Two bills aimed at addressing lingering challenges with California’s cannabis industry have failed to make it through this year’s legislative session.
Proposed by state Senator Steven Bradford (D- Gardena), Senate Bill 658 would have established a statewide emblem program for authorized retail businesses in order to enable prospective customers to readily distinguish between them and illicit operators. The bill, which was co-developed by the Los Angeles Department of Cannabis Regulation, would have also given local regulators access to the state’s track and trace program. This would have been an especially notable development, given the tug-of-war between state and local control that erupted after California implemented regulations allowing for statewide delivery. The state, in fact, continues to grapple with a lawsuit against its Bureau of Cannabis Control, filed by dozens of local jurisdictions opposing the move.
For the industry, which is keeping a close watch on legislation that can potentially quell illicit sales, the shelving of Senate Bill 658 is a considerable loss. At a realtors’ conference last Friday, Josh Draytong, director of outreach and communications at the California Cannabis Industry Association, said, “with the enforcement issues here in Los Angeles, this is one tool that would have helped.”
The lawmakers, however, have not necessarily given up on these measures. Senator Bradford’s legislative director, Ryan Morimune, told Cannabis Wire, that the “he definitely has an interest in this area and will revisit possible solutions with stakeholders,” but he has yet to decide whether to propose some form of the existing bill, which died in the Appropriations Committee, or to author new legislation for the Senate’s next session in January 2020.
Assembly Bill 286, which would have removed California’s cultivation tax and cut the excise tax from 15% to 11% for a period of three years, also died in the Appropriations Committee, despite receiving ample support from California State Treasurer Fiona Ma.
In an interview with Cannabis Wire, the bill’s co-author, Assemblymember Rob Bonta (D-Alameda), noted that this is the second time this legislation has failed to make it through. When asked about opposition to the bill, which he and supporters maintain would quell illicit sales and give authorized retailers a fighting chance, Bonta noted that “traditionally, Democrats don’t like to give corporate tax cuts, and that is what this is seen as.”
Currently, the assemblymember awaits a report from the California Legislative Analyst’s office, which might support the need for a change in the cannabis industry’s tax structure, or, perhaps, propose different recommendations. However, said Bonta, even if the report, which is due later this year, does not call for tax reductions, he will still consider proposing similar legislation when the Legislature reconvenes next year.
Reducing taxes for licensed cannabis retailers, he said, “is essential to accomplish what we set out to create, which is a robust, regulated marketplace.”
Reducing taxes, he added, can also serve as an incentive for those who continue to operate without a license. The cannabis industry, he noted is unique in that retailers are accustomed to operating outside the law. Those who are used to doing so need a reason to transition to the regulated market.