california

Immigrants Can Be Denied Citizenship for Working in Legal Marijuana Industry

The California Compassionate Care Network (CCCN) marijuana dispensary’s grow operation is one of the stops on the cannabis tour organized by L.A.-based Green Tours, January 24, 2019 in Los Angeles, California.  ROBYN BECK/Getty Images

The California Compassionate Care Network (CCCN) marijuana dispensary’s grow operation is one of the stops on the cannabis tour organized by L.A.-based Green Tours, January 24, 2019 in Los Angeles, California.

ROBYN BECK/Getty Images


 U.S. Citizenship and Immigration Services (USCIS) issued guidance a day before the unofficial marijuana holiday that makes clear working in the marijuana industry, or even just possessing cannabis could be grounds to reject a citizenship application—regardless of whether it is done in a state where it is legal.

Violations of federal marijuana laws “are generally a bar to establishing good moral character for naturalization, even where that conduct would not be an offense under state law,” according to the guidance issued Friday. Merely being “involved in certain marijuana-related activities” could be sign that an applicant for citizenship “may lack good moral character” regardless of whether “such activity has been decriminalized under applicable state laws,” according to the USCIS statement.

Immigration lawyers who work in states where marijuana is legal say they have been dealing with this issue for a while now, leading Denver Mayor Michael B. Hancock to send a letter to Attorney General William Barr asking for clarification about policies that have been affecting immigrants. This isn’t just a theoretical issue either. CNN reports that two immigrants who have lived in the United States for more than two decades were told they were not eligible for naturalization due to their work in the marijuana industry. “I work hard in an industry that offers opportunity and that’s unquestionably legal within the state. For the government to deny my citizenship application because I’m a bad person is devastating,” one affected immigrant tells CNN.

Advocates for legalization say the guidance is more a reflection of the government’s anti-immigrant attitude than about drugs. “I don’t think this is about marijuana at all,” said Michael Collins, national affairs director of the Drug Policy Alliance. “I think this is about them using the war on drugs to go after migrant community and that’s what they’ve been doing since Day 1.” A total of 33 states and the District of Columbia have legalized medical marijuana while 10 states and D.C. have legalized recreational marijuana.


California bill encourages banks to work with pot businesses

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California legislators considered a plan Monday intended to encourage more banks to do business with marijuana companies that have been frozen out of thousands of financial institutions.

Most Americans live in states where marijuana is legally available in some form. But most financial institutions don't want anything to do with money from the cannabis industry for fear it could expose them to legal trouble since the federal government still considers marijuana illegal.

The conflict between state and federal law has left businesses in California's emerging legal pot industry in a legal dilemma, shutting many out of everyday services such as opening a bank account or obtaining a credit card. It also has forced many businesses to operate only in cash — sometimes vast amounts — making them ripe targets for crime.

An Assembly bill would authorize state regulators to share detailed sales, cultivation and shipping information collected from cannabis companies with banks, a step supporters hope will provide additional assurances to financial institutions that a pot shop or grower is operating within the law.

During the Obama administration, the Justice Department issued guidelines to help banks avoid federal prosecution when dealing with pot businesses in states where the drug is legal.

But most banks don't see those rules as a shield against charges that could include aiding drug trafficking. And they say the rules are difficult to follow, in effect placing the burden on banks to determine if a pot business is complying with all legal rules.

Cara Martinson of the California State Association of Counties told members of an Assembly committee that the bill represented an incremental step until a solution is reached at the federal level.

"This could help move the ball," she said.

The number of banks and credit unions willing to handle pot money is growing — it's over 400 nationally — but they still represent only a small fraction of the industry.

$350,000 in cash? California marijuana taxes still make growers - and tax collectors - nervous

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On tax days, it’s not hard to spot marijuana growers waiting to exhale in downtown Eureka.
They haul cash in grocery bags and boxes, making their way to a state office where they can pay their taxes.

One grower “holds his breath as he walks into the building,” said Terra Carver, executive director of the Humboldt County Growers Alliance. The distance is “no more than 20 yards, but the fact that he was holding $350,000 (makes it) ... a public safety issue.”

