California’s legislative session kicked off this year with one particularly clear priority: tax reform.
Lawmakers, advocates, and industry stakeholders led a forceful push this spring, from letters to rallies to bills, as Cannabis Wire reported. Licensed cultivators are “collapsing” amid unrelenting competition from illegal growers, crashing cannabis prices, and a rigid tax structure determined by weight and not price. This ultimately culminated in a proposal in Gov. Gavin Newsom’s revised budget released last month, which now suggests completely eliminating the cultivation tax on July 1, 2022.
In parallel, lawmakers introduced dozens of bills that will transform the state’s industry if signed into law, on topics like interstate commerce and caterer licenses, as Cannabis Wire reported. Friday marked the deadline for those bills to advance out of their chamber of origin, and more than a dozen did so.
Here’s an overview of the bills that are still in play, and those that didn’t make the cut: (Note: only primary author/s are included below.)
SB 1293 (Sponsor: Senator Steven Bradford): This bill provides a tax “credit to a cannabis equity applicant or licensee, as defined, in an amount equal to $10,000” until January 1, 2027 (starting this past January 1).
AB 2925 (Sponsor: Assembly member Jim Cooper): This bill requires the State Department of Health Care Services to report to the legislature “a spending report of funds from the Youth Education, Prevention, Early Intervention and Treatment Account” for the current and prior fiscal years, and annually going forward. That fund is supported by cannabis tax revenue.
AB 2595 (Sponsor: Assembly member Reginald Byron Jones-Sawyer, Sr.): This bill regulations so that “when a social worker is investigating an alleged case of child abuse or neglect, a parent’s or guardian’s use or possession of cannabis is treated in the same manner as a parent’s or guardian’s use or possession of alcohol and legally prescribed medication.”
“Currently, mere possession of legal cannabis is insufficient to take custody of a family under case law. However, my office became aware of incidents where families are taken into dependency court solely for possessing legal cannabis, without any evidence of child abuse or neglect,” Jones-Sawyer, Sr. told Cannabis Wire.
“Drawing families into court, especially for this reason, is not only a stressful event that requires taking time off work or juggling schedules but can be incredibly traumatic for children,” Jones-Sawyer, Sr. added.
He said that Department of Social Services staff “appreciate the legislation.”
AB 1954 (Sponsor: Assembly member Bill Quirk): This bill would prevent doctors from “automatically denying treatment or medication” to medical cannabis patients “without first completing a case-by-case evaluation of the patient that includes a determination that the qualified patient’s use of medical cannabis is medically significant, as defined, to the treatment or medication.” It would also protect these doctors from being “punished, or denied any right or privilege, for having administered treatment or medication to a qualified patient pursuant to the bill and consistent with the standard of care.”
AB 2102 (Sponsor: Assembly member Reginald Byron Jones-Sawyer, Sr.): This bill imposes “a civil penalty of up to $30,000 per violation against a person who violates the prohibition on knowingly renting, leasing, or making available a building, room, space, or enclosure for the purpose of unlawfully manufacturing, distributing, or selling cannabis, in addition to the criminal penalty, and authorizes injunctive relief, as specified.” Each day would count as a new violation. Further, the person or entity who initiates the case will have their costs covered by the “defendant or from the fine.”
“Statewide we continue to see a problem with the illegal cannabis market. Not only do these operators undercut the legal market, but their operations, whether cultivation, manufacturing, or retail, pose a grave threat to public safety,” Jones-Sawyer, Sr. told Cannabis Wire. “This bill provides an additional tool for law enforcement to shut down these businesses by assessing fines on property owners who knowingly permit these businesses to operate.”
AB 2421 (Sponsor: Assembly member Blanca Rubio): This bill strengthens the penalties for violations related to the impact of unlicensed cannabis cultivation on the state’s waters and wildlife.
AB 1885 (Sponsor: Assembly member Ash Kalra): This bill will prevent a “veterinarian who recommends the use of cannabis on an animal for potential therapeutic effect or health supplementation purposes” from being disciplined. It also calls for guidelines for these vets and for regulations for “products intended for animals.” And, it would “exclude from the definition of ‘animal,’ for these purposes, livestock and food animals, as specified.”
SB 1097 (Sponsor: Senator Richard Pan): This bill would require that cannabis products have, on the front of their packaging, a “warning label” that “is in the largest type possible for the area, is bright yellow, and includes a pictorial or graphic element.” It also would require a “brochure” given to consumers “that includes steps for safer use of cannabis and the set of health warnings required for the labels.” It will also require cannabis ads to include these warnings on “at least 15% of the face of the advertisement.”
AB 1894 (Sponsor: Assembly member Luz Rivas): This bill will require, starting July 2024, certain cannabis vape packages, labels, and ads to “prominently display a specified message to properly dispose of an integrated cannabis vaporizer as hazardous waste.”
“For far too long, electronic vapes are being marketed as disposable when they are not legally disposable. The waste from vapes create significant environmental issues, yet, there is no traditional recycling system in place to collect and properly manage these products,” Rivas told Cannabis Wire.
“In order to educate consumers and prevent vapes from going in the trash, we must stop the marketing of these products in any way that implies they can be disposed of in the trash or recycling systems.”
AB 2150 (Sponsors: Assembly members Tom Lackey and Ken Cooley) This bill would fund a study on cannabis-impaired driving. There is currently no national definition of cannabis-impaired driving, as Cannabis Wire has reported.
