Public Policies for Advocates and Stakeholders to Consider in 2019

Note: This article originally appeared on the site Kannovate – an informational guide to help Activist and citizens keep a pulse on the Cannabis Enlightenments movement throughout the US. To read the full article, please visit Kannovate by clicking here.

Last week, Canada became the second country, after Uruguay, to legalize recreational cannabis. In one week, voters in four states—Michigan, Missouri, North Dakota, and Utah—will decide whether or not to legalize some form of marijuana use. Across the United States, there are currently 30 states that allow some form of cannabis use. If the four ballot measures pass in November, the total number of states that have legalized either medical or recreational use will reach almost 70%, including Washington, D.C.

While these recent developments indicate changing attitudes towards cannabis as a dangerous “drug,” they also present several public policy issues that stakeholders in the industry will need to proactively engage and address in the coming months and years in order to ensure the long-term sustainability of the industry.

I have compiled a list of the top seven public policy issues that all stakeholders in the cannabis industry should consider as the move towards full legalization in the United States approaches. My hope is to provide you a glimpse into topics that will be at the forefront in the public policy arena in the coming years, offering you a chance to prepare and plan for your engagement strategy in advance.

Read the full article here…


Questions about the legislative and regulatory landscape in your area? Contact us today to discuss at ashley@ampublicaffairs.com or by the contact form available here.

Governor Signs Two Bills to Expand Where Cannabis Events Can Be Held and to Provide Equity and Diversity in the Industry

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On September 26, Governor Brown signed two bills of interest to the cannabis industry: AB 2020, which expands the locations where cannabis events can be held and SB 1294, which establishes a cannabis equity program to provide assistance to local equity programs throughout the State. Both bills go into effect January 1, 2019.

Cannabis Events

AB 2020 (Quirk), expands where cannabis events can be held as long as the local governing entity approves. Prior to AB 2020, the law limited cannabis events to county fairgrounds and the State’s active district agricultural associations. Small business owners in the industry argued that these limits stifled economic opportunities for both businesses and the local governments that support commercial cannabis activities in their communities.

Under the bill, all event participants must be licensed retailers and the event organizer must submit a list of all participants at least 60 days in advance of the event to the Bureau of Cannabis Control. If a retailer is not on the final list submitted to BCC, they are prohibit from participating in the event.

In addition, the bill authorizes BCC to issue fines for non-compliance and provides the Bureau with the ultimate authority to cease an event if the Bureau or local law enforcement believe the event has become a threat to the health and safety of community. Moreover, the bill does not allow an event organizer to appeal the Bureau’s decision to cease an event; placing the burden of risk ultimately on the event organizer.

Cannabis Equity Programs

The Governor also signed SB 1294 (Bradford), also known as the Cannabis Cannabis Equity Act of 2018, which authorizes the Bureau of Cannabis Control to provide assistance to local equity programs throughout the State.

This bill was designed to provide some relief and assistance for people, specifically minorities and women, that have been disproportionately impacted by the War on Drugs. The passage of Proposition 64 created an opportunity for Californians to engage in the cannabis industry; including those that been marginalized or criminalized under previous state marijuana laws. However, since January 1, entities with significant financial resources have dominated the legal market; leaving economic and socially disadvantaged individuals without resources or an opportunity to enter the market. SB 1294 seeks to level the playing field so that all Californians can participate in this rapidly growing (no pun intended) industry.

Next Steps

Although AB 2020 was designed to support local economies and small businesses, the challenge of acquiring local approval for events or any type of cannabis business activity across the state is still a major challenge. For localities that have adopted cannabis-friendly policies, AB 2020 can help spur economic growth and jobs in those areas. For cities and counties that continue to ban cannabis business activities in their district, the challenge of holding an event remains.

On the equity front, SB 1294 is a first-step towards equalizing the opportunity for all to participate in the industry as intended by Proposition 64. It remains to be seen how local governments utilize the assistance provided by the State, and what type of resources are needed to ensure the program is a success.


