New Marijuana Taxes in California for 2018

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Category Archives: Cannabis Licensing

New Marijuana Taxes in California for 2018

California Marijuana Licenses Cannabis Licenses

New Marijuana Taxes in California for 2018

As Orange County Marijuana Licensing Attorneys, we get asked about the New Marijuana Taxes in California for 2018 on marijuana products for those purchasing.  As the LA Times noted in a recent story, unfortunately, those are going to be high (no pun intended).

When do the new Marijuana Taxes start?

Beginning January 1, 2018, all harvested cannabis is subject to a cultivation tax and both cannabis and cannabis products are subject to a cannabis excise tax.

If you are running, or starting, a cannabis business, it is important you are aware of the new tax rates, how these taxes apply to your business activities, and your registration requirements.

Cultivation: What are the cultivation tax rates and who pays the tax in CA?

The current cultivation tax rates under the New Marijuana Taxes in California for 2018 are:

• $9.25 per dry-weight ounce of cannabis flowers, and
• $2.75 per dry-weight ounce of cannabis leaves.

Additional categories and rates may be specified at a later date in regulations and will be posted on the state’s website.

The cultivation tax applies to all harvested cannabis that enters the commercial market. Cultivators are responsible for paying the cultivation tax to the distributor or to the manufacturer if the first transfer or sale of unprocessed cannabis is to a manufacturer. Manufacturers who collect the cultivation tax are required to pay the tax to the distributor. The distributor reports and pays the cultivation tax to the California Department of Tax and Fee Administration (CDTFA).

What is the cannabis excise tax rate and who pays the tax?

The cannabis excise tax is imposed upon purchasers of all cannabis and cannabis products at a rate of 15 percent of the average market price when purchased at retail. Retailers are responsible for collecting the cannabis excise tax from purchasers at the time of the retail sale and for paying the tax to the distributor. The distributor reports and pays the cannabis excise tax to the CDTFA.

How is the “average market price” determined?

  • When the sale to the retailer is an arm’s length transaction, meaning the consideration received reflects the fair market value between two parties under no requirement to participate in the transaction, the average market price is the wholesale cost of the cannabis or cannabis products sold or transferred to the retailer, plus a mark-up predetermined by the CDTFA (see heading below).
  • The wholesale cost is the amount paid by the retailer for the cannabis or cannabis products, including transportation charges and adding back in any discounts or trade allowances. In an arm’s length transaction, the excise tax is not based on the retailer’s gross receipts.
  • When the sale or transaction is not at arm’s length, the average market price is the cannabis retailer’s gross receipts from the retail sale of the cannabis or cannabis products.

What is the mark-up rate on marijuana wholesale cost?

The current mark-up rate as set by the CDTFA is 60 percent for all cannabis and cannabis products. CDTFA is required to determine the mark-up rate every six months. The rate will be posted on the State of California’s tax licensing website.

How does the distributor report and pay cultivation and cannabis excise taxes to the CDTFA?

  • Distributors must register with the CDTFA for a cannabis tax permit to report and pay the cultivation tax and cannabis excise tax to the CDTFA.
  • A microbusiness licensee is licensed to act as a distributor, among other things, and must comply with all the same requirements as a distributor.

How does marijuana sales tax apply?

  • Sales and use tax applies to retail sales of cannabis and cannabis products, but does not apply to sales of medicinal cannabis and cannabis products where a purchaser provides his/her Medical Marijuana Identification Card issued by the California Department of Public Health and a valid government identification card.
  • Gross receipts from the sale of cannabis and cannabis products for purposes of sales and use tax include the excise tax.
  • Cannabis retailers, cultivators, manufacturers, and distributors making sales must register with the CDTFA for a seller’s permit to report and pay any sales and use tax due to the CDTFA. If you already have a seller’s permit that was issued by the Board of Equalization (BOE), it is not necessary to re-register for a seller’s permit with the CDTFA.
  • It is important that you timely obtain a valid resale certificate that is accepted in good faith from the purchaser if you make sales for resale.
  • Current sales and use tax rates can be found on the state of California’s cannabis website.

When may I register my cannabis business?

Beginning November 20, 2017, you can register for all the proper tax permits for your cannabis business on the state’s official taxation website. From the CDTFA homepage, click the Register link, and follow the prompt. When registering your business activity, make sure to select box number 3, Cannabis business activities.

Where can I get more information about registering a marijuana dispensary or other cannabis business?

The information provided here about New Marijuana Taxes in California for 2018 is general. The tax law can be complicated and there are very specific requirements for the cannabis industry. The State has a Tax Guide for Cannabis Businesses with helpful information on a variety of topics including: registration, invoicing requirements, tax exemptions, record keeping, calculation of the tax due with examples, and other important resources.

