Some Highlights (and Lowlights) of California’s Legalization Law

LA Magazine did a decent job this week of capturing a wide swath of categories related to upcoming changes in California’s laws to inform the the average consumer on the basics of what he or she will want to know. It’s quite a long article, so I thought I would break it down for you:

Sellers Market
As the topic suggests, the dealers are still going to have the advantage in the cannabis market exchange, at least for the time being. Temporary licenses are being issued, but only for shops currently existing under the medical market (at least in LA). Specific terms for licensing will vary by locality.

Corner Shop
Josh Drayton of the California Cannabis Industry Association notes that consumer preferences have really created a demand for more quaint, local and boutique-type shops rather than the traditional “head shop” much of the world has envisioned in the past.

Adult vs Medical
All cannabis businesses must designate their use specifically for adult-use or medical. Retailers will have the option of selling both, but the idea will be to maintain space for strains that are particularly effective against different ailments, and continue supporting the needs of medical patients.

Taxes
No one likes them, and there are a LOT of taxes for cannabis at nearly every level of the industry chain. At least at the state level. There are still enormous barriers to overcome at the federal level, which means that normal business taxes still cannot be deducted, and taxes will invariably be paid largely in cash (which of course now comes with an economic penalty). On the plus side, those state and local taxes will going to some pretty good causes.

Fair Market
The world can thank the social justice movement for legalizing cannabis. Creating barriers to entry for people disenfranchised under prohibition is a stab in the back to those principals. Many good folks (though definitely not enough) are working hard to provide inclusion for communities who have suffered under prior policies.

Savings
Some police are sad to see revenues from asset forfeiture going away from their departments. In theory, not wasting resources on enforcing cannabis prohibition will be a net positive financially if not, you know, ethically.

Public Consumption
It’s still illegal.

Fines and Penalties
The man is still around, and he still wants to penalize you for doing illegal things. (See “Public Consumption”.) As stated in LA Magazine:

“As of November 9, 2016, the fine for driving with an open cannabis “container” (what defines a container is anybody’s guess) is up to $250. In September 2017, Governor Brown took it a step further by signing a bill that specifies a $70 fine for smoking or consuming marijuana while driving. And those people you see vaping on the sidewalk? They are indeed breaking the law. Smoking in public carries a $100 fine that jumps to $250 for smoking in places where tobacco is banned (think: restaurants and offices, in front of certain buildings). Selling weed without a license or having more than the allowable amount of cannabis carries a penalty of $500, six months in jail, or both. Finally anyone caught selling to a minor faces three to seven years.”

Arrests
As one would expect, arrests for cannabis are going down for states which have legalized cannabis. Unfortunately arrests still show extreme disparity with African-American rates being twice that of Caucasians.

Red Eyes, Red Tape
Honestly I am unclear what this topic or following paragraph is going for, other than to reiterate cannabis is illegal at the federal level, we still don’t know what Attorney General Jeff Sessions is going to do, and local regulators must forge ahead with implementation.

The Kids Are All Right
Spoiler alert to the US States which haven’t liberalized their cannabis laws: youth use rates have declined or remained steady since legalization in every state which has implemented it.

Many more nuanced issues are going to crop up over the coming months in California, but this is a start to think about. Any player in the industry, or those thinking of joining the industry, will want to informed of the latest changes, and there is no better place than the International Cannabis Business Conference. Next stop: San Francisco, California, February 1-2, 2018. Buy your tickets today!