published on May 30, 2017 - 10:05 AM
Written by David Castellon

A little more than two decades ago, California voters passed Proposition 215, the Compassionate Use Act, which allows for the cultivation, sales and use of marijuana for medicinal use.

And in about eight-and-a-half months, the landscape of marijuana use will change again in the state as a result of voter passage of Proposition 64, legalizing the use and sale of marijuana for recreational purposes.

Starting Jan. 1, 2018, the State Board of Equalization will begin issuing licenses to allow for the legal sales and cultivation of recreational cannabis.

At least that’s the plan, said Brian Wiggins, senior advisor to George Runner, vice chairman of the board, which besides issuing those licenses will collect excise taxes from those recreational cannabis businesses.

“I know in one committee hearing, there was one particular senator who said, ‘I’m doubtful that the state agencies that are charged with certain aspects of the regulatory framework can get that all done and get licensing in place by Jan. 1, 2018,’” he recounted.

“Everybody’s running to that January finish line, and we all hope it’s in place. It’s a lot to do in a short period of time, and sometimes that’s difficult for a state bureaucracy to accomplish,” Wiggins said recently after giving the Fresno Chamber of Commerce an update on the state’s progress on fully implementing cannabis licensing.

Portions of the new law already are in effect, including the right for people to grow cannabis — up to six plants per household — and the right of people 21 years or older to carry small amounts of the drug, up to ounce in plant form and up to eight ounces in “concentrated form as an oil or ingredient in food or other products, including hand creams.

“But that is subject to local regulations,” as cities and counties can create regulations that could make growing or using cannabis easy or very difficult, said Michael Green, president of the Fresno Cannabis Association.

For example, Clovis doesn’t challenge the six plants per household rules, but the city restricts growing the plants to a 32-square-foot area in a building, which isn’t a lot of space, said Green.

And he expects other cities and counties with leaders that don’t like the new recreational marijuana law to pass similar “shrink the box” rules to make growing the plants difficult.

Prop 64, prohibits counties or cities from banning indoor cultivation, so some community leaders may ban growing outside homes, in yards or gardens, said Green.

Similarly, the new law includes a series of local controls that allow counties and municipalities to impose their own licenses, fees and regulations that could make it easy to start a recreational cannabis business, or difficult, or could ban them entirely, Green noted.

And among local communities — if their histories with medicinal marijuana are any indication — places welcoming recreational marijuana businesses may hard to find.

In Tulare County, for example, rules for selling and growing medical cannabis have been so heavy handed and costly that few operators have been able to operate there.

Similar actions and outright bans have been imposed in most of Fresno County, leaving Coalinga the only city there with a licensing program allowing for a medical marijuana dispensary.

On the other side of the coin, a large Bay Area cannabis cultivator is eyeing a former tire plant in Hanford as a possible site for what could become as the largest cannabis cultivation site in the state, creating hundreds of jobs.

In addition, city leaders also are considering a proposal to allow medicinal cannabis dispensaries to operate just within the Kings Industrial Park, after cannabis businesses from the Bay Area and Southern California expressed interest in setting up operations there.

And the city of Coalinga is experiencing a boom in commercial real estate after voters there approved parameters for taxing commercial marijuana operations based on the size of the facility.

Clearly, city officials were on board with this, as they sold the former Claremont Custody Canter to Ocean Grown Extracts, which converted the former prison into a cultivation and manufacturing plant for cannabis-based extracts.

Prop. 64’s supporters touted that legal recreational cannabis sales could generate $1 billion in tax revenues for California, but Wiggins said that may not happen for a few years.

That’s because even though medical marijuana operations are legal, state officials estimate that 40 percent or less of those businesses fail to register with the state and pay their taxes, he said.

Part of that may be because many of those operators want to stay off the radar, as they aren’t operating in full compliance with state and local regulations, but some operators also worry that the federal government may crack down on such businesses, despite federal agencies steering clear of them in the past.
Wiggins said some are nervous that President Donald Trump and his new attorney general, Jeff Sessions, might end this policy initiated by the Obama administration and enforce the federal drug law that lists marijuana as a schedule 1 drug — which includes methamphetamine and heroin — despite California, 27 other states and the District of Columbia recognizing medical or recreational marijuana use or both as legal for adults.

“In certain parts of Los Angeles County, there are supposed to only be 135 permits out there for dispensaries, but they have about 1,800 to 2,000 dispensaries — or probably some unknown number above that, even — operating. So they would prefer to stay under the radar,” Wiggins said.

Still, there is a shift occurring in compliance as next year approaches, he said, noting that “We have cultivators that are coming forth and getting sellers permits like we’ve never seen before.”

“The reason for this is they’re beginning to look forward to Jan. 1 and say they, ‘I need to be in compliance with all the other licensing requirements,’” so they can be ready to start these new cannabis businesses.

And anybody looking to start such business should start by contacting officials in the city or county where they want to operate to find our if it will be permitted and the local rules they’ll need to follow, Wiggins said.

e-Newsletter Signup

Our weekly poll

Does the $2 trillion federal relief package go far enough to help Americans, economy?

Loading ... Loading ...

Central Valley Biz Blogs