Get more information on New Marijuana Taxes in California for 2018

Our Cannabis Business Licensing Lawyers are available to help you if you  have questions.  But the State of California also has some resources to help you, and your new business.  Contact us.

If you have additional questions, you may also call the California Service Center at 1-800-400-7115 (TTY:711) Monday through Friday8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays.

For additional information about the proposed regulations, or to subscribe to email alerts to hear about updates as they become available, please visit the State of California’s licensing website – http://www.bcc.ca.gov/.

For information on all three licensing authorities, please visit the state’s cannabis web portal – cannabis.ca.gov.

How to get an Orange County cannabis cultivation license.

Orange County Cannabis Lawyer

How to get an Orange County cannabis cultivation license.

As an Orange County cannabis licensing attorney, we often get asked what is needed to get a State of California cannabis cultivation license.

The State of California anticipates that they will begin issuing state cannabis cultivation licenses in California as of January 1, 2018.

While they are completing the final regulations, there are some steps you can work on now to prepare for your licensing application.

Whether you plan to commercially grow medicinal and/or adult-use (recreational) cannabis in California, here’s a checklist of documents you may need to complete your application.

  • Although not required, a permit from your city or county (or other jurisdiction) will streamline the application process.
  • Right to occupy property: Your lease agreement, property title, or deed n Business formation documents filed by the California Secretary of State’s office n California State Water Resources Control Board permits and verification of your water source, including: well logs, Notice of Applicability, or a Waste Discharge Requirement (WDR) waiver.
  • California Department of Fish and Wildlife’s 1602 permit or a waiver
  • California Department of Toxic Substance’s hazardous materials record search via their EnviroStor data management system
  • California Department of Fee and Tax Administration’s seller’s permit
  • Labor agreement if you’ll have more than 20 employees
  • Surety bond valued at $5,000
  • California Department of Justice fingerprinting via its Live Scan service

City and County Jurisdictions for Cannabis Licenses

Each city and county has different protocols. Depending on where you want to commercially grow cannabis in California, you might need to contact one or more of the following agencies, in the city where you want to operate, to get the necessary local permits:

  • Building Department
  • Environmental Health Department
  • Office of the County Agricultural Commissioner
  • Office of the Sheriff or Police Chief
  • Planning Department
  • Public Works Department Resources

Cannabis License Resources for California

• CalCannabis Cultivation Licensing, a division of the California Department of Food and Agriculture 1-833-CALGROW (225-4769) calcannabis@cdfa.ca.gov calcannabis.cdfa.ca.gov

• California Cannabis Portal cannabis.ca.gov

• California Department of Fee and Tax Administration 800-400-5448 efile.boe.ca.gov/ereg/index.boe

• California Department of Fish and Wildlife wildlife.ca.gov/conservation/Cannabis

• California Department of Justice Live Scan Fingerprinting Locations oag.ca.gov/fingerprints/locations

• California Department of Toxic Substances Control EnviroStor 877-786-9427 envirostor.disc.ca.gov/public

• California Secretary of State 916-657-5448 sos.ca.gov/business-programs

• Labor Agreements Contact any major union to help you with your labor peace agreement.

• State and Regional Water Control Boards 916-319-9427 waterboards.ca.gov

Contact us if you would like us to prepare and file the cannabis license for you.  For more information, please visit the following sites, which usually have updated information:

Long Beach Marijuana License Attorney

Long Beach Marijuana License Attorney

Long Beach has, or had, 32 licenses available for operation in the city.  They released them in stages, with the last 10 being released and assigned last week, on September 28th, 2017. The city had a lottery to assign the last 10, but they still have to await final approval.
Long Beach requires inspections of any proposed location from the following City agencies which will inspect proposed marijuana business locations:
  • Development Services: Building and Safety Division
  • Development Services: Planning Bureau
  • Environmental Health
  • Fire Department
Long Beach Permit requirements are here:  http://www.lbds.info/civica/filebank/blobdload.asp?BlobID=6361.
You will note that many of the requirements mention building codes, and if you are not doing construction of a new building, or remodel of an existing building that requires city construction permits, you will still need to make sure you are in compliance with all existing city codes.

City of Long Beach Marijuana Taxes

On November 8, 2016, Measure MA, “Long Beach Marijuana Taxation”, passed by the vote of the citizens of Long Beach. That new law sets the tax rates to:
  • six to eight percent (6-8%) of gross receipts for medical marijuana dispensaries; 
  • eight to twelve (8-12%) of gross receipts for non-medical (i.e., recreational) marijuana dispensaries; 
  • six to eight (6-8%) of gross receipts for processing, distributing, transporting, or testing marijuana and marijuana-related products; and 
  • twelve to fifteen ($12-15) per square foot for marijuana cultivation. 

