By: Justin A. Santarosa and Jennifer Briggs Fisher
Gavin Newsom, Governor of California, released his proposal for the State’s budget today, outlining a number of items of importance for the California cannabis industry.
The most noteworthy proposal is regulatory consolidation. In an effort to improve and simplify regulatory oversight of commercial cannabis activity, the Governor’s office is proposing to consolidate the three licensing entities that are currently within the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health, into a single “Department of Cannabis Control” by July 2021.
Such a change would be welcomed by many operators in the State, especially vertically integrated operators who must now contend with multiple state agencies that have different regulatory requirements and interpretations. This may also boost M&A activity in the state, given that it could lead to more consistent regulations regarding ownership changes and a more efficient regulatory approval process. A single regulatory agency would also streamline fee collections and enforcement. More details on this proposal are expected in the Spring of 2020 and we will be watching closely for those updates.
Additionally, the budget looks to “fix” what many consider to be a broken cannabis taxation regime. The Governor states that the goal of the proposal is to reduce the tax collection burden on the cannabis industry and simplify the tax collection process. The proposed changes move the responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer.
While no changes to the tax rates are specified, the proposed budget does state that the Governor will consider other changes to the existing cannabis tax structure, including the number of taxes and tax rates. The California tax burden is viewed as one of the major inhibitors of the growth and success of the cannabis market in the state.
We will continue to monitor these developments as they unfold, so please check back for further updates and analysis.
New Jersey’s top lawmakers have decided to let voters decide on legalization of cannabis during the 2020 presidential elections.
The constitutional amendment introduced today, November 18, 2019, by Senate President Stephen Sweeney and Senator Nicholas Scutari would legalize the use of recreational marijuana for anyone at least 21 years of age, and establish a Cannabis Regulatory Commission to oversee the new market.
The amendment does NOT detail the taxation rate, which was $42 an ounce in the original bill. It is also not clear if the commission will have 5 members, like the original bill.
According to NJBiz., Gov. Phil Murphy and legislative leadership long-resisted pursuing legalization via a ballot question because any, inevitable, changes to the program would have to go before voters in yet another ballot referendum.
“We made further attempts to generate additional support in the Senate to get this done legislatively, but we recognize that the votes just aren’t there,” reads the joint statement from Sweeney, D-3rd District, and Scutari, D-21st District.
To appear on the 2020 ballot as a constitutional amendment, both houses would need to pass the measure by a super-majority by the summer, or they would need to pass it 2x in both houses by a simple majority for 2 years in a row.
Just hours earlier, several progressive and social justice groups made a plea to legislative leadership to push through a legalization bill, pointing to a growing increase in low-level cannabis offenses which have disproportionately affected people of color.
On June 25, Illinois Gov. J.B. Pritzker (D) signed into law the Cannabis Regulation and Tax Act, making Illinois the 11th state in the country to legalize cannabis and the first to have a legislature approve commercial sales without a voter referendum.
Legalizing marijuana in Illinois is expected to generate revenue to help restore poverty-and crime-ridden communities and fund substance abuse, mental health, and law enforcement services. Adult-use cannabis sales could net Illinois about $500 million in tax revenue annually, according to some experts. The act takes effect Jan. 1, 2020.
The Illinois law will end cannabis prohibition and replace it with a comprehensive and highly regulated system to tax and regulate cannabis for adults 21 and over.
To view the full text of this article written by Duane Morris attorney Neville Bilimoria, please visit the Duane Morris website.
Just days after the NJ Senate and Assembly close in on expansion of medical use Cannabis, the New Jersey Department of Health (“Department”) published notice of a Request of Applications (“RFA”) for an additional 108 alternative treatment center (“ATC”) permits which authorize holders to cultivate, manufacture, and/or dispense medicinal marijuana. The Public Notice is available here, while the RFA is summarized below and available in full here.
Continue reading New Jersey Medicinal Marijuana Program Set For Expansion
The New Jersey Senate voted 33-4 yesterday (Thursday) to advance a bill that is intended to increase medical marijuana sales and likely create new business opportunities in the state.
Per Marijuana Business Daily, before the vote, the Senate amended Assembly Bill 10 to allow marijuana workers to become union members.
The Bill will now return to the NJ Assembly for a vote to approve the Senate’s modification.
If the Bill is ultimately signed, the measure will:
– Create a new regulatory commission for medical marijuana.
– Pave the way for the state to issue additional business licenses.
– Allow cannabis home delivery.
– Ease restrictions on the process for recommending medical marijuana.
Currently there are 12 vertically integrated medical cannabis licenses that have been granted in NJ.
We will continue to track this development and report back as it get’s closer to passage in the Assembly. -Brad
Duane Morris partner Rick Ball was a guest speaker on The Cannabis Reporter Radio Show, hosted by Snowden Bishop, on May 20, 2019. The episode is titled “How to Free CBD from the FDA’s Grasp: Tell Congress to Call It GRAS,” and can be found on The Cannabis Reporter website.
