JANUARY 2018 - Capitol Corner

With less than ten days back from recess, the Legislature is not rushing to introduce bills to fix any of the flaws with the regulations and the rollout of Prop. 64 on January 1st.  This is not terribly surprising as the Governor made it clear in last year’s “holding” of over fifteen cannabis-related bills that he prefers the regulatory agencies and the Advisory Board to work out any kinks before the Legislature should get involved.  With that said, below are cannabis-related bills have been introduced thus far:

AB 1741 (Bonta) - The Sales and Use Tax Law authorizes, before January 1, 2022, a person issued a seller’s permit for a place of business that is a dispensary, as defined in the Medical Cannabis Regulation and Safety Act, which was repealed, to remit amounts due for retail sales at the dispensary by a means other than electronic funds transfer. This bill, until January 1, 2022, would instead authorize a person licensed under MAUCRSA, whose estimated tax liability under that law averages $10,000 or more per month, to remit amounts due by a means other than electronic funds transfer if the board deems it necessary to facilitate collection of amounts due.

AB 1744 (McCarty) - Current law establishes the After School Education and Safety Program under which participating public schools receive grants to operate before and after school programs serving pupils in kindergarten or any of grades 1 to 9, inclusive. The After School Education and Safety Program requires each program component to consist of an education and literacy element and an educational enrichment element, as specified. This bill would specifically authorize for inclusion within the education enrichment element pupil assistance to prevent and reduce substance use and improve school retention and performance.

AB 1793 (Bonta) - Would state the intent of the Legislature to enact legislation to allow automatic expungement or reduction of a prior cannabis conviction

AJR 27 (Low) - This measure would urge United States Department of Justice not to direct its enforcement priorities towards California’s lawfully and closely regulated cannabis industry, among other things.

Governor’s Proposed 2018-19 Budget –

On January 10th, Governor Brown released his last proposed budget.  The Budget continues funding as approved in the 2017 Budget Act for cannabis regulatory activities, including the processing of licenses and permits, enforcement, laboratory services, information technology, quality assurance, and environmental protection. California’s three state cannabis licensing authorities have emergency regulations in place for commercial medicinal and adult-use cannabis, which includes state-licensed cannabis activity that became effective on January 1, 2018.

Proposition 64 specifically delineated the allocation of resources in the Cannabis Tax Fund, which are not subject to appropriation by the Legislature. Pursuant to Proposition 64, expenditures are prioritized as follows:

  • Regulatory and administrative costs necessary to implement, administer, and enforce the Cannabis Act. The Administration will use the initial revenues into the tax fund to repay the $135 million General Fund loan used to support these activities from last year.

Given the timing of the legalized market’s opening and the release of the Governor’s Budget, the Administration is deferring all cannabis-related budget proposals until the May Revision. While only a limited amount of data will be available at the May Revision, the Administration will use the updated information to make more informed decisions about future resource needs.

Regulations –

On December 22nd, JEA & Associates participated on a working group call hosted by the California State Associations of Counties (CSAC) and representatives from the Bureau of Cannabis Control (Bureau), Department of Public Health (DPH) and the Department of Food and Agriculture (DFA) to discuss the emergency regulations and newly-opened licensing process.  During the course of the call, all three agencies stated that they are open to accepting applications and over a hundred had been issued at that time.  There was much discussion about the controversial “one-acre” change in these emergency regulations, which the representative from DFA contended that they understood this shift in policy is a significant issue and that they will revisit during the formal rulemaking process, which they hope to have completed sometime this year.  All three representatives stated that they expect permanent regulations within 12-18 months.  In that time, many supervisors and county representatives stressed the need to not only address big policy issues but the minute technical issues that might impede cannabis business and local control.  For example, a larger policy issue is the lack of restrictions on how many licenses a person can hold and that an individual and/or business can hold multiple licenses in different counties, and no formal mechanism of those counties knowing.  A minute technical fix that CSAC is exploring is to allow locals to adjudicate disputes over local ordinances and not at the state agency level. 

On this local level, CSAC reported that 57 out of 58 counties have adopted some type of cannabis ordinance, and of these ordinances:

  • 12 counties have approved commercial cultivation

  • 18 counties are in the process for approval of some type of commercial activity

  • 22 counties have banned commercial activity

  • 6 counties have taken no action on commercial activity

A complete list of all 57 county ordinances can be accessed here.

JEA & Associates will continue to participate In these workshop calls and work closely with CSAC representatives and provide regular updates to the MCCIA Board and membership.

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