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California’s Craft Cannabis Industry May Soon Collapse

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Advocates, local farmers, and company owners pushed for a rewrite of California’s cannabis tax code as they fight to survive in the face of increasing operational and regulatory fees.

Participants assembled outside the Capitol in Sacramento to voice their cause and stress that the California cannabis business will fail if prompt action is not taken.

Co-founder and executive director of Supernova Women Amber Senter called out the crisis in the cannabis industry’s crisis, which she says is “on the brink of collapse.”

“Not only has the state fallen short in promises to right the wrongs inflicted upon black and brown communities impacted by the war on drugs, but it has also perpetuated regressive war-on-drugs 2.0 policies through oppressive taxation, which must end,” said Senter in a statement. “This is our cry and plea for help.”

Senter and others have petitioned the Legislature and Governor Gavin Newsom to remove the cultivation and excise tax on businesses in the social equity category.

The Thursday demonstration drew on the pressure generated by industry executives who called for a reform in California’s cannabis taxation.

Cannabis businesses previously told Newsom in a letter that urgent tax cuts and fast growth of retail stores were necessary to stabilize an unsteady market rattled by illegal sellers and cultivators.

Over twenty cannabis directors and supporters for legalization signed the letter in response to years of concerns that the taxed industry is unable to contend with the extensive illegal sector, which gives significantly lower price levels and generates double or triple the revenue of the legal sector.

Policy For Tax Reform And Social Equity

Proposition 64, which voters passed in 2016, was not approved just to generate tax income but to eradicate the illegal market, ensure public health and safety, and establish a responsible industry, the CEOs in the letter. They emphasized that the industry is imploding, and the worldwide leadership and heritage are on the verge of extinction after four years of legalizing sales.

“The opportunity to create a robust legal market has been squandered as a result of excessive taxation,” state the CEOs. “75% of cannabis in California is consumed in the illicit market and is untested and unsafe.”

Operators and analysts assert that small enterprises have been hampered by the state’s tax structure from the beginning. Cannabis is now taxed at a fixed amount of around $161 per pound in addition to a 15% excise tax and municipal production, manufacturing, distributing, and sale taxes.

Newsom, who voted in favor of Proposition 64 as liutenant governor, indicated that assistance might be on the way. When he revealed his proposed budget for 2022-2023, he stated that he favored tax reform for the cannabis industry and intended to work with the Legislature to change policy.

Newsom says his objective is to examine tax policy to stabilize the cannabis market. He also added that it is his goal to show municipalities the possibilities for eliminating the underground market and offer assistance for a legal market system.

Assemblymember Mia Bonta, an Eastern San Francisco Bay area representative, stated that Thursday’s protest on reforming cannabis policies guarantees social justice, equity, and recognition in an industry dominated by whites for years but has harmed primarily black and latino communities.

Crime and Cannabis Businesses

In November, several cannabis companies in Bonta’s area were burglarized, resulting in a loss of around $5 million in the days before Thanksgiving.

Henry Alston, co-founder, and COO of James Henry SF, an Oakland-based cannabis firm, claimed his store was attacked five times during the robbery. He explained that the robbers took everything, including a safe with the company’s tax money.

Casey O’Neill, the owner of Happy Day Farms in Mendocino County, claimed he was a personal witness to the drug war as a generational producer who learned the profession from his parents.

Authorities raided their home where the family was growing 30 plants, prompting them to flee.

O’Niell says he escaped to the north with his brother and pregnant mother.

The day’s trauma, says O’Niell, shaped some of his earliest memories.

O’Neill finds connections between California’s highly controlled cannabis business and his past prohibitionist views more than three decades later.

He said that high taxes deter small businesses from entering the market and disproportionately affect populations severely afflicted by the war on drugs.

 

By Michael Sands, January 25, 2022

Forget the Boston Tea Party. Here comes the California Weed Tax Revolt

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Back in 2016, when Californians were asked to legalize marijuana for recreational use, voters were promised that doing so “will incapacitate the black market.”

Obviously, that hasn’t happened. The black market is thriving in California — take a look at the illegal grow operation that copsbusted this fall in San Leandro, where at least 100,000 plants were confiscated.

But in the next few days, a few top cannabis company leaders are threatening to begin a tax revolt they say is directed at saving the state’s $4.4 billion legal cannabis industry. California may be pulling in more cannabis tax revenue than ever — $817 million this year, 55% more than the year before, according to the independent Legislative Analyst’s Office — but many of the Californians who grow and sell the crop are struggling.

First, let’s back up to see how we got here. It starts with how up to roughly 75% of the cannabis consumed in California is purchased on the black market, not from your legal neighborhood dispensary, confirmed David Abernathy, a vice president of Arcview Research, which analyzes the industry.

It doesn’t take an economist to figure out why. Because of the multiple types of state and local taxes levied on legal weed, it can sometimes be up to 100% cheaper to score bud from “your guy” than in a dispensary. And many Californians can’t even do that, because roughly only 1 in 5 cities has a licensed dispensary. Among the cities without dispensaries are Bakersfield and Fremont.

