Everyone knows there is a cannabis legal reform locomotive headed this way, but no one is sure exactly what track it’s on, what the fares will be or which timetable to follow.
Things got really rolling last November when California voters passed Proposition 64 to legalize adult recreational use by 2018. Four state agencies, a governor’s working group and 190 state employees are now scrambling to make a series of new tax and regulation deadlines leading up to Jan. 1, 2018.
On a more local track, Sonoma County voters just approved Measure A, the county supervisors’ tax package on medical and recreational growers and sellers. That adds a July 1 date to the master timetable when local cannabis operators can apply for new business licenses. (A local license is required to receive a state license in 2018.)
Also on the timetable is an April meeting of the county supervisors’ cannabis ad hoc committee (Lynda Hopkins and Susan Gorin) and a county staff update report due in June. Recent zoning restrictions on where cannabis operations may locate and other new regulations will be outlined.
The county anticipates collecting $6 million from an initial 5 percent tax to help fund more than a dozen new ag commission, health department and planning and zoning jobs at an annual cost of $3.9 to $5.7 million.
The runaway speed to set up all-new local and state “tax and trace,” permitting, cash handling and marketplace structures was clocked in by last November’s Prop 64 win, but not everybody was ready to jump on board.
“There is no way in hell we’re going to be able to enroll all the growers into this system by Jan. 1,” state Sen. Mike McGuire (D-Healdsburg) said at a oversight hearing in Sacramento last month. “We’ll be lucky if we get 5 to 10 per cent in our system by then. We need eight to nine months of just beta testing first.”
But McGuire is not willing to be the brakeman on this train. “We need to get people out of the black market. But if we can’t make our deadlines we need to be more transparent. We need to be blunt and take some accountability.”
The 68 pages of Prop 64 included an “off ramp,” allowing state lawmakers to announce formal deadline delays by September, McGuire said, adding that no such formal talks have taken place.
The state could decide to issue “provisional licenses” until it is ready to implement the detailed process for background checks and issuing permanent licenses, a major switching of tracks for everyone.
Over at the state’s Bureau of Equalization, tasked with “tax and trace” duties for medical marijuana, a spokesman said, “we still have every intention of meeting the Jan. 1, 2018 deadline.” A draft of the new medical pot regulations is expected to be released in April for early public comment.
Admittedly, the current rapid pace of cannabis reform is the opposite of inaction exhibited by California lawmakers for 20 years after compassionate use of medical marijuana was approved by voters in 1996. It wasn’t until 2015 when Sen. McGuire and Assemblyman Jim Wood (D-Healdsburg) led the passage of the Medical Marijuana Regulation and Safety Act (MMRSA.)
That means in some places there are now two cannabis locomotives steaming down separate tracks, one for the medical industry and one for the new recreational market, estimated by some as a potential $7 billion industry.
Just this week, in his new budget announcement, Gov. Jerry Brown has begun to call for “aligning” the two marijuana markets on a single track wherever possible.
Already, the state has set a single set of tax levels. Effective Jan. 1, 2018, a 15 percent excise tax is to be charged on all purchases of marijuana and marijuana products. Additionally, a tax on cultivators of marijuana is imposed as follows: $9.25 per dry-weight ounce of marijuana flowers; and $2.75 per dry-weight ounce of marijuana leaves
On top of those taxes, Sonoma County voters just approved up to a 10 percent tax on manufacturers, nurseries, distributors, transporters, labs and dispensaries.
Growers will be taxed a maximum rate of $10 per square foot for outdoor operations and $38 for indoor grows.
Local incorporated cities also can add on more taxes still as Cloverdale has approved and Santa Rosa voters will decide in June.
“This is a steep hill,” said McGuire. “We need to ensure equal and fair tax collections. Sixty percent of all marijuana (grown in the U.S.) comes from just four counties (Mendocino, Lake, Humboldt and Trinity.) That’s a lot of cash and security issues. We don’t know what the (federal) Trump Administration is doing.”
