much of that asset forfeiture windfall to his local department. In 2015, the mayor publicly recognized him for his drug prevention work. Tatum thanked the City Council for allowing him the opportunity to “fight the war on drugs.”

But Tatum has another reputation: A growing chorus of defense attorneys say he’s a rogue cop. He’s being sued for unlawfully taking a man’s cash, and he has a documented history of dishonesty on the witness stand.

“When I say highway robbery, I really mean it,” Sonoma County defense attorney Izaak Schwaiger said. “Officer Tatum has been involved in dozens of questionable traffic stops both above and below the Mendocino-Sonoma County line, where he has seized marijuana farmers’ product and/or their cash and given them no receipt and no criminal charges were ever brought.”

Now Tatum and his partner, Joseph Huffaker, are under investigation by the city of Rohnert Park. They are both on leave, according to their attorney.

Allegations of a Cover-Up

Rohnert Park began an administrative investigation around April of this year after independent reporter Kym Kemp published a series of articles about another suspect traffic stop and marijuana seizure.

Texas resident Zeke Flatten said he was driving south on Highway 101 last December, when an unmarked black Ford Police Interceptor pulled him over just north of the Mendocino County line, about 50 miles north of Rohnert Park.

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Jacy Tatum is sworn in as a Rohnert Park police sergeant in July 2015. (City of Rohnert Park Police & Fire Facebook page)
Flatten, like Freeman, was also in a rental car and said he, too, was not speeding or violating any traffic laws. He pulled over and showed the officer his driver’s license and the rental agreement for his car.

The officers did not identify what agency they were with, Flatten said, and he noticed they were not wearing departmental police badges or identifying name tags.

“At that point I really felt something was wrong,” Flatten said.

Flatten said he had 3 pounds of marijuana in his car from a farm in Humboldt County and he was taking it to a laboratory in Santa Rosa for testing. He said he was working on developing a number of cannabis products he hoped to bring to market after California’s law allowing recreational use for adults kicked in.

Flatten also offered to show the officers his doctor’s prescription for medical cannabis, but he said they weren’t interested.

The officers said they were working for the ATF -- the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives -- according to Flatten. He said they took his marijuana and left him on the side of the road, all in just a few minutes. They did not issue him a citation or arrest him.

Flatten reported the Dec. 5 incident to the Mendocino County Sheriff’s Department, the Mendocino County district attorney, the Mendocino County grand jury and the FBI. Kemp spoke with an ATF spokesperson who said the agency wasn’t involved in Flatten’s traffic stop.

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From a Rohnert Park Department of Public Safety press release issued on Feb. 13, 2018.
“Mr. Flatten did contact the FBI and the information he provided, we were not able to corroborate it as reported,” FBI spokesperson Prentice Danner said.

The Mendocino County Sheriff’s Department said it wasn’t their case and pointed to a press release from Rohnert Park police written on Feb. 13, 2018, not long after Flatten’s stop. The statement, written by Tatum and Cmdr. Jeff Taylor, touted a large “black market” marijuana bust on Highway 101 during the month of December.

Rohnert Park produced an incident report of the Dec. 5 stop of Flatten, also written by Tatum, that diverges in many places from Flatten’s account.

The redacted report doesn’t include any names. It describes a traffic stop involving a white Mercedes-Benz with no license plates. Yet Flatten said he drove a Kia rental car with California license plates. The report says that 30 pounds of marijuana and several hundred containers of hash were seized from the person driving the Mercedes. Flatten maintains he had 3 pounds of marijuana with him.

Records show that Officer Huffaker did book 30 pounds of seized marijuana into evidence, but not until Dec. 18, 2017, nearly two weeks later. The several hundred containers of hash are not mentioned in the evidence log.

Flatten doesn’t believe Tatum was among the two officers who stopped him, although he does think Rohnert Park Officer Huffaker was one of the officers who pulled him over.

Flatten-incident-report-shot-800x383.png

An excerpt from the incident report written by Jacy Tatum
and referenced in response to Zeke Flatten's allegations.
The report says a CHP officer and trainee assisted on Flatten’s stop. But a CHP spokesman wrote in an email, “There is no dispatch record of us assisting with this incident and no one recalls it.”

Flatten said he thinks Tatum crafted this report after the fact to cover up an illegal stop and seizure by police officers.

“I felt very strongly that I was robbed by legitimate police officers,” Flatten said.

Finally, the report said the case was referred to the Sonoma County district attorney for prosecution. The Sonoma County District Attorney’s Office has no record that Rohnert Park ever referred a case against Flatten. There are no charges against him.

The city of Rohnert Park would not respond to questions about this incident, but it is investigating. Attorney Justin Buffington, who is representing Tatum and Huffaker, confirmed the officers are on leave pending an administrative investigation related to Flatten. He stressed that the city’s probe is not a criminal investigation.

Tatum and Huffaker did not wish to comment for this story, according to Buffington.

Seizing Cash

This is not the first time Rohnert Park police officers have faced allegations of unlawful seizure. A gambler from Las Vegas named Lucas Serafine alleges in a lawsuit against the City of Rohnert Park that Tatum and Rohnert Park police Officer Nick Miller unlawfully seized more than $120,000 from him on March 10, 2016.

Serafine was also in a rental car traveling on Highway 101 near Cloverdale with a friend when he said the two officers pulled him over for allegedly driving too fast in the rain.

Serafine said he was headed to a high-stakes poker game at the Bear River Casino in Humboldt County and that the large amount of cash in the car was cash from a lawsuit he settled with the California Department of Corrections, and a workers' compensation claim.

The officers suspected Serafine’s money was related to drug purchase or sales, according to court documents, and seized it.

“He [Tatum] looks me in the eyes, pointing his finger pushing on my chest as he does it," Serafine remembered Tatum saying before he and Officer Miller drove away, “‘I took $1.2 million off the road this year. Nobody shows up for it and neither will you’.”

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Highway 101 in Cloverdale. (Adam Grossberg/KQED)
A review of incident reports provided by Rohnert Park in response to a public records request back up the statement. KQED reviewed 23 incident reports on traffic stops involving Tatum. The city continues to provide more reports on a rolling basis.

Between late 2013 and the end of 2016, Tatum was involved in stops that resulted in the confiscation of well over $1 million in cash, according to the incident reports released so far.

The department saw a 182 percent increase in funds from asset forfeitures between 2015 and 2016. According to data reported to the California Attorney General’s Office, Rohnert Park police netted $756,062 in 2016, an increase of nearly half a million dollars from the year before.

In Serafine’s case, $121,920 was logged into evidence and turned over to the district attorney for asset forfeiture proceedings.

On June 28, 2016, Serafine's lawyer sent a letter to Rohnert Park contesting the amount of money seized, but Serafine says he did not get a response. Serafine said he actually had $132,000.

The district attorney brought a civil action to seize Serafine’s cash -- a process called asset forfeiture. Serafine provided the prosecutors with proof of income for most of the cash and eventually got $100,000 of his money returned to him.

The Sonoma County District Attorney’s Office declined to comment on Serafine’s asset forfeiture case or to say whether they investigated Serafine’s dispute about the amount of cash seized.

The city is fighting Serafine’s lawsuit alleging police officers inappropriately confiscated his cash. A trial in that case is scheduled for November of this year.

Serafine has a criminal history, including a conviction in 2001 when he was 18, for unlawful sex with a minor. Serafine was forthcoming about his record.

'That is a very strong indication, based on the law, that the complaints, assuming there were such, were deemed frivolous by the department.'Justin Buffington,
Attorney for Sgt. Jacy Tatum and Officer Joseph Huffaker
And Zeke Flatten admits he didn’t have a legal license to transport marijuana, but he said that still doesn’t give law enforcement the right to essentially steal from people.

“I knew that what these officers were doing was so much of abuse of power and so just wrong for police officers to be doing that,” Flatten said.