That dynamic of pricey pot and not enough places to buy it outside of big cities hurts cannabis farmers, dispensary owners, workers and everybody else along the legal pipeline that was created to make sure that the herb Californians consume is tracked from farm to table, produced in an environmentally sound way and tested to make sure it is safe.

Plus, it makes cannabis really expensive for those who want to buy it legally.

That brings us to the weed tax revolution about to unfold. Mikey Steinmetz is ready to lead it.

Steinmetz is the founder and chief servant officer of Flow Kana, a cannabis brand, and was at the forefront of the legalization movement. The Mendocino County resident is floating a proposalthat he said could let the legal market catch up.

It starts with eliminating the cultivation tax on growers. It is scheduled to increase on Jan. 1 from $9.65 per ounce of dried flower to $10.08, to keep up with the rate of inflation, in accordance with state cannabis regulations.

“This doesn’t make sense as an industry,” Steinmetz told me on The Chronicle’s “It’s All Political” podcast last week. “We’ve tried it for four years, it doesn’t work. Let’s all get back together and fix that.”

In addition, Steinmetz proposed pausing for three years the 15% excise tax imposed on retail cannabis purchases.

“Three years can give us the amount of time necessary to stand up this industry to fix all the lack of retail problems,” said Steinmetz, a native of Venezuela who was a double major in engineering and finance at Carnegie Mellon University in Pittsburgh before gravitating to the cannabis business. “We have to get customers used to buying other products and coming into legal shops and stop dialing their dealer.”

Steinmetz wants Gov. Gavin Newsom — who led the fight to legalize cannabis in 2016 — to offer these changes in his budget that he submits next month. Keep in mind that California is projected to have a $31 billion budget surplus, according to independent estimates.

Steinmetz said that if he doesn’t see progress from Newsom and the Legislature by July 1, he won’t pay his cultivation taxes. And he said he’s got a group of roughly two dozen other cannabis company leaders who are ready to join him and recruit others. So far, none has publicly confirmed they plan to join him. Steinmetz said “while there are several, some are waiting for (this week’s) news conference to reveal, and I’d rather let them be the ones to share the news.”

Steinmetz wrote in a Medium post that he plans to “to place our estimated tax in escrow in good faith, and to withhold payment until we see real, actionable change. We invite our fellow California operators to join us.”

Yes, that would mean a weed tax revolt in the state that’s home to the Emerald Triangle — Mendocino, Trinity and Humboldt counties — which has long been America’s cannabis breadbasket. Much of the cannabis that’s grown here is illegally transported out of state.

He told The Chronicle on Thursday that “we’re going to be revealing, likely by the end of next week,” a plan for how the group is going to advocate for changing weed laws.

“We, as a company, have had it. Enough is enough,” Steinmetz told me “And as I started talking about this to other folks and other people out there, whether your company was big or small, in the Emerald Triangle in L.A., or an Oakland, everybody is struggling.”

Other cannabis leaders back Steinmetz — even if they’re not quite ready to stop paying taxes. Some fear getting their state licensing yanked if they don’t pay taxes. But some are going to focus on more traditional protest and legislator lobbying.

“I don’t know about not paying taxes. If he gets a critical mass, then we may jump in,” said Erich Pearson, the CEO and founder of SPARC, a cannabis company. He is longtime major player in the industry and owns five dispensaries and a few acres of cannabis farmland in Sonoma County.

For now, Pearson is focusing on regulators in Sonoma County. He is among those asking the Board of Supervisors to cut or suspend the county’s local cultivation tax for three years.

Pearson estimated that the cultivation tax costs farmers roughly “$90,000 for every acre of cannabis in Sonoma County.” They’re paying that a time when the price of the cannabis they grow has dropped to $300 to $400 per pound — down from $900 a pound last year.

And for those who think being a cannabis farmer is all laughs, think again. Pearson estimates it costs roughly $500,000 in fees and consultants to get a permit — and that’s on top of the four years it can take to complete the environmental regulation process that is unlike any agricultural crop.

“I don’t know many farmers in Sonoma County that made any money this year,” Pearson said. “You spend all this money to grow cannabis, and then you lose money.”

“This system, as it is, and I’m not joking,” Pearson said, “is literally on the brink of collapse.”

Yet part of this retro-tax regret was so predictable. The deal that cannabis industry leaders made in the 2016 legalization ballot campaign — after a lot of noisy internal discussion — was to accept high taxes and regulation for the ability to be legal. To be “out of the shadows,” as many put it.

“Cannabis regulation is full of compromises that were necessary because of the sort of entrenched stigma” against weed, said Abernathy, the industry analyst who has testified before the Legislature on cannabis tax policy. “That made for very bad public policy, but was necessary to get those (legalization) policies in place at all.”

One of those legalization compromises was to enable local cities to decide for themselves whether to permit cannabis businesses. Steinmetz wants that provision to be overridden.

Don’t hold your breath.

“I think the rollback of local control is quite unlikely in the near term,” Abernathy said. But he noted that there has been an appetite in the Legislature for reforming cultivation taxes.

Pearson, the longtime dispensary owner and cannabis advocate, said the industry has learned a lot of hard lessons since it emerged from the shadows.

