At the start of 2020, California lawmakers proposed more than two dozen cannabis bills, aiming to tackle everything from high cannabis taxes to enforcement against the illegal market. But as California lawmakers wrapped up their work at the end of August, only seven of those bills headed to Governor Gavin Newsom’s desk. Today, the deadline to sign or veto bills, the final tally is: five signed, two vetoed.
One of the bills Newsom signed was a top priority both for his administration and the industry. The budget bill, AB 1872, provides “tax certainty” for cannabis licensees through 2021. In August, Assembly member Phil Ting, chair of the Budget Committee, told Cannabis Wire, “We thought it was important to give these companies tax certainty over this next year because they are not getting much of the relief that other small businesses are getting through the federal government,” referencing the Paycheck Protection Program and other federal financial services that have helped keep small businesses afloat amid COVID-19.
Another signed bill, AB 1525, tackled the issue of banking access, which is not just a problem for California’s cannabis businesses, but for the national industry. Last September, the US House of Representatives passed the SAFE Banking Act, the first standalone cannabis bill to receive a vote in Congress, but it has since stalled in the Senate. This week, the House included the Act in its revised COVID-19 relief bill, the HEROES Act.
In signing the legislation, Newsom wrote that the state banking access bill “affirmatively protects certain entities providing financial services to the legal cannabis industry … This bill has the potential to increase the provision of financial services to the legal cannabis industry, and for that reason, I support it.”
In August, bill sponsor Asm. Reggie Jones-Sawyer, of Los Angeles, told Cannabis Wire, “My district is home to a number of financial institutions that would love to provide financial services to cannabis businesses, but feel there is too much risk without assistance from the state.”
Another bill signed by Newsom addressed California’s first-of-its-kind cannabis appellations program. Just as a wine cannot be called Champagne unless it was produced in Champagne, there will be such branding for, say, Humboldt cannabis. (Read Cannabis Wire’s extensive coverage of the process to create appellations in California.)
That bill, SB 67, would “limit the approval of appellations of origin for cannabis unless it requires the practice of planting in the ground in flowering areas and excludes the practices of using artificial lighting and structures in flowering areas.” It would also “require the department to establish standards by which a licensed cultivator may designate a city or city and county of origin for cannabis produced 100% within the designated city or city and county.”
One of the bills Newsom vetoed, AB 1470, also relates to cannabis testing. In his veto note, Newsom wrote that the bill “would provide that cannabis goods do not have to be in final retail packaging when being tested by laboratories to ensure compliance with current health and safety standards. This bill conflicts with current regulations promulgated by cannabis licensing authorities that prevent contaminated and unsafe products from entering the retail market. While I support reducing packaging waste, allowing products to be tested not in their final retail form could result in consumer harm and have a disproportionate impact on small operators.”
Newsom vetoed the final bill, AB 545, because it was “premature,” he wrote. In short, the bill aimed to “sunset” the Bureau of Cannabis Control, but Newsom’s administration is still in the process of consolidating cannabis regulation, which currently involves the Bureau, along with the Departments of Public Health and Food and Agriculture. COVID-19 has delayed the consolidation process.