INDUSTRY

Will It Work? California’s Mission to Save Its Cannabis Industry

Can California pull its cannabis industry out of tailspin?
Can California pull its cannabis industry out of tailspin? /

California’s legal cannabis industry is struggling, and that’s putting it nicely.

The state’s best cannabis growers can’t afford a license, the weed is overpriced, the taxes are outrageous, and most Californians prefer the legacy market (aka their friends and neighbors), where they can find superior quality product at half the price.

This is no way to grow a legal industry.

In September 2022, California Gov. Gavin Newsom signed several different cannabis bills to help pull the state’s industry out of tailspin while further addressing the harmful damage of prohibition.

In a press release, Newsom stated:

“For too many Californians, the promise of cannabis legalization remains out of reach. These measures build on the important strides our state has made toward this goal, but much work remains to build an equitable, safe and sustainable legal cannabis industry.

“I look forward to partnering with the Legislature and policymakers to fully realize cannabis legalization in communities across California.”

The collection of measures includes notable advances in interstate cannabis commerce, elimination of cannabis testing in the workplace, medical cannabis delivery, medical cannabis for animals, sealed cannabis convictions, and more.

These new measures provide positive, much-needed steps, and hopefully they are a sign of more reform to come.

Note: Emerging Markets Must Pay Attention

Emerging cannabis markets like New York, New Jersey, or Vermont ought to pay careful attention to what’s happening in California right now.

The learning moments are aplenty with gems such as:

  • Why it’s important to create pathways early on for legacy operators to participate in the legal market
  • Overregulation and high taxes are bad for the industry and impede safe access for consumers
  • Vested interests in cannabis prohibition have no right to influence cannabis policy and will only make a mess of things

Overall, the underlying lesson here is simple: cannabis regulation is an evolving thing that requires constant attention.

Most cannabis regulations are initially drafted amidst a proverbial minefield of fear, stigma, and vested interests coming from all sides.

Industry regulators should exercise bias in only one regard: the desire to create a sustainable industry free of artificial barriers that positively impacts everyone rather than a select few.

Quick Analyses on California’s New Slate of Cannabis Measures

The collection of new cannabis measures in California touch upon a wide range of issues, which are relevant to all cannabis markets.

SB 1326: Interstate Cannabis Commerce

Oregon signed a similar measure over the summer, and New Jersey lawmakers are also considering the same.

Here’s the thing: these interstate cannabis commerce measures are entirely contingent on approval from the feds.

If the feds were to approve, I don’t see how they could classify cannabis as a Schedule I controlled substance much longer – but watch them hold onto it for as long as they can due to the annual IRS windfall that is tax code 280-E.

Make no mistake, interstate commerce is a critical step forward for the cannabis industry. Every other industry has this freedom, why should cannabis be different? This is also a way to cut down on energy-intensive indoor grows and supply most of the nation’s pot from regenerative outdoor grows.

In regards to California’s situation, is this a band-aid solution overlooking the deeper issues within the California market – or the first steps toward sustainability and inclusion?

AB 2188: Ending Cannabis Discrimination in the Workplace

With this measure, employers are no longer be able to discriminate against nor drug test prospective or current employees for off-duty cannabis use.

This is a big deal, especially for medical cannabis patients. After all, employers don’t discriminate against other medications, why would cannabis be any different?

The same goes for adult-use cases. Why should any employer care if someone enjoys cannabis during their free time?

The main reason why so many employers still discriminate against consumption of THC-rich products is mostly due to lack of conversations about cannabis with HR departments and the drug testing industry. Remember what we said about vested interests in prohibition? Imagine how much money this sector will lose when people stop testing for weed.

The exceptions to this new law are construction workers and federal employees, but these people can still drink and take prescription drugs.

AB 1186: No More Bans on Medical Cannabis Delivery

Did you know that more than half of the counties in California have a ban on local cannabis sales?

With this measure, they counties can still ban sales but not medical cannabis delivery from other jurisdictions.

This is great news for medical cannabis patients who are tired of making long drives for safe access.

However, the real desire here is probably more toward licensed operators looking to make a dent in their unlicensed competition.

The measure will no doubt move the needle some, but with high retail prices, most people will continue buying cannabis from their neighbors.

AB 1706: Sealing Cannabis Conviction Records

This measure is designed to speed up the sealing of criminal cannabis convictions.

The big question here: why hasn’t this been done already?

A criminal record disrupts a person’s life in ways most people don’t realize: employment, child custody, adopting children, the right to own a firearm, college admission, and even renting or leasing property.

AB 1885: Allowing Medical Cannabis for Animals

Like humans, animals benefit from medical cannabis because they have endocannabinoid systems, too.

Yet, in California it was until now illegal for veterinarians to recommend cannabis for pets. This measure changes that and will require the veterinary medical board to create guidelines.

We’re talking everything from dogs and cats to livestock such as horses and cows.

It seems absurd that California is just now getting around to this, and it would be interesting to learn what took so long (probably more vested interests and stigmatized thinking).

AB 2568: Allowing Insurance Providers to Serve the Cannabis Space

This measure makes it “not a crime solely for individuals and firms to provide insurance and related services to persons licensed to engage in commercial cannabis activity.”

That’s right, insurance providers. This is your greenlight.

This is probably another “WTF” moment for many people on the outside of the cannabis industry.

 A lot of conventional insurance providers are afraid to touch cannabis clients due to the plant’s Schedule I status. Technically, all cannabis operators are in violation of federal law, and any sort of ancillary service could technically be construed as aiding and abetting.

This measure ensures the state would protect insurance providers.

AB 1894: Labeling Cannabis Vapes for Proper Disposal

The vaping industry has a terrible secret: their products are wrecking the environment with plastic, electronic, and chemical waste.

Properly labeling these products is a smart move, and this new measure requires such labeling.

But what took so long?

Cannabis industry regs are super anal about labeling, and yet they overlooked this for years at the peril of our own planet.

AB 2210: Allowing Cannabis and Booze at the Same Events

California State cannabis regulator: “Oh you want a license for this event? No can do; an alcohol license has already been granted.”

This new measure prohibits that kind of talk.

Look, if people want to cross-fade that’s their business.

If you consume alcohol and then weed, the effects will be much stronger. Some people do this on purpose because they like the mix. Others stumble into it on accident, and they are surprised when they green out.

This is where cannabis education comes into play. Instead of arbitrary restrictions, let’s educate people on the nuances of cannabis.

Bonus tip: check out what happens when you combine CBD with alcohol.

AB 2925: Accountability of Cannabis Tax Revenue

California law requires that a portion of cannabis tax revenue go to the Youth Education, Prevention, Early Intervention and Treatment Account.

This new measure requires the State Department of Health Care Services to show that the allotted tax revenue actually goes to California’s Prop 64 Youth Fund, which is supposed to “promote equity and prevent substance use among youth.”

You’d think lawmakers would have baked in this accountability from the beginning, but I’m sure the department has funded the program like they said they would and will be ready to prove it by July 2023, as mandated in the new measure.

AB 1646: Cannabis Beverage Packaging

With this measure, cannabis beverage manufacturers will be able to select containers of any material, clear or any color.

The fact that this was even an issue goes to show how crazy cannabis regulations are sometimes.

SB 1496: Changes in Cannabis Tax Policy

Gov. Newsom signed this bill a few days after the others.

It provides some much-need flexibility for cannabis operators, such as extending payment deadlines for businesses impacted by local emergency proclamations (think wildfires and drought, etc.).

Cannabis tax policies need much more reform, and this is a start, now let’s lower cannabis taxes next.

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