In a coming together that once seemed highly unlikely, California state regulators Wednesday greeted a hotel ballroom filled with marijuana growers, promising that a licensing program to bring thousands of pot producers out of the shadows will be operational in the state by Jan. 1, 2018.
It was hard to ignore the landmark nature of the informal meeting between California officials – including the head of the new marijuana regulations bureau – and members of the California Growers Association, a 2-year-old trade group representing marijuana farmers.
For years, some of those participating in the growers association’s two-day “Envision 2026: California Cannabis Policy Summit” at the Holiday Inn in downtown Sacramento had operated in the black market of illegal trafficking or the gray market of the California’s long unregulated medical marijuana industry.
But in late 2015, Gov. Jerry Brown signed legislation to regulate California’s medical marijuana industry by creating 17 business licenses for cannabis farmers, product manufacturers, testing labs, distributors and retailers. Then in November, California voters passed Proposition 64, an initiative that legalized recreational marijuana use and now stands to supercharge the state’s pot economy.
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So addressing the crowd Wednesday was Lori Ajax, who was appointed last year as the first-ever chief of the California Bureau of Medical Cannabis Regulation – an agency soon to be renamed the Bureau of Marijuana Control under Proposition 64.
Also speaking was Amber Morris, a branch chief for CalCannabis Cultivation Licensing, a new division under the state Department of Food and Agriculture that will issue permits and establish and a “track and trace system” and product testing protocols for cannabis delivered from farms to marijuana stores.
“Our goal is to make this business legitimate,” Morris told the crowd. “What we’re working for is a legitimate marketplace.”
Under both the state’s medical marijuana regulations and Proposition 64, California must be ready to issue licenses by 2018 for thousands of businesses operating in California, home of America’s largest marijuana economy.
Proposition 64 will create 19 new license categories for recreational marijuana while establishing a 15 percent excise tax on retail sales and a cultivation tax on growers of $9.25 per ounce for marijuana flowers (or buds) and $2.75 per ounce for marijuana leaves.
In addition to the Bureau of Marijuana Control, state agencies on public health, taxation, consumer affairs, water, fish and wildlife, and pesticide control all will play a part in regulating cannabis. California’s 58 counties and 482 cities will decide on local rules, including whether to accept or ban pot businesses or commercial cultivation.
“We will not fail. We will make this happen by Jan. 1, 2018, because we have to,” Ajax said. “It may not be pretty. But we will get there.”
She added: “We do agree you need to get your product to market in as quick and as easy of a fashion. The last thing we need is a clunky system.”
Also seated on the dais, offering praise for the new California marijuana bureaucrats, was former marijuana farmer Tawnie Logan. A year ago, she became executive director of the Sonoma County Growers Alliance, a group with a stated mission to help local marijuana farmers “participate and thrive responsibly” while meeting “reasonable, environmental social and economic standards” in a state-regulated cannabis industry.
“We’re coming out of an era of prohibition,” Logan said, encouraging growers to work with the state. “The more we can create this transition and identify the issues, the faster we can expedite this process. Government doesn’t work fast. But, man, they are working as hard as possible.”
Morris said state departments are consulting with economists to determine a tiered permit fee program for marijuana growers and producers based on the size and scale of the businesses. The permit fees are expected to cover millions of dollars in oversight costs.
There are plenty of obstacles to navigate, including the fact that banks and credit card companies are generally loath to work with marijuana businesses because pot remains illegal under federal law and transactions can be considered money laundering under drug-trafficking laws.
California Treasurer John Chiang recently wrote President-elect Donald Trump, requesting that new administration explore easing rules to allow state-permitted marijuana businesses access to the banking systems. He said that could help state and local agencies in California collect taxes and fees on regulated pot businesses.
Addressing growers Wednesday, Ajax said she hopes state officials – and pot growers – will have some clarity on the money conundrum by the time California begins issuing licenses.
“We’re obviously concerned,” she said. “That’s a challenge for you folks. That’s a challenge for us, too. As we set up our online permitting system, we would like to accept credit cards. We don’t want to have to accept wads of cash.”