“Back in 2016, and ’17 I think everybody thought that this was going to be you know, the next big thing — and it still can be — but that there was going to be money sort of pouring out of everybody’s pockets,” Pearson said. “And that was just a fallacy. It just isn’t the case.”

 

Written By

Joe Garofoli

Dec. 12, 2021

SCIENCE & HEALTHImpact Of Marijuana Legalization On Crime Reduction Is Being Underestimated, New Study Finds

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Studies have repeatedly identified an association between the legalizing marijuana and reductions in crime—but the impact of the policy change is being significantly understated because of limitations in the research methodology, a new paper co-authored by a federal official asserts.

Most studies looking at crime and cannabis rely on FBI data sourced from local police departments across the country. But reporting that data to the federal agency is entirely voluntary, leaving knowledge gaps that have underplayed the extent to which legalizing medical cannabis reduces violent and property crime.

That’s according to researchers from the U.S. Department of Agriculture’s (USDA) Economic Research Service and Appalachian State University, who published a working paper with their findings this month.

“U.S. drug policy presumes prohibition reduces crime. Recently states have enacted medical marijuana laws creating a natural experiment to test this hypothesis but is impeded by severe measurement error with available data,” the abstract states.

To account for those shortcomings, the researchers developed “a novel imputation procedure to reduce measurement error bias and estimate significant reductions in violent and property crime rates, with heterogeneous effects across and within states and types of crime, contradicting drug prohibition policy.”

“We demonstrate uncorrected measurement error or assuming homogeneous policy effects leads to underestimation of crime reduction from ending marijuana prohibition,” the authors said in the paper, which is titled, “Smoke and Fears: The Effects of Marijuana Prohibition on Crime.”

To improve upon existing research, the study authors said they used a “multiple imputation procedure for agency-level crime data to fill in the gaps in the [Uniform Crime Reporting] data that accounts for the inherent uncertainty in these imputed values in the subsequent statistical analysis.”

“Our results indicate that [medical marijuana laws] result in significant reductions in both violent and property crime rates, with larger effects in Mexican border states,” they wrote. “While these results for violent crime rates are consistent with previously reported evidence, we are the first paper to report such an effect on property crime as well. Moreover, the estimated effects of MMLs on property crime rates are substantially larger, which is not surprising given property crimes are more prevalent.”

While the study specifies that the USDA’s official’s involvement in the study “should not be construed to represent” the government’s position on the issue, it’s notable that an agency representative even participated and effectively reached the conclusion that the theory that criminalizing drugs—as the federal government has done for decades—reduces crime seems to be unfounded.

Other data has similarly challenged the notion that prohibition reduces crime.

In 2020, researchers looked at how adult-use marijuana legalization in Washington and Colorado affected crime rates in neighboring states, and the resulting study determined that passage of recreational cannabis laws may have actually reduced certain major crimes in nearby jurisdictions.

The previous year, a federally funded study found that legalizing marijuana has little to no impact on rates of violent or property crime. The policy change did seem connected to a long-term decline in burglaries in one state, however.

A 2018 study from the think tank RAND said county-level data from California suggested that there was “no relationship between county laws that legally permit dispensaries and reported violent crime,” the researchers wrote. What’s more, there was a “negative and significant relationship between dispensary allowances and property crime rates,” though it’s possible that’s the product of “pre-existing trends.”

That same year, researchers at Victoria University of Wellington and Harvard University found that medical marijuana laws essentially have a null effect of crime rates, with one big exception: A nearly 20 percent reduction in violent and property crimes in California following the legalization of medical cannabis there.

DEA marijuana seizures have significantly declined as more states have moved to legalize cannabis, a new study led by a top marijuana investigator for the federal government found. And at the same time, marijuana arrests are also dropping across the country, and they dipped significantly in 2020, recent FBI data shows.

Federal marijuana trafficking cases also continued to decline in 2020 as more states have moved to legalize, an analysis from the U.S. Sentencing Commission (USSC) that was released in June found.

Federal prosecutions of drug-related crimes overall increased in 2019, but cases involving marijuana dropped by more than a quarter, according to a report released by Supreme Court Chief Justice John Roberts that year.

A study released by the Cato Institute in 2018 found that “state-level marijuana legalization has significantly undercut marijuana smuggling.”

 

Published 1 day ago on October 15, 2021

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Newsom vetoes bill that would have allowed cannabis advertising on freeway billboards

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SACRAMENTO — Gov. Gavin Newsom vetoed legislation Friday that would have allowed cannabis products to be advertised on freeway billboards in most of California, a bill that sought to negate a court order in November that had banned the signs.

The bill would have permitted marijuana ads on billboards along interstate freeways and state highways that cross state borders, except within 15 miles of another state.

“When the voters passed Proposition 64, they enacted robust protections shielding youth from exposure to cannabis and cannabis advertising,” Newsom said in a veto message. “Among other things, voters completely prohibited billboard-based cannabis advertising on all Interstate Highways, and on all State Highways that cross the California border. Allowing advertising on these high-traffic thoroughfares could expose young passengers to cannabis advertising.”

