As our Riverside cannabis lawyers can explain, city council voted 5-2 to green light 14 marijuana shop permits. The city has first passed a moratorium on cannabis companies in 2017 – with the exception of marijuana testing labs. This was despite the fact that Riverside voters supported Proposition 64 (which legalized recreational cannabis) by a 53 percent majority. A year later, the council agreed on an outright prohibition of commercial cannabis operations – except for labs.

Then two years ago, the city caught wind of a citizen-led effort to undercut the municipal ban on marijuana sales. Signatures to move the petition forward were never formally submitted, but the city did start weighing whether it should initiate its own permit program and regulatory framework. (Likely, they wanted to sidestep the reality that it was probably going be done whether they wanted it or not, and best to have some control over the final outcome.)

The city is actively studying how best to support permit seekers who have been disproportionately impacted by anti-cannabis legislation in the past. The initial outlay caps cannabis retailers at 14, but there’s no such limit for the number of labs, manufacturing companies, or distribution firms. Voters will need to consider whether they’re willing to accept taxation for the measure. A vote is expected in November 2024.

One councilmember against the initiative said he doesn’t believe marijuana sales in the city are an inevitability, worried over police and other public services burdening more duties, and lamented the fact that a gateway drug was going to be so easily accessible – particularly for young people. Just recently, the sheriff’s office arrested several older adult teens in Riverside for selling vape pens with concentrated cannabis to minors using a mobile delivery service.

But those who support legal cannabis say that a well-regulated market has proven to offset many of these concerns.

It should be noted that this determination about Riverside City is separate from the rules of Riverside County. (Municipalities may have more stringent requirements than counties, and counties may have more stringent requirements than the state – provided they aren’t infringing on people’s rights.)

In Riverside County, cultivation of cannabis is legal if grown for personal use – indoors and within a single, private residence, obstructed from public view and for non-commercial use by someone over 21 for non-commercial use. Where it’s grown outside of a building, the building must be secured by an opaque fence that’s a minimum 6-feet-high. Commercial cannabis activities are allowed so long as the company has a permit from the county’s planning department (which does incur fees). Storefront retailers may be open to the public, provided they operate within authorized zones. Commercial growing operations can’t have plants that are visible from outside the facility. Cannabis delivery is also legal in Riverside County, so long as it’s done in accordance with California Business and Professions Code – but is not permitted in unincorporated areas of Riverside County.

The legalization of medicinal and recreational cannabis has been an economic boon to Riverside County, resulting in total taxable sales exceeding $100 million in 2019 and $265 million in 2020, according to CaliforniaCannabis.org.

If you are considering seeking a permit to operate a cannabis business in Riverside, our longtime marijuana lawyers can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Cannabis businesses in Riverside are on the way, March 1, 2023 by Sarah Hofman, The Press-Enterprise

More Blog Entries:

Can California Cannabis Patents Survive Illegality Doctrine? Feb. 20, 2023, Los Angeles Cannabis Lawyer Blog

This lawsuit is being closely watched by cannabis company legal advocates as it could have a direct impact on their bottom line and ability to engage in financial transactions.

The plaintiff, with more than 25 years in banking, launched her logistics/armored vehicle business four years ago in Colorado. Since then, it’s expanded to operation in 28 states. Her goal, she told Colorado News Online, was to address some of the challenges that cannabis companies face with financial transactions. Although many states now allow medicinal and even recreational marijuana, THC products are still considered illegal under federal law. That makes federally-backed banks – bound to comply with the U.S. Anti-Money Laundering Act and Bank Secrecy Act – wary of doing business with cannabis companies. For the 700-or-so banks that will accept money from marijuana dispensaries, there is a large compliance list that involves things like background checks, verification of money origins and destinations, and other stringent guidelines. Plaintiff said she only works with banks that are meticulous about meeting all the strict requirements.

