California Cannabis Legislation Roundup

California Cannabis Legislation Roundup

As another legislative session comes to a close, we take a look at which cannabis bills may become law.

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August 31, 2018
Eric Sandy

The current California legislative session ends Aug. 31, and lawmakers are advancing votes on several key cannabis bills up to the last minute; others will be left to languish as another season comes and goes.

At Cannabis Business Times’ Cannabis Conference in Oakland, Calif., earlier this year, California Growers Association Hezekiah Allen noted that his organization was actively tracking more than 100 bills (when as recently as 2014 there were only a handful of bills in the legislature relating to cannabis).

As August draws to a close, however, only a handful of those bills were approved by both the Assembly and the Senate. Several of those are still awaiting Gov. Jerry Brown’s signature.

YEA

Tax deductions

AB 1863 was approved Aug. 21, and now it’s up to Gov. Jerry Brown to see this crucial tax reform bill to fruition. The bill essentially counteracts the burden of IRC Code 280E, allowing tax deductions on commercial cannabis activity and breaking the connection between state and federal tax law. (California’s Personal Income Tax Law “conforms” to federal income tax laws, according to the text of the bill, and thus prohibits cannabis industry employees from deducting expenses related to their work.) The bill’s authors—Assemblymen Reggie Jones-Sawyer, Rob Bonta, Ken Cooley, Tom Lackey and Jim Wood—saw the need to separate California’s market from the federal perspective on taxation in the cannabis space.

MMJ in Schools 

This week, the legislature approved a bill that will allow parents to give their children medical marijuana on school campuses. For nearly two decades, parents have had to take their children off-campus to provide medical marijuana doses during the school day. The new law, once signed, will change that. Medical marijuana used at school may only be in non-smoking or vaping form.

Expungement

Last week, California lawmakers crystallized a long-running conversation by approving a law that will expunge marijuana-related convictions from 1975 to 2016. The state’s Department of Justice will direct local prosecutors to erase or modify the conviction records of almost 220,000 cases, according to the Associated Press. The DOJ has until July 1, 2019, to compile the list of eligible cases and forward it to the appropriate district attorney's office.

Compassionate cannabis

As the tax burden on compassionate cannabis programs mounted in 2018, calls for some sort of legislative relief were heard from all links in the state supply chain. Since the state’s first medical marijuana law was passed in 1996, compassion programs have provided donations of cannabis to low-income, terminally ill patients throughout California. Since Jan. 1, 2018, those donations have been seen as a transaction – and taxed as such. SB 829, passed by the state Assembly on Aug. 29, will do away with excise taxes on those donations, allowing compassion programs to freely do the work they’ve been doing for years.

NAY

Statewide equity program  

Though SB 1294 earned a 29-7 vote on the Senate floor, the bill has languished in Assembly committees since mid-August. The bill proposes a statewide equity program that would achieve what several municipalities have already developed on their own: focus funding and technical assistance  in jurisdictions that were disproportionately affected by prohibition-era cannabis convictions.

 According to the California Cannabis Equity Act of 2018, “During the era of cannabis prohibition in California, the burdens of arrests, convictions, and long-term collateral consequences arising from a conviction fell disproportionately on Black and Latinx people, even though people of all races used and sold cannabis at nearly identical rates. The California Department of Justice data shows that from 2006 to 2015, inclusive, Black Californians were two times more likely to be arrested for cannabis misdemeanors and five times more likely to be arrested for cannabis felonies than White Californians. During the same period, Latinx Californians were 35 percent more likely to be arrested for cannabis crimes than White Californians. The collateral consequences associated with cannabis law violations, coupled with generational poverty and a lack of access to resources, make it extraordinarily difficult for persons with convictions to enter the newly regulated industry.”

Industrial Hemp

SB 1409, which is still awaiting an Assembly vote, seeks to update California’s industrial hemp agricultural program by changing a few procedural elements. For one, the grower would not be permitted to be present when samples are taken for THC testing; only a representative of the California Department of Food and Agriculture may do so. The text of the bill further straightens out how California would like to see testing done and how growers must register and document the location of their hemp cultivation site.

This bill comes at a time, of course, when the California Department of Health is cracking down on hemp-derived CBD as a food ingredient. 

Events and farmers markets

This bill, which would have allowed small farmers to apply for temporary “on-site sales and consumption” licenses for temporary events, was last seen in the Assembly’s appropriations committee on Aug. 16. Groups like Allen’s California Growers Association have been watching this bill closely, as it’s tied intrinsically to the small businesses that populate more rural stretches of the state, where dispensaries are scarce and farmers markets offer the easiest sales portal for farmers and consumers alike. Direct cannabis sales at these sorts of events are not allowed under the Prop. 64 regulatory framework—unless a grower also has a retail license, which eliminates many small farmers from the events space.

 Banking

SB 930 is another bill that got stuck in committee earlier this summer and never made it out. (The Senate passed this banking bill 32-6 in May, but the Assembly has been slower to act.) The bill proposed would create the Cannabis Limited Charter Banking and Credit Union Law, which would have set up a state banking system for the cannabis industry; the Department of Business Oversight would have regulated the program and licensed charter banks and credit unions across the state.

Top photo courtesy of Adobe Stock