Nearly entire CA House delegation – including 4 Republicans – backs cannabis banking

More than three-quarters of California’s local governments have declined to authorize retail stores to sell cannabis, as permitted by state voters with their 2016 approval of Proposition 64. Opposition has been led by moderate Democrats and conservative Republicans unconvinced that making the drug readily available for recreational use is good for society.

But much of California’s House delegation is supportive of helping the marijuana industry achieve a key goal: access to the banking system. Even with cannabis now legal in some form in 33 states, the great majority of banks and credit unions in the Golden State and elsewhere have declined to do business with marijuana-related businesses because possession and sale of the drug remain illegal under federal law.

Last week, the House passed the Secure and Fair Enforcement Banking Act 321 to 103. Every California Democrat backed the measure and so did four of the state’s seven Republican members: Majority Leader Kevin McCarthy of Bakersfield, Tom McClintock of Elk Grove, Devin Nunes of Tulare and Duncan Hunter of Alpine.

The passage of the bill after past efforts went nowhere was widely credited to a change in focus in lobbying. Leading the push this time was lobbyists for the financial services industry itself – not the cannabis industry. They argued that making a multibillion-dollar industry use cash only created headaches and safety risks for the many legitimate, longstanding businesses that dealt with cannabis companies.

Bankers say other businesses shouldn’t be inconvenienced

American Bankers Association President and CEO Rob Nichols told Politico, “The most compelling arguments have been centered around these secondary relationships. It’s the local plumber, it’s the local electrician, it’s the attorney, it’s the accountant who are doing business with a cannabis grower or dispensary who are then having challenges associated with getting banking products and services.”

The American Financial Services Association focused its lobbying on McCarthy and Speaker Nancy Pelosi, D-San Francisco, also emphasizing the need to stop inconveniencing so many established businesses.

The fate of the SAFE bill in the Senate is unclear. Senate Banking Committee Chairman Mike Crapo, R-Idaho, has said that he will schedule a hearing on the bill, but his aides said that should not be interpreted as support.

California’s Democratic senators, Dianne Feinstein and Kamala Harris, are expected to be supportive. After 35 years as a staunch supporter of the drug war, Feinstein reversed course in spring 2018.

“My state has legalized marijuana for personal use, and as California continues to implement this law, we need to ensure we have strong safety rules to prevent impaired driving and youth access, similar to other public health issues like alcohol,” she told a McClatchy reporter.

Harris has also changed her position. In 2010, while running for California attorney general, she opposed an initiative to legalize recreational marijuana use. 

“Spending two decades in courtrooms, Harris believes that drug selling harms communities,” her aide told Capitol Weekly. “Harris supports the legal use of medicinal marijuana but does not support anything beyond that.”

But her position softened over the years, and last year she signed on as a co-sponsor of a bill by Sen. Cory Booker, D-New Jersey, that would make cannabis legal under federal law.

This article was originally published by CalWatchdog.com

California Officials Struggling to Regulate Weed Market

The agency overseeing California’s legal marijuana market has been overmatched by the job and is struggling to hire sufficient staff and set an overall strategy for the nation’s largest cannabis economy, an audit found.

About two-thirds of the 219 staff positions authorized for the Bureau of Cannabis Control remain unfilled, according to an audit by the state Finance Department. A shortage of staff in the enforcement unit is hindering the agency’s ability to conduct investigations.

While the cannabis bureau is in its relative infancy and has established a foundation to oversee the market, “the current status and location of personnel is not sustainable to provide effective and comprehensive oversight of cannabis activities throughout California,” according to the audit, which was released earlier this month.

Where does California’s cannabis tax money go?

Drug abuse prevention, public safety, protecting the environment, economic development — these were some of the visionary promises that legalized cannabis would pay for.

Now, 1 1/2 years after the start of legal sales, the lofty goals of Prop. 64 remain only partially fulfilled, deferring the dream of funding major new social programs.

In order to collect the $1 billion a year in state tax revenue promised by backers of the initiative, plus millions of dollars more for cities and counties, California needs to sell at least $7 billion worth of weed. Last year, $2.5 billion was sold.

Hampered by a slow start and strict rules required by the initiative, the state has put a regulatory structure in place. But much else is still on the drawing board. …

Click here to read the full article from the Mercury News

Tax revenue from legal pot sales falls short of projections in California

California’s projections of cannabis tax revenue are coming down from their original highs.

