Market Overview

California Cannabis Legislation In 2019: A Look At What Passed, Stalled In Sacramento

California Cannabis Legislation In 2019: A Look At What Passed, Stalled In Sacramento
Read more about our latest Cannabis News! CANNABIS HOME

It’s been a busy year for the California legislature, and like most of the previous seasons, cannabis has been at the top of lawmaker’s desks.

As we reach the end of the 2019 session, it’s a good time to go over the cannabis bills that played an important role in Sacramento.

Oct. 13 is the last day for Gov. Gavin Newsom to sign or veto bills passed by the legislature on or before Sept. 13. This means that the ongoing week is the last chance for legislators to approve bills until the legislature reconvenes in January 2020.

The Biggest Win: Budget Trailer Bill

The Budget Trailer Bill, also known as Assembly Bill 97, was the most significant milestone for the California cannabis industry, said Josh Drayton, the communication and outreach director for the California Cannabis Industry Association.

The CCIA is an influential trade association that represents the interests of the state’s cannabis industry.

“AB97 makes critical investments in cannabis equity programs, bolsters state enforcement against illicit cannabis operations and extends the provisional license program to ensure that more cannabis operators can enter the compliant market while undergoing a rigorous environmental review.”

Click here for more information about the upcoming Benzinga Cannabis Capital Conference Oct. 22-23 in Chicago.

The bill was approved by the governor in early July. Among other provisions, it prolongs the validity of provisional business licenses for cannabis companies until 2022. Temporary licenses would have otherwise expired in July.

AB97 also marks a turning point in the war on California’s black market cannabis, including a $30,000-a-day fine for cannabis businesses operating without a license.

Illegal cannabis businesses have been the biggest stick-in-the-wheel for the state’s tax collection on marijuana sales.

Tax Breaks For Cannabis Businesses Stall

In another effort to fight off the black market, AB 286 was introduced in the California legislature in January.

The bill was aimed at giving a temporary tax break to legal cannabis businesses in order for them to be able to compete with black market prices.

Although California was expecting to collect a large amount of cannabis tax dollars, legal retail prices simply cannot compete with the thriving black market.

“Tax relief is very important to the regulated cannabis industry as it struggles to compete against a thriving illicit market,” Drayton said.

Although the bill was presented at the start of the year, it has been held in committee review since May.

1,000-Plus New Cannabis Retail Licenses Shelved

Proposition 64 opened the way for recreational cannabis in California. Yet cities and counties were also given the right to ban adult-use dispensaries from their jurisdiction.

Assemblyman Phil Ting (D-SF) came up with a way to almost triple the number of dispensaries in the state by requiring at least one licensed cannabis store for every six restaurants and bars with liquor licenses in jurisdictions that voted yes on Prop. 64.

The number of legal dispensaries could have gone from 624 to over 1,800, according to the LA Times. The proposal was deemed controversial because it would have revoked the right of municipalities to opt out from dispensaries.

“To date, over 60% of California’s local municipalities remain in a full ban of cannabis activities," Drayton said, arguing that many counties and cities banned dispensaries despite a majority of their voters choosing to allow them.

The bill passed the Assembly Appropriations Committee, but it was then ordered inactive by Ting, who was not able not gather the two-thirds majority needed to pass it over to the Senate for a vote.

Hemp-Derived CBD Regulation Held Up

"Hemp-derived CBD is currently sold in many forms and in many outlets throughout California. AB 228 would have given clarity and a regulatory pathway for hemp-derived CBD to be legally manufactured and sold," Drayton said.

If passed, the bill would have allowed for hemp-derived CBD products to be included in any food, beverage or cosmetic without restrictions.

The bill passed the Assembly Appropriations Committee and was placed on suspense file, so it likely won’t be signed by the governor in this legislative session.

An Emblem For Licensed Retailers?

SB 658 would have required licensed retailers and delivery drivers to put up an emblem to prove they’re legitimate, driving people away from unlicensed vendors.

The legislation “would have done a lot to combat the illicit market and promote legal retail,” Drayton said.

The proposal has been held in committee since May.

Although many cannabis-related proposals have been roadblocked this season, there’s a good chance that they’ll be revisited in the next period, in Drayton's view.

Don’t miss out on the top cannabis stories of the day. Click here to sign up for our daily insider newsletter.

Picture by Unsplash and Flaticon.

Read more about our latest Cannabis News! CANNABIS HOME

Posted-In: Budget Trailer Bill CaliforniaCannabis Government Regulations Politics Markets General Best of Benzinga


Related Articles (MJ + HMLSF)

View Comments and Join the Discussion!

Cannabis Movers

Sign up for our secret cannabis newsletter!
Never miss out on the breaking news in the Cannabis Industry!

Catalyst Pharma Shares Pop After Cancelling Public Offering

The Daily Biotech Pulse: All Eyes On Aimmune, Ritter Stumbles In Late-Stage Study, Catalyst Shelves Offering Plans