Cannabis Related Issues to Be Considered by the California State Legislature in 2019

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The first major deadline of the 2019 California legislative session has passed and almost 2,600 bills were introduced in the Legislature. While many of these bills are in “spot bill” form (bills containing intent language to serve as placeholders), advocates and stakeholders should have a fairly clear sense on the issues that the legislature will confront in 2019. Here’s a quick summary of some of the cannabis-related bills that were introduced by the February 22 deadline.

Proposal to Temporarily Reduce Cannabis Taxes

The push to temporarily lower the cannabis tax rate is back for the 2019 legislative year. Last year, the bill was held in the Appropriations Committee over concerns that the proposed reduction was premature. Now that adult-use has been legal for over a year, proponents are hoping that the legislature will be open to helping small and medium cannabis businesses compete against the illicit market.

AB 286 (Bonta) Taxation: cannabis – This bill would eliminate California’s cannabis cultivation tax and reduce the excise tax from 15% to 11% through 2022. The measure is a reintroduction of a similar bill from last year, AB 3157, which would have also temporarily reduced California’s cannabis tax rate. Click here to read my brief summary of AB 3157 from 2018.

Banking and Financial Services Proposals

One of the more important pieces of legislation reintroduced this year is SB 51 (Hertzberg) which would create a state-chartered banking system for banks to offer basic services to the cannabis industry. Unlike the state-owned bank proposal considered in the State Treasure’s Cannabis Banking Working Group paper released in November 2017, Senator Hertzberg’s proposal is seen by some in the industry as a potentially workable fix in lieu of a federal solution.

SB 51 (Hertzberg) Financial institutions: cannabis – This bill establishes a state-chartered banking system to allow financial institutions to offer basic banking services to businesses in the cannabis industry. This bill is a reintroduction of SB 931 (Hertzberg) from 2018 that did not make it through the legislative process.

AB 717 (Nazarian) Public contracts: armored courier services – This bill would require state agencies to use armored car services to pickup, count, and transport to a bank or financial institution the cash remits of any state-imposed taxes and fees that are administered by that state agency. The bill also allow the state agency to charge cannabis businesses for the service.

AB 1525 (Jones-Sawyer) Cannabis: financial institutions – This bill would allow basic financial services transactions such as deposits, credits, fund transfers, etc., to be legal under California law. This bill appears to be another attempt, short of creating a statewide banking system to allow cannabis businesses to access banking and financial services.

Cannabis Equity Programs

SB 595 (Bradford) Cannabis: local equity programs – This bill is a placeholder to provide financial support to local cannabis equity applicants and licensees. Last year, Governor Brown signed SB 1294 and the legislature approved $10 million to support equity programs across California. This bill appears to build on that progress.

SB 658 (Bradford) The California Cannabis Equity Act – This bill is another placeholder bill to provide support and funding to local jurisdictions with established cannabis equity programs.

Cannabinoids and Hemp Related Products

AB 228 (Aguiar-Curry) Food, beverage, and cosmetic adulterants: industrial hemp products – This bill would narrow California regulators’ ability to penalize companies for selling Hemp CBD beverages or foods on the grounds that they are “adulterated” under California law.

Labor and Employment

AB 882 (McCarty) Termination of employment: drug testing: medication-assisted treatment – This bill would prohibit an employer from terminating an employee if the sole reason for termination is that the employee tested positive on a drug test for a drug that is being used as a medication-assisted treatment under the care of a physician or pursuant to a licensed narcotics treatment program. This bill is similar, but much broader than a bill last year, AB 2069 (Bonta) which would have provided reasonable accomodations for employees that use medical cannabis.

AB 1291 (Jones-Sawyer) Adult-use cannabis and medicinal cannabis: license application: labor peace agreements – This bill requires a licensed cannabis business to enter into a labor peace agreement within 60 days of employing 20 workers or more. If the business does not employ 20 or more employees, then they must provide a notarized statement saying they will enter into a labor peace agreement within 60 days of employing 20 people or more.

Substance Use and Youth Programs

AB 1031 (Nazarian) Youth Substance Use Disorder Treatment and Recovery Program Act of 2019 – This bill requires the state, in partnership with counties to establish community-based nonresidential and residential treatment and recovery programs to intervene and treat the problems of alcohol and drug use among youth under 21 years of age.

AB 1085 (McCarty) After school programs: substance use prevention: funding: cannabis revenue – This bill includes additional educational activities that promote healthy choices and behaviors in order to prevent and reduce substance use and improve school retention and performance to before and after school programs. The bill also encourages schools to develop programs that are designed to educate about and prevent substance use disorders or to prevent harm from substance abuse.

AB 1098 (O’Donnell) Substance use disorders: youth programs – This bill would set forth procedures for the implementation and administration of substance use youth programs funded by Proposition 64.

Track and Trace

AB 1288 (Cooley) Cannabis: track and trace – This bill would require the information captured by the track and trace program to additionally include the date of retail sale to a customer and whether the sale is on the retail premises or by delivery.

Additional Cannabis Proposals for 2019

SB 67 (McGuire) Cannabis: temporary and provisional licenses – This bill would extend temporary licenses through December 31, 2019, and extend provisional licenses through July 1, 2020. Under current law, the issuance of temporary licenses expired January 1, 2019, and provisional licenses are valid until January 1, 2020. This bill seeks to extend both time periods.

