MARCH 2018 - Capitol Corner

Lawmakers Announce Bipartisan California Cannabis Tax Reform

Yesterday, in a bipartisan effort, Assemblymembers Tom Lackey and Rob Bonta announced a bill that will reduce the price disparity between legal cannabis business and black market sources. The bill will reduce existing state taxes on cannabis for three years as California implements Proposition 64 which legalized cannabis for adult-use.

“Voters have approved Proposition 64 and now it’s time for the state to carry out their will. As someone who spent 28 years in law enforcement, I know how sophisticated California’s black market for cannabis has become,” said Assemblyman Lackey (R-Palmdale). “Criminals do not pay business taxes, ensure consumers are 21 and over, obtain licenses or follow product safety regulations. We need to give legal businesses some temporary tax relief so they do not continue to be undercut by the black market.”

Assembly Bill 3157 will suspend the state’s cultivation tax which currently charges a flat tax of $148 per pound. It will also reduce the state’s excise tax from 15% to 11%. Both tax reductions are temporary and would sunset in June 2021 after California’s regulated market has matured and has been fully implemented. The primary goal of the measure is to reduce the size of the state’s black market for cannabis and take money out of the pockets of criminals.

The amendments are not in print as of writing this, so it is unknown what the vote requirement will be or whether they plan on putting it on the November 2018 ballot.

California Cannabis Advisory Committee Votes on Regulatory Recommendations

The California Cannabis Advisory Committee met in Los Angeles yesterday to vote on their sub-committee recommendations to the state’s emergency regulations that were released in December.  In late-February, the policy-specific sub-committees convened in Sacramento to debate and propose changes to the emergency regulations.  In the 31 page document (link below) each sub-committees recommendations were categorized between “recommendations related to regulatory changes” and “recommendations requiring statutory changes”.  This important distinction was met with confusion and resistance as some members demanded that the Committee take a position on these changes and further it through legislation.  The Chair and the lawyers stated that they have no authority to pursue legislation and that their sole function was to advise the state regulatory agencies on matters of cannabis.  After a lengthy and contentious debate, the Committee voted to table the items requiring statute changes until their next meeting in Oakland, but allow the presenting sub-committee chair to raise a statutory change that is a clear priority and poses time constraints.  Regardless of this motion, the Committee approved three recommendations requiring legislation that came out of the Cultivators sub-committee.  First, is allowing cultivators to be allowed to transport their product to nearby licensed processors without having to obtain an additional license, so long as they account for the net weight of the product.  Second, is to allow cultivated materials to be transferred between A and M license types until the point of sale.  Lastly, pursue legislation to create a cultivation-based tax incentive for products being set aside for compassionate use programs.  The Committee will discuss with the regulatory agencies at the next meeting to discuss how to recommend and secure legislation at the Legislature.

Here is link to the sub-committee’s recommendation packet

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