State budget documents released Thursday by Gov. Gavin Newsom slash the administration’s cannabis tax prediction by $223 million through 2020. Industry analysts said tax revenue from the newly legal weed business is lower than expected because of limited access to legal pot in parts of the state, the impact of taxes on price-sensitive consumers and the state’s entrenched black market.

By dropping its expectations of tax revenue, California is simply acknowledging those realities, said John Kagia with New Frontier Data, a cannabis research firm.

“It is, I think, a pragmatic confession that the state still has a lot of work ahead,” he said. …

Click here to read the full article from USA Today

San Francisco will remove more than 9,300 marijuana-related crimes from people’s records

Marijuana smokingSan Francisco prosecutors announced Monday they would move to expunge 9,300 marijuana-related convictions dating back decades, part of a sweeping effort to rethink “the war on drugs” now that pot is legal in California.

The announcement culminated a year-long review of marijuana convictions in San Francisco, which critics say disproportionately punished minority communities and made it more difficult for those with criminal records to get jobs and other essentials.

Other California counties, including Los Angeles, are considering similar efforts, though none have gone as far as San Francisco. The Los Angeles County district attorney’s office estimates there have been 40,000 felony convictions involving pot-related offenses since 1993, but prosecutors have not said how many of those could be eligible for being expunged. …

Click here to read the full article from the L.A. Times

Gov. Newsom Shifts National Guard to Fighting Marijuana Black Market


Marijuana1Gov. Gavin Newsom is shifting the California National Guard from border enforcement to cracking down on the illegal marijuana industry — even though he was an advocate for the legalization of the drug.

After announcing earlier this month that he was scaling down the National Guard presence near the border, Newsom shifted resources to fighting illegal marijuana farms, which are maintaining a black market that makes it difficult for legal suppliers to thrive, and that deprives the state of tax revenues that it expected legalization would provide.

The Los Angeles Times reported Tuesday:

ast week, Newsom announced an expansion of efforts by the California National Guard to work with federal officials to target the black market, including illegal drug grows in Northern California operated by international drug cartels.

The governor proposed that at least 150 California National Guard troops would be redeployed from the U.S.-Mexico border to join a federally funded Counterdrug Task Force. The new forces would focus on illicit cannabis activity in Northern California.

As much as 80% of the marijuana sold in California comes from the black market, according to an estimate by New Frontier Data, a firm that tracks cannabis sales and trends. Analysts also found that California’s illicit pot market was valued at an estimated $3.7 billion last year, more than four times the size of the legal market.

In addition to black market woes, marijuana entrepreneurs in California are frustrated at the slow pace of local permitting processes for dispensaries.

California voters approved the legalization of recreational marijuana by passing Proposition 64 in 2016.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. He is also the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.

This article was originally published by Breitbart.com/California

Will tax breaks and banks help California’s struggling marijuana industry?


marijuanaUnfriendly banks, high taxes and black-market competitors are some of the obstacles that licensed cannabis companies say hold them back as they try to cultivate a new industry in California.

Some California lawmakers want to give them a hand, and they’re considering a set of bills that would in ways great and small fine tune the law governing recreational marijuana.

“We’re all in this for the long haul,” Assemblyman Rob Bonta, D-Alameda, said at a press conference Monday. “It’s incumbent on us to continue to monitor what’s happening and course correct if necessary.”

Some of the bills aim to give cannabis businesses the same opportunities as others — such as access to state tax deductions or the ability to bank — while others look to provide relief to legitimate businesses locked in a losing battle with the black market. …

Click here to read the full article from the Sacramento Bee

California Cannabis Delivery in Headed Toward Legal Battle


Marijuana StoreIn 2016, many California police chiefs and sheriffs opposed to legalized recreational marijuana use were placated by a provision in Proposition 64 that said local governments would have the right to block recreational sales.

The Ballotpedia overview of Proposition 64 reflected the conventional wisdom at the time it passed: “Local governments were also allowed to completely ban the sale of marijuana from their jurisdictions.” The text of the ballot measure stated: “Allows local regulation and taxation of marijuana.”

And as CalWatchdog has reported, 80 percent of local governments have declined to authorize the opening of local pot stores.