Tatum's attorney, Justin Buffington, said he is not under investigation for any additional matters.

“To my knowledge, none of the other matters [aside from the Flatten stop] that you referenced are, or have been, the subject of internal investigations undertaken by the department,” Buffington wrote in an email. “That is a very strong indication, based on the law, that the complaints, assuming there were such, were deemed frivolous by the department.”

An Unreliable Witness

At least a year before Flatten went public with his allegations against Rohnert Park police, Tatum was known by prosecutors to have written false information in police reports and to have testified dishonestly in court.

“He [Tatum] doesn't have a problem lying, and he does so with some regularity,” said Izaak Schwaiger a civil rights and defense attorney who has had run-ins with Tatum.

Schwaiger, who was a Sonoma County prosecutor from 2010 to 2012, said then-officer Tatum already had a reputation.

“His testimony was not of the highest quality,” Schwaiger said. “And sometimes gave rise to people disbelieving it, even on the side of law enforcement.”

Later, when Schwaiger became a defense attorney, the stories about Tatum mounted.

KQED has spoken to five defense attorneys in Sonoma County who say their clients alleged that Sgt. Tatum and often his partners stopped them on a flimsy pretext, fabricated police reports, and unlawfully seized cash and marijuana.

In 2016 Sgt. Tatum entered false information into an incident report. He and Huffaker pulled over a New Jersey man named Konstantine Charalidis, who the DA charged with having a concealed weapon. Charalidis’ attorney, Evan Zelig, provided KQED with Huffaker’s body-camera footage from the stop. It contradicts the police report written by Tatum.

The incident report says that a knife taken off Charalidis was “completely concealed” by his clothing. Huffaker’s body-camera footage shows Charalidis immediately pointed out both knives, neither of which were concealed.

“There's a difference between incorrect police reports and police reports that are falsified,” Zelig said. “The one with Mr. Charalidis, this was not incorrect. It was just falsified. The facts in there were not true.”

In the body-camera footage, both Huffaker and Tatum ask repeatedly whether there is any cash in the car, which Charalidis and his friend deny. Then Tatum says on the body-camera video he found $10,000.

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A screenshot from his body camera footage captures Rohnert Park Department of Public Safety Officer Joseph Huffaker reaching to remove two knives from Konstantine Charalidis' clothing after Charalidis immediately told the officer he had them. Both knives were unconcealed throughout the encounter. (Courtesy of Evin Zelig)
Zelig said the officers became angry at Charalidis because he wouldn’t admit that $10,000 was related to illegal activity, which would have allowed them to seize it.

“Give us fucking bullshit ass fucking answers, that’s what happens,” one of the officers says on the body-camera footage as Charalidis stands handcuffed. “We’re going to see a judge.”

The police report does not mention any money.

“It was absolutely an unlawful arrest,” said Zelig, “that they did solely because he would not give them the money.”

Prosecutors dismissed the charges against Charalidis because of the body-camera footage. Zelig says his client still had to pay attorneys fees, and deal with the hassle of a California court case while living in New Jersey.

In a separate 2016 case, Schwaiger suspected Tatum was lying about his justification for a traffic stop. He collected sworn statements from three other defense attorneys who said Tatum was dishonest and detailed specific instances of him lying.

Tatum’s dishonest testimony in that case led him to be placed on a list of officers with credibility issues maintained by the Sonoma County District Attorney's Office, Schwaiger and other defense attorneys said. Tatum gave shifting explanations in an attempt to justify the traffic stop and was caught lying on the witness stand. A judge dismissed the case.

'If or when concerns are raised about police officer conduct, we take the concerns seriously.'Don Schwartz,
Rohnert Park Assistant City Manager
Being on what’s called “the Brady list” meant, after that case, prosecutors had a duty to disclose evidence of Tatum’s past dishonest testimony to defense attorneys, who can use it to attack his credibility if he’s called as a witness.

The Sonoma County District Attorney’s Office declined to comment on Tatum’s credibility as a witness, but no perjury charges have been filed against him.

Schwaiger and another defense attorney say they were both interviewed by an investigator for the DA’s office regarding Tatum, but prosecutors would not say what the nature or the outcome of this investigation was.

“People want to believe police officers because we don't want to live in a world where cops can't be trusted,” Schwaiger said. “That's a scary world. Those are the people that are here to protect us. They're the people here to keep us safe. And if they can't be trusted, who can be?”

Broken Trust

For years, unlawful seizures and asset forfeitures were often considered by people in the marijuana industry as the cost of doing business. But now, legalization is offering men like Huedell Freeman a path to legitimacy. He pays taxes and permit fees -- those are the costs of doing business.

Freeman remembered the day in 2015 when a deputy from the Mendocino County Sheriff’s Office took his picture in front of his cannabis farm.

“‘You don’t know how weird this is for me’,” Freeman recalled saying to the deputy. “And he laughed and he said, ‘I think I do,’ he said. ‘We used to call this evidence. Now we call it verification’.”

It was scary to go legal, Freeman said, but it felt good, too: no more lying, no more hiding, no more risk of going to prison for doing what he loves. Now he grows more than a dozen varieties of cannabis that are tailored to specific medical ailments.

“I don't care about the 22-year-olds that want to get stoned and park on the couch,” he said. “I have nothing against that, but that's not why I do this.”

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Huedell Freeman. (Sukey Lewis/KQED)
Freeman said he explained all this to Tatum and Huffaker. He had nothing to hide. He gave them the name and phone number of Colin Stewart, manager and partner at The Higher Path dispensary in Sherman Oaks. Huffaker spoke to Stewart and to Freeman’s attorney, Hannah Nelson, who both confirmed what Freeman said: His cannabis was for medicine, not the black market. He was legit.

But the officers came back and told Freeman that they were seizing his property because he did not have a license issued by the state to transport marijuana.

The state Bureau of Cannabis Control declined to comment for this story and refused repeated requests to explain licensing and regulations for transporting marijuana legally in California.

The officers wrote Freeman a citation for possessing more than an ounce of marijuana, but they did not give him any documentation for the property they seized.

The Sonoma County District Attorney’s Office said no case against Freeman was ever referred to them.

Freeman said he called the Rohnert Park Department of Public Safety the next day. Sgt. Eric Matzen assured him that his cannabis was safe and that if the department determined its legality, he would get it back, Freeman said.

Freeman’s attorney wrote to the city and asked for it to return her client’s property. But the city of Rohnert Park never returned Freeman’s cannabis.

On June 27, 2017, he filed a claim against the city of Rohnert Park for the value of his cannabis. The city has rejected his claim.

Assistant City Manager Don Schwartz would not respond to a series of detailed questions about traffic stops by its officers.

"Rohnert Park is committed to compliance with the law and the constitution and its mission to serve and protect the public," Schwartz wrote in an emailed response. "If or when concerns are raised about police officer conduct, we take the concerns seriously and investigate as each situation may warrant. Once all of the facts are known, we take any and all appropriate measures."

The statement continued: “Rohnert Park participated in these [interdiction] efforts to reduce the flow of illegal drugs to Sonoma County, including the City of Rohnert Park,” Schwartz wrote. “Recreational marijuana was illegal until January 1, 2018.”

Freeman said he has still not recovered from the financial loss of his property. But he said even harder to recover is the faith he lost in a system that promised to protect him if he came out of the shadows.

“They broke my trust,” Freeman said.
 
"Those who buy NUG pre-rolls or eighth-ounces can scan the box and see seed-to-sale data on who grew it, trimmed it, and transported it."
Now that ^^ is pretty cool, I think

Stock up now, California. a lot of cannabis is about to disappear from stores

Buckle up, California consumers: It’s going to be a wild summer. Industry watchers are expecting to see statewide bargain blowout sales over the next two weeks, followed by immediate product shortages and price spikes.

