MAY 2020 - Capitol Corner
The Legislature is back in Sacramento – well, at least the Assembly. The Assembly convened on May 4th and have already begun to conduct hearings, while the Senate is expected to return on May 11th. Many have been anticipating this return, as there has been little or no oversight on the Governor’s many undertakings. Furthermore, they will be operating on an expedited timeline to move legislation and pass a much different budget, than had been anticipated in January, where the state had a $24.1 billion surplus and will now be working with tens of billions less. The Governor’s May Revision will be released on May 14th – giving the Legislature until June 15th to send a budget to his desk for consideration.
The following are cannabis-related bills that have been recently amended for legislative consideration:
Cannabis: facilities used for unlawful purposes.
Last Amended: 5/6/2020
Summary: Would impose a civil penalty of up to $30,000 per violation against a person who violates the prohibition on renting, leasing, or making available a building, room, space, or enclosure for the purpose of unlawfully manufacturing, distributing, or selling cannabis, in addition to the criminal penalty. The bill would make each day the violation continues a separate violation for this purpose. The bill would authorize a case to impose the civil penalty to be brought by a licensing entity, the Office of the Attorney General, or a local jurisdiction.
Cannabis: state temporary event licenses: venues licensed by the Department of Alcoholic Beverage Control: unsold inventory.
Last Amended: 5/4/2020
Summary: Would specifically authorize the Bureau of Cannabis Control to issue a state temporary event license to a retail licensee under MAUCRSA authorizing onsite cannabis retail sales of cannabis or cannabis products to, and consumption by, persons 21 years of age or older at an event held at a venue that is licensed by the Department of Alcoholic Beverage Control pursuant to the Alcoholic Beverage Control Act if the activities comply with specified requirements, including that the local jurisdiction authorized the event and onsite sales and consumption of cannabis or cannabis products may only occur in a separate and distinct area from alcohol sales and consumption.
Cannabis: advertisements: highways.
Last Amended: 5/4/2020
Summary: MAUCRSA prohibits a licensee from advertising or marketing on a billboard or similar advertising device located on an interstate highway or on a state highway that crosses the California border. This bill instead would prohibit a licensee from advertising or marketing on a billboard or similar advertising device visible from an interstate highway or on a state highway within the California border.
Cannabis Control Appeals Panel: membership.
Last Amended: 5/4/2020
Summary: Current law establishes in state government a Cannabis Control Appeals Panel that consists of one member appointed by the Senate Committee on Rules, one member appointed by the Speaker of the Assembly, and 3 members appointed by the Governor and subject to confirmation by a majority vote of all of the members elected to the Senate. This bill would, instead, require the Cannabis Control Appeals Panel to consist of 2 members appointed by the Senate Committee on Rules, 2 members appointed by the Speaker of the Assembly, and 5 members appointed by the Governor and subject to confirmation by a majority of all of the members elected to the Senate.
Cannabis retailers: delivery: vehicles.
Last Amended: 5/4/2020
Summary: MAUCRSA requires the Bureau of Cannabis Control to establish minimum security and transportation safety requirements for the delivery of cannabis and cannabis products. Under current administrative law, among other requirements, a licensed retailer’s delivery employee that is carrying cannabis goods for delivery is only allowed to travel in an enclosed motor vehicle. This bill would require, on or before January 1, 2022, the regulations established by the bureau regarding the minimum security and transportation safety requirements to include regulations that would allow for different value tiers of cannabis goods to be carried during delivery of those cannabis goods to customers by employees of a licensed retailer based on the type of vehicle used for the delivery, including bicycles and motorcycles, as specified.
Forestry: lumber and engineered wood products assessment: Timber Regulation and Forest Restoration Fund: loans: cannabis cultivation.
Last Amended: 5/4/2020
Summary: Current law establishes the Timber Regulation and Forest Restoration Fund in the State Treasury, and requires that all revenues received from specified assessments imposed on certain lumber and engineered wood products, less amounts deducted for specified refunds and reimbursements, be deposited into the fund, and used, upon appropriation, only for specified purposes including, until July 1, 2017, as a loan to the Department of Fish and Wildlife for activities to address environmental damage occurring on forest lands resulting from marijuana cultivation. This bill would instead authorize the loan described above until July 1, 2025, for activities to address environmental damage occurring on forest lands resulting from cannabis cultivation.
Cannabis and cannabis products: advertising and marketing: penalties.
