cannabis asset forfeituresThe current U.S. House of Representatives has made its share of poor decisions regarding drug policy and crime policy, especially when those policies align with the political dreams of Jeff Sessions. Easy example — they continue to stand in the way of legislation that would make us all safer, including legislation that would protect banks that want to serve marijuana businesses. But every now and then, the House doesn’t stand in the way of clearly reasonable policy. Last week, during its ongoing budgeting and spending process, the House approved an amendment to its appropriations bill that would stop the Department of Justice from expanding its civil asset forfeiture program. Amendment 126 would stop Jeff Sessions from rolling back Obama-era asset forfeiture reforms that barred the DOJ from adopting local civil asset forfeiture cases.

Civil asset forfeiture generally is the law that allows law enforcement to take assets used in conjunction with certain crimes. On one hand, it makes a lot of sense. Police are not courting controversy when they charge someone with a crime and take their meth lab. Where asset forfeiture becomes pernicious is when it isn’t used as an after-the-fact penalty in a criminal case. Asset forfeiture actions do not require anyone actually be charged with a crime, and law enforcement can gain significant leverage by seizing real property, cash, and other assets in situations where it isn’t clear that a crime has been committed. The value of a forfeited asset does not automatically go into the general public treasury either — it often goes straight to the police department seizing it, creating financial incentives for law enforcement to expand the reach of asset forfeiture.

In 2015, Attorney General Eric Holder announced a new policy regarding federal asset forfeiture. In short, there are both state laws and federal laws governing civil asset forfeiture. When state laws were too restrictive, state and local law enforcement agencies relied on a federal “Equitable Sharing Program” in which local law enforcement would identify something it wanted to be seized and would then transfer the matter to the Federal DOJ who would adopt it. The DOJ would then have jurisdiction and would move forward with the seizure that local law enforcement either did not have the resources to pursue or could not pursue under its state laws. Then, the DOJ would take its 20% commission and give 80% of the seized property to local law enforcement. Even if state law mandates seized assets go to the general fund, Equitable Sharing allowed the DOJ to make the payments directly to the local departments. The 2015 Holder policy ended that unless there was a clear public safety threat supported by warrants and criminal charges.

In July, Jeff Sessions announced that the Department of Justice would roll back these reforms and reinstate Equitable Sharing, further encouraging local law enforcement to engage in asset forfeitures.

Equitable Sharing poses a real threat to cannabis businesses. In states where marijuana is not yet legal, it continues to incentivize law enforcement to stand on the side of illegality, blurring the lines between public safety advocacy and advocacy for their own pecuniary gain. Even if we only look at states where marijuana is legal, Equitable Sharing is by its nature an incentive structure to get local police departments to play a role in federal law enforcement. As we have described in the past. The DEA does not have enough human resources to directly enforce marijuana laws in any major way. But under an Equitable Sharing policy, a police department in a rural part of a state could conceivably identify a number of local marijuana businesses and use Equitable Sharing to have the federal government conduct the seizures. That may not comport with current federal enforcement policy as described in the Cole Memo, but Jeff Sessions has often shown an eagerness to read the Cole Memo narrowly.

So it was great to hear that Amendment 126 passed in the House of Representatives. It is not law yet. After the House and the Senate pass their own appropriations bills, they go to conference and negotiate a single bill. If Amendment 126 survives conference, it will go back to the House and the Senate before being put in front of President Trump to sign. Even if the President doesn’t like the amendment, he is not going to veto an appropriations bill because of it, so what comes out of conference will almost certainly end up being law. Conference presents especially high stakes this year, as the Senate version also contains a restriction on federal enforcement of medical marijuana laws that have been in place since 2014 that the House blocked. Call your members of Congress and advocate on both of these issues — they’re important.

Will the (former) Senator yield?

The Oregonian, Willamette Week, and KGW, to name a few, are reporting that US Attorney General Jeffrey Sessions is visiting Portland today to meet with federal and local law enforcement. These reports suggest Mr. Sessions is in town primarily to discuss immigration, sanctuary cities, and his unconscionable position on the Deferred Action for Childhood Arrivals program (“DACA”).