The cause of the turmoil is the state’s fast-approaching testing and packaging deadline. As of July 1, 2018, all licensed medical and adult-use cannabis must conform to the state’s new testing and packaging requirements, to insure products are clean and child-resistant.
Look out for deals in email newsletters, social feeds and websites. You may find savings of 30% to 90% on flower, edibles, and extracts, with price reductions peaking at the end of June.

June blowouts will be better than Christmas, New Year’s, 4/20 or Memorial Day, said Erick Alfaro, operations manager for The Green Cross, an adult-use retail store in San Francisco. “This would be the best month for anybody trying to save some money and buy any type of cannabis.”

A few examples:

  • San Francisco storefront The Green Cross started blowing out flowers and edibles at 30% off in late May.
  • Buds & Roses customers in Los Angeles can expect to save 30% to 50% or more on rare products like cannabis oil in syringe applicators, as well as suppositories, both of which are in non-compliant packaging as of July 1.
  • Delivery service Sava emailed 75% off deals on flowers.
  • Connected Cannabis Co. dumped last year’s outdoor Gelato #41 for $40 per half-ounce at the June 3 Cannabis Cup in Santa Rosa.
Super-strong edibles of more than 100 milligrams are going to become a collector’s item, said Stephen Rechif, operations manager at The Bloom Room shop in San Francisco.

“Find any Kushy Punch TKOs,” he said. “Those are going extinct.”

What follows after July 1 is anyone’s guess. New brands might become statewide staples, while some legendary brands will be out of the marketplace, said edibles maker Kenny Morrison of Venice Cookie Co., and head of the California Cannabis Manufacturer’s Association. “It’s definitely a reckoning,” Morrison said. “We’re transitioning as we speak.”

California has been due for a reckoning. Since 1996’s medical marijuana Proposition 215, consumers complained that edibles were either too weak or strong, and they too often purchased flower contaminated with mold, mildew, or pesticides.

While the vast majority of customers were happy, there were reports of people sickened — sometimes to death — by flower contaminated with mold and fungal spores, or pesticides in vaporizer cartridges. Previous field studies have found that a significant percentage of the state’s cannabis supply chain appears to be tainted.

The cities of Berkeley and San Jose were among the first to clean up their cannabis with local lab testing rules. Statewide regulation in 2015 and legalization (with Proposition 64 in 2016) mandated testing for the entire state. On July 1, near-organic standards for marijuana products will separate the clean producers from the extinct producers.

“Your food isn’t going to be as clean as your cannabis,” said Rechif. “It’s really hard to pass.”

Morrison spent early June waiting for lab results and potentially relabeling packages if his edibles test 10 milligrams higher or lower than the packaging says.

“I think that’s a good thing,” said Lori Ajax, chief regulator for the state’s Bureau of Cannabis Control, which has held fast to the July 1 deadline. “I think this is the direction that the voters wanted.”

All products sold after July 1 have to go through a distributor and a lab before they hit the shelves.

But will there be enough labs to handle the volume? That’s an open question. There are 31 licensed labs in the state testing product that ends up at around 350 stores. Ajax said it remains to be seen how the labs can handle the load.

“We’ll have to keep an eye on things to see if labs can keep up with demand,” Ajax said.

Lab capacity is just one of many unknowns after July 1. All throughout the supply chain, from grower to distributor to edibles baker to retailer, no one knows who will survive the culling.

“There was a lot of confusion,” around the July 1 deadline for mandatory testing, Ajax said.

New packaging regulations are weeks old. And many brands seem to be doing the equivalent of cramming the night before the test, Rechif said — waiting until 20 days out to think about child-proofing and in-depth testing.

“They need to come into compliance,” he said. “We’re just slow to change and stuck in our ways. Some people are just not going to make it. It’s going to be a big shift. It’s kind of crazy.”

As of June 11, Buds & Roses operator Aaron Justis could not think of any products that would meet July 1 testing and packaging standards. Instead of compliant product, vendors are giving him “not a lot of solid, reliable answers so far.”

Most consumers walking in the store are unaware of the coming changeover. “It is scary and it doesn’t seem realistic, so I don’t know how this is going to happen,” Justis said. “I don’t know how the BCC expects this to happen so quickly.”

In addition to consumers swooping in on blowouts, companies that adapted early to the new rules stand to win in the new, tested era.

Oakland brand NUG’s award-winning line of 55 products is about 70 percent ready for July 1, according to John Oram, CEO of NUG’s holding company, Bloom Innovations.

“Come on, I got to have revenue July 1 — yeah we’re ready,” he said. “And we’re fortunate. It’s going to be tricky.”

Already, consumers are benefiting from cleaner, more transparent cannabis products. Those who buy NUG pre-rolls or eighth-ounces can scan the box and see seed-to-sale data on who grew it, trimmed it, and transported it.

“It’s a sea change,” said Oram. “The people who are well-positioned are going to see some market benefit and some increased market share. And I hope we get to capture some of that, but it’s going to be a challenge.”
 
Ah, and you silly CA citizens actually believe the inveterate, congenital liars (your politicians) when they said that they would protect the existing small grower market place for five years. Then they immediately allowed license stacking...and how much lobbying money do you think was behind THAT decision.


Chart: Handful of growers hold hundreds of cultivation licenses in California’s legal marijuana market


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Large-scale cultivation operations are beginning to emerge in California’s newly legal marijuana industry, despite regulations meant to curtail their presence.

A Marijuana Business Daily analysis of the latest licensing data from the state shows that 20% of cultivation licenses are held by just 12 licensees – or 0.7% of licensed cultivation businesses in California.


The data reinforce the fear among many smaller growers in the state that large, well-capitalized and more efficient growers will eventually come to monopolize the cultivation landscape.
Though California will not issue licenses for large-scale cultivation operations until 2023, some businesses are acquiring dozens of licenses for small grow sites, which they use in a single cultivation area.

That ultimately allows big cultivators to amass hundreds of thousands – or even millions – of square feet of canopy space.

The practice – known as “stacking” – is the target of a lawsuit filed by the California Growers Association against the California Department of Food and Agriculture (CDFA), the state agency responsible for issuing cultivation licenses.

Currently, growers can hold one medium cultivation license that allows for up to 22,000 square feet of grow space plus an unlimited number of small cultivation licenses that each allows for up to 10,000 square feet of grow space.

The lawsuit alleges the original intent of Proposition 64 – the 2016 initiative voters approved legalizing adult-use cannabis – was to prioritize small- and medium-sized businesses by giving them five years to establish operations before the state began licensing large-scale cultivators.

But by allowing individuals or companies to hold an unlimited number of small cultivation licenses, the CDFA is effectively violating the initial five-year prohibition on large cultivations, according to the lawsuit.

Here’s a closer look at the situation:

  • As of June 8, 3,535 cultivation licenses had been issued to 1,607 unique license holders, meaning that the average licensee holds approximately two licenses apiece. The top 10 license holders in the state control 646 licenses – or an average of 65 each.
  • With 147 cultivation licenses – over 4% of all cultivation licenses issued in California – Organic Green Farms is the largest license holder in the state. Its licenses allow for nearly 1.5 million square feet of total canopy. By comparison, the average grower in the state is authorized for about 24,000 square feet of cultivation space.
  • Based on the current number of licenses issued, annual license and application fees for the average cultivation business in the state is just over $35,000. Annual license and application fees for the top 10 license holders in California is approximately $657,000; fees for Organic Green Farms’ 147 licenses is nearly $2 million.
 
"Lawmakers in California prohibited large licenses from being issued until 2023, and regulators imposed a limit of one medium-sized license for each grower.

The state did not impose a similar limit for small licenses. This loophole has allowed larger cultivators to proliferate — especially in areas of the state where the land, and local ordinances, are good for growing cannabis outdoors.

