Capitol Alert

California won’t be ready to regulate marijuana businesses next year, lawmaker says

Californians legalized recreational marijuana in November, and the state is expected to begin distributing licenses to businesses by January 1, 2018.

But least one state senator, who represents California’s marijuana-rich northern counties, doubts the state will be able to write regulations fast enough to hit the deadline.

“Being blunt, there is no way the state of California can meet all of the deadlines before we go live on January 1, 2018,” said Sen. Mike McGuire, D-Healdsburg. “We are building the regulatory system for a multibillion dollar industry from scratch.”

Californians legalized medical marijuana in 1996. It took another two decades for the state Legislature to approve the first comprehensive seed-to-store licensing system in 2015, and lawmakers gave themselves until 2018 to set up the necessary agencies, systems and regulations.

Then voters passed Proposition 64, legalizing recreational marijuana, at the ballot box last year. The measure largely parallels the medical marijuana laws legislators previously passed in 2015, with a few stark differences on licensing, distribution and other key areas. It also gives the state far less time to draft regulations.

Now it’s legal to possess and use marijuana in California with some restrictions, but there are no legal avenues for consumers to purchase it without a medical marijuana card. The first recreational marijuana businesses are expected to be licensed next year.

McGuire heads the Senate Governance and Finance committee, and Senate President Pro Tem Kevin de León describes him as one of the go-to state legislators on marijuana issues.

In order to dole out licenses, the state will need to develop regulations on taxation, testing, tracking, growing, distribution, delivery and more to ensure that Californians are using safe products and the state receives the tax it’s due, McGuire said.

Currently, only as much as 30 percent of all cannabis-related businesses in the state are licensed and paying a consistent tax, according to estimates, McGuire said. He said the current tax collection system is uneven across the state.

Businesses are still operating in cash because banks are hesitant to accept their money due to the federal government’s classification of marijuana as a schedule 1 drug, alongside heroin, peyote and ecstasy. That’s another problem the state will need to solve down the road.

“It is truly a daunting task,” said McGuire, who didn’t support Proposition 64 prior to the election. “We’re literally digging out of a mess that has been created over the last 20 years. There is no turning back, which is why we need to work together to implement the voice of the voters.”

McGuire says Californians will be able to buy marijuana at a retail store early next year, but he worries that the businesses and products won’t be properly regulated yet.

“But is it a licensed business?” he said. “Is the cannabis tested for pesticides and are they paying their tax? There are so many layers that need to be pulled back, and those are a few of the significant priorities.”

Not everyone agrees with the senator.

Alex Traverso, a spokesman for the state’s new Bureau of Medical Cannabis Regulation, said there’s no doubt that it’s a “big job.”

“We’ve all along said that we’re going to meet that deadline and we’re confident that we will be able to do it,” Traverso said. “We’re right on schedule as far as we’re concerned.”

Traverso also disagreed that the state is starting from scratch. He said since 2015 the state has been developing medical marijuana regulations, some of which can be applied to the new recreational laws.

“There’s a lot of work that we’ve already laid down that will make the challenge easier,” he said.

McGuire said Traverso’s perspective was encouraging.

The Senate Business, Professions and Economic Development; Agriculture and Health committees are hosting a joint hearing to discuss the Bureau of Medical Cannabis Regulation, the status of regulations, coordination between agencies and stakeholder outreach on Monday.

McGuire said his committee, Governance and Finance, will meet to discuss marijuana regulations related to finance and statewide tax policy in mid-February.

Taryn Luna: 916-326-5545, @TarynLuna

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