For more information about these two bills, contact me at ashley@ampublicaffairs.

Quick Guide to Pending California Cannabis Bills on Governor Jerry Brown’s Desk

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In 2018, industry advocates and businesses witnessed a flurry of activity in the California State Legislature involving cannabis related legislation. By the end of April this year, over 40 different bills had been introduced and were weaving their way through the legislative process.

While not all bills made it through the process, a substantial amount of proposals did and many are currently on the Governor’s desk awaiting his signature or veto.

I’ve prepared this quick reference guide that highlights several bills that are awaiting action, and I have also included bills that were recently signed or vetoed as of late August. Click the link below to review the bills currently on the Governor’s desk or to review the ones he recently approved or disapproved.

Pending and Recently Signed California Cannabis Bills 2018

The Governor has until September 30, to sign or veto bills, and while he has taken action on some early on, I expect him to decide the fate of the most controversial bills closer towards the deadline.

Any bill that the Governor does sign, goes into effect January 1, 2019, unless the bill specifically states otherwise. I will keep you posted as the Governor takes action on these bills, and in the meantime, if you have any questions about how these pending measures may impact your business, please contact me at info@thecannabisfile.com.

California Cannabis Banking Bill Shelved for the Year and Other Legislative Highlights from the Appropriations Committee Hearings

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Today, the Assembly and Senate Appropriations Committees met and decided the fate of hundreds of bills including several that directly impact the cannabis industry. Here’s a run down of the most watched cannabis-related bills in the California State Legislature that were heard in one of today’s hearings:

Key Terms

  • Held in Committee – this means the bill is done for the year.
  • Passed to Assembly/Senate Floor – this means that the bill will be heard and potentially voted on before the full Assembly or Senate membership. I say “potentially voted on” because bills can still be placed on the “inactive file”, sent back to a policy or fiscal committee for review, etc., depending on a variety of reasons.

SB 829 (Weiner)Passed to the Assembly Floor

This bill would exempt qualifying compassion care programs from the cultivation and excise tax enacted by Proposition 64.

SB 930 (Hertzberg) – Held in Committee

This bill would have established a state-chartered banking system to allow financial institutions to offer basic banking services to businesses in the cannabis industry.

SB 1294 (Bradford) – Passed to the Assembly Floor

This bill was recently amended to establish the Cannabis Collaboration and Inclusion Act, which will require the Bureau of Cannabis Control (BCC) to establish an equity program beginning January 1, 2020, and requires the Bureau to provide technical support to state and local equity applicants and licensees.

SB 1409 (Wilk) – Passed to the Assembly Floor

This bill updates current law related to the production and cultivation of industrial hemp, and allows the California Department of Food and Agriculture (CDFA) to establish and implement an agricultural pilot program.

AB 1863 (Jones-Sawyer) – Passed to the Senate Floor

This bill amends California’s personal income tax law to allow taxpayers to deduct ordinary and necessary business expenses related to commercial cannabis activity.

AB 2641 (Wood) – Held in Committee

This would have allowed the BCC to issue a temporary retailer license for cultivators and manufacturers to sell their products directly to consumers at events.

Friendly Reminder: Public Comments on Proposed Statewide Cannabis Regulations Due by August 27.

Information regarding the regulations proposed by the BCC, CDFA, and the Department of Public Health can be found by clicking here on this link.


If you are interested in submitting comments on the proposed statewide regulations and need help, or have questions about any of the bills mentioned above, please contact us at info@thecannabisfile.com or by clicking here.

Legislative Update – July 4, 2018

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Upcoming at the State Capitol

Senate Floor Schedule

The Senate will be in session on July 5, at noon. The Senate goes on Summer recess July 6 and will return on Monday, August 6.

Assembly Floor Schedule

The Assembly will be in session on July 5, at noon. The Senate goes on Summer recess July 6 and will return on Monday, August 6.