Given the recent exchange of letters between Oregon Governor Brown and the Attorney General, it seems likely Mr. Sessions has also come to Oregon to discuss and criticize Oregon’s medical and recreational cannabis programs. We’ve recently discussed how this exchange of letters demonstrates how Oregon sits uncomfortably within Mr. Sessions’ crosshairs. Governor Brown eviscerated Mr. Sessions’ reliance on a leaked, incomplete, and misleading draft of a report prepared by the Oregon State Police on cannabis in Oregon. Our money says Mr. Sessions is also here on a fact-finding mission, to see if he can drum up some better (or any?) sources for his claims that Oregon has so far failed to comply with Cole Memorandum guidelines.

Anyone in the cannabis industry here in Oregon knows Oregon treats these guidelines with the utmost respect and importance. Heck, if they didn’t, our Oregon cannabis business lawyers would not all be putting in 12 hour days! The Governor, the legislature, and Oregon’s relevant regulatory agencies, including the Oregon Liquor Control Commission and Oregon Health Authority, have been working tirelessly to improve their policies and procedures to ensure that Oregon’s recreational and medical cannabis programs protect public safety and prevent illegal activity.

Hopefully, Mr. Sessions’ visit will change his heart, but I wouldn’t count on it.

Receiver time?

Back in 2014, we wrote that bankruptcy is not an option for marijuana businesses. That issue has been litigated here and there since then, but as of today, cannabis businesses are no better off than before. The hard reality is this: all bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code. Those courts have held that it would be impossible for a U.S. Trustee to control and administer a debtor’s assets (cannabis) without violating the federal Controlled Substances Act.

Bankruptcy laws are designed to afford a fresh start to honest but unfortunate debtors, while providing equal treatment to creditors. Without recourse to bankruptcy, parties can only: (1) liquidate without court supervision, or (2) explore state court receivership. Liquidating without court supervision offers no protection to pot business creditors. State court receivership does afford protections, but adds complexity because states closely regulate who is allowed to possess and sell marijuana (through licenses). For a while, it was an open question as to whether a state court receivership would actually work in the cannabis context. Recently, one actually did.

In the case at issue, a landlord (creditor) had leased space to a licensed marijuana business tenant (debtor). The tenant failed to pay rent, and the landlord evicted the tenant and acquired a judgment for unpaid rent. Because RCW 7.60.010 et seq. provides that a Washington state court may appoint a receiver over a marijuana business, the landlord convinced the court to issue an order appointing a receiver to sell the tenant’s cannabis and satisfy the judgment. The landlord then successfully navigated the licensure issue with the Washington State Liquor and Cannabis Board, sold the pot, and collected on its judgment.

Washington is not the only pro-cannabis state with statutes and administrative rules that seek to bridge the bankruptcy gap by allowing creditors to seize and sell cannabis. In Oregon, OAR 845-025-1260 provides “Standards for Authority to Operate a Licensed Business as a Trustee, a Receiver, a Personal Representative or a Secured Party.” Our Oregon and Washington cannabis lawyers have assisted numerous clients in acquiring and perfecting security interests under the relevant rules. We expect California to adopt a similar regime.

One of the reasons creditors get such high rates of interest for loans to cannabis businesses—in addition to the fact that banks won’t lend to them—is because many pot businesses lack lienable collateral. For many of them, the net worth of the business is mostly tied up in the cannabis itself. It is now clear that, at least in Washington, the cannabis can be liquidated by a third party, whether or not the pot was initially proferred by the debtor as collateral for a loan. In that way, cannabis businesses are being treated by progressive states much like non-pot concerns.

That we finally have had one successful state court receivership probably won’t nudge circumspect lenders to reach out to the cannabis industry. However, cannabis businesses can feel encouraged that their number one asset (their cannabis) may have marketable value when looking for loans; and lenders can feel hopeful that if everything falls apart, there may be liquidation value in the cannabis crop. None of this “solves” the bankruptcy issue, but it’s a step in the right direction.

How to structure your cannabis empire
How to structure your cannabis empire

Market consolidation in the cannabis industry was always going to happen, and it is already starting to happen. States like Washington and California have or will have limits on the number of marijuana-licensed businesses that individuals can own, but those limits are likely to erode over time. The market simply puts too much value on the efficiencies that come with consolidation — more consistent retail and product experiences, lower prices, etc. There are negatives that come with market consolidation, especially if markets move past standard consolidation to anti-competitive consolidation. Market efficiency is good, but oligopolies are bad. For government regulators, the value in market consolidation is that companies that earn more money have more resources to put into compliance — enforcement is likely to be easier. But market consolidation also makes it easier for businesses to coalesce and participate politically, and business political power can come at the expense of regulatory political power. For a thoroughly enjoyable Ted Talk on “Big Marijuana,” I cannot recommend highly enough this talk given by Hilary Bricken, our lead cannabis business attorney in Los Angeles.