To date, California has issued over 2,700 small licenses to hundreds of companies. Many growers hold several small licenses.

Five farms have accumulated 579 small licenses, more than a fifth of awarded licenses.

This is not a loophole, this is CA politicians and bureaucrats selling out to large commercial operations and selling the existing small/med size growers down the river. Its not a loophole, its not an unintended consequence, they KNOW its happening, and they have allowed stacking of licenses anyway. No matter how you cut it, CA state government has pulled some shit off on the citizens who voted for this in referendum and even on those legislators who thought they ensured protection for small/med growers. You know, the guys who have been doing this for 30 years and have brought us all of these great strains we are used to enjoying. They are being screwed. What else is new, eh?



As smaller marijuana businesses get squeezed, state revenue takes a hit

Tyler Kearns, owner of the cannabis cultivation company Seven Leaves, stood in one of his half-dozen temperature-controlled grow rooms on a recent day, surveying a crop derived from the same mother plant.

“We have really tried to educate the general public through talks, tours, communication and presentations,” Kearns said, “to bring a better understanding of the legal California cannabis industry.”

But winning public favor is only half the battle for operations such as Seven Leaves. The other challenge is trying to survive as a small business in the state’s increasingly crowded cannabis industry. At about 10,000 square feet of indoor marijuana canopy, Seven Leaves is small for a California cultivator — the kind of business the new law was supposed to help.

The ballot measure legalizing recreational marijuana in California, which voters approved in 2016, promised that the recreational marijuana industry would “be built around small and medium-sized businesses.” Lawmakers placed size limits on cannabis cultivators and prohibited monopolies in the recreational market.

The goal was to protect nascent businesses from being crushed by big farms or well-financed conglomerates. The protections also were supposed to give existing pot businesses — especially those in the black market — a chance to transition to the legal, taxable recreational marijuana industry.

But many small businesses have struggled to gain a foothold in California’s cannabis industry. A loophole in the licensing scheme has allowed larger cultivators to stack dozens of licenses and expand virtually unfettered. Meanwhile, the costs and regulatory requirements of entering the legal cannabis industry have persuaded many smaller cultivators to stay in the shadows, causing state tax revenue to take a hit.

Their reluctance to enter the legal, taxable marijuana market is one reason why California’s pot revenue is coming up tens of millions of dollars short of projections.

“We need to do everything in our power to assist and incentivize business to move from the black and gray market to the regulated market,” said state Assemblyman Rob Bonta, an Oakland Democrat. “And we need to do it this year — because people make their decisions early.”

Cautionary Tales
The experiences of Colorado and Washington, the first to legalize recreational cannabis, serve as cautionary tales about the way the promise of a small-business-friendly marijuana industry can leave those small businesses hanging out to dry.

As in California, legislators in Washington viewed cannabis as an industry that could support small farmers. When crafting the state’s recreational cannabis legislation, they created three tiers of licenses to support small, medium and large growers. The thinking was that the market would support farms of different sizes.

But retail and wholesale pot prices in Washington have plummeted since 2014, squeezing smaller operations.

In 2014, the average price of marijuana exceeded $35 a gram retail and reached nearly $10 a gram wholesale, considerably higher than black market prices.

By late 2017, the average price fell to about $7.50 a gram retail and $2.50 a gram wholesale, according to FiveThirtyEight.

“There are a lot of businesses struggling with this price pressure,” said Steven Davenport, a researcher at the RAND Corporation who formerly worked as a Washington state regulatory consultant. “People refused to believe that it could happen before it happened.”

Colorado has witnessed a similar plunge in cannabis prices. The wholesale price of marijuana dropped from $2,000 a pound in January 2015 to $1,300 a pound in late 2017, according to The Economist.

Lower prices, while welcomed by consumers, come at the expense of small growers’ profits. Washington state observers point to the consolidation in the recreational cannabis cultivation market as a cause of declining prices. Through most of 2017, 10 farms harvested 17 percent of Washington state’s dry weight cannabis yield.

Large-scale growers are better positioned to weather a big drop in wholesale prices. While their profit margins are smaller, large growers have the scale to sell more product and still turn a profit. For small cultivators, the diminishing margins can be debilitating.

“We’re not there yet, but there’s a very real possibility that a few larger farmers could dominate the cultivation market in Washington,” Davenport said.

Small-License Loophole
As in Washington, officials in California created different license classifications depending on the size and type of cultivation: small, medium and large, and indoor, outdoor and so-called mixed-light cultivation.

The state’s Department of Food and Agriculture set the size limitations for each license type. A small license allows for cultivation on less than 10,000 square feet indoors and a quarter-acre outdoors. A medium license allows for cultivation on less than 22,000 square feet indoors and 1 acre outdoors.

Large licenses allow for cultivation on more than 22,000 square feet indoors and 1 acre outdoors. Lawmakers in California prohibited large licenses from being issued until 2023, and regulators imposed a limit of one medium-sized license for each grower.

The state did not impose a similar limit for small licenses. This loophole has allowed larger cultivators to proliferate — especially in areas of the state where the land, and local ordinances, are good for growing cannabis outdoors.

To date, California has issued over 2,700 small licenses to hundreds of companies. Many growers hold several small licenses.

Five farms have accumulated 579 small licenses, more than a fifth of awarded licenses.

A Santa Barbara County cultivator, Organic Green Farms, has accumulated 200 small licenses. The company did not respond to a request for comment.

Forty-two percent of statewide small licenses, nearly 1,200 licenses, have been issued to growers in Santa Barbara County alone.

The proliferation of cannabis cultivation in Santa Barbara has been driven by several factors. Unlike many other cities and counties in California, Santa Barbara until recently did not license and tax cannabis businesses.

County voters this month approved a ballot measure that included a 4 percent tax on cultivators and a 6 percent tax on retailers.

The county is home to large stretches of farmland, but crops traditionally grown in the area, such as strawberries and cut flowers, have been less profitable because of a saturated market and competition from South America.

“Farmers are subject to many outside forces including consumer demand, foreign competition and regulations,” said Mollie Culver, a consultant with the Cannabis Business Council of Santa Barbara County. “The ability to switch crops and to integrate new crops is essential for long-term sustainability.”

Some smaller cultivators have cried foul over ballooning cannabis farms, many of which dot the state’s central and northern coast. In January, the California Growers Association, which represents cannabis cultivators and has helped shape legislation, sued the California Department of Food and Agriculture, which oversees statewide licensing for cultivators.

“Authorizing large cultivation operations prior to 2023 will have a devastating effect on small and medium cannabis businesses, local economies throughout the state, and the environment,” the Growers Association said in the lawsuit.

Gray Markets
Cultivation is not the only area of California’s cannabis industry where the state is struggling to combat the black market and the semilegal gray market. Regulators in March warned 900 retailers to stop operating without a license. Permits can be prohibitive, more than $70,000 for some stores, and there are several layers of taxes on pot.

Retailers must pay a 15 percent state excise tax on cannabis sales, as well as local tax — on top of the minimum 7.25 percent state sales tax. For small retailers, those costs can be prohibitive for getting off the ground — or remaining in the regulated market.

A primary facilitator of the retail and delivery gray market, at least to state and local enforcement agencies, is a company called Weedmaps, which offers online reviews and product listings by area businesses. Weedmaps has allowed unlicensed cannabis businesses to advertise on its site.

The state Bureau of Cannabis Control, along with the city of Sacramento, sent cease-and-desist letters this year ordering the company to remove listings of unlicensed cannabis businesses. Earlier this year, Weedmaps listed about 200 cannabis delivery businesses in the Sacramento area. Fewer than 10 were registered with the state.

Weedmaps says that excessive permitting fees, high taxes and local restrictions on cannabis are creating unfair barriers to entry to the legal market for owners of small cannabis businesses.

