On November 8, Americans will go to their polling places to elect a new president. In addition, millions of Californians will be asked to vote for or against Proposition 64, the Adult Use Marijuana Act. Also known as AUMA, Prop 64 would legalize recreational marijuana in California by controlling, regulating and taxing the responsible adult use, sale and cultivation of cannabis statewide. Six years ago, Californians narrowly defeated Proposition 19, a similar but less complex initiative.
The California chapter of NORML (The National Organization for the Reform of Marijuana Laws) calls AUMA “an elaborate, 62-page document which writes hundreds of new provisions and regulations into state law. Due to its extraordinary length and complexity, AUMA contains a number of inconsistencies that will have to be ironed out by the courts or the legislature. It also includes a number of restrictions and oversights that many users find objectionable—for example, it imposes an unduly high 15 percent-plus tax increase on medical marijuana. Fortunately, the act allows for most provisions to be modified by the legislature.”
Santa Rosa-based cannabis business attorney Ben Adams predicts confusion and some pushback within the local marijuana industry if Prop 64 passes. “There will be 1,000 new regulations, such as tracking every single plant,” he says. “With all the new requirements and permit costs, it will be expensive for many cannabis growers to ‘go legal,’ and the price of cannabis will at least double—possibly triple—while the growers won’t earn any more.”
Local cannabis activists say most people in their industry in the North Bay don’t support AUMA, which would make it possible for big corporations to buy large tracts of land to grow cannabis and give them lobbying power to take over the industry with no concern for the impacts.
Workers’ rights will also be problematic for cannabis growers, says Adams. “There are many gardens in remote areas, and to become legitimate, those growers will have to provide bathrooms and showers for workers, among other new health and safety regulations. So a lot of them will stop operations or will continue to grow cannabis for the black market and take the risk of getting caught.”
“The AUMA initiative has large endorsements behind it that has brought great momentum for evolving the industry” says Ilana “Sugar” Laytart, CEO of Giggle Therapeutics in Santa Rosa, which specializes in cannabis-infused organic and gluten-free products.“The cannabis industry here doesn’t believe AUMA is the best initiative,” adds Adams. “It’s very broad. If you take the approach that cannabis is safe and beneficial, then why does it take 62 pages to explain?” (See “What’s on the Ballot?” )
Still criminals
California passed the Compassionate Use Act in 1996, which has made medical marijuana legal here for two decades. Yet the state government has yet to grant licenses and enact regulations for that segment of the industry.
“We’ve had legal medical cannabis for 20 years and the state still hasn’t put in place full regulation,” says Laytart. “We’re still seen as criminals by the federal government, and there are still many people here in the cannabis business who’re scared to do what’s being asked of them because there’s a high risk of getting in trouble with the feds. If the recreational initiative passes, it will add more issues to address.”
In anticipation of a recreational use initiative appearing on this year’s ballot, last year Governor Jerry Brown signed three bills that comprise the Medical Marijuana Regulation and Safety Act (MMRSA). That law has been in effect since the first of this year, but the state claims it needs more time to set up regulatory agencies, information systems and testing and distribution functions before it can begin issuing licenses. One of those new agencies will be the Bureau of Medical Marijuana Regulations, overseen by the Department of Consumer Affairs.
By regulating the medical marijuana industry first, according to California NORML, the framework should then be in place to regulate the industry’s recreational sector when the time comes.
Federal roadblocks
California NORML held a membership meeting in June where attendees overwhelmingly supported voting for AUMA, with some reservations. “AUMA is only a partial step towards complete legalization, which will require changing federal law,” said Cal NORML Director Dale Gieringer in a prepared statement. “Even if it passes, we will still have our work cut out for us to strengthen and defend the rights of patients and consumers to use marijuana.”
And that’s the rub: The federal government still outlaws cannabis. The Drug Enforcement Administration also classifies it as a Schedule I drug, placing it in the same category as heroin and other highly addictive illicit substances. In the eyes of the DEA, cannabis has no medical use.
The DEA announced earlier this year that it would consider rescheduling cannabis, a move that would have perhaps made it possible for any pharmacy to fill cannabis prescriptions. But in early August, the agency announced that cannabis will remain a Schedule I drug until further notice. Expanded medical research, however, will be allowed. In a prepared statement, the DEA acting administrator wrote, “If the scientific understanding about marijuana changes—and it could change—then the decision could change.”