Committee Hearings

Fiscal and policy committee hearings will resume after the Summer recess.

Other Events

Happy Independence Day!

On Tuesday, July 10, the National Cannabis Industry Association (NCIA) will hold their third Northern California Quarterly Cannabis Caucus in San Francisco, CA.

On Thursday, July 12, the NCIA will head down south and hold their Southern California Quarterly Cannabis Caucus in sunny San Diego, CA.


Week in Review: July 1st Packaging and Testing Requirement Deadline Leaves Dispensary Shelves Bare

On July 1, the temporary grace period for cannabis dispensaries to offer untested cannabis products ended, forcing an estimated $90 million+ worth of products to be destroyed. The new rules require all cannabis products be tested and meet all regulatory and statutory packaging standards before it can be offered by a retailer.

Prior to the implementation of the permanent rules, a group of cannabis businesses and trade associations made a last minute plea to Governor Jerry Brown to extend the temporary grace period. Chief among their concerns was the limited availability of state licensed testing facilities; creating a bottleneck that would force legal operators to destroy a significant part of their inventory. Once the legal untested supply was destroyed, the group argued, consumers would turn to the illicit market to meet their cannabis needs. Several online pictures and videos emerged of cannabis retailers with empty shelves on July 1. The fallout of the transition should become clearer over the next few months.

The Mercury News: “California pot shops struggle to keep shelves stocked as new state rules roll out”

Marijuana Business Daily: “Last-minute California cannabis industry ‘Hail Mary’ to delay July 1 transition”

California Bureau of Cannabis Control: Transition Fact Sheet

California Department of Public Health: Packaging Requirements Fact Sheet


Week Ahead: The Legislature Goes on Recess for Some R&R and the Industry Prepares for the Final Leg of the 2018 Legislative Session

With legislators are out on recess, many in the industry will use this time to catch up on their own rest while also shoring up support for any remaining bills that are still alive. Among the top bills that are moving through the legislative process include:

SB 829 (Wiener), would exempt qualifying compassion care programs from the cultivation and excise tax enacted by Proposition 64. Supporters argue that the new taxes have forced compassionate use programs to close their doors because they can no longer afford to donate the cannabis and cover the tax liability. The bill is currently in the Assembly Appropriations Committee and will be heard in mid-August as a part of the final Suspense File hearing.

SB 930 (Hertzberg), would establish a state-chartered banking system to allow financial institutions to offer basic banking services. The bill has passed several significant legislative hurdles and may be facing its toughest challenge yet. The bill will be heard in the Assembly Appropriations Committee mid-August as a part of the final Suspense File hearing.

SB 1294 (Bradford), would require the Bureau of Cannabis Control to create a statewide cannabis equity program taskforce, and offer assistance to state and local cannabis entities that have been disproportionately impacted by the War on Drugs. Many in the industry believed that Proposition 64 would create new opportunities for all Californians to engage in the cannabis industry; including those that been marginalized or criminalized under previous state marijuana laws. However, since January 1, entities with significant financial resources have dominated the cannabis industry leaving many of the disadvantaged individuals without resources or an opportunity to enter the market. The bill will be heard in the Assembly Appropriations Committee mid-August as a part of the final Suspense File hearing.

AB 2020 (Quirk), would expand where cannabis events could be held, as long as the local governing entity approves. Current law limits cannabis events to the state’s 23 county fairgrounds or 52 active district agricultural associations, and many in the industry argue that these limits have stifled economic opportunities for both cannabis businesses and the local governments that support commercial cannabis activities in their communities.The bill will be heard in the Senate Appropriations Committee mid-August as a part of the final Suspense File hearing.

AB 2641 (Wood), similar to AB 2020, would also allow the Bureau of Cannabis Control to issue a temporary retailer license for cultivators and manufacturers to sell their products at events. The bill will be heard in the Senate Appropriations Committee mid-August as a part of the final Suspense File hearing.