“Weedmaps is operating in good faith, and we want to do what’s right to ensure that the will of California voters is realized,” said Weedmaps spokesman Carl Fillichio in an emailed statement. “We also want to help make sure that people have access to cannabis, good sustainable jobs are created, and communities gain much-needed revenue.”

California Gov. Jerry Brown, a Democrat, and state lawmakers appear to be at an impasse over how to fund enforcement of the illicit cannabis market — but Oakland’s Bonta thinks that enforcement is essential for preserving the regulated market.

“It can’t just be a business decision to stay out of the black market. There needs to be some enforcement,” Bonta said. “It’s not fair to those businesses that are following the rules. We can’t let them undercut the businesses that are in the regulated market and following the rules.”
 
Manufacturers, retailers comment on new California cannabis regs

With new California cannabis product testing and packaging regulations scheduled to take effect on July 1, legal cannabis manufacturers, distributors, and retailers are feeling increased growing pains as they struggle to fall into compliance.

As mandated in 2016, when cannabis was legalized in California under Proposition 64, after July 1, cannabis flower growers will have to meet nearly organic standards with seed-to-sale documentation. Cannabis products will be required to be lab-tested, compliantly labeled, and wholesaled through state-licensed distributors. Cannabis product packaging must also be child-resistant, including carry bags for retail purchases. Edibles that contain over 100mg of THC will be prohibited.

Consumers, meantime, can stock up on products that will not meet compliance by the required date, through the end of June and while supplies last. At retailer MedMen, the largest chain of retail cannabis stores in California, the flagship West Hollywood location was busy this week with customers looking to take advantage of fifty percent off deals on flower, concentrates, vape cartridges, edibles, and more.

“The new packaging regulations have caused the entire industry to scramble,” cannabis manufacturer Henry’s Original Chief Executive Officer Jamie Warm told mgretailer. “There’s a lot of flower on the market but not a lot of legal flower. At Henry’s Original, we prepared for this and we’re doing business as usual. All testing is done by Anresco and SC Labs, which provide us with fully compliant test results for July 1.”

“We’ve noticed an extraordinary uptick in sales demand for our flower due to the new regulations because many retailers are concerned that they’ll be in short supply of compliant flower. The only adjustment to our plans is to scale up our processing center to meet demand,” Warm added.

Cannabis companies that planned ahead may be able to absorb increased costs with early implementation of inventory and compliance strategies, but many industry insiders acknowledged the regulations are challenging and the changes, costly. Those with a steep compliance learning curve or limited capital may not survive the new climate with less than two weeks for companies to fall into line.

“I do believe the consumer wants to know that they’re getting a tested and clean product, and it does indeed benefit the consumer,” Warm said, but speculated increased costs may also be passed on to consumers.

“The regulations helps some businesses and damages others. It completely depends how much liquid the company has because the new testing and logistical costs severely affect everyone’s bottom line,” he explained. “Ultimately the hard cut-off date for product to meet the new regulations without grandfathering in the product that was already entered into the supply chain has increased cost, which in turn, creates a higher priced product to the customer.”

Bryce Berryessa, president of manufacturer/distributor La Vida Verde and chief executive officer at Santa Cruz, California’s Treehouse dispensary, said, “There has never been a industry in the history of this state that has had to undergo so many changes in such a short period of time. We’re having to make monumental shifts to our business, while the rules on how we are meant to operate are still evolving and in flux.”

On the distribution side, Berryessa noted, “The additional costs of regulations and testing are forcing us to drop many SKUs from our catalogue. This will inherently lead to fewer options for patients and consumers across the board, as many manufacturers are having to increase their inventory levels and batch sizes to account for the continued increase in testing costs.”

“Our packaging costs have increased over five times what it was in 2017,” Berryessa said, speaking as a retailer. “In order to meet compliance CRP (child resistant packaging) we have also had to move away from primarily recyclable options to less environmentally-friendly packaging. Our vendors have to come up with options that are compliant but also add so much excess and waste in the packing.”

“Wholesale costs on products have increased across the board and we anticipate they will continue to rise, as more regulations and testing requirements kick in,” he predicted.

“Any continued increase in our pricing will hurt our business–especially when there is an illicit market of delivery services and dispensaries openly advertising on venues like Weedmaps and undercutting our pricing by 30-40 percent since they are not subject to the same taxes, costs, and rules,” Berryessa added, raising the issue of well-entrenched black market vendors that grow, produce, distribute, and retail illicit products, in competition with legal vendors.

At Lowell Herb Company, manufacturer of California’s most popular pre-roll, Chief Executive Officer David Elias said that early planning has held compliance pains down to a minimum for the company, though they are rolling out new child resistant packaging on packs of pre-rolls.

“As the number one selling pre-roll in the state, our team is hyper-focused on freshness and we carefully monitor our inventory levels. We have a new customer child resistant pack that is now being shipped to stores and we’ve almost fully run out of our non-CR packs prior to this release,” Elias explained. “We’re thrilled to launch our new nationally-certified child resistant packaging, which we believe will delight our customers.”

“[The packaging standards are] a bit strict for flower,” he mused. “With that said, we are happy to comply with these new rules. As for all of the labeling, testing, and origin specification, we were doing this before these laws were put in place. We believe that all customers should be provided this information, so we welcomed these changes.”

At The WEED dispensary, located in Studio City, California, partner Stewart Stinson agreed with Lowell’s Elias, adding that other adult-use products do not need to meet overly stringent packaging requirements.

“I feel like the new regulations are overkill for cannabis. Anyone can go buy a bottle of liquor, unscrew the top and drink it,” Stinson reasoned. “Similar with tobacco; but cannabis customers have to get through a childproof lock to get their product. Seems odd, considering those other two products are proven to cause major health issues and even death. It is a hurdle for everyone to get through the red tape, and that will drown some manufacturers, vendors, and cultivators.”

Retail management solution software Treez offers retailers options to help with the transition to increased compliance, while the Treez development team works diligently to keep up with changing regulations, as well as competitors in the retail software business.

“A majority of the stated packaging and labeling requirements are not met,” said John Yang, chief executive officer at Treez. “Compliance enforcement–via label inspection–is the lowest hanging fruit, and our retailers must print additional info labels within Treez to fully comply with the labeling requirements.”

Other regulatory inconsistencies have been difficult for retailers who already have their hands full with the July 1 deadline looming, according to Yang. Few can predict how increasing regulation will play out for individual businesses, but adaptability will be key as standards and best practices are established by the state.

“Accurate excise tax calculations continue to be a challenge,” he said. “Many operators are over-taxing and spending too much time figuring out what is due, owed, and paid. We implemented a Treez tax module that’s similar to Avalara, in automating the correct arms vs. non-arms excise tax calculations. In addition, it is critical to account for the right delivery tax rates across the multiple layers of taxation (excise, local and state).”

Yang added, “Overall, these are welcome changes that help legitimize the canna-businesses. We are working hard at Treez to adapt the systems and workflow changes needed for our operators to distance themselves from the pack.”

Hopeful that California consumers will seek out clean, legal cannabis, Palm Springs Safe Accessdispensary President Robert Van Roo remained optimistic.

“At Palms Springs Safe Access, we believe California’s new regulations legitimize the cannabis industry and level the playing field as bad actors are weeded out,” Van Roo said. “We’ve been doing full spectrum testing since 2012, well before regulations, and it’s only made our products better and our consumers happier.

“The California cannabis industry is fortunate to have state agencies that are focused on working with us through this process,” he pointed out. “Change is never easy but we think it’s worthwhile. Companies and regulators alike are learning together, as we slowly perfect one of the best state regulatory systems to date.”
 
Bit dated but more on the stacking of licenses and the swindle CA is pulling off on its citizens and the existing MJ industry.