But we are still in the early stages and the possible negatives of market consolidation still appear to be a long way into the future. Acquisition and merger activity continues to be hot in the cannabis industry, as is organic growth and expansion. If you are one of those growing businesses, there are a ton of ways to put it all together. You can have a single corporation that holds everything. You can have a corporate holding company with multiple wholly-owned subsidiaries. Or you can have a number of parallel entities with common ownership but without a direct corporate relationship to one another. Here are a few considerations to keep in mind when putting it all together.

  1. Liability structuring: There are two schools of thought on how many entities to have for a business that has multiple locations and holdings. On the one hand, having multiple corporate entities is great for limiting liability. If you own five retail stores and have each of them in separate legal entities and one of them gets sued, the worst-case scenario is you totally lose one store and have to shut it down. If they are all owned in one large entity, all of the assets are at risk. On the other hand, properly managing many different companies can be a governance and accounting nightmare. The efficiency gains of internally consolidating as many things into single entities can be worth it regardless of the additional liability exposure.
  2. Investment: A cannabis business’s valuable assets can generally fit into the following categories: trademarks and other intellectual property; real and personal property and other physical assets, inventory, cash receivables and ongoing profit interest. When that business goes out to raise capital, a fundamental question to ask is whether the investor is buying into the whole pie, or if the return on investment is targeted. With a multi-entity structure, an investor can invest in Facility A, while having no stake in Facility B or IP Holding company C. But be warned — different ownership structures in related companies come with serious risks of conflicting interests for the management of those companies, and the business must adopt cross-company conflicts policies.
  3. Employees: Multi-company structures often involve employees providing services to multiple entities. This is especially true for internal marketing employees, bookkeepers, and anyone else involved in business strategy. But it can also be the case where employees at one entity are asked to cover a shift at a different location. This can be a major headache if the business doesn’t have clear employment policy. There are three main options. First, the companies can all maintain clear separation and treat the employee as separately employed by each company. This isn’t really a good plan, however, because for many government purposes, like the Family and Medical Leave Act, the Affordable Care Act, and overtime rules, the business entities will likely be treated as an integrated employer anyway. Another option is to use “paymaster” rules, where a single entity within the chain can pay the employees and be reimbursed by the other entities. Finally, an affiliated entity within the business structure can serve as a professional employer organization and be licensed to formally provide paid employment services to the various entities within the business empire.
  4. Company Separation: No matter how closely aligned, different legal entities should not commingle their funds. Work done by third parties should be invoiced to the recipient of that work, and transactions within the business empire need to be invoiced and paid at reasonable market rates. Without following clear structures and formalities, there could be tremendous tax and liability consequences — the liability shield that exists between entities can be pierced if the companies don’t act as if they are truly separate.

As cannabis businesses grow, the time and money spent on internal compliance and good governance processes needs to grow as well. Policies and procedures that work for a single location company don’t work when that company outgrows its original home and multiplies.

Cannabis patents
Cannabis patents

In cannabis intellectual property (IP) law, as in most areas of cannabis law, separating the flowers from the weeds is difficult. There is a lot of misinformation available on the internet and elsewhere about whether pot is protectable under patent or similar laws, and what patentability means for the industry.

This post gives an overview of IP protection potentially available for cannabis strains and related plants. Under U.S. federal law, new plant varieties can be protected under the Plant Variety Protection Act (PVPA), as a plant patent under the Plant Patent Act (PPA), or as a utility patent under the Patent Act. Plant varieties could also be trade secrets or subject to contractual (licensing) protection.

PVPA: The Plant Variety Protection Act protects sexually reproduced (by seed) or tuber-propagated plant varieties, except for fungi or bacteria. The statute, which is administered by the Department of Agriculture, usually provides 20 years of almost-exclusive rights after the date on which the plant variety is certified. A variety for which PVPA certification is sought must be new, which is similar to the novelty requirement under the Patent Act. The variety must also be distinct, uniform, and stable, accordingly to USDA regulations. A certificate holder may pursue civil infringement remedies in court.