Questions about any of the bills or events mentioned above? Contact us at info@thecannabisfile.com or here.

Legislative Alert – Results from the Assembly and Senate Appropriations Suspense File Hearing – May 25, 2018

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Photo by John Jennings on Unsplash

Today, the California Assembly and Senate Appropriations Committees decided the fate of hundreds of bills in the current legislative cycle. The Appropriations Committee in general is considered a significant hurdle in the legislative process, and bills that are passed from these Committees live to fight another day. The bills that are held on the Suspense File are, for most intents and purposes, dead for the remainder of the legislative session. While there is a process to reintroduce a proposal that is held in the Appropriations Committee (called a “gut and amend”), this process is rarely used and usually comes at great political cost to the organization or interest group that uses this option.

Here’s an update on the most commonly tracked bills in the industry that were heard in Committee today:

AB 1793 (Bonta) which seeks to streamline the judicial process of expunging or reducing criminal convictions and sentences due to Proposition 64 passed out of Committee and now heads to the Assembly Floor.

AB 1863 (Jones-Sawyer) which would allow cannabis businesses to deduct businesses expenses passed out of Committee and now heads to the Assembly Floor.

AB 2058 (Chau) which requires law enforcement agencies to submit annual reports with the number of cannabis-related DUI arrests to the Department of Motor Vehicles passed out of Committee and is now headed to the Assembly Floor.

AB 2069 (Bonta) which would have prohibit employers from discriminating against employees who are treating a known physical or mental disability or medical condition with medical cannabis and has a medical marijuana ID card was held in the Appropriations Committee.

AB 2520 (Cooper) which would have created the California Illegal Cannabis Task Force to review and analyze existing statutes to determine if they adequately address illegal cannabis cultivation, manufacturing, distribution, sales, and diversion of cannabis to other states was held in Committee.

AB 2525 (Wood) which required the Department of Fish and Wildlife and Department of Parks and Recreation to survey public lands and surface water sources during outdoor cannabis cultivation season to find unlawful cultivation activity was held in Committee.

AB 2641 (Wood) which would allow the Bureau of Cannabis Control to issue a temporary retailer license for cultivators and manufacturers to sell their products at events was passed out of the Committee with amendments and is now headed to the Assembly Floor.

AB 3157 (Lackey) which would have temporarily suspend the cultivation tax and lower the cannabis excise tax from 15% to 11% until 2021 was held in Committee.

SB 930 (Hertzberg) which would create a statewide-chartered banking system to allow California banks to offer basic services to cannabis businesses was passed out of Committee and now heads to the Senate Floor.

SB 1409 (Wilk) which would delete the requirement that industrial hemp seed cultivars be certified on or before January 1, 2013, in order to be included on the list of approved hemp seed cultivars and would also remove the definition “industrial hemp” from the California Uniform Controlled Substances Act passed out of Committee and now heads to the Senate Floor.


Questions about any of the bills mentioned above? Contact us at info@thecannabisfile.com or here.

Weekly Roundup – May 11, 2018

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Photo by pac bac on Unsplash
  • Tax revenues collected by the state in the first quarter of FY 2018 are far below January estimates
  • A bill to temporarily suspend the cannabis cultivation tax and reduce the excise tax passes its second legislative committee
  • A New York based medical marijuana manufacturer expands its presence into California
  • The Bureau of Cannabis Control Cannabis Advisory Committee holds its next meeting in Oakland

Cannabis Taxes Collected in Q1 of FY2018 Lower than Expected

On Tuesday, the Legislative Analyst Office (LAO) released a cannabis tax updated that showed California collected $34 million in excise tax in the first quarter of 2018. The Governor’s January budget assumed that the state would collect about $175 million in the first two quarters of 2018, far more than what the state has seen so far. For some in the industry, the lower than expected tax revenues reflects the clumsy rollout of a statewide legal system. Primary among the concerns by many in the industry has been 1) the slow process from reviewing and approving licenses at the state level; 2) the high-cost of complying with state regulations; 3) the widespread prohibition of cannabis business activities in many of the state’s cities and counties and; 4) the high tax burden that incentivizes consumers to buy in the illicit market.