Assemblyman Bill Quirk (D-Union City) said his bill was necessary to help the state’s legal cannabis industry, which has struggled in the face of high taxes and bans on cannabis shops by most cities.

“We have not done enough to help the legal cannabis industry thrive,” Quirk said. “The legal cannabis industry has a very limited and narrow set of marketing avenues available to them. Removing their ability to promote their legitimate business along hundreds of miles of roadway does nothing but help the illicit market.”

A judge ruled in November that California officials exceeded their authority when they allowed commercial cannabis businesses to advertise on billboards along the state’s interstate freeways in violation of Proposition 64, the legalization initiative approved by California voters in 2016.

State officials interpreted Proposition 64’s provision barring ads on interstate highways as meaning they could ban billboards within 15 miles radius of the state border but allow them elsewhere.

The state Bureau of Cannabis Control determined that allowing billboards, except within 15 miles of a border, “satisfied the intent of Proposition 64” and also “provided assurance that licensees, including those located in jurisdictions along the California border, would still have an opportunity to advertise and market their commercial cannabis operations within the radius limitations.”

However, San Luis Obispo County Superior Court Judge Ginger E. Garrett ruled that Proposition 64, because it was approved by voters, could not be amended by the state bureau through a regulation.

The ruling forced the state to direct cannabis firms to remove their ads from billboards in areas that included 4,315 miles of interstate highways, including the 5 and the 80, and state highways that cross state borders.

Attorney Saro Rizzo filed the lawsuit on behalf of a San Luis Obispo father of two who thought Proposition 64 would prohibit freeway ads that could be seen by his teenagers. Rizzo said the bill was improper because the state Constitution requires changes to initiatives to be put to a vote of the people unless the ballot measure provides for legislative amendment, which Proposition 64 did not.

 

“It unconstitutionally seeks to amend Proposition 64 in a manner contrary to the purposes and intent of the act because it eviscerates Prop. 64’s mandate of a blanket ban on those highways,” Rizzo said of the legislation.

Rizzo noted that Newsom was instrumental in putting Proposition 64 on the ballot and was the highest-level politician who supported the initiative.

“Needless to say, he was, and is, well aware of Prop. 64’s ban on marijuana billboard ads,” Rizzo said.

The lawyer citied a ballot argument submitted by proponents of the initiative that, appearing in the official voter guide, said Proposition 64 “contains the nation’s strictest child protections: warning labels, child-resistant packaging, and advertising restrictions, and it requires keeping marijuana out of public view, away from children.”

Rizzo had called on the governor to veto the new legislation “in order to remain true to your own words and to uphold the will of the voters,” and to “prioritize children’s health and safety over corporate cannabis profits.”

BY PATRICK MCGREEVY

Cannabis enters the California State Fair competition

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Next to wine, cheese, olive oils and craft beer, marijuana cultivation will be judged for the first time at one of the world’s largest state fairs.

 

CALIFORNIA, USA — The best of California’s commodities are showcased at county and state fairs. Now for the first time ever, cannabis is entering the competition at the California State Fair.

“We are going to be educating what that means and really having campaigns around education and teaching people about what the cannabis plant is,” said Brian Applegarth, CEO of Cultivar Brands.

The California State Fair will return in July 2022 which will be a historic year for the first-ever state-sanctioned cannabis competition and awards.

Just like the top wine, cheese, olive oils, and craft beers made in the Golden State, 7,000 of the state’s licensed cannabis cultivators could earn 77 awards and seven of the coveted Golden Bear trophies.

“We also want to say to the industry, ‘you deserve recognition.’ If you are producing the best cannabis in the state of California you deserve an award just like the best winemaker in California,” said Jess Durfee, California State Fair Board Chairman.

He said judges will not be smoking cannabis on or off-site.

“We are being respectful of some of the concerns people may have. For example, there will be no consumption of cannabis authorized during the state fair or at the state fairgrounds,” said Durfee.

Judging is done a few months prior and consuming is not part of the panel.

The state is partnering with Cultivar Brands for the awards and there are three divisions: Indoor, mixed light and outdoor which will be based on cannabinoids and terpenes and submitted to the well-known cannabis testing company SC Labs.

“This is all about science and really getting lab test results and seeing what compounds are within the cannabis plant,” said Applegrath.

In 2016, California voters approved pot for recreational use and two years later commercial cannabis became legal.

Joel Weisberger owns White Mountain Farms cannabis in Oceanside, he’s also the chairman of the San Diego County Farm Bureau Cannabis Working Group.

“People have been having fun with it for years by hiding it in the shadows. It’s time to bring it out and share with everyone,” said Weisberger.

Supporters of the cannabis awards say they hope this will normalize and destigmatize California’s multimillion-dollar cannabis industry.

“We have an obligation to educate Californians about the cannabis industry,” said Durfee. “Over time I think that we are going to find cannabis is one of the most valued commodities coming out to agriculture.”

The San Diego County Fair released the following statement:

“Our San Diego County Fair exhibits and competitions are reflective of the agriculture, arts and business in the local communities we represent. California State Fair’s competition is intriguing and we’ll be interested to learn more about it, but as of yet we haven’t considered holding cannabis competitions at our Fair.”