California still doesn’t have a better way to collect taxes from its burgeoning, licensed marijuana industry three years after voters passed an initiative to legalize recreational cannabis and 23 years after they sanctioned medical marijuana.

That won’t change as long as marijuana is considered an illegal drug by federal authorities, which makes banks reluctant to do business with the cannabis industry.

But from Eureka to San Diego, the state is making some headway in easing obstacles that kept cannabis entrepreneurs from paying their state taxes and fees on time.

For starters, California finally has state tax collectors stationed in the heart of the so-called Emerald Triangle, which produces most of America’s marijuana. The tax collectors work out of a Humboldt County building with support from state and local law enforcement officers.

That’s a big change. Until last year, state-licensed marijuana companies from Humboldt, Mendocino and Trinity counties had to drive hundreds of miles with bags full of cash to pay their taxes at the nearest state offices in Sacramento or in San Francisco.

“It has been unacceptable that legal cannabis farmers have to drive up to five hours to pay their taxes or have a face-to face with their regulatory agencies,” said Sen. Mike McGuire, D-Healdsburg. “This isn’t safe for the farmer, it isn’t safe for the public and it definitely isn’t a good way to do business.”

On the opposite end of the state, California tax offices in San Diego County simply refused to accept money from cannabis companies in 2016 and 2017 after state workers worried their offices weren’t equipped for that kind of cash businesses.

Their fears persuaded elected representatives overseeing regional tax offices for what was the Board of Equalization to prohibit cannabis growers and retailers from making cash payments at state offices in their districts.

“You have to think about hostage situations,” former Board of Equalization member Diane Harkey said at a December 2016 meeting where she explained why she was reluctant to permit cannabis cash transactions at offices she oversaw without significant investments in security.

Her colleague former Board of Equalization member Jerome Horton at the same meeting suggested state workers should receive “combat pay” for working with hefty cash payments.

Russell Lowery, Harkey’s former chief of staff, said the Board of Equalization allowed alternate payment arrangements at the time, such as tax collectors meeting cannabis growers at banks and depositing funds directly into state accounts. Those visits were not promoted because of security fears, he said.

State Treasurer Fiona Ma, who was on the Board of Equalization at the time, said the state did not lose money because of the inconvenience.

“Everyone who was supposed to pay, paid,” she said. “They all knew they had to pay. They just had to hire more security or armored cars because they had to drive.”

The Board of Equalization no longer has power to allow varying tax collection policies around the state.

Its tax-collecting responsibilities have been handed to the California Department of Tax and Fee Administration, which reports to the governor instead of a board run by regional elected leaders.

Tax department Director Nicolas Maduors said cannabis companies now can make cash payments at 11 offices around the state. The department has invested security features at its offices and no one has been harmed.

“We recognized that cash acceptance is going to be a big challenge and there were certain places in the state where cash was not accepted,” he said. “We need to make sure that all taxpayers no matter where they live in the state have access to service.”

State workers are still nervous about the practice, and he asked that The Sacramento Bee not identify the locations that accept cash. Cannabis companies call ahead of time. Transactions take place in the presence of security officers.

“We’re doing all that we can with law enforcement, retrofitting facilities to make sure we can keep people safe,” he said.

Next month, several state departments plan to open a new “one stop shop” for the marijuana industry in Eureka. It’ll open in the Eureka Times Standard building with space for the Bureau of Cannabis Control, Department of Public Health and State Water Resources Control Board.

The tax department does not plan to move from its county-managed building with the other cannabis regulatory departments.

Gov. Gavin Newsom’s administration projects the state will collect more than $500 million in marijuana-related taxes next year. It doesn’t all come in cash.

Many marijuana businesses have found ways to work with credit unions and other alternative financial institutions to pay tax. Lawmakers are working to expand those opportunities. Last week, a bill that would encourage charter banks and credit unions to work with the cannabis industry cleared a Senate committee.

Carver of from the Humboldt County Growers Alliance said the state had done a “good job” working with her industry.

“The complication doesn’t necessarily come from the state. The complication still rests on the federal level because a lot of our businesses are still unable to bank,” she said.