"But in what looks like an oversight, the new rules don’t set a limit on how many “small-farm” licenses can be bought by one person or corporation."
Oversight my ass....they KNOW that these regs issued in Nov violate the intent of the referendum and yet not only have they not corrected it (and rules are enacted by administrative fiat not time via the time consuming process of legislation) but as noted in the post two above, they have issued hundreds of "small" licenses to to a small handful well funded corporate grows. They know, they don't care, the fix is in, and all I can say is follow the money, honey

Anybody know current status of this law suit?



California farmers sue to stop a corporate cannabis takeover

Mom and pop grows were promised a head start on the recreational market, but it’s not quite panning out that way.
Jan 31, 2018



A group of California cannabis cultivators last week filed a lawsuit to block rules they say could allow huge corporate pot farms to drive smaller growers out of business. The lawsuit, filed by the California Growers Association in Sacramento County Superior Court, argues that state rules would allow big businesses to get an unlimited number of growing licenses, reports the Associated Press. That creates the likelihood of large operations which would have a “devastating effect” on the state’s smaller mom-and-pop grows.

According to the lawsuit, the rules conflict with the intent of state law, which the CGA says was to build the new cannabis market around smaller growers. Proposition 64, the law which legalized recreational marijuana in California, promised smaller farmers a five-year head start over corporate competition. But in what looks like an oversight, the new rules don’t set a limit on how many “small-farm” licenses can be bought by one person or corporation. Opponents worry that that could allow a corporation to buy 80 licenses for 1/4 acre each in order to assemble a 20-acre pot farm.

“This is clearly a broken promise,” said state Senator Mike McGuire (D-Healdsburg). “For two years, every discussion has included a cap on cannabis grows and the Department of Food and Agriculture needs to fix this massive loophole they have created. This last-minute revision rolls out the red carpet for large corporations to crush the livelihood of small family farmers.”

The California Department of Food and Agriculture last November issued emergency rules allowing small (up to a quarter-acre) and medium (up to an acre) pot farms to get licenses for the first five years of legalization, reports the Los Angeles Times. That five-year head start for smaller farmers was promised in Prop 64, the California bill which legalized marijuana use for all adults over the age of 21.

California.jpg

PUEBLO, CO – September 3, 2016: Los Sueños Farms LLC is the owner of 36 acres of rich farmland in Pueblo County, Colorado, which it leases to four Colorado licensed retail marijuana cultivations: Farmboy LLC, Baseball 18 LLC, Los Sueños LLC and Emerald Fields Grow LLC. (Photo by Vince Chandler / The Denver Post)
It was part of California’s plan to transform its long-established black market, along with its medical marijuana community, legal since 1996, into the nation’s largest legal cannabis market. But the lawsuit warns that this loophole on the number of licenses could have the opposite effect, pushing smaller growers out of the legal market and resulting in illegal sales. This, of course, would undercut attempts to establish a new, tax-paying legal marketplace in the state.

With cultivation licenses now taking effect, state lawmakers promised hearings on why the rules were drafted to disadvantage mom-and-pop pot farms. No such hearings have yet taken place. It is also unclear if any businesses have already tried to get multiple licenses in order to establish big cannabis cultivation operations. The CGA is asking the court to block the state from awarding licenses that could be used to create huge, corporate pot farms.

“California only has one chance to get this right, and it is already on the wrong path with this last-minute change that flies in the face of what the backers of Prop. 64 promised,” said Hezekiah Allen, executive director of the California Growers Association. “This single decision will hand over the California marketplace to multinational corporations and a wealthy few at the expense of thousands of growers who are ready to play by the rules and provide economic opportunity in communities that until recently were criminalized or—at the very least—marginalized.”

The California Department of Food and Agriculture in December issued a response to the CGA’s concerns which basically said it’s up to local municipalities to ensure fairness, a statement which doesn’t provide the farmers with much security.
 
Look...IMO...with this much money on the line...hell yeah the industry is going to be corporate and consolidate. No stopping it and I'm ok with that....AS LONG AS they still protect and make room for boutique growers. Just like wine. There is Gallo and Mondavi and then there is Colagrossi Wines (yes, you have never heard of them! LOL).


California cannabis market expected to reach $5.1 billion market value

The cannabis market could triple in size in the next four years, according to Arcview Market Research and BDS Analytics new report, 'The State of Legal Marijuana Markets'. In fact, by 2022, the global cannabis market could be worth as much as $32 billion, a three-fold increase in just five years with the U.S. expected to fuel much of that growth with an expected market value of $23.3 billion. Much of the current growth we're seeing comes from California's cannabis market, which is expected to exceed $5.1 billion market value in the next year after legalizing its recreational use on January 1, 2018. Several legitimate cannabis market players include High Hampton Holdings Corporation (CSE: HC) (OTC: HHPHF), CannaRoyalty Corporation (OTC: CNNRF) (CSE: CRZ), CannTrust Holdings (TSX: TRST), Canopy Growth (NYSE: CGC) and MedReleaf Corporation (OTC: MEDFF).

With sizable growth in store for California's massive cannabis market, investors have been increasingly attracted to companies with exposure to the state, including High Hampton Holdings and its 10.8-acre property in Coachella, California, as well as CannRoyalty Corporation and its strong focus on California's cannabis consumer products goods.

California Legal Marijuana Attracting Big Business
With nearly 40 million residents and more than a million medical marijuana patients, California's market represents about a third of the North American cannabis market. Months after California legalized recreational marijuana, BDS Analytics estimates that sales could hit $3.7 billion by the end of 2018, as reported by Business Insider, predicting that number will reach $5.1 billion by 2019. Analysts at Cowen & Co. believe the nation's legal cannabis industry could reach $50 billion by 2026, with California accounting for about $25 billion of that market, according to CFN Media Group.

Given the market growth, it's no surprise that companies are increasing their stake in California.

CannaRoyalty Corporation is just one of a growing number of larger Canadian companies that are increasing their share of the market for example. The company recently acquired RVR, a large-scale distributor of both medical and recreational cannabis, Alta Supply, a smaller medical marijuana company, and Kaya Management, an edibles and vaporizer producer. In April 2018, it also acquired Flora-Cal Farms, a licensed ultra-premium cannabis producer.

MadMen Enterprises recently broke ground on a high-tech cannabis factory in Desert Hot Springs, California, the company's second large-scale marijuana cultivation and manufacturing facility, reports New Cannabis Ventures. "The Desert Hot Springs facility is scheduled to open in early 2019 and service California's fast-growing adult-use marijuana market."

Even High Hampton Holdings Corporation (CSE: HC) (OTC: HHPHF) is just beginning to gain momentum, advancing its foothold in California's cannabis market through acquisitions and property development.

High Hampton Holdings' Dominance in California
High Hampton Holdings offers an interesting opportunity in the state's cannabis market, as it actively seeks to consolidate California's cannabis industry through equity, royalty and direct property ownership with licensing agreements. For example, the company's CoachellaGro Corp. is developing a 10.8-acre property that it plans to develop into a cannabis industrial park. On May 2, 2018, the City of Coachella's Planning Commission granted a conditional use permit for the cultivation of marijuana.

"With a conditional use permit for CoachellaGro in hand, we have created instant added value for this asset which will remain the cornerstone of our business model and be complemented by the aggressive acquisition process we have begun this spring as we consolidate the California cannabis market," said High Hampton CEO David E. Argudo.

The company also announced it had entered into a binding agreement with 8 Points Management and its subsidiary Bravo Distro, a fast growing California cannabis distributor, to acquire 100% of all issued and outstanding shares of both 8 Points and Bravo. The deal will provide High Hampton Holdings with immediate access to a major distribution hub in Sacramento, California.