Cannabis entries will be accepted between November 1, 2021, to March 30, 2022, and winners will be announced ahead of the fair in May 2022.

 

 

Author: Abbie Alford
Published: 10:32 PM PDT September 27, 2021

California Governor Signs Bill To Allow Medical Marijuana Use In Hospitals For Severely Ill Patients

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The governor of California on Tuesday signed a bill to require hospitals to permit medical marijuana use by certain patients.

Gov. Gavin Newsom (D) approved the legislation, signaling that his prior concerns about an earlier version that he reluctantly vetoed in 2019 have since been resolved.

The bill’s sponsor, Sen. Ben Hueso (D), has been pushing for his measure to allow cannabis use in medical facilities for terminally ill patients over multiple sessions. He recently sent a letter to the head of the U.S. Department of Health and Human Services (HHS) seeking clarification on whether the policy change could jeopardize federal funding for those facilities.

“It is inconceivable to me that, in a state where medical cannabis was legalized more than 25 years ago, those in deepest suffering receiving treatment in our state’s healthcare facilities cannot access this proven, effective and prescribed treatment,” Hueso said in a press release.

“Instead, terminally-ill patients in California healthcare facilities are given heavy opiates that rob them of their precious last moments with family and friends,” he said. “This is a simple, yet critical, move that will provide relief, compassion and dignity to terminally-ill Californians.”

Hueso received a letter from the Centers for Medicare and Medicaid Services (CMS) several months ago stating that there are no federal regulations in place that specifically address this issue and that the agency isn’t aware of any cases where funding has been pulled because a hospital allows patients to use medical cannabis.

“With this confirmation from CMS and the safeguards in the law, we are confident that healthcare facilities have the necessary authority to implement these provisions while ensuring the safety of other patients, guests, and employees of the healthcare facility, compliance with other state laws, and the safe operations of the healthcare facility,” the senator said.

There are some restrictions embedded in the new law. For example, patients receiving treatment for emergency care wouldn’t be covered, and smoking and vaping marijuana would be prohibited. It also stipulates that hospitals aren’t required to provide or dispense cannabis.

Newsom didn’t release a statement about the hospitals bill, which his office announcedhe signed along with more than two dozen other pieces of unrelated legislation.

The legislation was partly inspired by the experience of a father whose son died from cancer and was initially denied access to cannabis at a California hospital. Jim Bartell did eventually find a facility that agreed to allow the treatment, and he has said his son’s quality of life improved dramatically in those last days.

 

“In the invaluable last days as Ryan fought stage 4 pancreatic cancer, I first-handedly experienced the positive impact medical cannabis had on my son’s well-being, as opposed to the harsh effects of opiates,” Bartell said. “Medical cannabis is an excellent option for relieving pain and suffering in those who are terminally-ill, but most importantly it serves to provide compassion, support, and dignity to patients and their families, during their loved-ones’ final days.”

“Looking at each other, holding Ryan’s hand and telling him how much I loved him during his final moments would not have been possible without the medical cannabis,” he said.

Also pending on Newsom’s desk is a bill to set up a regulatory framework for hemp-derived CBD sales that also removes the ban on smokable hemp products.

Separately, a California bill that passed the Senate and several Assembly committees to legalize possession of a wide range of psychedelics such as psilocybin and ayahuasca has stalled following a decision by the sponsor that more time is needed to build the case for the reform and solidify its chances of being enacted.

Meanwhile, California activists have also recently been cleared to begin collecting signatures for a 2022 ballot initiative to legalize psilocybin mushrooms in the state.

Published 4 days ago on September 29, 2021

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Drought, wildfires create new challenges for California cannabis growers

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“It’s going to be tight. We’re going to be draining everything by the time this is over,” a cannabis cultivator who doubles as the fire chief said of his receding pond

 

HUMBOLDT COUNTY, Calif. — Driving through a dense canopy of towering redwood and old growth fir trees in southern Humboldt County, Ryan Hale’s rental car bucked and bounced as he laid out the rules of the day.

The first point of contact, a veteran cannabis grower who asked not to be identified, would lead the way to a secluded compound deep within the Emerald Triangle, a widely known cannabis-growing region comprising Humboldt, Mendocino and Trinity counties in northwest California.

It is the first time reporters have been allowed to tour this small corner of the Emerald Triangle, Hale said, and discretion is paramount.

“We’ve basically built our own version of Fort Knox,” he said.

Hale, partner and chief sales officer of Operational Security Solutions, a cannabis security and compliance company, has deep ties to many of the legal cultivators operating in the Emerald Triangle. His team of former military, law enforcement and federal service personnel work closely with the growers, ensuring that they meet state regulations and helping them secure cash and crops.

As drought and climate change batter the West, many outdoor growers face a new obstacle. Wildfires not only destroy crops, but they also contaminate plants if they are soaked in fire retardant or tainted by excessive smoke. Sometimes the latter is jokingly called “campfire kush.”

“The impact wildfires can have expands beyond just the plant,” said Luis Merchan, CEO of the cannabis company Flora Growth. “The growers are at risk, and we’ve seen it over a number of years.”

