California Cannabis Bill Roundup for October 2019

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Appears like not a month goes by in California exactly where the Assembly is not attempting to pass a slew of cannabis bills to support regulate the state’s market beneath the Medicinal and Adult-Use Cannabis Regulation and Security Act (“MAUCRSA”). And October was no distinct. As of October 13, 2019, California has some new cannabis laws on the books (thanks to the Governor). This post is devoted to the highlights of some of these new laws and how they’ll influence cannabis corporations.

State tax deductions. 

There’s no genuine gold common for state cannabis taxation. And at the federal level, cannabis corporations endure frequently beneath the heavy weight of I.R.C. 280E. Even so, AB 37 will deliver at least some tax relief to California cannabis corporations (from 2020-2024). AB 37 is a departure from California’s otherwise common mandate that revenue taxation be treated the very same as on the federal level, which, for cannabis corporations, formerly meant no state deductions for company expenditures connected to trafficking in cannabis since of I.R.C. 280E. Now although, California cannabis corporations licensed beneath MAUCRSA will be capable to lawfully take ordinary company deductions beneath California law.

Charitable donations. 

SB 34 creates greater breaks for low-revenue health-related individuals that have a physician’s recommendation but that may perhaps not have an ID card from the Division of Public Overall health pursuant to the 2004 Healthcare Marijuana Plan Act. Through tax-absolutely free “compassionate care donations” by licensed retailers and/or retailer microbusinesses, ahead of supplying any health-related cannabis to any certified patient or their caregiver, these licensees have to make sure that all of the following criteria are met: only certified individuals or caregivers may perhaps have access to absolutely free health-related cannabis, the retail licensee has to confirm that the patient has a valid physician’s recommendation and that the doctor is in very good standing, retain a copy of the patient’s driver’s license or government issued ID,  and make sure that the donated cannabis complies with MAUCRSA in all capacities. In addition, a retailer “may contract with an person or organization to coordinate the provision of absolutely free medicinal cannabis or medicinal cannabis solutions on the retailer’s premises. Licensed retailers that are solely authorized to engage in retail sales by signifies of delivery may perhaps deliver absolutely free medicinal cannabis or medicinal cannabis solutions by signifies of delivery.

Testing. 

AB 404 represents a substantially required, sensible modify to existing cannabis testing laws. If a cannabis batch sample failed testing, a cannabis business only had two selections: remediate (which can only be completed beneath particular situations) or destroy the batch. Now, with the passage of AB 404, a testing laboratory is authorized to amend a certificate of evaluation “to right minor errors, as defined by the Bureau of Cannabis Handle. ” In addition, labs can now retest a failed batch sample “if the test outcome falls outdoors the specifications authorized by law or regulation, when the testing laboratory notifies the bureau, in writing, that the test was compromised due to gear malfunction, employees error, or other situations permitted by the bureau and the bureau authorizes the retest.” Undoubtedly, the Bureau of Cannabis Handle (BCC) may perhaps have some challenging rulemaking ahead of it to meet the mandates of AB 404 exactly where cannabis businesses and testing labs frequently battle about the use of “dirty” gear in testing, but AB 404 is a step in the ideal path for greater protection of the bottom line for cannabis corporations.

Social equity assistance.

California has created wonderful strides in supporting regional social equity programs–the California Cannabis Equity Act of 2018,authorizes the Bureau of Cannabis Handle, upon request by a regional jurisdiction, to deliver technical help to a regional equity plan that assists regional equity applicants or regional equity licensees. With the passage of  SB 595, “on or ahead of January 1, 2021, [the state licensing agencies will have] to create and implement a plan to deliver a deferral or waiver for an application charge, a licensing charge, or a renewal charge for a wants-primarily based applicant or wants-primarily based licensee.” At least 60% of the total dollar quantity of deferrals of costs pursuant to this new plan will be allocated to the deferral of costs for regional equity applicants and licensees, and SB 595 also calls for at least 60% of the total dollar quantity of waivers of costs to be allocated to the waiver of costs for regional equity applicants and licensees. This is vital exactly where, previously, the only “technical assistance” support social equity applicants received with licensing was at the regional level, and not at the state licensing level, which are two quite distinct processes.

Analysis.

AB 420 expands current University of California analysis mandates with the authorization of the California Cannabis Analysis Plan, hosted by the current Center for Medicinal Cannabis Analysis at UC San Diego. “The plan shall create and conduct research intended to ascertain the common health-related security and efficacy of cannabis and, if located beneficial, shall create health-related suggestions for the acceptable administration and use of cannabis. The research may perhaps examine the impact of cannabis on motor abilities, the wellness and security effects of cannabis, cannabinoids, and other connected constituents, and other behavioral and wellness outcomes.” Exactly where the Center has had problems with acquiring sufficient cannabis for its analysis purposes (since of stringent federal analysis laws and prohibitions about cannabis), AB 420 enables the Center, by way of the Plan, “to cultivate cannabis for its use in analysis, pursuant to applicable federal and state laws and regulations.”

Vape Cartridges and Pens.

AB 1259 requires impact promptly, and it will modify up the packaging/labeling specifications for vape cartridges and pen makers by generating life a small bit less difficult. Particularly, a cannabis cartridge or a integrated cannabis vaporizer that consists of cannabis or a cannabis solution “shall bear the universal symbol . . . [t]he universal symbol shall be visible on the cannabis cartridge or integrated cannabis vaporizer and shall not be smaller sized than one particular-quarter inch wide by one particular-quarter inch higher. The universal symbol shall be engraved, affixed with a sticker, or printed in black or white.” The universal symbol was currently expected to go onto pens and carts, but it was also significant beneath law to feasibly be engraved on that hardware. In turn, the state, fortunately, decreased the size of the symbol by way of AB 1259 so that compliance with labeling will be less difficult for makers. What we do not know although is if the California Division of Public Overall health will build any sort of grace period for the sale of now non-compliant vapes and carts.

Hemp.

In case you missed it, our hemp laws also got a tiny facelift. While Governor Newsom ushered in some substantially required technical-repair legislation of MAUCRSA this October, he didn’t assistance each and every single cannabis initiative. For instance, the cannabis tourism market lost out with Newsom’s signing of AB 1810, which preserves the existing prohibition on cannabis consumption in celebration busses and limousines. Newsom also vetoed SB 305, which would have permitted terminally ill individuals to consume health-related cannabis on-website at their care facilities due to “federal conflicts”.


In the wake of the foregoing legislation, we may perhaps see the BCC and other state agencies take to rulemaking to achieve the intent of these new statutes. So be confident to remain tuned as we strategy 2020!

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