Last Amended: 5/4/2020
Summary: Would prohibit a person, as defined, from collecting a fee or any other form of compensation for advertising or marketing the sale or provision of cannabis or cannabis products, unless the sale or provision is done in compliance with MAUCRSA. The bill would also prohibit the completion, initiation, or facilitation of the sale or provision of cannabis or cannabis products unless the sale or provision is in compliance with MAUCRSA. The bill would make a violation of these provisions a public nuisance and subject a person in violation of these provisions to a criminal penalty and a civil penalty of up to $30,000, as provided.
California Unveils State-Certified Organic Cannabis Plan
Regulators in the California Department of Food and Agriculture have unveiled their OCal program, which will label organically grown cannabis products in a market scorned by federal regulators. The proposal, which was released last week, would “ensure that cannabis products bearing the OCal seal have been certified to consistent, uniform standards comparable to the National Organic Program,” according to a CDFA statement. California regulators also announced they would be accepting public comment on the proposal until July 7.
Notably, certified products will be allowed to display the OCal seal but still cannot be labeled as “organic.” The “certified organic” label found commonly in grocery stores is regulated by the USDA, which — because it is a federal agency that must obey federal laws — automatically prevents cannabis products from qualifying for the official organic certification. CDFA heard from some 250 cannabis industry stakeholders while crafting rules for the certification program. If approved, OCal would be the first organic-comparable state certification program for cannabis products and could set the standard for similar programs in other states. The proposed cannabis regulations and additional information are posted on the CalCannabis Cultivation Licensing Division’s OCal Program web page.
Two Relief Options California’s Small Cannabis Businesses Shouldn't Miss
State Treasurer Fiona Ma has confirmed to Cannabis Business Times that small marijuana businesses are eligible for a sales tax extension and a $50,000 bridge loan program available from the state. “Ma says that small businesses may keep up to $50,000 of their sales tax payments for a year, effectively using the cash as a no-interest bridge loan between now and next summer,” the publication reports. “The $50,000 would need to be paid back in installments by June 30, 2021. This bridge loan is available to businesses will less than $5 million in annual revenue.” Click here for further information.
Tax Relief Options for Cannabis Businesses Coping With COVID-19
The state of California is offering tax relief to cannabis businesses struggling to cope with the pandemic. Marijuana Business Daily reports that the following initiatives have been approved by the California Department of Tax and Fee Administration (CDTFA), the Office of Tax Appeals, and the Franchise Tax Board.
• Extending state tax return filings and payments under $1 million to July 31.
• Relief from tax interest and penalties.
• A 60-day extension to file refund claims, annual fees, installment payments, annual reports and audits.
• A 60-day extension to July 31 to request tax appeals.
• A 12-month sales and use tax deferral of up to $50,000 for businesses under $5 million in annual taxable sales.
• An extension to July 31 to file first-quarter taxes for businesses under $1 million in annual taxes.
Most advocates agree that more relief is needed to keep the industry afloat. Many want to see a suspension of the cultivation tax and a reduction of the excise tax. Emerald Grown Board Chair Hezekiah Allen also worries the state’s current efforts will benefit companies unequally. But anything that buys time is better than the status quo.
California Announces $30 Million in Cannabis Social Equity Grants
The Governor’s Office of Business and Economic Development (GO-Biz) and the Bureau of Cannabis Control have announced a $30 million grant program for cannabis entrepreneurs disproportionately affected by the War on Drugs. At least $23 million of the funding, in the form of low/no-interest loans or grants, will be directly allocated to applicants and licensees specifically identified by local jurisdictions as being from communities most harmed by cannabis prohibition. To date, jurisdictions seeking to create this inclusive regulatory framework represent roughly a quarter of the state’s population.
“These Cannabis Equity Grants reflect California’s desire to lead our legalization efforts with equity and inclusivity,” said Nicole Elliott, Governor Newsom’s Senior Advisor on Cannabis. “We applaud these jurisdictions for not only embracing the challenge of creating pathways to participate in a legitimate cannabis marketplace, but for doing so in a thoughtful way that seeks to uplift all communities. It is our hope that these efforts lead to the creation of a truly diverse industry and that these programs serve as a blueprint for others who share in our commitment to address systemic discrimination and create real prosperity for all.” In its press release, the state identified 16 jurisdictions that will be receiving funds:
City of Oakland $6,576,705.76 City of Los Angeles $6,042,014.23 City and County of San Francisco $4,995,000.00 City of Sacramento $3,831,955.93 City of Long Beach $2,700,000.00 County of Humboldt $2,459,581.02 County of Mendocino $2,245,704.40 County of Lake $150,000.00 County of Monterey $150,000.00 County of Nevada $149,999.95 City of Palm Springs $149,397.90 City of San Jose $149,300.37 City of Santa Cruz $147,666.75 City of Clearlake $98,890.43 City of Coachella $93,783.26 City of Stockton $60,000.00