Taxes set by Measure MA could be increased or decreased within the established ranges by the City Council, provided the maximum rates listed above are not exceeded.

Specific Dispensary Rules in the City of Long Beach

Note that you are not allowed to smoke or consume marijuana inside any dispensary.
You also cannot deliver marijuana unless it’s sealed and labeled, and there are signage requirements for the business (see link above).

City of Long Beach Marijuana License Application Fees

There is a minimum tax of $1,000.  Application fees are:
  • Application Fees range from $200.45 for one owner, up to $925.45 for six owners.
  • Zoning Review Fee $33.00 
  • Development Services Review Fee $22.45 
  • ADA State Mandated Fee $1.00 
  • LBPD Background Investigation Fee $145.00 for each owner and business manager
(See the application at http://www.longbeach.gov/globalassets/finance/media-library/documents/business-info/business-licenses/marijuana-applications/medical-marijuana-application).  Note that they want photos and dimensions of the location, specific licenses, and information on each owner.
There are currently no delivery licenses, or dispensary licenses, available after the lottery last week.  If more open up, the application instructions are at  http://www.longbeach.gov/globalassets/finance/media-library/documents/business-info/business-licenses/marijuana-applications/medical-marijuana-application-guidelines_final/
Long Beach also has a “buffer zone”, where you must show you are more than 1,000 feet from any other dispensary, and not near public schools, beaches, or parks.  A description of last week’s lottery and a map showing existing dispensaries are here:  http://www.thecannifornian.com/cannabis-news/southern-california/long-beach-uses-lottery-system-hand-limited-medical-marijuana-licenses/
Background check requirements, requirements of the owner of the property where the business is located (in your case landlord), and a description of the point system used by Long Beach for marijuana licensing is here:  http://www.longbeach.gov/globalassets/finance/media-library/documents/business-info/business-licenses/marijuana-applications/medical-marijuana-faq-s
You will also need a general business license in Long Beach, which is required for the marijuana application.  That license application form is here:  http://www.longbeach.gov/globalassets/finance/media-library/documents/business-info/business-licenses/marijuana-applications/new-medical-marijuana-business-application_final/
There is no current deadline or limit for distribution facilities, although they do have to go through the licensing process as any other business would have to, and are subject to the buffer zones and must provide an operating plan and other information.

Long Beach Marijuana Cannabis Licenses Still Available

How many non-dispensary medical marijuana businesses are allowed in the City of Long Beach (cultivation, distribution, manufacturing, testing)?

Currently, there is no limit to the number of non-dispensary medical marijuana licenses that can be issued.
As of the writing of this article, there is only one distribution license application pending in Long Beach.

Does my landlord have to give permission or agree to my marijuana license?

Yes.  Long Beach has their own form for landlord permission. Applicants who do not own the proposed business property must submit the Property Owner Authorization Form.​

​So, if you rent or lease your location, you will need your landlord to certify permission to operate.  See

http://www.longbeach.gov/finance/business-info/business-licenses/marijuana-business-information/​.

Contact us for any questions about obtaining a marijuana dispensary license, or other cannabis business license.  As a top Long Beach Marijuana License Attorney, we can help you today.

Cannabis Business Resources: Health Benefits of Marijuana

Cannabis Business Resources: Health Benefits of Marijuana

Marijuana Hemp Cannabis License Health Benefits

For your California Cannabis License, or your Orange County Marijuana Dispensary, the following list of Cannabis Business Resources: Health Benefits of Marijuana, with studies discussing the benefits of Cannabis are as follows:

United States Marijuana Patent:  Cannabinoids as antioxidants and neuroprotectants http://www.google.com/patents/US6630507

Cannabis and Skin Cancer

http://www.ncbi.nlm.nih.gov/pubmed/12511587
http://www.ncbi.nlm.nih.gov/pubmed/19608284

Cannabis Cures Lung Cancer

http://www.ncbi.nlm.nih.gov/pubmed/22198381?dopt=Abstracthttp://www.ncbi.nlm.nih.gov/pubmed/19608284
http://www.ncbi.nlm.nih.gov/pubmed/21097714?dopt=Abstract