But last week, the state Office of Administrative Law approved rules crafted by the state Bureau of Cannabis Control that say marijuana sales by delivery services can operate in any community – even if local governments object.

This led to an immediate backlash – and strong hints that the rules will lead to a court fight.

“This decision puts the public safety needs of communities across the state at risk,” Carolyn Coleman, executive director of the League of California Cities, said in a statement.

“We are deeply concerned with the adoption of the new cannabis regulations, which allow for the delivery of cannabis anywhere in the state. We are already having trouble enforcing a new and complex industry, and this allowance will only make enforcement even more difficult,” California Police Chiefs Association President David Swing told the Sacramento Bee.

Marijuana industry officials disputed the idea that the deliver-anywhere ruling went against the spirit of Proposition 64 or its language. They said the ruling reflected the will of Californians, who approved the measure 57 percent to 43 percent – a 2 million vote cushion.

But even some supporters of Proposition 64 appeared unsure if the cannabis bureau’s ruling squared with what the ballot measure said. Assemblyman Ron Bonta, D-Oakland, told the Associated Press that he thought only medicinal marijuana deliveries should be allowed. Bonta thinks clarifying new legislation may be in order.

Even with such legislation, lawsuits over the state regulations appear inevitable. California has decades of history of courts being asked to interpret poorly or vaguely written ballot measures approved by voters.

City attorney says Sonoma should defy state

The city of Sonoma could also be a flash point for local defiance of the state. After the cannabis bureau concluded that there should be no limits on recreational marijuana deliveries, the Sonoma Index-Tribune reported last month that Sonoma City Attorney Jeff Walter recommended to City Council members that they maintain their ban on recreational pot deliveries.

Walter criticized the rules as being “very vague” and said he did not consider them a legally binding “statute.”

“I think we should stay that course [of banning recreational deliveries] pending outcome of that regulation and the challenges that are likely to be against it,” he said.

Questions about the legality of marijuana deliveries are also coming from other quarters. On Monday, the Sacramento Bee reported that California Highway Patrol officers continue to arrest drivers and seize cannabis that they find during traffic stops of vehicles used for deliveries.

A CHP spokesperson told the Bee that “in order to legally transport cannabis in California for commercial purposes, a person must possess the appropriate [state] license and comply with [cannabis bureau] administrative regulations.”

Two licensed marijuana distributors who had $257,000 seized from them by the CHP have filed a lawsuit to try to get the money back. They insist that they had the proper credentials when the money was taken.

This article was originally published by CalWatchdog.com

Legal Cannabis Industry Struggling in California


Marijuana StoreCalifornia’s first year with legal recreational sales of marijuana is wrapping up with a series of downbeat reports on a new industry struggling to find its footing.

An Associated Press analysis posted Sunday said estimated legal sales of cannabis would total just $2.5 billion in 2018 – in a state of 40 million people in which 13 percent of adults admit to use, significantly higher than in most states. State officials will be lucky if they receive half the $630 million in pot taxes anticipated in the 2018 state budget.

When tax revenue goals went unmet early last year, one assumption was that this was primarily the result of resistance to legal cannabis. An estimated 80 percent of local governments have not authorized recreational sales, as is their right under Proposition 64, the 2016 ballot measure that cleared the way for such sales. And in some of the cities that have issued permits, only a handful have been issued.

But as the year wore on – and costly state regulations kicked in mandating careful testing and child-resistant packaging of marijuana and marijuana products, such as edibles – reporting on the California pot beat increasingly focused on the huge price advantage that illegal sellers have.

Medical marijuana law led to sales networks

A recent Southern California News Group article pointed out that with voters’ approval of medicinal marijuana in 1996, growers and sellers had a 20-year head start in establishing sales and distribution networks that were poised to fill demand when cannabis possession and use became legal on Jan. 1, 2018. These networks are able to sell marijuana that is up to 50 percent cheaper than the marijuana available in licensed stores.

These growers and sellers don’t just balk at going the legal route because of fees, regulations and paperwork. They’re emboldened by the weakening of criminal penalties related to marijuana in recent years, according to the Southern California News Group analysis.

A San Francisco Chronicle report published last week quoted Steve DeAngelo, a co-founder of Oakland’s huge Harborside marijuana dispensary, as saying “the unrolling of legal adult-use cannabis has reinvigorated the underground market rather than curtailed it.”