Bill Allowing Locals to Ban All Cannabis Deliveries Defeated in Committee

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 A bill that would have allowed local jurisdictions to ban cannabis deliveries originating outside their jurisdictional borders, was defeated in its first committee hearing today after cannabis activists and industry representatives objected to the bill.

Cal NORML wrote to the committee and testified against the bill, and promulgated an Action Alert that generated hundreds of letters to lawmakers in opposition. Thanks to all of our members and supporters who took action!

In introducing the bill, Asm. Cooley noted that he has been involved in both cannabis and local control issues for many years, citing his success as mayor of Rancho Cordova in enacting a local tax on cannabis businesses (however, that tax is overly high and was objected to by Cal NORML). Several times he referred to locals getting past a "parade of horribles" and tried to argue that passing the bill would somehow encourage locals to license cannabis businesses. He conceded that Prop. 64 allowed locals to ban adult-use cannabis businesses, not medical ones.

Unsurprisingly, the League of Cities, Rural County Representatives of California (RCRC), and California Association of Counties (CSAC) expressed support for the bill, as did the City of Santa Monica.

Amy Jenkins of the California Cannabis Industry Association testified that the CCIA must "sadly and regrettably" oppose. She gave statistics on the abysmal failure of local jurisdictions to license an adequate number of cannabis retail outlets as the reason that delivery access must be permitted.

Ellen Komp of Cal NORML and Sabrina Fendrick of Berkeley Patients' Group challenged Asm. Cooley's assertion that patients who required access would be able to grow their own, citing restrictive local cultivation ordinances, the lack of renters' rights, and the inability for disabled patients to grow their own.

Also opposing the bill were representatives from Epilepsy CA, the CA Hispanic Chamber of Commerce, Weedmaps, and the city of St. Helena, as well as a score of veterans.

After the public testimony, Asm. Grayson (D-Concord) spoke first, saying that while he is in favor of local control, he wouldn't be able to support the bill because delivery is necessary for those who need cannabis. "No doubt that my mother would be alive today had she had access," he said. "I thought delivery allowed people to have access when locals banned storefronts."

Asm. Eggman (D-Stockton) then spoke up, saying, "I don’t think you can take something away from people after you have provided access." Noting she is also a veteran, she mentioned the opioid crisis as a consideration.

Asm. McCarty (D-Sacramento) then chimed in saying he could not vote for the bill, noting that while Sacramento was "killing it" bringing in tax revenue from licensed dispensaries, people were driving as much as 100 miles to those dispensaries, and many don’t have access to transportation. "By having more jurisdictions shut it down, it just means fewer tax dollars coming into California and perpetuates the illegal market," he said.

Committee chairman Evan Low (D-San Jose) announced that he would be voting in favor of the bill in order to keep the conversation going, but said he would vote against it in future if it was not amended.

The vote fell on bipartisan lines, with Republicans Bill Brough (Dana Point), Vince Fong (Bakersfield), and Jay Obernolte (Hesperia), and Democrats Jacqui Irwin (Oxnard), Jose Medina (Riverside) and Kevin Mullin (San Mateo) joining Low in voting Aye.

Voting No were Assembly members Bloom, Chen, Cunningham, Eggman, Gloria, McCarty, and Ting; Chiu, Dahle, Gipson, Grayson, Holden and Wood abstained. The final tally was 7 in favor and 7 against, with 6 members not voting.

In the meantime, 24 cities and the county of Santa Cruz have filed suit against the Bureau of Cannabis Control over its regulation allowing state-licensed delivery services to deliver cannabis statewide.

Los Angeles hiring cannabis social equity program manager

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The Department of Cannabis Regulation (DCR) in the city of Los Angeles is looking for someone to run its social equity program.

The project is part of a handful of efforts in California intended to get minorities and those negatively affected by the war on drugs involved directly in the state’s legal marijuana industry.

According to an online job posting, the position pays $95,776 to $140,021, requires a master’s degree and at least three years of experience with either economic and community development or providing services to low-income, minority or underserved communities.

The L.A. social equity program has been a point of contention for many in the city’s struggling legal cannabis market and has not yet been fully rolled out.

Other California cities that have social equity programs include Oakland, Sacramento and San Francisco.