Cannabis kills Tumor cells

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1576089
http://www.ncbi.nlm.nih.gov/pubmed/20090845
http://www.ncbi.nlm.nih.gov/pubmed/616322
http://www.ncbi.nlm.nih.gov/pubmed/14640910
http://www.ncbi.nlm.nih.gov/pubmed/19480992
http://www.ncbi.nlm.nih.gov/pubmed/15275820
http://www.ncbi.nlm.nih.gov/pubmed/15638794
http://www.ncbi.nlm.nih.gov/pubmed/16818650
http://www.ncbi.nlm.nih.gov/pubmed/17952650
http://www.ncbi.nlm.nih.gov/pubmed/20307616
http://www.ncbi.nlm.nih.gov/pubmed/16616335
http://www.ncbi.nlm.nih.gov/pubmed/16624285
http://www.ncbi.nlm.nih.gov/pubmed/10700234
http://www.ncbi.nlm.nih.gov/pubmed/17675107
http://www.ncbi.nlm.nih.gov/pubmed/14617682
http://www.ncbi.nlm.nih.gov/pubmed/17342320
http://www.ncbi.nlm.nih.gov/pubmed/16893424
http://www.ncbi.nlm.nih.gov/pubmed/15026328

Cannabis Cures Colorectal Cancer

http://www.ncbi.nlm.nih.gov/pubmed/22231745
http://www.ncbi.nlm.nih.gov/pubmed/17583570

Cannabis Cures Uterine, Testicular, and Pancreatic Cancers

http://www.cancer.gov/…/cannabis/healthprofessional/page4

Cannabis-derived substances in cancer therapy and anti-tumor properties.

http://www.ncbi.nlm.nih.gov/pubmed/20925645

Cannabis Cures Brain Cancer

http://www.ncbi.nlm.nih.gov/pubmed/11479216

Cannabis Cures Mouth and Throat Cancer

http://www.ncbi.nlm.nih.gov/pubmed/20516734

Cannabis Cures Breast Cancer

http://www.ncbi.nlm.nih.gov/pubmed/20859676
http://www.ncbi.nlm.nih.gov/pubmed/18025276
http://www.ncbi.nlm.nih.gov/pubmed/21915267
http://www.ncbi.nlm.nih.gov/pubmed/22776349
http://www.ncbi.nlm.nih.gov/pubmed/18454173
http://www.ncbi.nlm.nih.gov/pubmed/16728591
http://www.ncbi.nlm.nih.gov/pubmed/9653194

Cannabis Cures Prostate Cancer

http://www.ncbi.nlm.nih.gov/pubmed/12746841?dopt=Abstract
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3339795/
http://www.ncbi.nlm.nih.gov/pubmed/22594963
http://www.ncbi.nlm.nih.gov/pubmed/15753356
http://www.ncbi.nlm.nih.gov/pubmed/10570948
http://www.ncbi.nlm.nih.gov/pubmed/19690545

Cannabis Cures Blood Cancer

http://www.ncbi.nlm.nih.gov/pubmed/12091357
http://www.ncbi.nlm.nih.gov/pubmed/16908594

Cannabis Cures Liver Cancer

http://www.ncbi.nlm.nih.gov/pubmed/21475304

Cannabis Cures Cancer in General

http://www.ncbi.nlm.nih.gov/pubmed/12514108
http://www.ncbi.nlm.nih.gov/pubmed/15313899
http://www.ncbi.nlm.nih.gov/pubmed/20053780
http://www.ncbi.nlm.nih.gov/pubmed/18199524
http://www.ncbi.nlm.nih.gov/pubmed/19589225
http://www.ncbi.nlm.nih.gov/pubmed/12182964
http://www.ncbi.nlm.nih.gov/pubmed/19442435
http://www.ncbi.nlm.nih.gov/pubmed/12723496
http://www.ncbi.nlm.nih.gov/pubmed/16250836
http://www.ncbi.nlm.nih.gov/pubmed/17237277

Cannabis kills cancer cells

http://www.ncbi.nlm.nih.gov/pubmed/17952650
http://www.ncbi.nlm.nih.gov/pubmed/16835997
http://cancer.gov/…/cam/cannabis/healthprofessional/page4

Cannabis Treatment in Leukemia

http://www.ncbi.nlm.nih.gov/pubmed/15978942
http://www.ncbi.nlm.nih.gov/pubmed/16754784
http://www.ncbi.nlm.nih.gov/pubmed/15454482
http://www.ncbi.nlm.nih.gov/pubmed/16139274
http://www.ncbi.nlm.nih.gov/pwubmed/14692532

Cannabinoids and the immune system

http://www.ncbi.nlm.nih.gov/pubmed/11854771
http://www.ncbi.nlm.nih.gov/pubmed/19509271