Later today, the Governor will release his May Revise with updated estimates and potential funding and policy changes that may directly impact the industry. I will provide a brief recap of the Governor’s May Revision this week.

Does a Temporary Tax Reduction Have Legs?

On Tuesday, the Assembly Business and Professions Committee voted unanimously to temporarily suspend the cannabis cultivation tax and reduce the excise tax for three years. Supporters of AB 3157 say that California’s high tax rate makes it almost impossible for legal operators to compete against illicit operations that do not pay licensing fees or state and local taxes. Opponents of the bill say that the temporary tax reduction is premature, and the real problem lies at the local level where more than half of the state’s local jurisdictions have refused to allow cannabis business activity. In addition, education and mental health groups believe that the tax reduction will reduce much need funding to support youth drug prevention and equity programs in communities that were impacted the most by the war on drugs.

The Committee did express concern over the state’s ability to repay the outstanding loan of $135 million that was provided to state agencies to fund enforcement and oversight. As written in Proposition 64, taxes collected must be first used to cover he administrative costs of state agencies to implement cannabis laws. The next stop for AB 3157 is the Assembly Appropriations Committee. Stay tuned.

New York is Coming to California

Earlier this week, Etain, a women-owned and managed New York based medical cannabis company announced that they have joined forces with delivery company West Sacramento Management and Daily Green to produce and deliver products beginning this month. As one of ten medical dispensaries in Manhattan, Etain’s expansion into the Golden State follows approval in their home state to offer a water-soluble marijuana powder to medical patients. Approval for the water-soluble solution comes after New York regulators search for ways to jumpstart the state’s medical marijuana program in which growth has stalled since its approval in early 2016. Etain’s move to California is another in a series of investments by non-California businesses and investors. Recently, CannaRoyalty, a Canadian-based cannabis company announced several acquisitions of distribution assets throughout Northern California. The recent moves by both of these companies could signal more to come.

The State’s Cannabis Control Advisory Committee Meets in Oakland

Next Thursday, May 17, the Bureau of Cannabis Control’s Advisory Committee meets in Oakland California to discuss possible action on recommendations to modify the state’s licensing application, manufacturing and microbusiness requirements. The discussion will also include potential pathways on how to proceed with approved recommendations that require statutory change. Click here to review the agenda.


Questions about the budget, legislative or regulatory process? Contact us here or by email at info@thecannabisfile.com.

The Top 5 Cannabis Related Bills Currently in the California Legislature

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In the 2018 California Legislative Session, at least 40 bills have been introduced that are cannabis related. Here are the top five bills that are currently being tracked by the industry.

Temporary Events

AB 2020 (Quirk) expands where cannabis events could be held, as long as the local governing entity approves. Current law limits cannabis events to the state’s 23 county fairgrounds or 52 active district agricultural associations, and many in the industry argue that these limits have stifled economic opportunities for both cannabis businesses and the local governments that support commercial cannabis activities in their communities. A Similar bill, AB 2641 (Wood) would also allow the Bureau of Cannabis Control to issue a temporary retailer license for cultivators and manufacturers to sell their products at events. Both bills were heard and passed out of their first policy committee and are now awaiting a hearing in the Assembly Appropriations Committee.

Workplace Protections

AB 2069 (Bonta) would prohibit employers from discriminating against employees who are treating a known physical or mental disability or medical condition with medical cannabis and has a medical marijuana ID card. The bill does not prevent employers from disciplining or even firing employees that are under the influence while at work, but does provide a level of protection for employees that use marijuana outside of work and test positive for cannabis. The bill faces significant opposition from employers, including the California Chamber of Commerce. Their argument is that the bill will place additional burdens on the employer and hinder their ability to effectively manage the workplace. The bill passed out of the first policy committee and is currently awaiting a hearing in the Assembly Appropriations Committee.

