Senate Bill 67 is a Band-Aid on a Bullet Wound for Legal Cali Cannabis

Everybody in California has an opinion about Prop 64 these days – and not many of them shine a very generous light on the 2016 voter-approved legalization of recreational cannabis in the 5th largest economy on the planet.

For over a full year after that fateful vote, business continued pretty much as usual in the anything-but-usual world of quasi-legal weed in Cali. Everyone from cultivators to consumers continued doing what they had been doing for the past X amount of years just waiting for the hammer of regulation to finally drop from the state.

The first major blow was struck on July 1st of 2018 after which all products being tested and pushed to the legal market would have to come from licensed entities from every stop on the supply chain.

This ended deep-rooted, hard-earned business relationships overnight as those who had gotten past the velvet ropes and into the industry suddenly had too much at stake to risk losing it all over an old school deal.

An outcry from those struggling to get legal, as well as from those who had navigated their way into the industry but were being crushed by shortsighted regs, forced the Bureau of Cannabis Control and other regulatory agencies to reconsider and, in some cases, rewrite significant portions of the framework language that makes up Prop 64.

They had until the end of 2018 to make their changes, which they did with mixed levels of satisfaction from the public.

Now Prop 64 is the law, and it’s not just any law, it is now a part of the California Constitution which makes it only amendable by way of a supermajority 2/3s vote in the state legislature.

A quick search of current pending/proposed legislation in the Golden State reveals 58 bills under consideration that contain either the word “cannabis” or the word “marijuana”.

With a new, more weed-friendly governor in the state capitol, this could mean some much-needed reform to the 2016 reform of the 1996 reform.

An excellent rapid-rundown of all proposed legislation has been compiled by MJBizDaily and the California Cannabis Industry Association – you can view it HERE – but we thought we’d take a deeper dive into one specific bill that we feel is crucial for the survival of this industry and deserves more attention.

SENATE BILL 67

We mentioned SB 67 in last week’s article but this may be the single most important piece of legislation currently making its way up the chain. As we reported last week, thousands of state-issued temporary cannabis licenses are set to expire by this summer and the state does not have the manpower or a Plan B to get them all approved in time.

The state has said that it will not issue any more temp licenses, despite the fact that roughly 10,000 applicants have been told that they qualify to enter the legal cannabis industry, but just 52 annual licenses have been issued since Prop 64 passed in November of 2016.

At this rate, thousands of cultivators, manufacturers, distributors, and retailers will be forced to decide to either obey the law and cease all operations, losing all they have worked for… or go back to the streets that paid their bills for the past 10-20 years.

Senate Bill 67, if passed, will require the state to hold any currently issued temporary license valid until Jan. 1 2020 if the licensee submitted an application for an annual license before their temporary license expired and the application is pending, as so many are. Those temporary licenses will remain valid until their applications are approved, denied, or disqualified.

This keeps farmers farming.

keep farmers farming

This keeps a diversity of product moving along the supply chain which helps everyone, especially the consumer which is who Prop 64 was essentially written for.

“In our office, we call this a good, old-fashioned hot mess,” said Sen. Mike McGuire, the lead sponsor of SB 67, adding, “This is a Band-Aid to a big challenge, but it buys us breathing room for a big fix.”

That breathing room might not cure enough cases of the claustrophobia currently choking the industry, however.

Even though the bill is marked with an “urgency clause”, it falls under the 2/3s majority vote rules in both chambers of the state legislature as we mentioned above. Even if it does make it through that sausage-making process intact, insiders agree that it will be a minimum of 60-90 days before it can possibly reach Gov. Newsom’s desk for a final signature.

How many otherwise legit companies will perish in the meantime?

Well, we sort of know that answer since roughly 6,200 temp licenses are set to expire by the end of April, long before this bill can bail them out.

Companies with expired temp permits don’t necessarily have to cease all operations, some business types can try to wait out the process if they can afford to, but how do you put a half-finished cannabis crop on pause indefinitely?

The state is up in arms about receiving a laughably low haul in cannabis tax revenues in 2018, blaming the black market for undercutting the $75 eighths of light dep boof. Meanwhile, they’re enforcing nonsensical regulations to keep pushing everyone from both the supply and demand sides of the curve back to the streets for decent weed and prices for consumers and ability to actually work every day for the legacy operators that laid the foundation for the whole damn thing.  

Really the best bet now would be some sort of indication from the state’s regulatory agencies that enforcement of licensing in these cases will be their lowest priority, essentially giving a tacit green light to those in limbo to quietly keep going.

This could help some outdoor growers whose sights are set on an October harvest, but it would do little to help the average cannabis product manufacturer who needs to move units every month to survive but whose expired paperwork will blacklist them from legal dispensaries.

What is happening with these temporary licenses is a travesty.

Sen. McGuire calls SB 67 a Band-Aid, but this problem is a self-inflicted bullet wound to the foot and we’re not sure that the industry will be able to limp away unscathed this time.

Post by Jack Riordan

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