California state marijuana excise tax could go up July 1

California state marijuana excise tax could go up July 1

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Although the California marijuana industry has hoped for tax relief as it struggles to compete with a thriving illicit market, a tax increase could be on the way.

A tax hike would hit cannabis companies’ bottom line and could drive more consumers into the illicit market in search of cheaper marijuana products.

But an increase isn’t a foregone conclusion. Moreover, a tax cut could occur.

The California Department of Tax and Fee Administration (CDTFA) uses a 60% markup rate, along with the average market price of wholesale marijuana, as a basis for the state’s 15% marijuana excise tax.

That markup rate has to be recalculated every six months, and CDTFA Director Nicolas Maduros told an industry conference this week in Sacramento the excise tax may go up this summer.

“We’re responsible for resetting that markup rate every six months, so it will be reset July 1,” Maduros said, when asked during a panel with other MJ regulators.


“It’s based on market data, and I think particularly once …track-and-traceis more fully utilized, that we’ll have some better pricing data to figure out what that markup rate should be,” Maduros said.


The state track-and-trace system launched in January but is only used by cannabis companies with annual business licenses.

And so far just a fraction of the legal companies have obtained those permits, which means most of the industry isn’t feeding data into the track-and-trace system.

“We’re administrators, so it’s not up to us to sort of use that as a way to lower or increase the tax burden. We’re simply looking at what the facts are. It’s up to the legislature … to determine what the actual tax rate is,” he said.

When asked if the markup rate – and therefore the excise tax – could increase, Maduros said: “It could.”

It’s worth noting, however, that the rate also could either decrease or stay the same.

A CDTFA spokesman said in an email that there’s also no cap on how much the markup rate could increase – or decrease.

What a markup could mean

Maduros said after the panel that any decision on the markup rate and the excise tax will not be made until June at the earliest.

The markup recalculation would not affect the state cultivation tax, which is $9.25 per ounce of flower, $2.75 per ounce of leaves and $1.29 per ounce of fresh plant.

California Cannabis Industry Association Spokesman Josh Drayton said that a tax increase “would only further damage the supply chain as it competes against the illicit market.”

But, Drayton emphasized, it’s possible the excise tax may either stay the same or even decrease, and said it’s too early to tell what will happen with the CDTFA’s recalculation.

“I think we need full implementation of Metrc and track-and-trace before we consider any increase,” Drayton said.

“We have not seen any data that would support an increase in the excise tax for any part of the supply chain.”

Separately, a state bill to temporarily reduce state cannabis taxes is awaiting hearings in the California Legislature.

If successful, Assembly Bill 286 would reduce the excise tax from 15% to 11% and suspend the cultivation tax until 2022.



California only made half as much on 2018 marijuana taxes as expected

When California, the most populous state in America, legalized recreational marijuana last year, many had high hopes for the industry, writes Joseph Misulonas. But unfortunately, it appears initial projections for the success of the industry were a little off.

The California Department of Tax and Fee Administration announced that in 2018 the state collected $345.2 million from marijuana taxes. While that is a huge number, it's actually only slightly more than half of the state's initial projections of $643 million in tax revenue that they predicted they would receive in 2018. 

Many have argued why the state didn't make more money off of legal sales. The biggest reason seems to be the tax rate. California has some of the highest cannabis taxes in the nation, and customers can sometimes pay tax rates up to 45 percent on their marijuana purchases. These high prices are forcing many cannabis users to continue purchasing black market marijuana. This would also explain why California cannabis sales actually decreased between 2017 and 2018, despite it being legal recreationally last year.

Despite the fact that almost everyone acknowledges the tax rate is an issue, California legislators continue dragging their feet on the issue and not passing bills to lower the rate, despite several proposals to do so.

Wall Street Analyst Estimates US Cannabis Market Will Reach $47 Billion

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For years, “$20 billion by 2020” was an oft-heard refrain from market analysts who saw a bright and prosperous future for the legal cannabis industry. Now, with that horizon fast-approaching, analysts are setting their sights on what the next decade has in store. And one analyst, RBC Capital Markets’ Nik Modi, is seeing green.