Cannabis Induces apoptosis of uterine cervix cancer cells

http://www.ncbi.nlm.nih.gov/pubmed/15047233

Cannabis treatment in lymphoma

http://www.ncbi.nlm.nih.gov/pubmed/18546271
http://www.ncbi.nlm.nih.gov/pubmed/16936228
http://www.ncbi.nlm.nih.gov/pubmed/16337199
http://www.ncbi.nlm.nih.gov/pubmed/19609004

Cannabis treatment of Melanoma

http://www.ncbi.nlm.nih.gov/pubmed/17065222

Cannabis treatment for Thyroid Carcinoma

http://www.ncbi.nlm.nih.gov/pubmed/18197164

Cannabis treatment in Colon Cancer

http://www.ncbi.nlm.nih.gov/pubmed/18938775
http://www.ncbi.nlm.nih.gov/pubmed/19047095

Cannabinoids in intestinal inflammation and cancer

http://www.ncbi.nlm.nih.gov/pubmed/19442536

Cannabinoids in health and disease

http://www.ncbi.nlm.nih.gov/pubmed/18286801

Cannabis a neuroprotective after brain injury

http://www.ncbi.nlm.nih.gov/pubmed/11586361

Cannabis inhibits Cancer Cell Invasion

http://www.ncbi.nlm.nih.gov/pubmed/19914218

Cannabis partially/fully induced cell death in Cancer

http://www.ncbi.nlm.nih.gov/pubmed/12130702
http://www.ncbi.nlm.nih.gov/pubmed/19457575
http://www.ncbi.nlm.nih.gov/pubmed/18615640
http://www.ncbi.nlm.nih.gov/pubmed/17931597
http://www.ncbi.nlm.nih.gov/pubmed/18438336
http://www.ncbi.nlm.nih.gov/pubmed/19916793
http://www.ncbi.nlm.nih.gov/pubmed/18387516
http://www.ncbi.nlm.nih.gov/pubmed/15453094
http://www.ncbi.nlm.nih.gov/pubmed/19229996
http://www.ncbi.nlm.nih.gov/pubmed/9771884
http://www.ncbi.nlm.nih.gov/pubmed/18339876
http://www.ncbi.nlm.nih.gov/pubmed/12133838
http://www.ncbi.nlm.nih.gov/pubmed/16596790
http://www.ncbi.nlm.nih.gov/pubmed/11269508
http://www.ncbi.nlm.nih.gov/pubmed/15958274
http://www.ncbi.nlm.nih.gov/pubmed/19425170
http://www.ncbi.nlm.nih.gov/pubmed/17202146
http://www.ncbi.nlm.nih.gov/pubmed/11903061
http://www.ncbi.nlm.nih.gov/pubmed/15451022
http://www.ncbi.nlm.nih.gov/pubmed/19394652
http://www.ncbi.nlm.nih.gov/pubmed/11106791
http://www.ncbi.nlm.nih.gov/pubmed/19189659
http://www.ncbi.nlm.nih.gov/pubmed/16500647
http://www.ncbi.nlm.nih.gov/pubmed/19539619
http://www.ncbi.nlm.nih.gov/pubmed/19059457
http://www.ncbi.nlm.nih.gov/pubmed/16909207
http://www.ncbi.nlm.nih.gov/pubmed/18088200
http://www.ncbi.nlm.nih.gov/pubmed/10913156
http://www.ncbi.nlm.nih.gov/pubmed/18354058
http://www.ncbi.nlm.nih.gov/pubmed/19189054
http://www.ncbi.nlm.nih.gov/pubmed/17934890
http://www.ncbi.nlm.nih.gov/pubmed/16571653

Contact our law firm today

If you’re interested in starting a business growing, selling, transporting or testing marijuana, then contact us.  We can help you as a cannabis licensing attorney in Orange County.

How profitable is a marijuana dispensary in California?

How profitable is a marijuana dispensary in California?

Cannabis Dispensary License

In order to calculate how much, on average, a medical marijuana dispensary can earn, you would have to look at the financial records. That depends on how many operating dispensaries there are in any particular area, city, or county, in California, and how much each dispensary earns, on average.

How many dispensaries are there in California?

Through June 30, 2016, 1,023 publicly disclosed medical cannabis sellers registered with the Board of Equalization (BOE) filed returns and remitted sales and use tax to the BOE. There certainly were more than that operating without filing taxes or registering themselves.

How much in sales taxes does the BOE collect from medical marijuana businesses?

Through June 30, 2016, $575,021,347 taxable sales of marijuana were reported to the BOE, and $50,507,006 was remitted in sales and use tax.

Calculation of marijuana sales and profit

That means that each marijuana dispensary license brought in an average of $562,093.  Net profit would be lower, including staff salary and product and building or rent costs.