“People in the cannabis industry are hopeful that the DEA will reschedule cannabis. They’re assuming it will happen, but you’d be unwise to think it’s a given,” says Adams. “If cannabis is moved to Schedule II status, it means anyone in any state in the U.S. could use cannabis legally with a doctor’s prescription. Even better, it would open up doors to medical research.”
All eyes on Colorado
AUMA proponents and opponents alike are closely watching what’s unfolded in Colorado four years after that state legalized recreational cannabis. “Colorado now has more marijuana-related businesses than all of the McDonald’s, Starbucks, and 7-Eleven stores combined,” says Petaluma Police Chief Patrick Williams. “There’s big money in this. AUMA is about corporate marijuana legalization, so it’s all about profit.”
With a proliferation of cannabis businesses out in the open in Colorado after legalization, lease rates for commercial property there have skyrocketed, according to Williams. “I’m told their commercial vacancy rates are approaching zero percent, and rates per-square-foot have quadrupled.”
From a law enforcement standpoint, Williams forecasts more drugged-driving arrests in the North Bay if recreational marijuana becomes legal. “Marijuana-related driving incidents have been growing in Petaluma, and also in Colorado and Washington [where recreational use is also legal],” he says. “Both of those states have data showing increases in pot-related traffic accidents and driving infractions, and the Colorado data also suggests an increase in pot-related traffic fatalities.”
California will soon need to establish how much of the psychoactive chemical in marijuana, known as THC (tetrahydrocannabinol), indicates “drugged” driving. Drivers in Colorado and Washington can be prosecuted for DUI if they have 5 nanograms of active THC in their bloodstream. “Here, there’s no agreed-upon standing of the level of THC in the bloodstream to make a presumption that a driver is impaired,” says Williams. “With alcohol, it’s a blood alcohol content of .08 percent or more, but there’s no equivalent standard for marijuana.”
A bill was introduced in the state legislature earlier this year proposing law enforcement use a sobriety testing method that swabs the inside of a driver’s cheek to detect marijuana. The bill was moved into the committee process this summer. Meanwhile, a breathalyzer device for measuring THC is reportedly undergoing testing and trials at UCSF.
“I don’t think proponents of the AUMA initiative would dispute that marijuana-related problems will increase here if recreational use is legalized,” adds Williams. Even with legalization, he says, marijuana-related robberies and homicides will still happen, and there will continue to be a black market. “The crime won’t end because something has been made legal. It’s legal to own a car, but they get stolen every day.”
He’s also uneasy with a section in AUMA that states persons who’ve been convicted of dealing more dangerous drugs cannot be denied a license for a marijuana business. “Organized crime won’t ignore the fact that this is occurring, and the cartels are very interested, too.”
The next Gold Rush?
Cannabis is widely regarded as the fastest growing industry in the United States, according to Adams. “And the heart of that industry is in Northern California. The amount of money to be made is absurd, especially if AUMA passes. It will generate a lot of economic activity, and some of the most lucrative businesses will be the ancillary services to the cannabis industry. All that money trickles down into local economies.
“I’m a pragmatic businessman and so I think of cannabis as a commodity,” he continues. “Like Mark Twain once said, ‘During a gold rush, it’s a good time to be in the pick and shovel business.’”
In addition to her cannabis business, Laytart is the founder and chairwoman of the Sonoma County chapter of Women Grow, an organization with over 40 chapters across the nation and Canada. Women Grow “seeks to connect and empower women in the legal cannabis industry,” she says. “Our mission is to educate and inspire women to become entrepreneurs in the cannabis industry through networking and social events. Cannabis is a fast-growing industry, and we want women to feel confident about stepping into amazing opportunities and making a mark in the industry, which is unprecedented for other industries. Both women and men are welcome to attend our meetings, as long as everyone is in line with our mission.”
Laytart says that regardless of whether Prop 64 passes, “It’s very important that the cannabis industry focus on local relationships with city officials. It’s ever changing, even in discussions of trying to create a safe place for currently compliant businesses.”
Too much cash
Until the federal government decriminalizes cannabis, it will remain a predominantly cash-based industry. Cannabis businesses avoid banks, which are part of the Federal Reserve System and federally insured. As such, money storage and security in the cannabis industry is a huge dilemma, says Adams. “I’m told that in Colorado, there are whole buildings with vaults full of millions of dollars. There’s so much cash earned there from recreational cannabis that they’ve run out of space to store it all.”