Analyst Says Concentrates and Edibles Could Propel Sales To $47 Billion Annually

RBC Capital Markets, an investment bank that’s part of Royal Bank of Canada, issued a memo to clients outlining the rapid growth of the U.S. marijuana sector. The memo, authored by Nik Modi, shows how cannabis sales in the U.S. are gaining ground on beer and wine sales.

Projecting a compound annual growth rate (CAGR) of 17 percent, Modi estimates that the legal cannabis category could reach $47 billion in sales annually in the United States within the next decade, according to Business Insider.

Yet the cannabis market in the U.S. faces uncertainties that Canada does not. Regulatory environments are constantly and rapidly shifting as states implement legalization and adopt different approaches to dealing with federal prohibition. Investing in the industry still carries risk.

 

But RBC Capital Markets analyst Nik Modi brushed off concerns about the unpredictability of legal cannabis in the U.S.. Instead, he drew clients’ attention to a shift in consumer trends that is already having a major impact on domestic retail markets.

Data from BDS Analytics, included in Modi’s memo, shows that the margin on cannabis flower has steadily declined since the beginning of recreational sales in Colorado in 2012. That’s indicative of a larger national move away from flower and toward cannabis edibles and concentrates.

In Colorado, flower made up 70 percent of legal sales when shops opened in 2014. By the end of Q4 2017, flower accounted for just 46 percent of total sales. Picking up the slack were edibles and concentrates. Both are surging in popularity everywhere, and Modi thinks those forms of cannabis can propel total sales beyond $47 billion a year by 2027.

 

Including Illegal Cannabis Sales Drastically Shifts Financial Forecasts

Another eye-catching aspect of Modi’s analysis is another BDS Analytics chart showing the estimated U.S cannabis market size. The chart compares cannabis sales to spirits, wine, cigarettes, and beer. From spirits at $58 billion to beer $117 billion, all four categories best cannabis at $50 billion. But interestingly, the chart includes total legal and illegal cannabis sales to arrive at the $50 billion figure. It’s unclear what proportion of that amount is made up by illegal sales.

Other cannabis market analysts say that illegal sales still account for the majority of total marijuana purchases in the U.S. But as legalization continues to channel consumers into the legal market, illegal sales are slowly declining.

While access to legal cannabis expands nationwide, the size of the illegal market remains difficult to measure. So does predicting how much of it will move aboveboard in the coming years.

 

RBC Capital Analyst Praises Big Investment in Canadian Cannabis

The letter RBC Capital Markets sent to clients also lauded Constellation Brands’ recent $4 billion investment in one of Canada’s largest medical cannabis producer Canopy Growth Corp. Constellation Brands is the firm behind the popular beverage companies Modelo, Corona and Svedka. The company has been moving incrementally into the Canadian cannabis market, upping its stake each time. Nik Modi says he’d like to see more companies make similar moves in the cannabis space.

Report Shows Teen Marijuana Use in California Has Declined

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A statewide study in California has found that cannabis use by teens in the state has declined. Results of the California Healthy Kids Survey were released by the California Department of Education on Monday. The study is funded by the state’s health and education departments and is conducted every two years.

According to the research, 4.2 percent of 7th graders reported that they had used cannabis at any time between 2015 and 2017. That figure represents a 47 percent drop from the last survey when 7.9 percent of 7th graders reported using marijuana from 2013 to 2015.

Among 9th graders, 17.4 percent reported that they had used cannabis at some time during 2015 to 2017. That is a 25 percent decline from the 23.1 percent who reported using marijuana in the previous study.

Eleventh graders also showed a reduction in marijuana use. In the last survey, 37.9 percent of high school juniors said they had used cannabis between 2013 and 2015 while this year’s result for 2015 to 2017 recorded a 16 percent decline with 31.9 percent claiming cannabis use.

 

The percentage of teens who had used cannabis in the 30 days prior to the survey also declined. For 7th graders, the figure dropped from 5.0 percent in the last survey to 2.3 percent for the latest one. For 9th graders, the drop was from 13.4 percent to 9.5 percent, and for 11th graders, the number declined from 20.1 percent to 16.7 percent.

Will Legalization Affect Future Results?