PPA: The Plant Patent Act protects asexually reproduced (e.g., by cuttings, grafting and budding) plant varieties, which are not tubers. For PPA protection, the Patent and Trademark Office requires that a variety be new, nonobvious, and have some de minimus utility, among other things. These requirements are common to all U.S. patents, and are the subject of extensive statutory and case law interpretation. In addition, a patented plant must differ from known plants by at least one distinguishing characteristic which is more than that caused by different growing conditions or fertility. A plant patent is limited to one genome of the plant, so that mutations or hybrids would not be covered in the patent, but would be separately patentable. Plant patents expire 20 years after the filing date of the application for the patent. A patentee may pursue civil infringement remedies in court.

Patent Act: Utility patents under non-Plant Patent Act law can be granted for plants, seeds, plant varieties, plant parts (e.g., fruit and flowers), and processes of producing plants, plant genes, and hybrids. As with other patents, a variety sought to be patented must be new, nonobvious, and have some utility, among other things. Civil infringement remedies are available in court.

Trade secrets/licensing: Though trade secret protection might be available to plant varieties, the ability of a skilled person to independently reproduce the variety in question could eliminate any protectable secret. Some breeders have sought to protect plant varieties by licensing contracts that purport to limit the use or distribution of the variety. Often known as “bag-tag” or “seed-bag” licenses, these are generally covered by state law.

The PVPA, the PPA, and the Patent Act all provide exclusive rights for 20 years, which can be enforced in court. The PVPA and the PPA differ primarily depending on whether the plant is sexually (PVPA) or asexually (PPA) reproduced. Utility patents may have more stringent requirements for applications than plant patents, but generally offer broader protections than plant patents. In particular, whereas a plant patent has only a single claim that defines the scope of the patent, a utility patent can have multiple claims, each addressing different parts of the plant or ways of using the plant that are disclosed in the specification of the patent. Also, utility patents are available for both sexually and asexually reproducing plants.

IP protection for cannabis plants used to be theoretical, but this changed recently. In the last two years, the PTO has issued plant patents, e.g., U.S. PP27475 P2 (Cannabis Plant Named ‘Ecuadorian Sativa’), and utility patents, e.g., U.S. 9,095,554 (Breeding, Production, Processing, and Use of Specialty Cannabis). In the next installment of the Cannabis Patent Primer, I will discuss what cannabis patents mean to the cannabis industry and try to dispel some of the patent myths common to the industry.

D’Amato is right, of course, and he is not the first to say this. Attorney General Jeff Sessions cannot rid himself of his anti-pot prejudices even though his holding on to them directly contradicts his previously held position supporting states’ rights. Supporting states rights means you believe the states (not the federal government) should decide on things like cannabis legalization, whether you like those decisions or not.

D’Amato’s quote highlights how cannabis is not a partisan issue as he belongs to the same political party as does Sessions. Methinks one of these two politicians is a hypocrite when it comes to pot. Can you guess which one?

 

Alameda cannabis lawyersCalifornia has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we cover who is banning cannabis, who is waiting to see what to with cannabis, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your California cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on Oakland and before that San FranciscoSonoma County, the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Today’s post is on Alameda County.

Welcome to the California Cannabis Countdown.

Location.  Alameda County is the 7th most populous county in the state of California. Its county seat is in Oakland and it occupies much of the East Bay region. It’s home to the Alameda County Fair and the Alameda County Fairgrounds, which can boast to being the home of the oldest one-mile horse racing track in America. Hope that tidbit comes in handy on trivia night.

History with Cannabis and Current Cannabis Laws. Back in 2005, Alameda County (this post is addressing only Alameda County and not the City of Alameda) began regulating cannabis by passing a medical cannabis dispensary ordinance. Though we’re always happy to see cities and counties embrace cannabis businesses with sensible and reasonable regulations, Alameda’s first foray should be described as a very timid one. Alameda’s ordinance only addressed medical cannabis dispensaries and it capped the number of dispensary licenses at three and it also limited the amount of cannabis a dispensary could keep on its premises.

With friendlier regulations in Oakland, Berkeley, Richmond, and Emeryville, this first ordinance put Alameda at a competitive disadvantage with potential cannabis businesses when compared to those cities. With the passage of the Medical Cannabis Regulation Safety Act (MCRSA), Alameda County (along with a number of other California jurisdictions) decided it was time to amend their cannabis ordinance. In June of 2016, the Alameda County Community Development Agency and the Castro Valley Municipal Advisory Council held a meeting to begin the process of updating Alameda’s cannabis ordinance. If you’ve ever followed a cannabis ordinance as it winds its way through your local jurisdiction you are well aware that after one meeting comes many others – supervisor meetings, planning commission meetings, citizen advisory committee meetings, and interdepartmental working group meetings, just to name a few. Like Gremlins, the meetings just continue to multiply. Let me not be too harsh on Alameda because slow progress is better than no progress and definitely better than these alternatives.