About the Episode
When Congress legalized agricultural hemp with the passage of the 2018 Farm Bill, it seemed like the hemp industry would finally be out of the woods from a regulatory standpoint. So, it defies logic that the FDA is creating obstacles for hemp CBD producers and that every-day people are still being arrested for possession of hemp biomass and extracts.
Just last week, a 67-year-old great grandmother was arrested at the happiest place on earth when a Disney World employee discovered a bottle of CBD in her purse after a routine inspection at the park entrance. You may recall the truck driver who was arrested in Idaho with a load of freshly harvested hemp on its way from Oregon to a processing plant in Colorado just weeks after the hemp measure was signed into law.
Incidents like that leave most of us scratching our heads, considering that hemp is now legal at the federal level and hemp-derived CBD is a harmless molecule that is naturally produced in our own bodies when we’re young.
Let’s face it, legal hemp seems to be an oxymoron. Minutes after the hemp measure was signed into law, the FDA blindsided the elated industry with its stern warning that only one CBD product has ever been approved for sale in the U.S. and that all other hemp CBD products would remain illegal to sell until they can be approved by the FDA. The only exceptions would apply to the manufacturing and sale of CBD limited to states that had included CBD provisions in their state marijuana policy measures.
To read more about this episode and listen to the interview with Duane Morris attorney Rick Ball, please visit The Cannabis Reporter Radio Show page here.
The CA Senate voted 35-1 to allow banks and credit unions to accept cash deposits from marijuana retailers.
Per reporting from the Star Tribune, those banks would be permitted to issue special checks to the retailers that could only be used for certain purposes, including paying taxes and California-based vendors.
State lawmakers are of the view that such banks would make it easier for licensed cannabis retailers to pay their taxes, which fell far short of expectations in the first year after legalization.
“This is as close as we can get until the federal government changes its policy,” said Sen. Bob Hertzberg, a Van Nuys Democrat and the author of the bill that now goes to the Assembly.
Per the Marijuana Law Reporter, Marijuana has been legal in California since January 2018, but it’s still illegal under federal law under the Controlled Substances Act.
-Brad A. Molotsky, Esquire
According to late night reporting from NJ Biz – Dan Munoz, who has been all over this topic, committees in both the NJ Assembly & Senate approved a measure that would legalize adult-use recreational marijuana, setting the proposals for a showdown full-floor vote in 7 days from now on March 25.
Senate Bill 2703 passed by a 6-4 vote with one abstention in the Senate Judiciary Committee Monday evening while its counterpart, Assembly Bill 4497, passed by a 6-1 vote with two abstentions at the Assembly Appropriations Committee.
Both measures would allow for anyone over 21 years of age to possess up to an ounce of marijuana.
The product would be taxed at $42 an ounce and the industry would be regulated by a five-person Cannabis Regulatory Commission, which will function similarly to how the Casino Control Commission operated following the legalization of gambling in the 1970s.
The approval of both measures followed hours of closed-door meetings as lawmakers hammered out last-minute changes to the legislation, including a dramatically increased expungement process for people with marijuana-related convictions.
Stay tuned for a detailed analysis as the final bill is published. – Brad
Last year was a record year for cannabis. Canada passed the Cannabis Act, making adult-use cannabis legal there. The FDA approved a cannabidiol-based medicine, Epidiolex. And the President signed the Agriculture Improvement Act of 2018, aka the 2018 Farm Bill, into law on December 20, 2018.
While the 2018 Farm Bill granted the U.S. Department of Agriculture the ability to regulate hemp, it also preserved the right for the U.S. Food and Drug Administration (FDA) to regulate products containing cannabis or cannabis-derived compounds. The FDA regulates products such as human and animal drugs, biological products, cosmetics, food and animal feed, among other things. So any inclusion of cannabis or cannabis-derived compounds, like CBD, in any of those types of products would be regulated by the FDA. The FDA has stated that this is true regardless of the source of the cannabis substance, be it hemp or marijuana.
Read the full Duane Morris alert.
On January 16, 2019 the California Office of Administrative Law (OAL) approved the final regulations that were submitted by California’s three licensing agencies, the Bureau of Cannabis Control (BCC), the Department of Food and Agriculture (CDFA) and the Department of Public Health (CDPH), in December. These new, approved regulations went into effect immediately, meaning the previous emergency regulations (under which the industry has been operating for the past year) are no longer in effect. The regulations can be viewed here.
In a joint press release issued by the three agencies, BCC Chief Lori Ajax stated: ““These approved regulations are the culmination of more than two years of hard work by California’s cannabis licensing authorities. Public feedback was invaluable in helping us develop clear regulations for cannabis businesses and ensuring public safety.”
Continue reading New Cannabis Regulations Approved in California