After taxes, the profit to each dispensary would be $512,722.  Still a healthy profit for a retail business of any kind.

Future prospects of Marijuana and Cannabis Product Sales

As there is more competition in the market, more dispensaries should each take in less, if the demand remains the same.  However, there are substantially more retail customers for marijuana than just the previous medical marijuana patients.  That, plus new products, including edibles, means substantial upside on the demand part of the equation.

Cannabis cultivation licenses, laboratory testing licenses, and the CBD/THC infused products/concentrates sectors are particularly lucrative, with 29% of wholesale growers and 27% of infused companies saying that they are “very profitable.

For retail operations, the cannabis dispensary business makes more money than average for retail businesses.  According to the 2016 Marijuana Factbook, a store that sells either medical or recreational cannabis or marijuana of any type earns on average $974 per square foot in revenue, topping Whole Foods, whose 431 stores earn an average of $930 per square foot.

So how profitable is a marijuana dispensary in California? Cannabis sales are expected to skyrocket to nearly $23 billion in 2020, nearly triple from this year, according to ArcView Market Research and New Frontier, a data analytics company that focuses on the industry.

Given that, a tripling of net profits from current amounts could mean that each dispensary in California could be making over one billion dollars per year, making it a very profitable retail business indeed.

Contact us

Contact us

Contact us today to get started with your profitable marijuana business.  We can help you start your business right.

Can you get a cannabis license with a criminal record

Can you get a cannabis license with a criminal record?

Can you get a cannabis license with a criminal record

If you are interested in applying for a license to start a business in California’s new cannabis or marijuana industry, you may worry that a criminal past might hurt you from being approved for any of the following California cannabis licenses:

  • Mobile cannabis or marijuana business;
  • Marijuana dispensary;
  • Cannabis testing lab; 
  • Marijuana growing operation; or
  • Cannabis wholesale distribution.

The State of California must approve all cannabis licenses in Calfornia, and California requires that you pass a criminal background check before you can be granted a license.

What does the State of California state regarding what types of crimes may disqualify you for a CA Cannabis License?

The State of California only addresses this in a question and answer by stating, in question and answer format:

Q. If I have a criminal background will I be denied approval for a license?

A. According to the Act, the Bureau may deny a license to an applicant who has been convicted of an offense that is substantially related to the qualifications, functions, or duties of the business or profession for which the application is made.

What crimes are “substantially related” to the cannabis application?

The State doesn’t answer that question directly.  But for cannabis licenses, the State has an interest in two types of crimes – those that show 1. An inability to follow rules, or being unfit for the business; and 2. An avoidance of taxes or an inability to follow the rules.

1. An inability to follow rules, or being unfit for the business.

The inability to follow rules doesn’t just refer to selling marijuana during the time period that it was illegal in California.  The State of California usually, for many types of professional licenses, wants to protect consumers.  That means that they look especially seriously at “crimes of moral turpitude”.  A crime of moral turpitude, from the point of view of the state, means that you might be more likely to be dishonest. Those crimes may include the following types of convictions:

  • Convictions for fraud;
  • Convictions for theft of all types (shoplifting, burglary, embezzlement from an employer, robbery, or theft from customers)
  • Convictions for the types of crimes that are serious enough to be “shocking” to the reasonable person, such as the following: murder, voluntary manslaughter, kidnapping, robbery, and aggravated assault.

2. An avoidance of taxes or an inability to follow the rules

The State of California is highly interested in not only regulating this new industry but also in the tax income it is expected to bring.  As a result, any indication that you are behind on filing taxes or paying taxes, or any efforts to avoid taxation, are looked at as especially seriously by California’s license issuing authorities.

Can you get a cannabis license with a DUI?

A DUI is not a crime of moral turpitude like the above and does not involve taxes due to California.

As a result, a single DUI is unlikely to prevent someone from becoming licensed for Cannabis business purposes in California.  DUI is the number one crime in California, and so it is very common, and many applicants will have a DUI on their record.

More than one DUI, however, could indicate an alcohol or drug problem (especially if it was a Drug DUI or DUID), which for other types of licenses the state has looked especially closely at.  That doesn’t mean that the license may not be approved, but there may be a probationary period or a requirement that counseling or a program be completed.

Contact us for questions.

Contact us

If you are interested in having an attorney handle your cannabis license in California, then contact our firm today.  We can help.