Last year, during California’s historic fire season, which burned 4.2 million acres across the state, Hale found himself in high demand. While some cannabis businesses were prepared with contingency plans in the event of an emergency, many were not.

“It was absolutely chaotic,” he said. “There would be brief periods of time where we would have anywhere from 15 to 25 requests for immediate solutions because of fire threat. We weren’t sure what each day was going to bring.”

Some clients called Hale as firefighters pounded on their doors instructing them to evacuate. They needed help getting money safely off their premises before wildfires or would-be thieves descended. Dozens of armored security vehicles dashed across California to pack up bundles of cash, but it could take several hours for security teams to reach remote locations like Humboldt, Hale said.

While Sacramento is the capital of the state, the Emerald Triangle is the capital of cannabis in California, if not the whole country. It started as a haven in the late 1960s for hippies and people drawn to the back-to-the-land movement, which espoused a return to nature and sustainable homesteading.

Since then, the Emerald Triangle has blossomed into a mecca for both legal and illegal cannabis.

Humboldt County began licensing once-clandestine operations in 2016 under the state’s medical marijuana program, and it expanded cultivation licenses in 2018, when recreational cannabis became legal in California. Of the 7,951 cultivation license holders in the state, nearly 3,000 are in the Emerald Triangle, and 1,702 of those are in Humboldt County, according to the state Department of Cannabis Control.

Drawn to the promise of cashing in on the new green rush, growers from all over — including Mexico, Bulgaria and Laos — flocked to the region, gobbling up land and diverting water for their crops.

But the Emerald Triangle is also home to generations of local growers. Some of the younger ones were born into the trade while their elders made the transition from black market operators to fully licensed cultivators. Among them is a farmer and fire chief named Manning, who is being identified by only his middle name to protect his identity.

Tired of waiting for outside fire agencies — some of which must use helicopters to reach the area — to respond to wildfires in remote terrain, Manning is working to create the area’s first fire district as drought and wildfires threaten the historically verdant region. He must coordinate with the county to establish the department’s mission and draw boundary lines and then secure enough local support to get the issue on a ballot.

“The goal is to get to the fire really quickly because we live here,” he said.

In Humboldt County, where growers and other residents prefer to keep to themselves, the threat of wildfire is ever-present and costly. Some cannabis cultivators have resorted to building their own fire rigs using trucks, hoses and water drums.

Almost all of the fire departments in the county rely on volunteer firefighters who do not receive salaries. The departments are largely self-funded through donations, fundraising and grants, and the money they raise pays for projects like maintaining firehouses and buying equipment.

“We’ve been the rebel hippie fire department forever,” Manning said of his all-volunteer crew.

He replaced an aging 1980s fire engine this summer with a new one that cost about $150,000. It was recently parked in Manning’s driveway, which doubles as a runway for his small aircraft.

By Alicia Victoria Lozano

World Anti-Doping Agency to review cannabis ban for athletes

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An advisory group to the World Anti-Doping Agency (WADA) will review whether cannabis should remain a banned substance, a move that comes after American track and field star Sha’Carri Richardson missed the Tokyo Games after testing positive for it.

The scientific review will be initiated next year, WADA said on Tuesday. Cannabis is currently prohibited in competition and will continue to be in 2022, it added.

Richardson tested positive for a chemical found in cannabis during the U.S. Olympic Track & Field trials in June, which wiped out her trial results. She was also hit with a one-month suspension.

The 21-year-old, who had been seen as a top contender in the 100 meters, has said she used cannabis to help cope with the death of her mother.

The suspension sparked an outpouring of sympathy and calls for a review of anti-doping rules, including by the U.S. Anti-Doping Agency.

 

 

(Reporting by Rory Carroll in Los Angeles; editing by Richard Pullin)

Published Wednesday, September 15, 2021 7:25AM EDT

California completes marijuana regulatory agency merger; new cannabis czar takes over

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California Gov. Gavin Newsom’s Department of Cannabis Control aims to unclog a glut of temporary licenses and transition them to annual permits as well as ease regulatory red tape and financial burdens on businesses.

That’s according to spokespeople at the newly established agency, which launched in July and amounts to one of the state’s biggest regulatory overhauls in years.

The Department of Cannabis Control (DCC), which counts nearly 400 employees, is led by Director Nicole Elliott, a Newsom confidante for more than a decade.

It also must grapple with the world’s largest illicit market.

The DCC combines the regulatory, licensing and enforcement responsibilities of three different state agencies into one large, wide-ranging regulator.

“We heard from businesses, local governments, law enforcement and others that it was complicated to work with three different state cannabis programs,” according to Christina Dempsey, the DCC’s deputy director of external affairs.

Those three agencies were:

  • The Department of Consumer Affairs’ Bureau of Cannabis Control.
  • The Department of Food and Agriculture’s CalCannabis Cultivation Licensing Division.
  • The Department of Public Health’s Manufactured Cannabis Safety Branch.

The DCC’s creation represents California’s largest regulatory reorganization since the 2013 debut of the Business, Consumer Services and Housing Agency, the department under which the DCC now falls.

The agency’s goal, according to Dempsey: Boost the number of businesses participating in the legal market, ease the licensing process for applicants and keep licensed operators compliant.

