California Gov Asks Struggling Cannabis Market for Five More Years to Figure Things Out

It should be crystal clear by now that if your local or state-level leaders and lawmakers are in favor of legal cannabis it is for one reason and one reason only – money. From application and permit fees, to outrageous taxes at nearly all stops of the supply chain, to the rampant underfunding and understaffing of critical regulatory agencies, the authorities in states like California are attempting to extract as much cash from cannabis as possible.

Example A

California’s embattled Democratic Governor Gavin Newsom has been a vocal proponent of Proposition 64, the 2016 voter enacted legislation that created the recreational cannabis market in the state, because of course the government plans to profit from it.

When the legal market came limping out of the gates last year, it quickly became apparent that the suits in Sacramento were not going to get the kickback they had counted (and in some cases, campaigned) on. Same with the sack-pinchers at the city level who were counting on cramming cannabis cash into their cobwebbed coffers.

Since that realization – that nobody was going to make any money at that rate – lawmakers in California have sprung into action by drafting and advancing a dizzying number of pieces of legislation in the form of Assembly Bills and Senate Bills. Some have introduced much-needed changes, some have taken an axe to a concept that required a scalpel, and some have seemingly intentionally made things even harder for struggling small to midsize operators in the legal market.

I mean, let’s face it. If you are a government agency employee tasked with clocking into your cubicle 8 hours a day, 5 days a week tasked with overseeing cannabis industry licensees, would you rather be responsible for 1,000 of them or 10,000 of them?

Even those bills with strong bipartisan support take time to advance through both chambers of the state government on their way to Gov. Newsom’s desk. But the shortcomings of Prop 64 and the agencies tasked with policing it have created an extremely tight bottleneck when it comes to getting licensed to operate in the volatile legal market.

If an applicant can navigate all of the various barriers of entry to get legal in Cali, they used to be granted a Temporary License while the state slowly, ever so slowly, meandered its way through ever-growing stacks of worthy application packages. These Temp Licenses were eventually assigned artificial and totally unnecessary expiration dates and that’s when it got really ugly.

Applicants at all stages of the supply chain began seeing their Temp Licenses expire while waiting for the state to hold up their end of the bargain. Having no idea when, or even if, they would be granted a more permanent Provisional or Annual License left thousands of legal operators in a moral and legal quandary. Many had sacrificed so much, emotionally and financially, to be totally legal and now they were being forced to either impossibly pause their operation or risk running afoul of the law. This especially hurt cultivators who found themselves in this dilemma, as you can’t put plants on pause. Outdoor growers get one crop per year, every week counts.

So band-aid legislation was advanced up the political chain – much like a snail advances down the sidewalk. Simultaneously, the governor has been living up to his promise to spend as much as $200 Million this year alone to combat the illicit cannabis market. Many legal operators would probably like to see their black market competitors vanish, whether they will admit that or not, but anyone who applauds the military tactics, and military MEMBERS, being used to carry out this enforcement needs to have their head checked. Nobody should be going to jail for a plant, period.

Far from Hollywood, further from Baghdad

So far, since that fateful Election Day in November of 2016, just 208 growers have been granted their Annual Licenses, with more than 1,500 still operating under a Provisional (the state did away with the “Temporary” status earlier this year). There just is not a worthy financial incentive for many cultivators to step out of the shadows that they have known for decades.

The assignment of Temporary, Provisional, and Annual as potential classes of licensure status has led to confusion and logistics problems on the supply chain where METRC track and trace software is mandatory for the small handful of Annual License holders, but is not mandatory for the array of licensees that they work with up and down the chain who are still in limbo waiting for their status to change.

All of this is being screamed from the rooftops of the California cannabis industry and now we’re getting news that Gov. Newsom himself has crowbarred a pet piece of legislation into an omnibus style budget bill known as Assembly Bill 97.

If the Gov gets his way, all current Provisional Licenses would be extended up to five years, allowing those licensees to operate their biz as usual while the government gets its act together.

Let’s face it, they aren’t giving anyone five years, they are asking for five years just to wrap their heads around the task they’ve already been toiling at for the past year or two. Originally, they vowed to flip all licenses into Annuals in one calendar year, now they need five.

A recent LA Times article on the subject reveals that, “The division that licenses growers is authorized for 151 positions, but 60 of them are still unfilled, leaving the office 39% below its budgeted staffing level.”

Anyone who thought legal weed in California would go smoothly severely underestimated the sheer size of the state in square miles, in population, and in economy.

Some environmental groups are pushing back against the 5-year plan wedged into AB 97, falsely fear mongering that Provisional Licensees might just start cutting corners as they wait for their Annuals, polluting our rivers and our children without regard or remorse. This is a ridiculous position, considering that the amount invested into a legal cannabis venture is never worth risking if a surprise inspection arrives at your door. These environmental groups are lobbying for a 2-year extension, max. Our money is on Newsom in this case but if he compromises don't be shocked.

Further cannabis-friendly language peppered into AB 97 includes a 2-year delay on mandating local governments to submit lengthy and costly environmental studies in order to enact local commercial cannabis regulations. This requirement has been a major contributor to the fact that 75% of California’s municipalities do not allow for legal commercial cannabis activity even though in most cases a vast majority of their residents voted for it.

AB 97 will also set a new max limit of $30,000 for per-instance fines imposed on illegal cannabis operators in the state.

If it passes as written, and it likely will since the governor himself pretty much wrote it, the 5-year Provisional extension would take effect less than two weeks from today, on July 1st, 2019.

How hard do you have to kick a can to move it five years down the road? We'll find out.

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