Meanwhile, particularly in states where possession of marijuana for any reason is still criminal. Kansas is one of those. State law enforcement officials there report that in the last three years, its officers have seized more than $8 million from all motorists (not just those ferrying marijuana-related funds through the state). That accounts for half of all civil forfeitures, which is a process by which law enforcement agencies can seize money, vehicles, real estate, weapons, and other personal property they suspect may have been involved in criminal activity. It is not necessary for the cops to arrest anyone or secure a conviction in order to seize the money/property. In Kansas, half of all forfeitures were done with no criminal case being filed. All they had to do was demonstrate a connection between the property and a crime – and show a lawful reason for making the stop. (As any attorney will tell you, follow behind any driver long enough and you’ll find some minor traffic infraction that can be used as cause to pull them over.)

The lawsuit alleges that the company’s vehicles have been stopped by law enforcement in Kansas and California a total of five times since last May – twice resulting in cash seizures of more than $1 million, money that was later turned over to the FBI.

These actions prompted the company to stop driving through Kansas and halt all business operations in San Bernardino County, CA – the largest in the U.S. It has also lost customers due and put the kibosh on rolling out any new services in other states because of these incidents. Should these incidents continue, as there is every indication they will, the company claims it will face difficulty continuing to do business – something that will hamper state-legal cannabis operations. The company noted that there wasn’t a single incidence of a driver being issued a traffic citation in any of the stops – something the company says supports its case that the initial reasons for stops were dubious.

An FBI spokesperson declined to comment to the press on pending litigation. In a response filed in court, the DOJ asserted the company lacked standing to file the lawsuit, as it is merely transporting money owned by the cannabis companies, not losing money itself.

The sheriff of San Bernardino responded on Twitter to an initial report of the lawsuit, saying more than 80 percent of marijuana is grown illegally, and that such operations have adversely impacted quality of life for residents in the county. He said he’s confident that the facts of the case are on the side of his officers.

While this case is being closely watched, it’s worth noting that President Joe Biden has thus far not issued any public guidance to his DOJ about how to navigate conflicts between federal and state marijuana laws. When he was a presidential candidate, a spokesman told the media that Biden would allow states to make their own calls on legalization, though he did intend to push for rescheduling the drug from its current Schedule 1 status (the most restrictive) to Schedule 2, making it easier to study. That has not yet happened.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

FBI and California sheriff illegally seized marijuana cash belonging to licensed dispensaries, lawsuit claims, Jan. 31, 2022, By Josh Campbell, CNN

The California Cannabis Reform Project and Weed for Warriors organizations are working together to hammer out a ballot initiative that would, among other things, deprive local governments of the power to approve or deny licenses for cannabis business operators. They allege local governments have failed to wield that power effectively, in turn causing more harm than good, giving illegal operators a leg-up while making it harder for many law-abiding consumers in massive swaths of the state to obtain safe, legal cannabis.

As noted by analysis in the New York Times, roughly 8 in 10 of the state’s local governments have outlawed the sale of marijuana within their borders, effectively creating marijuana retail deserts. Local governments’ loss of control is effectively evidenced by the huge – and growing – illicit marijuana market.

Whether the ballot initiative has any hope of passing is questionable. As a Los Angeles attorney practicing cannabis law, I think it’s a fair assumption that local governments aren’t likely to cede any of the control they currently hold. A big part of the battle to pass Proposition 64 was gaining local government buy-in. Assurance of local control, while controversial, made it more digestible and was one of the only reasons some cities didn’t fight it harder.

However, five years in, it’s become clear that reform is necessary if we want to wrest control from the black market. Addressing issues of taxes and local control is going to be critical.

Organizations that represent cities so far haven’t commented on the effort, saying they don’t offer opinions on proposed ballot measures that have not officially qualified. Still, blanket statements were issued to the effect that local control of cannabis issues is something they still staunchly support.