SB 185 (McGuire) Cannabis: marketing – This bill would allow cannabis trademarks, organic certifications, and appelation designations, among other provisions for cannabis related products.

SB 283 (Bates) and AB 551 (Brough) Fatal vehicular accidents: chemical test results – Currently law requires the cornor to perform alcohol and chemical tests in vehicle accidents that result in fatalities. These two bills extend this requirement to medical examiners, and makes other requirements.

SB 305 (Hueso) Access to Cannabis in Healthcare Facilities Act – This bill, the Compassionate Access to Medical Cannabis Act or Ryan’s Law,  requires a healthcare facility to allow a patient who is receiving palliative care to use medical cannabis within the healthcare facility.

AB 420 (Lackey) The California Cannabis Research Program – This bill would allow the Center for Medicinal Cannabis Research to cultivate cannabis for its use in research and to include the study of naturally occurring constituents of cannabis and synthetic compounds, including the examination of the effects of cannabis, cannabinoids, and related constituents, and other behavioral health outcomes.

SB 475 (Skinner) Cannabis: trade samples: cultivation tax: exemption – This bill would allow a licensee to designate a cannabis product as a trade sample and would exempt these samples from cultivation and sales taxes.

SB 527 (Caballero) Local government: Williamson Act: cultivation of cannabis – This bill includes the cultivation of cannabis under the Williamson Act Program.

SB 581 (Caballero) Cannabis: licensing: public records – This bill would require the state’s licensing authorities to publish online information related to disciplinary actions taken against a cannabis business in another state or jursidiction.

SB 625 (Hill) Party buses: cannabis – This bill would allow the ingestion of cannabis products by a passenger in bus, taxicab, or limousine only if there are no passengers under 21 years of age present and the driver is sealed off from the passenger compartment.

SB 627 (Galgiani) Medicinal cannabis and medicinal cannabis products: veterinary medicine – This bill would allow a veterinarian to discuss the use of, and issue a recommendation for the use of, medicinal cannabis or medicinal cannabis products on an animal patient for any condition for which cannabis or cannabis products provide relief.

AB 404 (Stone) Commercial cannabis activity: testing laboratories – This bill would allow a testing laboratory to amend a certificate of analysis to correct minor errors, with such parameters defined by the Bureau of Cannabis Control.

AB 953 (Ting) Cannabis: state and local taxes: payment by digital asset – This bill allows local and state governments to accept fee and tax payments by stablecoins which are a type of cryptocurrency that can be pegged to a currency.

AB 1296 (Gonzalez) Tax Recovery in the Underground Economy Criminal Enforcement Program – This bill creates a multi-state agency enforcement team to go after businesses that operate illegally and that do not pay taxes. Similar versions of this bill have been introduced in the legislature, but this team appears to be more comprehensive and includes a representative from the Bureau of Cannabis Control.

AB 1420 (Obernolte) Cannabis: licensing fees – This bill would set cannabis application and licensing fees that are consistent with the fee schedule adopted by state regulations as of January 1, 2019.

AB 1530 (Cooley) Unauthorized cannabis activity reduction grants: local jurisdiction restrictions on cannabis delivery – This bill creates a grant program administered by the state to provide grants to local jurisdictions to create and expand enforcement programs against illegal cannabis activity. The bill also creates a funding source for educational programs to help the public determine the difference between legal and illegal cannabis activity.

AB 1710 (Wood) Cannabis – This bill states the intent of the Legislature to enact legislation to create more accessible pathways for compliance with cannabis laws by small-scaled cannabis businesses.

Reintroduced Bills

SB 34 (Wiener) Cannabis: donations – This bill would exempt qualifying compassion care programs from the cultivation and excise tax enacted by Proposition 64. This bill is nearly identical to SB 829 (Wiener) from last year that was vetoed by Governor Brown.

SB 223 (Hill) Pupil health: administration of medicinal cannabis: schoolsites – This bill would enable K-12 school districts and county boards of education to choose whether to allow a student’s parent or guardian to administer medical cannabis to the child on campus under strict conditions. This bill is almost identical to SB 1127 (Hill) from last year that was vetoed by Governor Brown.

AB 37 (Jones-Sawyer) Personal income taxes: deductions: business expenses: commercial cannabis activity – This bill would allow businesses to deduct cannabis-related businesses expenses on their state income tax form. This bill is similar to AB 1863 (Jones-Sawyer) from 2018.

AB 141 (Cooper D) Cannabis: informational, educational, or training events – This bill would allow licensed retailers, cultivators, and manufacturers to participate in educational or informational events held for state and local government officials and their employees without having to obtain a temporary cannabis event license. This bill is similar to AB 3069 (Cooper) that was vetoed by Governor Brown.

AB 858 (Levine) Cannabis: cultivation – This bill creates an Emerald Triangle Sun-Grown Cannabis Commission for the purpose of conducting research, examining the impact of local and state regulations on the cannabis products industries, and tracking market price information to prevent unfair trade practices. This bill was introduced last year as AB 2810 and covered all of California. The bill died in its second policy committee as it was double-referred.

In addition to the bills discussed above, there are several “spot bills” that were introduced as placeholders for the time being. These bills could later be amended to include substantive language on issues related to cannabis. We will continue to monitor these proposals as the legislative session moves forward.

If you have any questions related to any of these proposals, contact Ashley Martinez at to discuss.

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