Avoiding monopolies with California cannabis licenses

Avoiding monopolies with California cannabis licenses

Marijuana Hemp Cannabis License Health Benefits

The current issue (September 2017), of GQ magazine, has an interesting article on the legal structure and secrecy of big companies that are getting into the cannabis business.  As you may know, the State of California is about to issue cannabis licenses in California for those that want to become marijuana growers, retailers, wholesalers, lab testing facilities, and mobile delivery services for marijuana. The State of California currently does not allow certain licenses to be held if you already have a cannabis license.  That is, according to the appropriate departments in the State, to prevent vertical integration, under the fear that large tobacco companies can come in and control the growing, wholesaling, and retail distribution of marijuana, as they did with tobacco.

The State of California currently does not allow certain licenses to be held if you already have an existing cannabis license.  That is, according to our Orange County DUI lawyer, to prevent vertical integration, under the fear that large tobacco companies can come in and control the growing, wholesaling, and retail distribution of marijuana, as they did with tobacco.

The GQ article mentions one company, BioTech Institute, as follows, as one company that has been aggressive in applying for (and paying for) patents on specific strains of marijuana:

If the rest of its patents get approved, and they hold up legally, BioTech Institute might have a near-monopoly over crucial intellectual property for a commodity whose soothing, mind-altering effects make it more valuable than wheat. Unless the hustlers in the rest of the cannabis industry take a break from shoving one another aside to work together against the patents, BioTech Institute could have the market cornered in a few years. The company could control access to a plant that has been shown to reduce tremors in Parkinson’s patients, to help veterans stop dreaming in flashbacks, to relieve the nausea of anyone undergoing chemotherapy. They could charge whatever they wanted.

One cannabis business lawyer,  Gary Hiller, has been helping investors as the lawyer who runs Phytecs and BioTech Institute, according to the article.

California Lt. Gov. Gavin Newsom, a big supporter of the legalization measure, stated that:

“We have got to protect the small cultivators as well as entrepreneurs who don’t have access to millions of dollars.”

To that end, the Adult Use of Marijuana Act – as the California initiative is called – includes language meant to protect the industry “against monopolistic practices” for five years, noted Newsom, the highest-ranking state politician to support legalization measures.

For example, any adult-use cultivation business that operates an outdoor facility larger than one acre or an indoor building that exceeds 22,000 square feet would be prohibited from getting a license until January 2023. All legal rec growers prior to that date would have to fall within those limits.

Under the proposed law, state licensing authorities also would be required to consider whether issuing a particular applicant a permit might stifle competition or create a monopoly.

Newsom stressed the need to ensure minorities have a place in the cannabis industry, and he also said existing medical marijuana businesses that have proven they can operate responsibly will have a leg up in obtaining a recreational license

“For those who have been good actors in the state of California, you’re going to be prioritized,” he said.

Contact us today for questions about your California cannabis license.

 

Marijuana and California State Law

Marijuana and California State Law

Cannabis Dispensary License

Marijuana and California State Law: A growing number of states are defying the federal marijuana ban, not only by rewriting their own laws, but by actively cooperating with marijuana growing, processing, and use. Many contend that pot should be a state, rather than a federal, concern. California made the sale legal of Marijuana and California State Law reflects that by making a cannabis business license available under state laws for sales to patients and the general public.

There are 17 different types of California marijuana licenses based on the type of business activity involved. The following types of business are permitted under the CA MMRSA law:

  1. Marijuana Cultivators or Growers (Cultivars) with four total acres of growing area,
  2. Marijuana Manufacturers
  3. Marijuana Testing labs
  4. Marijuana Retail dispensaries
  5. Marijuana Distributors and
  6. Marijuana Transporters.

Each of these types of business must acquire its own license as provided in Section 19300.7 of the California Business and Professions Code. For example, a Type 1 license will be allowed for small specialty outdoor operations, whereas a Type 4 license is required for cultivation in a nursery. A Type 6 or 7 license will be required for manufacturers, while a Type 8 license is required for those engaged in testing. Type 10 and Type 10A are for dispensaries. Type 11 is a license for distributors, while transportation businesses must apply for a Type 12 license.

Licensees may usually hold licenses in two separate categories, but only in certain combinations. All cultivators and manufacturers must send their products to a Type 11 licensee in order to obtain quality assurance, and Type 11 licensees must submit marijuana products to Type 9 laboratories.

Federal Law and Marijuana Legality

The U.S. Supreme Court has ruled in Gonzales v. Raich (2005), the court held that under the Constitution, Congress may use its Commerce Power to ban even “window box” medical marijuana, whether permitted under state law or not.

The Commerce Power derives from two constitutional provisions: (1) the Commerce Clause, which grants Congress authority to “regulate Commerce … among the several States,” and (2) the Necessary and Proper Clause, which says Congress may “make all Laws which shall be necessary and proper for carrying into Execution” certain itemized grants—including the Commerce Clause.