Proposed Cannabis Laws: On August 1, 2017, the Alameda County Board of Supervisors conducted the first reading of its proposed amendments to their cannabis ordinance and on September 12th of this year (we like to keep you up to date here on the Canna Law Blog) the Board held a second reading of their cannabis ordinance. Here’s a list of the some of the highlights of Alameda’s cannabis ordinance:

  • Increases the number of dispensaries allowed from three to five.
  • Allows delivery of medical cannabis from permitted dispensaries within the county and from outside jurisdictions from 9:00am to 9:00pm.
  • Allows the sale, distribution, and delivery of edibles.
  • Removes the 100-pound limit on the amount of cannabis that can be stored by a dispensary on its premises.
  • Implements a two-year pilot program authorizing medical cannabis cultivation. This pilot program will authorize up to six cultivation permits – up to two indoor cultivation operations and four mixed-light operations. Outdoor cultivation is prohibited.
  • Nurseries may be permitted where cultivation is permitted.
  • Cultivation sites will have to be at least one thousand feet from any pre-K to 12th grade school, licensed child or day care facility, public park or playground, drug or alcohol recovery facility or public recreation center.

Although the caps imposed on medical cannabis dispensaries and cultivators will limit the innovation, investment, and tax revenue generated by Alameda County cannabis businesses, this is still a step in the right direction and we should not let perfect be the enemy of the good. We’re also optimistic that Alameda County will continue on its path towards increased legalization – perhaps with fewer meetings next time.

At the beginning of this month, Oregon implemented a critical change to its cannabis pesticide testing regulations: As of August 30, 2017, every batch of cannabis produced in Oregon must be tested for pesticides prior to transfer or sale. This simply wasn’t possible a year ago, when the Oregon Liquor Control Commission (“OLCC”) issued a finding that there were not enough accredited labs available to allow for universal pesticide testing. As a stop-gap measure, the OLCC limited testing to one-third of all batches from each harvest. According to the OLCC, the situation on the ground has changed substantially. There are now twice as many accredited labs and the Oregon Health Authority (“OHA”) has recently increased testing batch sizes. The net result is that the OLCC believes there is now capacity to ensure universal pesticide testing.

We’ve written quite a bit about how Oregon is slowly shifting responsibility for medical cannabis from the OHA to the OLCC, but product testing remains an outlier. The OHA retains responsibility for issuing cannabis testing rules for both the medical and recreational program, and has issued some of the strictest pesticide testing requirements in the nation. With this recent change, all Oregon cannabis, recreational and medical, will be tested for pesticide contamination prior to transfer to retailers and processors, and ultimately to the consumers.

 

It could happen.

On Monday, ace cannabis reporter Tom Angell broke a nice story regarding a Senate Appropriations Committee report that, among other things, does the following: (1) expresses “concern” at “the [limited] amount and [constricted] type of research that can be conducted on certain schedule 1 drugs, especially marijuana…”; (2) directs federal agencies to formulate a “National Testing Program for Schedule I Marijuana-Derived Products”; and (3) specifically asks for distinct “analysis of marijuana and marijuana derived from products sold commercially in dispensaries or online.” As far as federal government reports and cannabis, that’s about as good as it gets.

We have written here before about the federal cannabis research fail, and ensuing efforts by states and local actors to fill in the gaps; and we have observed that expanding research should be promoted by industry advocates, prohibitionists and everyone in between. The reasoning is as follows: advocates should welcome the opportunity for scientific inquiry to validate their position that the plant has medically valuable effects, or is benign; whereas prohibitionists should seek to validate their view that pot is a gateway drug, or has no medical value.

The Senate report takes an agnostic approach, observing simply that research “is necessary for informing substance abuse prevention efforts, public health policy and law enforcement tactics across the Federal Government.” In further support of its recommendations, the report observes that “scientific rationale and laboratory studies suggest a decrease in addictive potential when botanical derivatives, including cannabidiol extracts, are used with an opioid in treating patients” (our emphasis). That CBD may help combat opioid abuse, which is a problem we have pointed out could also use some attention from law enforcement, is promising indeed.

