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California legislative update: Several key cannabis bills still hang in balance

When the California Legislature returns from its summer recess in mid-August, it’ll face a monthlong sprint to get to all the bills remaining on its docket, including several that could have a significant impact on marijuana companies.

There’s no guarantee that any of those bills – including one that would establish a new banking system in California for cannabis businesses – will get to Gov. Gavin Newsom’s desk.

The 2019 legislative session as a whole proved a mixed bag for the cannabis industry, with “some wins and some losses,” said Amy Jenkins, lobbyist for the California Cannabis Industry Association (CCIA).

One of those losses, she noted, was the failure earlier in the session ofAssembly Bill 286, a temporary state marijuana tax reduction.

“We wanted to be in a better position as it relates to tax reduction, enforcement enhancement,” Jenkins said.

“So, some of our priorities are going to be ongoing,” she noted, adding, “CCIA is already evaluating what our agenda items are going to be for next year.”

Perhaps the biggest win so far was the passage and quick signing into law of Assembly Bill 97, a budget trailer bill that extended the life span of provisional MJ business licenses, added a new $30,000-a-day civil fine for regulators to use against the illicit market and addressed several social equity program issues.

That bill, Jenkins said, was “critical” for licensed MJ companies.

Beyond flashy bills

At this point, most of the legislation that’s left to be considered is relatively smaller potatoes, yet still has the potential to alter the industry landscape for good or ill.

“The flashy bills have come and gone, and where we’re at now is slow and steady progress, with bills that will make subtle but important improvements every day,” said Max Mikalonis, a legislative advocate at K Street Consulting in Sacramento.

Some of the biggest industry priorities – including tax reduction and increased funding for enforcement against illegal MJ operators – will have to wait until next year, since a bill to reduce state marijuana taxes has already died and budget negotiations fell short, Jenkins said.

But a key report is expected in January from the Legislative Analyst’s Office that will aim to determine how effectively Proposition 64 – which legalized adult-use cannabis in the California in 2016 – has been implemented.

Both Jenkins and Mikalonis said that report may give more ammunition to cannabis businesses advocating for tax relief and other reforms.

Challenges ahead

Many bills face an uphill battle in either the Senate or Assembly Appropriations Committees, where plenty of measures wind up dying because of their fiscal impact.

Here’s a rundown of most of the cannabis industry-related bills that remain alive in the Legislature, as well as educated guesswork on their chances by Jenkins and Mikalonis.

Many could have big impacts for certain sectors, or for the industry at large.

Assembly Bill 228

What it would do: Allow for hemp-infused food/beverages and enable them to be sold by licensed marijuana retailers.

Current status: Awaiting Senate Appropriations Committee hearing.

Odds and insight: This is one that looks likely to become law, and it’s moved easily through the Legislature to date with little opposition.

Lawmakers may amend the bill in some form to address hemp farmers’ concerns that such products don’t have to pass the same stringent testing as marijuana.

But that’s also an issue that regulators could solve after the bill passes.

Assembly Bill 1417

What it would do: Crack down on online platforms such as Weedmaps that advertise for unlicensed marijuana businesses. The measure would implement a $2,500-a-day fine per violation for any site that posts such ads without a corresponding state license number.

Current status: Awaiting Senate Appropriations Committee hearing.

Odds and insight: The bill is backed by the Los Angeles-based United Cannabis Business Association, a coalition of licensed retailers that has expressed frustration for the past 18 months as Weedmaps has continued to allow their unlicensed competitors to market themselves.

Weedmaps, meanwhile, filed a letter of opposition with the Legislature, arguing the bill may run contrary to federal law and could result in litigation.

Jenkins called the bill a “significant priority” for CCIA, but it’s hard to tell if it’ll get all the way to Newsom’s desk.

Assembly Bill 1529

What it would do: Change a current requirement for universal symbols on marijuana vaporizer cartridges, shrinking the mandated symbol size from a half-inch by half-inch to a quarter-inch by quarter-inch.

Current status: Waiting to pass the full Senate on third reading.

Odds and insight: This one is almost certain to easily advance to Newsom.

The measure, which has one last hurdle in the Senate and broad bipartisan support, is a simple regulatory tweak that will make life a lot easier for vape cartridge producers.

Senate Bill 51

What it would do: Establish a new but limited banking system in California for marijuana companies.

Current status: Awaiting an Assembly Appropriations Committee hearing.

Odds and insight: This bill could prove to be a huge deal for the industry, or it could be for naught if it dies in the Appropriations Committee, which Jenkins noted was the same committee that killed a similar banking bill in 2018.

It’s hard to judge the chances, but even if it passes, there’s no set timeline for actual implementation.

A spokeswoman for the bill’s sponsor, Democratic Sen. Robert Hertzberg, said it could be “months to years” before financial services are available to marijuana companies if SB 51 becomes law.

“Everybody is watching in anticipation,” Jenkins said.

Senate Bill 475

What it would do: Allow marijuana product samples to be shared free of charge between licensed companies and employees but not to the public.

Current status: Awaiting an Assembly Appropriations Committee hearing.

Odds and insight: “There’s still some additional work to be done” on the bill, Jenkins said, hedging a bit when asked about the measure’s chances.

She said she is optimistic, but again, the Appropriations Committee can be a death knell for bills, so it’s hard to judge. Still, it’s faced little opposition so far.

John Schroyer can be reached at johns@mjbizdaily.com

Mary Creasey