Temporary Tax Reduction

AB 3157 (Lackey) would temporarily suspend the cultivation tax and lower the cannabis excise tax from 15% to 11% until 2021. In March, we covered the potential impacts of what a reduction would mean for local enforcement and oversight and the industry. The bill passed its first legislative hurdle on a unanimous 8 – 0 bi-partisan vote. The bill now heads to its second policy committee and will be heard on May 8, 2018, at 9:30a.m. in the Assembly Business and Professions Committee.

Statewide Banking Solution

SB 930 (Hertzberg) would create a statewide-chartered banking system to allow California banks to offer basic services to cannabis businesses. This bill, sponsored by Board of Equalization Board Member and State Treasurer candidate, Fiona Ma has received significant support early in the legislative process and passed from both the Senate Banking and Financial Institutions and the Senate Governance and Finance on a 7 – 0 and 6 – 1 vote, respectively. The bill now heads to the Senate Appropriations Committee where it will most likely be heard in May.

Local Deliveries

SB 1302 (Lara) would prohibit cities and counties, including chartered cities from banning cannabis deliveries in their jurisdiction. This bill is an attempt to enforce the intent of Proposition 64 which was to create a statewide legal adult-use system. However, in the first few months since legalization, at least 75% of the state’s cities and counties ban the deliver of both medical and recreational cannabis in their area. The bill has strong support from the industry, and faces stiff opposition from cities and counties. The bill faces its first legislative test on May 2, 2018, at 9:30a.m. in the Senate Governance and Finance Committee.


Do you have questions about legislation in California? Please contact us at info@thecannabisfile.com or here.

Legislative Alert – April 2, 2018

 

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As the California Legislature returns from Spring Recess, policy committees will begin hearing bills to meet the April 27, deadline to report all bills with a fiscal impact to the Appropriations Committee. Here’s a list of bills that have been scheduled for a hearing over the next few weeks.

AB 1741 (Bonta) Cannabis: taxation: electronic funds transfer. This bill, until January 1, 2022, would allow cannabis businesses to pay their taxes with cash. Currently, the Department of Tax and Fee Administration (CDTFA) requires all tax amounts owed over $10,000 to be remitted electronically, or the taxpayer can request a hardship exemption. Without a current solution to provide stable bank services to the industry, taxes will mostly likely continue to be paid primarily in cash. This bill requires a two-thirds vote by the Legislature.

This bill is scheduled to be heard in the Assembly Revenue and Taxation Committee on April 16, at 2:30p.m.

AB 2058 (Chau) Vehicles: driving under the influence: statistics. This bill requires law enforcement agencies to submit annual reports with the number of cannabis-related DUI arrests to the Department of Motor Vehicles. One of the key concerns by public safety groups in all states that have legalized recreational adult-use is that DUI incidents go up after legalization. AB 2058 appears to be an effort to gather the data to really see if that’s the case.

This bill is scheduled to be heard in the Assembly Transportation Committee on April 9, at 2:30p.m.

AB 2641 (Wood) Temporary Events. This bill would authorize the Bureau of Cannabis Control (BCC) to issue a temporary event license, and would allow cultivators and manufacturers to directly market and sell their products at special events. This bill has industry support and requires a two-thirds vote of the Legislature.

This bill is scheduled to be heard in the Assembly Business and Professions Committee on April 10, at 9:30a.m.

AB 2810 (Levine) Sun-Grown Cannabis Commission. This bill creates the Sun-Grown Cannabis Commission that will be comprised of six outdoor cannabis cultivators, two cannabis cultivators that have an “Outdoor” or “Mixed-light Tier 1” license, and one public member that is appointed by the Secretary of Food and Ag. The Commission would have powers to conduct research, assess and address the impact of local and state regulations on cannabis products.