The study’s authors noted that the survey was conducted prior to the legalization of recreational marijuana sales, which began in California at the beginning of 2018.

“How the recent legalization of marijuana use for adults in California [affects] the declining trend among youth warrants attention,” they wrote.

 

“The next biennial survey will be of particular interest to shed light on whether the change in state marijuana laws [affects] these findings,” researchers added.

Tom Torlakson, the State Superintendent of Public Instruction, said in a press release that educators have a role in making sure that cannabis legalization does not lead to increased use by young people.

“We must continue to be diligent in our efforts to prevent, or at least limit, marijuana use in light of the potential effect of the legalization for adults as a result of the passage of Proposition 64 two years ago,” Torlakson said.

 

Cannabis Activist Responds

Ellen Komp, deputy director of California NORML, said in a blog post from the advocacy group that the legalization of recreational cannabis is actually a factor in the decline of use by teens.

“These initial reports confirm that legalizing and regulating cannabis doesn’t increase youth marijuana use, but rather it has the opposite effect,” said Komp. “The fact that the biggest drop in reported use came from younger age groups is a particularly encouraging indicator of the success of regulation.”

Komp also said that sound cannabis policy reforms are the best way to keep California residents and their communities safe.

“It’s time to stop trying to ‘send a message’ to young people about drugs and instead implement sound, science-based policies that best protect our children and public safety, along with our privacy and human rights,” Komp said.

California Lawmakers Pass Bill to Overturn Pre-Legalization Marijuana Convictions

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California lawmakers have passed a bill directing prosecutors throughout the state to overturn convictions for acts that are no longer illegal under the state’s Prop 64 cannabis legalization initiative. The bill would also reduce many felony convictions for marijuana-related crimes to misdemeanors.

The measure, Assembly Bill 1793, was passed by the California Senate Wednesday with a bipartisan vote of 22-8 after being approved by the California State Assembly on May 31 by a vote of 43-28.

If the bill is signed into law by Gov. Jerry Brown, it will direct the state Department of Justice to identify cases from between 1975 and 2016 that are eligible to be overturned or reduced by July 31, 2019, and notify the appropriate district attorney for action. Prosecutors will then have until July 1, 2020 to decide if they want to challenge the reduction or elimination of any of those convictions.

Prop 64, passed by voters in 2016, legalized the recreational use and sale of cannabis and eliminated many marijuana-related crimes. That decriminalization also applied retroactively, making many eligible for a reduction or elimination of past cannabis convictions. Those with convictions for non-violent felonies including possession or distribution of less than one ounce of cannabis are eligible for reduction to misdemeanors. Prosecutors have the right to challenge relief based on the criminal history of affected individuals.

 

Thousands of Cases Eligible For Relief

The justice department estimates that 220,000 convictions qualify to be reduced or eliminated.  Prosecutors in San Diego and San Francisco have begun to proactively reduce or eliminate convictions, but many other district attorneys in the state have said that they do not have the resources to follow suit. That puts the burden of relief on those with the convictions, many of whom may not be aware that they are eligible. Some with convictions that qualify for a reduction or elimination have taken it upon themselves to petition the court for relief, but only a small minority of those who are eligible have done so.

Sen. Scott Wiener, a Democrat from San Francisco who voted for the measure, said it “creates a simpler pathway for Californians to turn the page,” according to an Associated Press report.

State Sen. Joel Anderson, a Republican from San Diego County, said that reducing felony convictions to misdemeanors will allow people to regain lost civil rights, including gun ownership.

 

“This bill will take those people off the prohibited list, save us time and money,” Anderson said.

AB 1793 was introduced by Democratic Assembly Rob Bonta of Oakland. He said that “the role of government should be to ease burdens and expedite the operation of law — not create unneeded obstacles, barriers, and delay.”

Although AB 1793 received broad bipartisan support, not all lawmakers agreed with the elimination of past convictions. Republican Sen. Jim Nielsen of Gerber argued against passage of the measure by his colleagues in the Senate.

 

“This directs us to forget any prior behavior that was illegal,” Nielsen said. “They should not be given a pass.”

With the approval of AB 1793 by both houses of the California legislature, the bill now heads to Gov. Jerry Brown for his approval.