Last month, California Gov. Gavin Newsom left his first official mark on the regulated cannabis industry.
His signature ensured the success of AB 37, which will allow the state to deviate from the federal tax code by permitting licensed cannabis businesses to deduct business expenses on their taxes. Newsom’s approval also meant victory for proponents of SB 34. Named in honor of San Francisco compassionate care pioneers Dennis Peron and “Brownie” Mary Rathbun, the bill codifies language from Proposition 64 to ensure businesses are allowed to give free medical cannabis to low-income patients and not be subject to state taxes for their donations.
Not every bill focused on cannabis was the recipient of Newsom’s signature, however. While the governor also signed legislation establishing an industrial hemp program and defining vape cartridge labeling requirements, he chose to veto several other bills, including SB 305, which would have required some health care facilities to permit terminally ill patients to consume cannabis on site.
As the 2020 election edges closer, the time has come to pinpoint what advances are most necessary to ensure a vibrant, functioning cannabis industry in the San Francisco Bay Area and California at large.
For State Senator Scott Wiener — primary author of SB 34 and representative of California’s 11th district, which includes San Francisco — taxes and access are the next urgent topics on the docket.
“California legalized adult use of cannabis,” Wiener says, “but we are now over-regulating and over-taxing the legal market. State taxes are too high, regulatory hurdles are high, and many cities have effectively banned legal cannabis entirely. As a result, the illicit market continues to thrive, which is both unsafe and inequitable. We desperately need cannabis regulatory and tax reform so that the legal market can thrive.”
To Wiener’s point, some have argued that permitting cities to essentially “opt out” of participating in the legal cannabis industry has left wide swathes of the state with only illicit options to rely on. At present, over 60 percent of California’s 482 municipalities have banned brick-and-mortar recreational cannabis sales. The intent of Prop. 64 was never to make cannabis available only for major urban areas like San Francisco and Los Angeles, but the longer the majority of the state refuses to embrace the will of the people, the more talent, resources, and infrastructure will inevitably be condensed into a few areas rather than spread more widely across the state.
As a national nonprofit focused on turning public opinion in favor of legalized, responsible cannabis use, NORML (National Organization for the Reform of Marijuana Laws) has been working to shape policy and expand education on cannabis since 1970. Ellen Komp, California NORML’s Deputy Director, is also concerned about tax rates and what she calls “cannabis deserts” — referring to the 60 percent of the state where recreational sales are currently not permitted.
Komp notes that one bill aimed at lowering taxes — AB 286 — was unfortunately stalled this year as the legislature opted to wait for a report (due on Jan. 1) expected to underscore the necessity of nonprofit collectives.
“[SB 34] will help some patients,” Komp says, “but with few localities allowing outdoor cultivation — even of the six plants per parcel required in Prop. 64 — many of those who can’t grow at home or afford retail prices are still left out in the cold.”
In addition to NORML’s desire for AB 286 to find its way to Gov. Newsom’s desk in 2020, Komp also expresses disappointment over the fate of AB 1465 (which would have allowed for separate licensing for consumption rooms) and SB 625 — aka the “party bus” bill. In the case of the latter, Komp faults “bad media reporting” for the public’s failure to grasp the intent of the law.
“It would have regulated party buses to require walled-off driver compartments, not allowed for buses,” she says. “They were allowed for in Prop. 64. Instead [we now have] a ban on cannabis use in limos and buses passed via a transportation bill.”
Finally, there’s Lindsay Robinson, who serves as the Executive Director of the California Cannabis Industry Association. Advocating on behalf of over 500 California businesses employing approximately 15,000 employees, Robinson says the CCIA has two familiar objectives heading into 2020: access and affordability.
“California’s regulated cannabis industry is still in survival mode while the illicit market thrives,” Robinson says. “This undersells the regulated market and endangers consumers. We must find ways to course-correct through policy reform.”
From legislators to public policy advocates to representatives from the industry, the message is becoming abundantly clear: if the specter of the illicit market is ever to be vanquished for good, it appears lower taxes and increased access must be California’s chief concerns in 2020.