In Gonzales, the court found that marijuana growing and use were economic activities. It then followed some 20th-century cases that (contrary to earlier rulings) allowed Congress to use the Constitution’s Necessary and Proper Clause to regulate economic activities with “substantial effects” on interstate commerce. 

Was the court correct? Answering that question requires us to determine what the Constitution meant to those who adopted it. Even though the founders did not discuss marijuana specifically, a vast array of sources tells us their answer. The sources include debates from the Constitution’s framing and ratification, and writings informing us how key constitutional phrases were used in legal documents.

All students of the Constitution know it splits authority between the states and the federal government. What many do not recognize is that it deliberately divides responsibility for some closely-connected activities. For example, the founders often observed that commerce and domestic manufacturing were tightly related. Nevertheless, their Constitution granted power over several forms of commerce to Congress, but left authority over California cannabis manufacturing licenses to the State of California. The founders divided authority this way because protecting liberty was a higher priority than regulatory coordination.

So the Supreme Court is wrong to conclude that because an activity “substantially affects” interstate commerce it follows that Congress may regulate it. Many activities, economic or not, substantially affect commerce without being constitutional targets for Congress.

When the Constitution was adopted, the phrase “regulate commerce” was well-understood. It referred to laws governing mercantile trade and certain associated matters, such as tariff barriers, commercial finance, navigation, and marine insurance. It did not include other aspects of the economy. In fact, many of the founders are on record as specifically assuring the public that Congress would have no jurisdiction over agriculture, manufacturing, land use, or (according to Chief Justice Marshall) “health laws of every description.”

Growing marijuana is, of course, a species of agriculture. Processing is manufacturing. The ban on personal consumption is a health regulation. The Constitution places control over all those activities squarely within the state, not the federal, sphere.

 

So does Congress have any power over marijuana? Under a correct reading of the Constitution, the answer is, “Only some.” The Commerce Clause allows Congress to restrict or ban the marijuana trade across national and state boundaries. Moreover, the Necessary and Proper Clause recognizes some additional authority.

The background and history of the Necessary and Proper Clause establish that the provision is not a grant of authority to Congress, but merely a rule of interpretation. The Clause does, however, acknowledge Congress’s prerogative to pass certain laws “incidental” to regulating commerce. For example, if Congress prohibits interstate trade in marijuana, it might also require interstate shippers to disclose whether their cargoes included the substance—but only if disclosure is reasonably necessary to enforce the congressional ban.

However, incidental powers do not extend to comprehensive regulation of areas, such as agriculture or manufacturing, reserved to the states.

In sum: Under the original Constitution, as ratified by the American people, Congress may regulate, or even ban, marijuana from interstate and foreign commerce. It also may exercise some incidental authority. But it may not constitutionally regulate or prohibit in-state growing, processing, or use of marijuana. For better or worse, those are exclusive concerns of the citizens of the several states.

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Contact us today if you have more questions about Cannabis licenses in California.

Were marijuana laws racially discriminatory?

Were marijuana laws racially discriminatory?

DUI Under the Influence of Marijuana

As NORML marijuana lawyers in California, we had notification of one of our colleagues making an argument today (July 18th, 2017), in court in Connecticut that was interesting.

Aaron Romano says many state laws criminalizing marijuana were based on the federal “Marihuana Tax Act of 1937“, which essentially criminalized marijuana by imposing harsh financial penalties. That is one of the reasons why, under federal law, the legal nature of banking for marijuana dispensaries and other businesses is such a difficult area to deal with for most cannabis businesses.

Mr. Romano argued that the federal law was rooted in racism and bigotry against blacks and Mexicans and therefore was unconstitutional, as are the state bans based on the law including Connecticut’s, where he practices as a marijuana lawyer.

“It was racially motivated and states just adopted it wholesale,” said Romano, a Bloomfield attorney who also is legal counsel for the state chapter of the National Organization for Reform of Marijuana Laws (NORML). “With the growing awareness of cannabis’ health benefits … at this point there is no reason to maintain its illegal status.”

The prosecutor in the case declined to comment, while at least one drug law expert doesn’t believe such an argument would be successful.

Romano made the unusual argument Tuesday in a motion to dismiss marijuana possession and probation violation charges against his client, William Bradley, who was caught with nearly a pound of marijuana in January while on probation for a previous marijuana conviction. He is detained while awaiting trial because he can’t post $150,000 bail.

The article about the case from US News and World Report is an interesting read, and the financial laws regarding banking and marijuana remains in dispute.

If you have questions about the ever changing field of marijuana laws in California, or need an attorney for your marijuana business licenses or cannabis license, contact us today. 

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