Pubdate: Thu, 03 Sep 2015
Source: SF Weekly (CA)
Column: Chem Tales
Copyright: 2015 Village Voice Media
Author: Chris Roberts


Governor Jerry Brown has spoken: It is time to get a grip on 
California's unregulated medical cannabis industry.

But even with JB's blessing, nothing is guaranteed.

It's nearing the 11th hour in Sacramento, where lawmakers and 
lobbyists are hammering out the final details of the first statewide 
regulations for California's multibillion-dollar marijuana industry.

Last week, Brown circulated among lawmakers his preferred vision for 
a regulated California cannabis industry.

Licenses would be required for every level of commercial cannabis 
activity - with a carve-out for individual patients and patient 
caregivers - and each license would be tiered, giving mom-and-pop 
operations a chance while taxing Big Marijuana appropriately. All 
this would be overseen by the state.

There's a real sense of urgency to get this done before next year, 
when voters will potentially be asked to legalize recreational 
marijuana. The deadline for bills to escape the Legislature is Sept. 
11; Brown's signature is needed in October.

This means the time is now.

However, as of press deadline Tuesday, Brown's language was absent 
from proposed bills in the Legislature.

Instead, Assembly Bill 266, the bill most watched by cannabis 
industry insiders, is almost entirely empty. In a parliamentary 
maneuver called "gut and amend," the bill was stripped of earlier, 
rejected language. At some point - one would hope soon - it will be 
amended to have preferred language inserted.

What did remain as of press deadline was a requirement that another 
bill - Senate Bill 643 - be passed in order for any of AB 266 to become law.

What's standing in the way of getting this done? "Egos," one insider said.

As of now, SB 643, authored by Sen. Mike McGuire (D-Healdsburg), 
would, among other things:

Create an "Office of Medical Marijuana Regulation" in the state 
Business, Consumer Affairs, and Housing Agency, which would be 
responsible for crafting and imposing regulations by Jan. 1, 2018;

Require all commercial cannabis activity to be licensed;

Allow for cannabis to be "tracked" from seed to sale to prevent 
California weed from flowing to other states;

Allow for every conceivable form of marijuana activity to be taxed;

Mandate laboratory testing and allow for the state certification of 
testing labs;

Allow for regulators to establish a maximum potency level for 
cannabis and cannabis extracts (1,000 mg brownie lovers, beware);

Require the Department of Agriculture to create standards for organic 
marijuana by 2020, and create a cannabis appellation system similar 
to wine by that time;

Allow for unregulated cultivation of medical marijuana by individual 
patients or patient caregivers;

Require the California Highway Patrol to figure out a way to find out 
if a driver is stoned;

To do all this would cost $25 million to begin with, according to an 
Aug. 26 state Senate analysis, and as much as $50 million on an annual basis.

The state's general fund would pay for that in the beginning. After 
that? Hopefully cannabis would pay for itself, but under McGuire's 
bill, the state money would come from licensing fees. The tax money - 
aside from state sales tax - would stay local.

This all sounds reasonable enough. However, there are many industry 
players working overtime to kill the bill, or at least weaken it 
enough to protect pre-existing business models.

Just like any other industry.

The situation is apt to change daily, so keep your eyes out.

2,000 Dispensaries, 1,500 Tax Scofflaws

Nobody really knows how many medical marijuana dispensaries are in 
California (the lack of a state license and statewide regulation is a 
major reason why).

That hasn't stopped Board of Equalization member Fiona Ma from 
hazarding a guess - and from guessing how many of those are dodging 
state sales taxes.

After crunching what data is available - some of the best of which 
are listings from WeedMaps, as sad as that sounds - Ma arrived at a 
figure of about 2,000 brick-and-mortar cannabis businesses from the 
Mexican border to Oregon.

Of those, only about a quarter have BOE sellers' permits. Which means 
75 percent of the state's medical marijuana clubs are dodging the 
taxman, according to Ma.

It's better in the Bay Area, but not by much. Here, only roughly half 
of dispensaries are dodging their taxes, according to Lizette Mata, a 
spokeswoman for Ma.

(This is real money. One since-closed San Francisco dispensary on 
10th Street and its former operator, Robert Martin, are on the list 
of the state's top 500 tax scofflaws, with debts to the taxman of 
more than $1.6 million.)

As for how much tax revenue those dispensaries are bringing in? Wait 
for it: nobody really knows!

The BOE last ran an estimate of statewide marijuana sales and 
resulting tax revenue in 2007. Back then, sales could be as high as $1 billion.

That was eight years ago - before dabs, CO2 oil cartridges, high-end, 
branded edibles, and before Barack Obama became president - in other 
words, before the industry as we know it existed.

How much bigger has the cannabis industry become since then? Double, triple?

The BOE is anticipating a new estimate at some point, Mata said. No 
word on what it will be, but it won't be small.
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MAP posted-by: Jay Bergstrom