CA Assembly Bill 97 Is All About Encouraging and Protecting Compliant Cannabis Operations

On July 1, 2019, California Governor Gavin Newsom approved Assembly Bill 97, a bill that is squarely aimed at protecting compliant cannabis operations and punishing those that are not. For context, California cannabis tax revenues for 2018 have been drastically lower than originally projected. While California was projected to collect $1 billion in new tax revenue annually from pot within a few years from the 15% cannabis excise tax, the state pulled in approximately $288 million for the year ending in June, and is projected to garner $359 million for the next year.

Such low numbers are largely attributed to the proliferation and even growth of the illegal cannabis market, even since the passage of Prop 64 and the subsequent state regulations that followed in the time thereafter. In light of the thriving black market, the Bureau of Cannabis control launched the “#weedwise campaign,” a campaign meant to encourage consumers to purchase cannabis and cannabis products from licensed operations, and urge noncompliant businesses to obtain licensing and become compliant.

Assembly Bill 97 is an even more robust take on these efforts. First of all, the bill initiates an administrative fine of $30,000 per day on those businesses that are operating in the black market. This fine can be levied by any of the three state licensing agencies – the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health.

Additionally, given that the temporary licensing structure phased out on December 31, 2018, now, the lifespan of provisional licenses has been extended until January 1, 2022, thanks to Assembly Bill 97. Those businesses that have already applied for a state annual license do not need to apply separately for a provisional license, as the licensing agency will review the materials submitted for the annual license to then assess whether the business is eligible for a provisional license. This move is meant to mitigate and prevent any backlog that may occur due to the processing time for the annual licenses, and keep businesses that are on track with to continue their operations without delay.

If you are a commercial cannabis operator and would like more information on Assembly Bill 97, or have any questions or concerns related to anything involving cannabis compliance, please reach out to Jared Younker at jared@crec.us.