“It simplifies regulatory oversight by having one entity issuing licenses, promulgating and interpreting regulations for the entire commercial cannabis supply chain, and addressing all compliance and enforcement issues,” she added.

Moving forward, the DCC will oversee all commercial cannabis license holders in California, including cultivators, retailers, manufacturers, distributors, testing labs, microbusinesses and event organizers.

The agency also will manage the state’s track-and-trace system used to monitor cannabis flower and other products, from seed to sale, within the legal supply chain.

Newsom proposed the regulatory consolidation as part of the state’s $262 billion fiscal budget, which he signed into law July 12.

The agency was formally created through Assembly Bill 141, a so-called trailer bill that also eliminates provisional licensing in 2026 and prohibits the DCC from issuing provisional licenses after Jan. 1, 2025.

The DCC’s budget for the fiscal year is $154.3 million, nearly identical to the three former cannabis programs combined.

The overhaul is the culmination of 18 months of planning, public comment and debate involving more than 10 state agencies, various stakeholders and several assembly members.

Key personnel

Elliott, who was confirmed by the state Senate, has formally advised the governor on cannabis issues since 2019. She also served as director of the Office of Cannabis in San Francisco and held several positions under Newsom while he was mayor of that city.

Other key personnel, all appointed by Newsom, include:

  • Chief Deputy Rasha Salama, who has served at the state’s Department of Public Health since 2016, including the past five years as assistant branch chief of the Manufactured Cannabis Safety Branch.
  • General Counsel Matthew Lee, who has served as deputy legal affairs secretary in the governor’s office.
  • Deputy Director of Legal Tamara Colson, who has served as assistant chief counsel of the Bureau of Cannabis Control since 2016. She’s the only Republican appointee.
  • Deputy Director of Equity and Inclusion Eugene Hillsman, who most recently served as deputy director of the Office of Cannabis for the city and county of San Francisco.

These positions are among 26 new roles at the DCC, which is comprised of 10 divisions, including lab services, enforcement and licensing.

Provisional licenses and grant program atop agenda

The department, according to Dempsey, is unifying its processes and procedures, consolidating regulations and streamlining licensing applications to create a more consistent experience for businesses.

As of Aug. 9, California cannabis operators held 8,649 active provisional licenses, which represents more than 75% of all state licenses, according to the governor’s office. By contrast, there were only 2,834 active annual licenses, Dempsey said.

Provisional license holders and industry advocates have voiced concerns that regulators and applicants will be hard-pressed to meet the looming 2026 deadline to transition provisional licenses into annual ones.

The DCC hopes a new government relief program – perhaps the first one anywhere dedicated for cannabis businesses – will alleviate those fears.

“We are preparing to roll out the Local Assistance Grant Program, which commits $100 million in funding to assist local governments and licensees with swiftly moving from provisional licensure into annual licensure,” Dempsey said.

Though none of the $100 million has yet made it to any of the recipients, Dempsey said the agency’s goal is to “begin dispersing funds by the end of the year.”

The grants, which will be dispersed to 17 cities and counties, will provide:

  • Aid for local governments in processing substantial workloads to transition businesses into the regulated market.
  • Incentives for local governments to better align permitting methods with the state to remove barriers to licensing.
  • Resources to support the completion of environmental impact assessment and mitigation.
  • Additional assistance to support eligible jurisdictions implementing social equity programs.

A push to support local municipalities to create more pathways to the regulated market is welcomed by legal operators, who take on high capital, taxes and compliance costs while the underground market thrives.

Los Angeles-based Global Go Analytics estimates California’s illicit cannabis market generates $8 billion in annual sales, nearly double that of the legal market, which the MJBizFactbook pegged at $4.4 billion last year.

“Ultimately, we want to make it easier to participate in the legal, regulated market and less desirable to operate in the illicit market,” Dempsey said.

“We hope to create more opportunities for businesses, particularly small businesses, who want to enter the cannabis market.”

 

August 17, 2021 | By Chris Casacchia

Senate moves to legalize pot at federal level. What are the chances?

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WASHINGTON — The Senate is preparing to wade into a controversial conversation about federal policies on marijuana after Senate Majority Leader Charles E. Schumer, a Democrat from New York, released draft legislation this month that would legalize weed at the federal level.

The draft bill, known as the Cannabis Administration and Opportunity Act, follows a similar bill that passed the Democratic-controlled House in December and comes as recent polling from the Pew Research Center shows that about 60% of Americans support legalizing marijuana for recreational and medical use.

But Senate Democrats have a lot to balance over the next several months, tasked with drafting and passing legislation on issues such as infrastructure, policing and immigration that President Biden has marked as priorities. As the draft bill jump-starts discussion on Capitol Hill, here’s a look at where marijuana legalization might go.

Weed has been fully legalized for recreational use in 18 states, starting with Colorado and Washington in 2012. A total of 37 states have approved medical marijuana. In California, cannabis has been legal for medical use since 1996 and for recreational use since late 2016.

But cannabis is still illegal under federal law, where it is classified as a Schedule I drug under the Controlled Substances Act.