“Because we are up against high taxes and the proliferation of illegal shops, it is difficult right now,” pot shop owner Javier Montes told the Los Angeles Times last week. “We expected lines out of our doors, but unfortunately the underground market was already conducting commercial cannabis activity and are continuing to do so.”

Shop owners in the Los Angeles and Bay areas have urged authorities to crack down on illegal storefront and delivery sellers. But while state regulators say that is a priority in 2019, it’s unclear how much of a priority it will be for local law enforcement agencies who are strapped by pension costs and often have difficulty maintaining police staffing because of recruiting woes.

Among those who anticipated that legal California sellers were going to be seriously undercut by illegal sellers is Gov.-elect Gavin Newsom, who led the Proposition 64 push.

Newsom: Addressing black market to take ‘5 to 7 years’

While on the campaign trail in May, Newsom said he thought it would take “five to seven years to substantively address the black market” issue.

As governor, Newsom could order stepped-up efforts to target growers and sellers, as well as seek new funding for such enforcement.

But the legal marijuana industry also wants help on another front. The Chronicle reported there is a huge backlog at the state office processing permits to legally grow marijuana, with no action yet on about 90 percent of applicants.

Most California Cities Not Embracing Legal Marijuana Sales


Marijuana StoreSix-plus months into the beginning of California’s experiment with legal recreational marijuana, a review of Proposition 64’s effects shows a mixed and complicated record. Here’s a look at four broad categories:

Availability of legal pot stores: Even though local governments had nearly 14 months from when Proposition 64 was adopted in November 2016 and when it took effect this Jan. 1, local officials have been in no hurry to implement the law – either because of continuing disdain for recreational marijuana or sluggish bureaucracies.

The most recent Southern California News Group study, updated June 11, found that just 30 percent of cities (144 of 482) had permitted any recreational or medicinal marijuana sales and just 30 percent of counties (18 or 58) allowed such sales in their unincorporated areas.

The assumption that many budget-stressed cities would eagerly embrace recreational marijuana sales because of lucrative tax revenue – a source of funds not available with untaxed medicinal marijuana sales – has not been borne out. The Southern California News Group reports that fewer than one in seven cities have licensed recreational pot shops.

Marijuana supplies: Even in cities and counties which allow pot sales, availability of cannabis has reportedly been tight in many areas since July 1. That’s when provisions of state law went into effect requiring legal sellers to use new child-proof packaging and to test their products for the presence of mold and pesticides.

The Fox News team serving Sacramento and Central Valley TV markets reported last week that several dispensaries in the region “have empty shelves and have had to turn away customers and lay off staff.” The pot shortages could last, Fox reported, because of another shortage: in state labs certified to test marijuana for purity and healthfulness.

Criminal justice: A report issued earlier this month by the state Attorney General’s Office showed the number of marijuana-related arrested in 2017 in California had plunged 56 percent – going from about 14,000 in 2016 to a little more than 6,000.

Why didn’t the numbers drop even more? Because while possession of up to 1 ounce of marijuana is now legal, possession of larger amounts and growing cannabis is not. Selling pot without a license and using it in restricted areas or before driving remain crimes.

Elsewhere on the criminal justice front, Sacramento County District Attorney Anne Marie Schubert has won praise from social justice activists for using a provision in Proposition 64 to reduce or dismiss old marijuana convictions that are no longer classified as crimes under the measure’s weakened rules.

Sacramento Bee columnist Marcos Bretón has praised Schubert – long seen as something of a strict law-and-order conservative – for her policy.

The Bee reported that San Francisco and San Diego counties have similar efforts under way.

State pot tax revenue: In May, the nonpartisan Legislative Analyst’s Office reported total state tax revenue from the first quarter of the year was running more than 60 percent below expectations.

But the LAO remains optimistic that revenue from cannabis will rebound.

As reported by The Motley Fool website – which is keeping close tabs on the emerging legal marijuana industry as a possible lucrative investment niche – the LAO recently adjusted downward its forecast of how much the state would get from from its 15 percent excise tax on legal marijuana sales during fiscal 2018-19. But the reduction was only a modest 2 percent – going from $643 million to $630 million.

This article was originally published by CalWatchdog.com