This bill is scheduled to be heard in the Assembly Agriculture Committee on April 11, at 1:30p.m.

SB 930 (Hertzberg) Financial institutions: cannabis. This bill creates the Cannabis Limited Charter Banking Law, that would allow banks to offer basic financial services to the cannabis industry. Click here to read our initial analysis of the bill.

This bill is scheduled to be heard in the Senate Banking and Financial Institutions Committee on April 18, at 1:30p.m.

SB 1409 (Wilk) Industrial hemp. This bill would delete the requirement that industrial hemp seed cultivars be certified on or before January 1, 2013, in order to be included on the list of approved hemp seed cultivars. The bill would also remove the definition “industrial hemp” from the California Uniform Controlled Substances Act as a fiber or oilseed crop, and delete the requirement that industrial hemp be grown as a fiber or oilseed crop, or both. This update of hemp seed cultivation law could help spur the use of hemp for CBD products.

This bill is scheduled to be heard in the Senate Agriculture Committee on April 3, at 9:30a.m.


Questions about legislation? Contact us at info@thecannabisfile.com or here.

 

Would a California State-Chartered Banking System Solve the Industry’s Cash Crisis?

Recently, SB 930 (Hertzberg), was amended to created a state-chartered banking system in California that would allow banks to offer basic services to cannabis businesses.

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Photo by Fabian Blank on Unsplash

Under the bill, banks that are not a part of the federal banking network would be allowed to apply for a license through the Department of Business Oversight. This license would allow a bank to 1) create accounts; 2) accept deposits; 3) issue “special purpose” checks; and 4) join in a network with other state licensed banks. Account holders could use the special purpose checks to pay taxes, rent, and vendors, and invest in state and municipal bonds.

For many in the industry, SB 930, comes as a welcomed solution to the cash-crisis that plagues the industry. However, despite it’s promise, the largest obstacle to a long-term functional banking solution remains: the federal government.

In 2013, U.S. Deputy Attorney General James Cole issued guidance, commonly referred to as the “Cole Memo” that said the federal government would not prosecute marijuana businesses where state’s had created a strong regulatory system, and kept the drug away from children, other states, and profits away from drug cartels.

In 2014, the U.S. Treasury issued guidance that said it would not charge banks with a federal crime for offering services to the industry as long as they ensured the businesses were following all state rules and the directives laid out in the Cole Memo.

Colorado and Washington, both early adopters of legal adult-use, used the guidance provided by the Cole Memo to encourage banks to engage with the industry. In doing so, the banks in these states adopted stringent requirements and invested heavily in compliance staff. The result of these actions was twofold: 1) banks turning down more accounts than opened because the businesses were not fully compliant with state law, thus violating the directives of the state law and the Cole Memo; and 2) higher banking costs for the account holder to cover compliance overhead and longer delays in processing basic banking transactions.

With the recent repeal of the Cole Memo and the Trump Administration’s lawsuit against California’s “Sanctuary State” laws, it’s not impossible to assume that the federal government would use every leverage point, including heavy enforcement and large penalties to serve as a strong deterrent for any bank, state-chartered or not from servicing the industry.

For businesses in the industry, it’s almost impossible to predict how a banking system such as the one created by SB 930, would work, and that’s assuming the bill passes the Legislature and is signed by the Governor. However, the experience from many businesses in Colorado and Washington is a timely reminder that if this bill does become law, banks will require that each account holder is in 100% compliance with all laws and regulations for all the businesses in the supply chain. Remember, one unlicensed link in the chain could place your business license in jeopardy.

Now is the perfect time to review your business plan, licenses, and compliance with California’s rules to ensure your business is eligible to participate in the state-chartered banking system should it become law.

Questions? Please contact us here or at info@thecannabisfile.com.