Dale Schafer Law News – 5/13/22

#californiacannabis – San Diego – “San Diego County voters will be asked to authorize a tax system for marijuana businesses in the unincorporated areas on the November ballot, after the Board of Supervisors this week approved a marijuana tax ordinance…
“We recommend that local tax rates be set to try to keep the cumulative rate at or below 30 percent,” he said. “The development of the program itself should be value neutral to the county. That leaves any revenue generated by the cannabis tax available for whatever spending priorities the board may choose: public safety, health and social services, roads and infrastructure, social equity issues or any other government services.””


#cannabisresearch – “Colin Nuckolls, a chemist out of Columbia University in New York, has an upcoming study that compares the genetics of indoor versus outdoor cannabis flower. What he’s found in that study, Nuckolls told me, “is that outdoor cannabis has a great number and quantity of terpenes than indoor in a comparison of genetically identical plants for two different strains.””


Dale Schafer Law News – 5/10/22

#californiacannabis – Humboldt – “Ultimately, the report lists seven recommendations, which we’ll paraphrase below:
The county should pay to upgrade the Accela system so applicants can complete the application, including payment, online, thereby reducing the need for them to physically come into the Planning and Building office.
The county should pay to improve Accela so that employees in Planning and Building can complete more tasks, including reviews, calculations, permitting and reporting.
The county should pay to “fully implement Accela to a level which enables Public Works to meet its specific needs.” (This one is a bit redundant, perhaps.)
In the county’s Citizen Access Portal, the Planning and Building Department should give the public specific instructions on how to search a location without creating an account in Accela or contacting the Planning and Building staff.
When the Planning and Building Department gets notified that a state provisional license has been approved or denied, staff should immediately act on the corresponding interim cannabis permits.
For applications pending more than 30 days, the Planning and Building Department should notify applicants what they need to do for approval.
Before the end of the year, Public Works employees need to conduct actual verification that a roadway meets Category 4 requirements.”


#californiacannabis – “Dicus’ deputies stopped Empyreal’s vans on three occasions in November, December, and January, making off with a total of $1.1 million. The joint statement avers that the deputies “are not highway robbers as previously reported in the media.” But that remains a fair characterization, since the businesses whose proceeds the deputies stole and Empyreal itself were operating in compliance with state law.
Money earned by state-licensed marijuana businesses is not subject to forfeiture under California law. Dicus therefore transferred the loot to the FBI, seeking federal “adoption” of the seizures, which would have allowed his department to claim up to 80 percent of the money under the Justice Department’s “equitable sharing” program. That adoption fell through once the department agreed to give the money back.”


Dale Schafer Law News – 5/6/22

#californiacannabis – “Vertical integration was the name of the game when California launched its recreational marijuana market in 2018, as companies handled everything from cultivation to retail sales and home delivery.
Four years later, small and large operators across the state are unloading assets, shuttering business lines and letting coveted licenses expire in order to cut costs and narrow their focus in the world’s largest marijuana market.”


#californiacannabis – “Regulatory costs, high taxes, and local bans on retailers are the main factors impeding the transition to a legal market, according to a new report from Reason Foundation, the organization that publishes this website. The report, written by Geoff Lawrence, the foundation’s managing director of drug policy, focuses on the latter two issues. It recommends tax relief, which Lawrence shows would be compatible with continued growth in state marijuana revenue, and incentives aimed at encouraging local governments to allow retail sales.”


#californiacannabis – “Currently, cannabis companies in California face some of the steepest tax rates in the country. The 36-page report, titled “The Impact of California Cannabis Taxes on Participation within the Legal Market,” found that by removing some of that tax burden, licensed operators would be able to price their products more competitively with the unregulated marketplace, thus drawing in more customers and ultimately, more tax revenue for the state.”