If Prop 64 passes, Adams says, California may establish its own credit union just for the cannabis industry. “The state may say a big ‘screw you’ to the federal government and create a state corporation for cannabis banking. That’s one possibility of handling money more wisely.”
And where taxes are concerned, he adds, “Once the feds get a tiny taste of the taxes to be made from cannabis, it’ll want it all. I believe it will eventually change its mind about cannabis because it will want that immense revenue stream.
What’s on the Ballot?
The Control, Regulate, and Tax Adult Use of Marijuana Act, more commonly known as AUMA or the “Parker Initiative,” would legalize recreational marijuana use in the state of California. Sean Parker, founder of Napster and a former president at Facebook, reportedly contributed $2.5 million to help launch and promote the initiative (as of August 1, 2016), which has been endorsed by, among others, the California Medical Association and Lieutenant Governor Gavin Newsom. The initiative will appear on the ballot in November as Proposition 64.
The 62-page initiative covers a wide range of technicalities aimed at regulating the legal marijuana trade, from the intricacies of licensing growers on numerous levels and cultivating their crops, to the proper labeling of marijuana products of all types that are packaged for consumers, including edibles.
Regarding oversight, the initiative states: “AUMA creates a comprehensive regulatory structure in which every marijuana business is overseen by a specialized agency with relevant expertise. The Bureau of Marijuana Control, housed in the Department of Consumer Affairs, will oversee the whole system and ensure a smooth transition to the legal market, with licenses issued beginning in 2018. The Department of Consumer Affairs will also license and oversee marijuana retailers, distributors and microbusinesses. The Department of Food and Agriculture will license and oversee marijuana cultivation, ensuring it’s environmentally safe. The Department of Public Health will license and oversee manufacturing and testing, ensuring consumers receive a safe product. The State Board of Equalization will collect the special marijuana taxes, and the Controller will allocate the revenue to administer the new law and provide the funds to critical investments.”
Some of the major points of this vast initiative include:
• Adults 21 years of age and older could possess 28.5 grams (or just over 1 ounce) of marijuana in plant form (or 8 grams in concentrate) and cultivate up to six plants for personal use.
• Although a homeowner or renter could grow, harvest and process up to six plants inside a home or apartment, outdoor cultivation might still be banned by local jurisdictions. However, indoor cultivation of six plants or less could not be banned.
• Adults 21 and older could buy marijuana at licensed dealers without a prescription. But just as individual cities and towns can now prohibit medical marijuana dispensaries, municipalities would also be able to prohibit marijuana retailers. People living in cities and towns where marijuana retailers are prohibited could have it delivered to their door or travel to another city to purchase it.
• Smoking marijuana in public would be banned under the same restrictions that apply to the smoking of tobacco. It will also continue to be illegal to operate motor vehicles under the influence of marijuana.
• Persons who have been convicted in the past of dealing in controlled substances such as heroin and cocaine would be allowed to become licensed marijuana dealers (with some exceptions).
• Persons convicted of any marijuana offense may petition to have his or her conviction recalled or dismissed, including those currently serving jail time.
• Cannabis products will require labels identifying where the marijuana was grown and how much THC (tetrahydrocannabinol, the psychoactive chemical in marijuana) it contains, as well as health warning labels similar to those that appear on tobacco products.
Hooray for Hemp
Proposition 64, if approved by voters in November, would also legalize industrial hemp, defined in the initiative as “a fiber, oilseed crop or both, that’s limited to nonpsychoactive types of the plant cannabis sativa L., and the seed produced therefrom.” An Industrial Hemp Advisory Board would be created and most functions involving cultivation, processing and labeling will be regulated by the Department of Food and Agriculture.
Move Over, Wine Tastings
If there’s any doubt that cannabis is more openly accepted than ever before, look no further than the HerbaBuena Social Club, a series of cannabis tastings that take place in different locations in the North Bay. HerbaBuena is the brainchild of Alicia Rose and Brant Hindman, who have reportedly established the first Demeter-certified biodynamic cannabis collective in California. While they wait for a license to open a storefront business, the pair has hosted members-only educational and tasting events, where the emphasis is on good health and promoting their product line. Attendees with the proper medical recommendations may also partake in a sampling of cannabis.