"Securing distribution is a crucial if not the most important component of a successful business model for the Californiacannabis market," says CEO Argudo. "In 8 Points Management we have found a well-positioned operator that offers a full-service distribution model for our industry that will help us establish access to major distribution hubs in strategic locations throughout California including a prominent location in West Sacramento. Their team is renowned for already starting and operating another highly successful cannabis distribution outlet, and together, we are poised to succeed in building a leading cannabis distributor in California."

With a market cap of less than $65 million, investors are increasingly attracted to the company, especially with several catalysts for growth, including the Coachella property and the recent acquisitions of 8 Points Management and Bravo. It would appear the company is in the early stages of actively consolidating California's growing cannabis market to increase its value.

Potential Comparables in the industry include:
CannaRoyalty Corporation (OTCQX: CNNRF) (CSE:CRZ) is a private equity firm specializing in acquisitions. The firm invests in the legal cannabis sector with a focus on research and intellectual property, consumer brands, and industry infrastructure with a strong focus on California, one of the world's largest cannabis markets.

CannTrust Holdings (TSX: TRST) produces and distributes pharmaceutical grade medical cannabis products in Canada. It sells dried cannabis and oil extractions to the client based on the medication document provided by health care practitioner.

Canopy Growth (NYSE: CGC) through its subsidiaries, produces and sells medical marijuana in Canada. The company offers dried, oil, and soft gel cannabis products. Canopy Growth Corporation also sells its products through online.

MedReleaf Corporation (OTCPK: MEDFF) produces and sells cannabis-based pharmaceutical products in Canada. It offers dried cannabis, cannabis oils, and cannabis oil capsules; and various accessories, including grinders, vaporizers, and lockable containers.
 
More on the screwing that CA bureaucracy is giving to the small legacy growers who were supposed to be protected from large corps for five years....which with allowing license stacking just ain't happening.


Small California pot farmers struggle to survive, worry that central coast growers are using loophole to skirt size restrictions


Northern California pot farmers spent decades turning the Emerald Triangle into the cannabis industry’s most rock-solid brand. But just six months into California’s legal weed foray, it’s clear that growers and governments along the state’s Central Coast are making an aggressive push to crown themselves a new pot powerhouse. According to data from the California Department of Food and Agriculture, many of those Central Coast cultivators are taking advantage of a regulatory loophole that small farmers – mostly in the Emerald Triangle – say could lead to a big business takeover of the industry.

California isn’t issuing any large cultivation licenses, which allow grows larger than one acre, until 2023. The idea was to allow smaller growers to gain a foothold in the industry before competing against mega grows. But the California Growers Association is now suing the California Department of Food and Agriculture over the agency’s decision to allow growers to “stack” an unlimited number of small cultivation licenses, leading to potentially massive grows in cities and counties that don't set their own restrictions.

And early cannabis cultivation license data analyzed by NBC Bay Area’s Investigative Unit shows that’s exactly what’s happening.

Emerald Triangle vs. Central Coast
As strange as it may sound to longtime California residents, as of June 11, Santa Barbara County, not Humboldt County, leads California in state-issued cultivation licenses. Santa Barbara growers hold 1,146 temporary cultivation licenses, or 30 percent of the 3,793 cultivation licenses California has issued so far. Humboldt County growers, by comparison, have obtained just 702 licenses.

The most interesting revelation in the data, though, is not that Santa Barbara has the most licenses, but that on average, each Santa Barbara cultivator controls dramatically more licenses than their Northern California competitors. And the difference is not even close.

In fact, nine of the 10 largest cultivation license holders in California are all growing in Santa Barbara County. Those 10 growers hold more licenses than the next 50 largest legal growers combined. Of the businesses in the state's database, the average Santa Barbara grower has about 12 cultivation licenses. In Humboldt County, the average grower has just two.

One Santa Barbara company has stacked 200 cultivation licenses, enough to grow on about 46 acres of land. By comparison, the largest license holder in Humboldt County holds just 26 licenses, according to state data.

NBC Bay Area requested interviews with the California Department of Food and Agriculture to discuss this issue, but the agency declined, citing the pending litigation. But the numbers themselves tell an interesting story.

The chart below shows how many temporary cultivation licenses have been issues to growers in each California county, and how many businesses control those licenses.

figure%201_0.PNG


The Small Farmer
Johanna Mortz, co-founder of Mendocino County’s PolyKulture Cannyard, considers herself to be among the smallest of small farmers forging ahead in California’s legal weed market. She grows on less than a quarter acre of land, but hopes what she lacks in quantity is outweighed by the quality of the cannabis she grows.

“We have something very special in this region and I hope we are able to preserve it and amplify it,” Mortz said.

But life under the state’s new regulation can be stressful for small pot farmers.

“We have gotten outside jobs in order to make this small farm stay alive,” Mortz said. “Because with what we’re currently getting on the marketplace and with coming into compliance and everything, there is no way that we could afford to continue to do what we love doing without taking on other incomes.”

The challenges for Mortz and other small growers around Northern California are many. Bringing land into compliance with a litany of state and local regulations can be costly, particularly for growers in the hills of Humboldt and Mendocino. Many of those properties are difficult to bring up to code. For many, it can cost tens-of-thousands of dollars to make the necessary changes. For others, it can cost even more, or is simply not possible.

Mortz said preserving those small farmers, though, is critical for consumers who want a top shelf product grown with care.

“The same thing that happened to our agriculture with large scale ag is real,” she said. “It’s going to happen [to cannabis]. It is happening.”

On top of the compliance challenges, it’s nearly impossible for small farmers to get a small business loan from a traditional bank because marijuana is still illegal under federal law. Mainstream banks just won’t touch the money. It’s partially why coming into compliance with new regulations is cost prohibitive for many small growers who aren’t backed by deep-pocketed investors. For those who can’t make it work, some will work for other marijuana businesses, others will leave the industry altogether, and thousands more will likely risk growing on the illicit marketand sell to out-of-state buyers.

Sam Jacobszoon, water quality team lead at Jacobszoon and Associates, a land management consulting company, is often the one who has to break the news to small farmers that their property has too many challenges to be dealt with.

“A lot of people, they didn’t realize how much work they had on the property,” Jacobszoon said. His company used to mainly do consulting work for forestry companies, but now his phone rings constantly from cannabis growers looking for help. “They start the enrollment process and realize that they are just not going to be able to fix the property.”

While some farmers can afford to buy a new piece of land that’s easier to get permitted, perhaps on the valley floor instead of the hills, Jacobszoon fears many of the small farmers who helped prop up the Emerald Triangle economy for decades may vanish.

“What was always said was this policy was crafted to help the small farmers transition so they could have a piece of the market,” he said. “The things that are unfolding, it doesn’t seem like that was the real intention. In actual practice, it seems like the small farmer is being pushed out.”

New Competition
Down the Central Coast, from Monterey to Santa Barbara, there’s an aggressive push to build a thriving cannabis industry in an area better known for growing produce than pot.

King City Mayor Mike LeBarre says he wants to turn his small Monterey County town into the Silicon Valley of cannabis. The city has attracted 40 new marijuana companies since voters approved Prop 64, LeBarre said. He expects those new businesses to bring more than 1,000 new jobs and $6.5 million of annual revenue to the city. For King City, an additional $6.5 million means doubling its current annual revenue.

LeBarre said King City is specifically targeting people who understand business and can navigate the regulations.

“We were trying to attract people who understood how highly regulated it would be,” LeBarre said. “They are good people who want to be part of the community.”

A few miles away from City Hall, political strategist Brandon Gesicki points out vacant lots that will soon be filled with marijuana greenhouses and manufacturing facilities.

He’s new to the cannabis industry, but sees plenty of opportunity. Gesicki created King City Cultivation with several well-connected partners. They’re leasing 15 acres of land to clients in an industrial park specifically zoned for marijuana. He’s the kind of new player that longtime pot farmers fear will put them out of business.