Just because the Senate committee recommends more funds for cannabis research does not guarantee those funds will be allocated. These recommendations may have wings, however, in that they accompany a bona fide bill (SB 1771). Given that Congress has voted for years to extend state medical marijuana programs—at least when votes have been allowed—the report’s recommendations could become law. And if SB 1771 does make it through, the funds for cannabis research would be allocated for the coming fiscal year, which begins October 1, 2017.

The fact that we have a powerful, bi-partisan committee making recommendations of this sort is good news for the cannabis industry, and for the public generally. Reasonable public policy on cannabis should produce reasonable laws. So keep your eye on SB 1771, and any following authorizations. It certainly would be a great start to the new fiscal year.

California cannabis Having begun my cannabis legal career in Washington State, which is a cannabis marketplace that started with a loose collective model and then morphed into the heavily regulated medicinal and adult use marketplace it is today, I know firsthand that it will be no small task to get right on cannabis regulation here in California now. As we all know by now, cannabis regulations are constantly changing and in California such changes seem already to be hitting us nearly every month. California seems hellbent on getting revising (and re-revising) its regulations so as to get a strong regulatory grip over what will soon be the most profitable and dynamic legal cannabis market in the world (by far).

Cue AB 133, which is the most significant and realistic technical fix bill to California’s cannabis marketplace since passage of SB 94 this summer. SB 94 represents a regulatory union between medical and adult use cannabis from the get-go. Most other states that have legalized recreational cannabis already had a robust (though unregulated) medical cannabis market that they let remain for a while to the detriment of regulated operators, but California has decided from the outset that the two cannabis industries (medical and recreational) would be combined under one regulatory regime. However, there are flaws in SB 94 and a lot of gaps and ostensible impossibilities when it comes to logistics and operational standards. Though regulating agencies (like California’s Bureau of Cannabis Control) might normally be expected to interpret and fill in the blanks on legislation via rule-making, California isn’t leaving anything to chance with its proposal of AB 133.

If passed, AB 133 would make SB 94 even more business-friendly for operators and consumers. AB 133 would do the following:

  • Cannabis deliveries would allowed by a retailer using any technology platform owned, leased, or controlled by the retailer. Currently, retailers can only use technology platforms they own and control to undertake deliveries.
  • Holders of multiple cannabis licenses would no longer be required to keep their licenses “separate and distinct.” This likely will mean you can combine your multiple licenses or your adult use and medical operations on a single “premises.”
  • AB 133 would repeal the requirement that licensed medicinal cannabis manufacturers only manufacture cannabis products for sale by a medicinal cannabis retailer.
  • Verification of local approval would change for applicants that voluntarily provide proof of such approval to the state during the licensing process. Essentially, if you provide this proof to the State of California, it will presume you’re in compliance with local laws unless otherwise notified by the city or the county.
  • If you’re a cultivator and your water source stems from diversion, you will have until October 31, 2017 to get that use authorized and to disclose that diversion to the state (rather than the July 31, 2017 deadline that’s already come and gone).
  • If you’re under 21, you can be on the premises of an A-licensee so long as the A-licensee also holds an M-license at the same location. And if you’re over 21, you can be on the premises of an M-licensee so long as that licensee also holds an A-license at the same location.
  • Caregivers would be allowed on premises to purchase medical cannabis for verifiable qualified patients, but the Bureau of Cannabis Control would set forth the specific rules around these purchases.
  • Cannabis cooperatives would be barred from undertaking contracts, etc. with other cooperatives in other states.
  • The unlawful possession of concentrated cannabis amounts would be increased from 4 grams to 8 grams.
  • The cannabis cultivation tax would apply only to harvested cannabis that “enters the commercial market” and cannabis that “enters the commercial market” would re redefined to be cannabis or cannabis product that completes and complies with a quality assurance review and testing, except immature cannabis plants and seeds,
  • You won’t pay your cannabis excise taxes directly to the Board of Equalization anymore; you will instead pay them to the California Department of Tax and Fee Administration.

Though passage of AB 133 is not a cure-all for all that ails us in SB 94, it is a good start toward ensuring that some of the wider gaps in California’s existing cannabis legislation are headed off at the pass of rule-making. Most importantly, California is still on track to be one of the most business-friendly regulatory states, but we’ll see what future rule-making (and local restrictions) do to that status as fall approaches.