Another element to the proposed ballot measure would be to restructure California cannabis taxes. The proposal would eliminate the cultivation tax, which is $9.65 per ounce of dry cannabis flower, $2.87 per ounce of dry cannabis leaves and $1.35 per ounce of dry weight for fresh cannabis plants. Further, it would reduce the existing excise tax, currently 15 percent of the average market price, to 5 percent. Further, it would bar local government entities from imposing any cannabis taxes. To compensate municipalities, it would grant local governments 1/5 of the total revenue of state excise taxes.

The effort of the cannabis activists is still in the early stages. Just getting the question in front of voters is estimated to cost $6 million on the low-side. The current planning phase involves discussions with lawmakers, lawyers and industry insiders and weighing whether such a measure would be best suited for presentation next year or in 2024.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Should California reform its marijuana laws? Why advocates want cannabis back on the ballot, April 20, 2021, By Andrew Sheeler, Sacramento Bee

More Blog Entries:

California Cannabis Companies Should Expect More Audits, Taxes, March 30, 2021, Los Angeles Cannabis Lawyer Blog

That said, our Los Angeles marijuana business lawyers have been fierce defenders of those involved in cultivating, manufacturing, selling, using, prescribing and advertising marijuana for more than a decade. We have become deft at examining the trends as we advise our clients, many of whom were better off than some other businesses due to their designation by the state as “essential.”

In looking at the year ahead, our marijuana lawyers see a handful of factors that will likely impact the future of the industry and the clients we serve.

More Efficient Oversight by the State

Marijuana businesses in California are heavily regulated – some nearly to death. Things could get a little easier in 2021 given a plan by the governor to fold the three state departments responsible for overseeing the state’s legal cannabis markets into one. Marijuana oversight operations in the Department of Public Health for product makers, the Bureau of Cannabis Control for retailers, distributors and labs and the Department of Food and Agriculture for growers would be combined into a single operation, the Department of Cannabis Control. This could be a huge relief to cannabis operators, as every link in the supply chain would have a single point of contact.

It was already supposed to have happened this past summer, but COVID-19 derailed those plans. New estimates are that the DCC will become a reality late this year or possibly even next year.

Last month, the chief of the BCC retired after having been appointed by the previous governor to oversee the launch of industry regulations and oversight. Not everyone has been happy with every decision she’s made, but most agree that loss of her experience may have result in some setbacks for the industry. Although there is some speculation about who her replacement will be, the governor hasn’t yet announced it.

Regional Cannabis Marketing Legalization

We’ve mentioned this in previous blog posts, but the new appellation program is going to allow cannabis to be marketed by city/county/regional name, in the very same way wine is. This is considered to be a big boost when we look at what appellations rights did for California wine businesses in places like Napa Valley. Cannabis cultivators will have the legally protected right to advertise their products as being grown in specific places in the state with certain elevations, soil compositions and climates that are known to impact the end product quality.

That requirement, which requires the cannabis be grown in the ground with local soil and no artificial light, began Jan. 1st. The move is expected to help smaller, sun-grown operations in Northern California especially. Those in Riverside, Orange and Los Angeles counties, however, may actually be adversely affected, as these localities don’t currently allow outdoor cannabis farming.

California Cannabis Reforms on the Table

There is some hope that lawmakers this year will pick up and keep moving on legislative actions that were stalled by the pandemic. Among these:

• Lower tax rates for marijuana products. (The current rate makes it difficult to compete with illegal growers.)
• Regulation of medical cannabis for pets.
• Regulation of hemp-derived CBD.
• Approval of drive-through marijuana retail operations.
• Streamlining of all cannabis business license applications from a single platform.
• Approval of trade samples between businesses.
• Increasing the amount of marijuana that marijuana delivery drivers can legally transport.

And of course, there is as always an ardent hope that federal cannabis law will change. This may take a back seat until the pandemic and related issues are resolved, but it remains a critical matter for California’s budding marijuana businesses.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Marijuana: 4 things to watch for in California in 2021, Dec. 28, 2020, By Brooke Staggs, Orange County Register