Gesicki says there’s room for the small farmer in the industry, but says California needs cannabis companies that have business savvy and can produce at a high level. Larger, investor-backed companies are what's coming, he said.

“The folks that are coming here are some of the top in the industry and folks who want to make a difference in the industry,” Gesicki said. “Yeah, they are going to make a lot of money, but they also want to make a difference.”

Although Gesicki himself is a new player in the pot world, he says companies like his are able to lure top talent.

“You’re going to have some brand names out here and some new brand names that are amazing, that are spending a lot of money on talented people, on amazing research,” he said.

It's still too early to tell what California's cannabis industry will look like when the dust settles. For now, it’s a time of significant transition, with established businesses trying to hang on, new businesses trying to grab opportunity, and state and local regulators figuring out how to police it all.
 
More on the screwing that CA bureaucracy is giving to the small legacy growers who were supposed to be protected from large corps for five years....which with allowing license stacking just ain't happening.


Small California pot farmers struggle to survive, worry that central coast growers are using loophole to skirt size restrictions


Northern California pot farmers spent decades turning the Emerald Triangle into the cannabis industry’s most rock-solid brand. But just six months into California’s legal weed foray, it’s clear that growers and governments along the state’s Central Coast are making an aggressive push to crown themselves a new pot powerhouse. According to data from the California Department of Food and Agriculture, many of those Central Coast cultivators are taking advantage of a regulatory loophole that small farmers – mostly in the Emerald Triangle – say could lead to a big business takeover of the industry.

California isn’t issuing any large cultivation licenses, which allow grows larger than one acre, until 2023. The idea was to allow smaller growers to gain a foothold in the industry before competing against mega grows. But the California Growers Association is now suing the California Department of Food and Agriculture over the agency’s decision to allow growers to “stack” an unlimited number of small cultivation licenses, leading to potentially massive grows in cities and counties that don't set their own restrictions.

And early cannabis cultivation license data analyzed by NBC Bay Area’s Investigative Unit shows that’s exactly what’s happening.

Emerald Triangle vs. Central Coast
As strange as it may sound to longtime California residents, as of June 11, Santa Barbara County, not Humboldt County, leads California in state-issued cultivation licenses. Santa Barbara growers hold 1,146 temporary cultivation licenses, or 30 percent of the 3,793 cultivation licenses California has issued so far. Humboldt County growers, by comparison, have obtained just 702 licenses.

The most interesting revelation in the data, though, is not that Santa Barbara has the most licenses, but that on average, each Santa Barbara cultivator controls dramatically more licenses than their Northern California competitors. And the difference is not even close.

In fact, nine of the 10 largest cultivation license holders in California are all growing in Santa Barbara County. Those 10 growers hold more licenses than the next 50 largest legal growers combined. Of the businesses in the state's database, the average Santa Barbara grower has about 12 cultivation licenses. In Humboldt County, the average grower has just two.

One Santa Barbara company has stacked 200 cultivation licenses, enough to grow on about 46 acres of land. By comparison, the largest license holder in Humboldt County holds just 26 licenses, according to state data.

NBC Bay Area requested interviews with the California Department of Food and Agriculture to discuss this issue, but the agency declined, citing the pending litigation. But the numbers themselves tell an interesting story.

The chart below shows how many temporary cultivation licenses have been issues to growers in each California county, and how many businesses control those licenses.

figure%201_0.PNG


The Small Farmer
Johanna Mortz, co-founder of Mendocino County’s PolyKulture Cannyard, considers herself to be among the smallest of small farmers forging ahead in California’s legal weed market. She grows on less than a quarter acre of land, but hopes what she lacks in quantity is outweighed by the quality of the cannabis she grows.

“We have something very special in this region and I hope we are able to preserve it and amplify it,” Mortz said.

But life under the state’s new regulation can be stressful for small pot farmers.

“We have gotten outside jobs in order to make this small farm stay alive,” Mortz said. “Because with what we’re currently getting on the marketplace and with coming into compliance and everything, there is no way that we could afford to continue to do what we love doing without taking on other incomes.”

The challenges for Mortz and other small growers around Northern California are many. Bringing land into compliance with a litany of state and local regulations can be costly, particularly for growers in the hills of Humboldt and Mendocino. Many of those properties are difficult to bring up to code. For many, it can cost tens-of-thousands of dollars to make the necessary changes. For others, it can cost even more, or is simply not possible.

Mortz said preserving those small farmers, though, is critical for consumers who want a top shelf product grown with care.

“The same thing that happened to our agriculture with large scale ag is real,” she said. “It’s going to happen [to cannabis]. It is happening.”

On top of the compliance challenges, it’s nearly impossible for small farmers to get a small business loan from a traditional bank because marijuana is still illegal under federal law. Mainstream banks just won’t touch the money. It’s partially why coming into compliance with new regulations is cost prohibitive for many small growers who aren’t backed by deep-pocketed investors. For those who can’t make it work, some will work for other marijuana businesses, others will leave the industry altogether, and thousands more will likely risk growing on the illicit marketand sell to out-of-state buyers.

Sam Jacobszoon, water quality team lead at Jacobszoon and Associates, a land management consulting company, is often the one who has to break the news to small farmers that their property has too many challenges to be dealt with.

“A lot of people, they didn’t realize how much work they had on the property,” Jacobszoon said. His company used to mainly do consulting work for forestry companies, but now his phone rings constantly from cannabis growers looking for help. “They start the enrollment process and realize that they are just not going to be able to fix the property.”

While some farmers can afford to buy a new piece of land that’s easier to get permitted, perhaps on the valley floor instead of the hills, Jacobszoon fears many of the small farmers who helped prop up the Emerald Triangle economy for decades may vanish.

“What was always said was this policy was crafted to help the small farmers transition so they could have a piece of the market,” he said. “The things that are unfolding, it doesn’t seem like that was the real intention. In actual practice, it seems like the small farmer is being pushed out.”

New Competition
Down the Central Coast, from Monterey to Santa Barbara, there’s an aggressive push to build a thriving cannabis industry in an area better known for growing produce than pot.

King City Mayor Mike LeBarre says he wants to turn his small Monterey County town into the Silicon Valley of cannabis. The city has attracted 40 new marijuana companies since voters approved Prop 64, LeBarre said. He expects those new businesses to bring more than 1,000 new jobs and $6.5 million of annual revenue to the city. For King City, an additional $6.5 million means doubling its current annual revenue.

LeBarre said King City is specifically targeting people who understand business and can navigate the regulations.

“We were trying to attract people who understood how highly regulated it would be,” LeBarre said. “They are good people who want to be part of the community.”

A few miles away from City Hall, political strategist Brandon Gesicki points out vacant lots that will soon be filled with marijuana greenhouses and manufacturing facilities.

He’s new to the cannabis industry, but sees plenty of opportunity. Gesicki created King City Cultivation with several well-connected partners. They’re leasing 15 acres of land to clients in an industrial park specifically zoned for marijuana. He’s the kind of new player that longtime pot farmers fear will put them out of business.

Gesicki says there’s room for the small farmer in the industry, but says California needs cannabis companies that have business savvy and can produce at a high level. Larger, investor-backed companies are what's coming, he said.

“The folks that are coming here are some of the top in the industry and folks who want to make a difference in the industry,” Gesicki said. “Yeah, they are going to make a lot of money, but they also want to make a difference.”

Although Gesicki himself is a new player in the pot world, he says companies like his are able to lure top talent.

“You’re going to have some brand names out here and some new brand names that are amazing, that are spending a lot of money on talented people, on amazing research,” he said.

It's still too early to tell what California's cannabis industry will look like when the dust settles. For now, it’s a time of significant transition, with established businesses trying to hang on, new businesses trying to grab opportunity, and state and local regulators figuring out how to police it all.
Corporation's are buying most of da land.

QA PM's CONTroller's Staff = low prices better QUALITY?
 

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