The state’s cannabis law requires, “if the Regents of the University of California accept the responsibility,” for them to “establish the Center for Medicinal Cannabis Research.” The bill would subsequently “require the center to establish a study examining the effects of cannabis products that are currently in the commercial cannabis market and, in consultation with the Department of the California Highway Patrol, evaluating the public safety consequences of driving after cannabis use and improving understanding of the best methods for determining related driving impairments.” The findings would be due by the start of 2027, and the study would receive $2 million in funding from cannabis tax revenue.
SB 1326 (Sponsor: Senator Anna Caballero) This bill would aim to facilitate interstate commerce of cannabis, which is currently not allowed anywhere in the United States as cannabis remains federally illegal.
The bill would “authorize the Governor to enter into an agreement with another state or states authorizing medicinal or adult-use commercial cannabis activity, or both, between entities licensed under the laws of the other state or states and entities operating with a state license pursuant to [the Medicinal and Adult Use Cannabis Regulation and Safety Act], provided that the commercial cannabis activities are lawful and subject to licensure under the laws of the other state or states.”
Despite the efforts of the Department of Cannabis Control and local governments to build and bolster the legal market in the state, “California produces three times the amount of cannabis that it can consume, creating an oversupply issue that is destabilizing the market,” Caballero told Cannabis Wire.
“Market expansion is a key piece of the puzzle to stabilize the industry and build a workable framework today that will create a competitive advantage in the years to come as we move closer to federal legalization,” she continued.
Further, the bill aims to advance a more serious conversation around interstate commerce, an area of cannabis policy that is, as Cannabis Wire has reported, a significant part of the reform debate at the federal level.
“This bill is the tool needed for the Governor to start having conversations with other states around a viable option to pursue interstate commerce,” Caballero said, adding that her bill “can be the catalyst to move the needle on interstate commerce,” and that, if it passes, she will be “ready to initiate conversations with my counterparts in others states to explore potential partners.”
SB 1281 (Sponsor: Senator Steven Bradford): Of the various tax reform bills that were introduced before Gov. Newsom updated his budget, on which Cannabis Wire reported, only this one advanced beyond Friday’s deadline.
Bradford’s bill would “discontinue the imposition of the cultivation tax,” and would “impose the excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 5% of the gross receipts” of a retailer. Finally, the bill would make it so that distributors no longer have to “collect the excise tax from the cannabis retailer” and “remit the excise tax to the department,” but that the remit would be the responsibility of the retailer who would “collect the cannabis excise tax from the purchaser.” All of this would take effect at the start of 2023.
AB 1656 (Sponsor: Assembly member Cecilia Aguiar-Curry): The bill would allow hemp-derived CBD products at adult use cannabis shops, which is currently not allowed, as hemp products and adult use cannabis products are regulated separately.
The bill would make it so that state law “does not prohibit a licensee from manufacturing, distributing, or selling products that contain industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp, if the product complies with all applicable state laws and regulations.”
AB 2568 (Sponsor: Assembly member Ken Cooley): This bill states that it’s not a crime to provide insurance to cannabis companies. Specifically, considering that cannabis remains illegal under federal law, it “would provide it is not a crime solely for individuals and firms to provide insurance and related services to persons licensed to engage in commercial cannabis activity.”
SB 1148 (Sponsor: Senator John Laird): The bill will streamline cannabis licensure by making it so that once a locality has reviewed and approved an application under the California Environmental Quality Act (CEQA), an additional CEQA review by the Department of Cannabis Control is no longer required.
AB 2188 (Sponsor: Assembly member Bill Quirk): This bill will “make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, if the discrimination is based upon the person’s use of cannabis off the job and away from the workplace.” This would “not apply to employees in the building and construction trades” or “preempt state or federal laws requiring employees to be tested for controlled substances.”
AB 1706 (Sponsor: Assembly member Mia Bonta): This bill would require, for cannabis-related sentences that were “not challenged” by July 1, 2020, “the court to issue an order recalling or dismissing the sentence, dismissing and sealing, or redesignating the conviction no later than March 1, 2023, and would require the court to update its records accordingly and to notify the Department of Justice. The bill would require the Department of Justice, on or before July 1, 2023, to complete the update of the state summary criminal history information database, and ensure that inaccurate state summary criminal history is not reported, as specified.” It would also require an “awareness campaign” aimed at impacted individuals.
“I introduced this bill as a matter of justice and equity. We legalized cannabis in 2016 and in 2018, we enacted legislation meant to remove barriers and streamline the process by which individuals could get their records automatically reduced, dismissed or sealed for old offenses that had been decriminalized. It is unacceptable that in 2022, people are still carrying the burdens of these records,” Bonta told Cannabis Wire.
“We must right the hypocrisy of the millions our state makes from the legal cannabis market, and the people who are still being denied opportunities to succeed in life because of minor cannabis records. We have a moral obligation to get this right.”
SB 1336 (Sponsor: Senator Scott Wiener): This bill would provide a tax credit to certain cannabis businesses “in an amount equal to 25% of the total amount of the qualified taxpayer’s qualified expenditures, as defined, in the taxable year not to exceed $250,000 per taxable year” for the taxable years between next January to January of 2028.
“Our legal retailers are in danger of losing business to the illicit market, in part due to high taxes,” Wiener told Cannabis Wire. “SB 1336 will give legal businesses a much-needed leg up so Californians can continue to access safe and tested cannabis products.”
AB 2210 (Sponsor: Assembly member Bill Quirk): This bill would allow for a “temporary event license” that would allow cannabis retailers to sell cannabis at events at venues licensed by alcohol regulators as long as cannabis and alcohol sales and consumption are separate.
Jones-Sawyer, Sr., the bill’s co-author, referred to the bill as “an effort to further ensure legal cannabis is not demonized” by ensuring that “a temporary event cannabis license cannot be denied based solely on a venue holding a concurrent alcoholic beverage license.”