Dale Schafer Law News – 5/5/22

#californiacannabis – “”Restricting access to cannabis = increased opioid addiction and suicide.” That’s the message commuters driving down Miramar Road in Mira Mesa are seeing, thanks to a billboard placed by military veterans’ advocacy group, Weed for Warriors….
“California and the nation’s, veterans are dying at horrific rates from opioid addiction and suicide. A lack of local access to safe, legal medical cannabis in San Diego threatens the livelihood of veterans who depend on this medication,” said Sean Kiernan, CEO of Weed for Warriors. “Local control has severely disrupted access to a product that veterans rely on. Despite serving their country overseas, the state’s legal cannabis prohibition demonstrates veterans are being left behind.””


#californiacannabis – “As a measure to protect cannabis consumers from untested and unregulated product at unlicensed businesses, two Los Angeles City Council members introduced a motion Wednesday aimed at implementing a county program that issues emblem placards to licensed cannabis businesses.
Under the County of Los Angeles’ Emblem Program for Authorized Cannabis Stores, storefront and delivery cannabis businesses are able to apply for an emblem, obtain the requisite inspection and place the emblem on their premises in an area visible to someone outside the store.”


#cannabisindustry – “The Controlled Substances Act (CSA) identifies the cannabis plant and all its derivatives as a Schedule 1 controlled substance. Schedule 1 controlled substances have a “high abuse potential with no accepted medical use,” and they cannot be “prescribed, dispensed, or administered.” Because cannabis remains classified as a Schedule 1 controlled substance, the CSA “imposes strict controls on possession, manufacturing, distribution, and dispensing” of cannabis.
Under the Money Laundering Control Act of 1986 (MLCA) and the BSA as amended, covered banks and NBFIs are prohibited from providing financial services to businesses that are engaged in illicit activities. Because federal law prohibits the distribution and sale of cannabis, financial transactions involving CRBs are therefore deemed to be transactions that involve funds derived from illegal activities….
The growing divide between federal prohibition and state legalization of the cannabis industry creates a precarious position for federally regulated banks and NBFIs with the main concern involving exposure to legal, operational and regulatory risk. The situation begs the question: How might the federal government and regulators pursue and prosecute players in the legal cannabis industry?”


#cannabisindustry – “A recent ruling from the U.S. Bankruptcy Court for the District of Arizona serves as another reminder that federal bankruptcy courts are hostile territory for cannabis companies and their operators.  Ryan Mayer filed a bankruptcy case under Chapter 13 of the U.S. Bankruptcy Code, seeking to reorganize his personal debts and liabilities.  In a Chapter 13 bankruptcy, an individual proposes a plan to re-pay all or a portion of his debts.  The amount to be repaid depends on how much he earns, the amount and types of debt owed, and how much property he owns.  As a general rule, debtors must use all monthly disposable income to re-pay their debts.
Mayer was the president and a major shareholder of Rosinbomb.  Although not plant-touching, Rosinbomb derived most revenue from the manufacture and nationwide sale of extraction and processing equipment within the state-legal cannabis industry.  And all Mayer’s income came from Rosinbomb….
Unfortunately for Mayer, the Court found there was no credible evidence to support his claims that sufficient income could be generated from equipment sales to federally-lawful hemp and other non-cannabis customers and that the inheritance claimed by Mayer was speculative.  The Court dismissed the case, finding that Mayer’s only reliable source of income came from a business whose operations violate the CSA, since Rosinbomb’s business activities themselves amount to the sale of federally illegal cannabis paraphernalia under the CSA.”


Dale Schafer Law News – 5/3/22

#cannabisindustry – ““Cannabis is medically legal in 37 states, but for purposes of this report we focused on operating adult-use states—the 11 states where any adult can walk into a licensed store and buy cannabis—for salience to the general public,” the report’s authors wrote. “In those 11 adult-use states, cannabis supports 13,042 licensed farms that harvested 2,278 metric tons of marijuana last year. That amount would fill 57 Olympic swimming pools, or over 11,000 dump trucks stretching for 36 miles—and it’s returning $6,175,000,000 to American farmers every year.”
That figure of a little more than $6 billion “ranks (cannabis) as the fifth most valuable crop in the United States,” trailing corn ($61 billion), soybeans ($46 billion), hay ($17.3 billion), and wheat ($9.3 billion) but outpacing cotton ($4.7 billion), rice ($3.1 billion), and peanuts ($1.3 billion).”