Possession of marijuana remains a federal offense, punishable by up to one year in jail and a minimum fine of $1,000 for a first conviction.

Because of federal restrictions, marijuana producers and retailers face significant logistical challenges with banking, transporting goods and paying taxes, even in states where the drug is legal.

In 2019, Rep. Jerrold Nadler (D-N.Y.) and California’s then-Sen. Kamala Harris, now vice president, introduced legislation in both chambers of Congress that would have decriminalized marijuana and expunged some criminal records, among other things.

The House passed the legislation in a 228-164 vote in December 2020. It was the first time legislation to remove cannabis from the Schedule I list made it to a floor vote.

The bill ultimately failed to move out of committee in the Senate.

What does the new draft legislation do?

The bill draft is partially based on last year’s failed effort. It proposes removing federal penalties for marijuana, expunging criminal records for nonviolent offenders of federal cannabis laws, earmarking funding for restorative justice programs, establishing tax rates for cannabis products and formally allowing states to decide whether to legalize pot.

John Hudak, a senior fellow at the Brookings Institution who researches state and federal marijuana policy, said the draft legislation gives states “quite a bit of deference.”

For marijuana producers and retailers in states where recreational use is already legalized, removing federal penalties for marijuana will solve banking, taxation and transport problems, cannabis reform advocates say.

In places where weed is still illegal, state governments can opt to keep it that way.

However, without federal prohibition, pot-unfriendly states wouldn’t be able to prevent interstate transport of marijuana. Those states would also miss out on tax revenue. Marijuana advocates predict state governments could be pushed toward legalization if the federal draft bill was to be signed into law.

“While it wouldn’t tell Nebraska you have to legalize marijuana, it would say you have to allow marijuana that’s being transported from California to Ohio to be able to pass through on your interstate highway system,” said Justin Strekal, political director of the National Organization for the Reform of Marijuana Laws. “That is going to trigger a tectonic shift in thinking.”

 

Would the federal government stop all regulation of pot?

No, not under the current proposal.

Hudak said the draft legislation takes “a comprehensive approach” and lays out a detailed plan for oversight and regulation of recreational marijuana.

The Food and Drug Administration and the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau would regulate the production, distribution and sale of marijuana.

In an effort to address past injustices caused by federal marijuana prohibitions, the Justice Department would establish an office to help people convicted of nonviolent marijuana-related violations transition out of incarceration.

 

What are advocates and critics saying?

Advocates of the draft legislation see it as a rare opportunity to push federal reform on marijuana.

Still, Strekal said the draft legislation continues drug testing for federal employees and, under its proposed taxation structure, would tax medical marijuana. He hopes to see those items changed in the final version.

“Fifty years from now, the implications of the initial bill passed are going to be massive,” Strekal said. “And there’s no perfect legislation, but we want to make sure it’s as close to right as possible.”

Smart Approaches to Marijuana, an organization that supports decriminalization but opposes legalization of cannabis, released a letter from its research advisory board calling for the final legislation to include limitations on potency, advertising restrictions and a ban on flavored products that could appeal to children.

Kevin Sabet, president of the organization, said he would also like to see further discussion about whether legalization might increase the number of DUIs on the road and other public health consequences.

“There’s a lot of protections for people who use marijuana and not a lot of protections for people who don’t use marijuana, which obviously is the majority of people, believe it or not,” Sabet said.

How would federal legalization affect scientific research of cannabis?

Jennifer Bailey, a principal investigator with the University of Washington’s Social Development Research Group who has studied cannabis use, said an end to federal prohibition of marijuana would be “immensely beneficial to science.”

Research on both the harm and potential benefits of cannabis has been slim because it’s difficult for scientists to gain funding and access to marijuana.

 

Does legalization lead to an increase in use among children?

Researchers believe that adolescent use of cannabis has not risen in states where marijuana has been legalized. In fact, some early studies suggested it could be decreasing.

However, Bailey does see cause for concern when it comes to young children accidentally ingesting edible marijuana products, such as cookies, brownies and candy.

She said states where marijuana is legal have seen rises in accidental ingestion of cannabis by children — even in Washington, where state law bans advertising that could appeal to children.

“I mean, who doesn’t want to eat brownies,” Bailey said. “And of course, children want to eat brownies and gummy bears and large lozenges and things that look like candy.”

 

Will it pass?

Because the bill is still just a draft, Schumer and other lawmakers could change it substantially. But in its current form, most experts believe the bill will not pass.

Hudak called the bill “a good conversation starter.” Sabet said he is “not losing a ton of sleep over this.”

But Strekal said similar comments were made about last year’s bill having “no shot,” and it surprised many by passing the House amid the COVID-19 pandemic.

Schumer acknowledged at the draft bill’s unveiling that he does not yet have the votes to push it through the Senate. He would need total support from Democratic senators plus at least 10 Republican votes to overcome a filibuster.

If passed, it’s unclear whether Biden would sign the legislation into law. He has expressed support for decriminalizing marijuana, but not for full legalization. At a recent briefing, White House Press Secretary Jen Psaki said “nothing has changed” regarding Biden’s views on cannabis reform.

BY SASHA HUPKA