JUNE 2018 - Capitol Corner

Feds Poised to Ease Cannabis Restrictions, Including Banking?

A bipartisan effort in Congress to ease federal restrictions on cannabis, which President Trump said Friday he is inclined to support, would solve a few of the biggest problems facing the nascent industry in California, experts say.

Most importantly, they say, the bill introduced last Thursday — which gives states the authority to create their own marijuana laws — would open the door to banking for businesses by declaring that cannabis activities that comply with state rules do not constitute “trafficking” and their proceeds, therefore, are not the fruits of illegal transactions.

“It’s a really elegant solution,” said Hezekiah Allen, Executive Director of the California Growers Association, an advocacy group for hundreds of marijuana farmers, business owners and patients in the State. “It doesn’t go all the way, but it does alleviate some of the day-to-day challenges we face.”

The bill would also prohibit marijuana distribution at places such as rest areas and truck stops. By allowing states to control what happens with cannabis within their borders, the bill could also usher in new medicinal research. Additionally, industrial hemp, which can be turned into oils or fabrics, wouldn’t be classified as marijuana under the proposal.

The STATES Act could not only permit businesses to get bank accounts — since their operations would no longer be considered federal crimes — it could also allow them to deduct ordinary business expenses from their taxes. And a broader fear — that the feds could simply shut everything down someday — would potentially be abated, at least for the businesses that are licensed and in compliance with state regulations. The proposed law doesn’t explicitly address whether cannabis could be sold across state lines. 

California Extends Temporary Cannabis Licensing Rules

Emergency regulations for cannabis manufacturers, put into place by California government as it continues to develop permanent regulations for the cannabis industry, have been extended for 180 more days.

As state licensing agencies continue to refine permanent rules, temporary regulations remain in place, according to the California Department of Public Health on Wednesday. The bridge rules also apply to the Bureau of Cannabis Control and California Department of Food & Agriculture.

The health department stated there are some changes in the new, temporary rules. For example, the latest regulations remove restrictions created by the adult use (“A”) and medicinal (“M”) license designations. Businesses will be able to complete one license application and receive one license allowing them to operate in both cannabis markets.

“Beginning June 6, 2018, designation of cannabis and cannabis products as adult-use or medicinal will primarily occur at the time of retail sale, except for higher THC products permitted only in the medicinal market,” the Public Health Department said in the announcement.

Under previous rules, cannabis plants would have been designated at cultivation for either the A or M market and the plant material and resulting products would be required to maintain that designation throughout the supply chain.

The agency said pushback from industry groups stemmed from the concern that maintaining separate designations would, among other things, reduce the number of business getting into the medicinal cannabis market. The department provided a summary of the new temporary rules.

Budget Dispute Hinders State Crackdown on Illicit Marijuana Market in California

A dispute between the Governor and lawmakers over how to pay for a crackdown on the illicit marijuana market in California, has resulted in the $14 million for the effort being left out of a proposed budget, officials said.

Last month, Gov. Jerry Brown proposed the funding to create five teams in the state attorney general’s office to investigate California’s black market for marijuana. The proposal was made after businesses with state licenses warned that they are at a competitive disadvantage against illicit growers and sellers. However, a budget plan negotiated between legislators and the Governor did not include the funding. The Legislature will vote on the plan this week.

According to the Department of Finance, they are placing the blame on the Legislature for not funding it, however the Speaker’s office wants to fund it through the general fund due to concerns enforcement units are an ineligible use of cannabis tax fund dollars.

The Legislature will take up the budget this week before the June 15th deadline. We anticipate a funding deal to be worked out in a future trailer bill.

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