Public Agencies and Marijuana:

Beyond the Basics

Next Steps and Strategies
for Successful Implementation of Cannabis-Related
Taxes and Regulations
Presented by:
Neil Hall
September 22, 2016

4745 Mangels Blvd, Fairfield, California 94534

707-430-4300

Introduction
SCI Consulting Group
Neil Hall, Cannabis Group Leader

Overview
Interactive
Unbiased
Questions and Answers

History of Cannabis in US
U.S. hemp cultivation common through 1937
Prohibition of alcohol
Harry Anslinger
Federal Bureau of Narcotics
Mexican immigration challenges in the 1930s

More History of Cannabis in US

Marijuana Tax Act of 1937
Opposed by American Medical Association
Boggs Act of 1951
Narcotics Control Act of 1956
First-time cannabis possession
with no stamp tax:
2 10 years
Up to $20,000 fine
Controlled Substances Act of 1970
Schedule 1 classification

Even More History of Cannabis in US

2014 - The Cole Memo
8 criteria to maintain State right to control
The Rohrabacher-Farr Amendment
Prevents funding for the DOJ or DEA to use arresting or
prosecuting patients, caregivers, and businesses that are
acting in compliance with state medical marijuana laws
2016 - U.S vs. McIntosh 9th Circuit Court of Appeals
reaffirms Rorabacher-Farr

Legalization Trends
Medical cannabis is currently legal in 25 States
Recreational Cannabis
2012 Colorado and Washington
2014 Alaska, Oregon and Washington D.C.
In November 2016
Arizona
California
Maine
Massachusetts
Nevada

Current State Situation

History of Cannabis in California

1996 The Compassionate Use Act
55.6% voter approval

More History of Cannabis in California

2003 - SB 420 The Medical Marijuana Program (MMP)
Numerous Dispensaries and Chaos
Numerous Lawsuits:

San Diego and San Bernardino Counties

Garden Grove
Live Oak vs. Maral
Browne vs. Tehama
Riverside County vs. Inland Empire

Recent History of Cannabis in California

2015 - The Medical Marijuana Regulation and Safety Act
Three bills co-joined AB 243, AB 266, SB 643
Now known as MERSA
Provides needed structure and clarity
Allows for local control
SB 837 MCRSA

Some MCRSA Highlights

Prevents vertical integration to avoid monopolization of market
Requires Distributors to transport product between licensees
Removes affirmative defense and provides legal protection
from arrest
Allows for existing cannabis businesses to integrate over time
Allows for profit cannabis activity
Requires implementation of seed to sale tracking
Allows delivery only in public agencies that do not prohibit
delivery
Requires testing with specific requirements
Prohibits testing facilities from holding any other license type.

Some More MCRSA highlights

Licenses to be issued by 2018
Bureau of Medical Cannabis Regulation created within
Department of Consumer Affairs
Allows local taxation and regulatory and licensing fees
19316. (a) Pursuant to Section 7 of Article XI of the California Constitution, a
city, county, or city and county may adopt ordinances that establish additional
standards, requirements, and regulations for local licenses and permits for
commercial cannabis activity. Any standards, requirements, and regulations
regarding health and safety, testing, security, and worker protections
established by the state shall be the minimum standards for all licensees
statewide.

California Proposition 64 - Nov 2016

AUMA
Adult-Use Recreational
60% in polling favor
21 years old
Indoor cultivation of 6 plants for personal use allowed
Outdoor cultivation may be prohibited
Adults may possess 28.5 grams of cannabis plant material
and 8 grams of concentrate
Allows local taxation
State excise tax of 15% on medical and recreational
State cultivation tax of $9.25 on flower/$2.75 on non-flower
plant leaf for medical and recreational

Four Primary Components of the Cannabis Industry

Retail

Delivery

Cultivation

Manufacturing

Cannabis Ingestion Methods Today

Traditional Smoking

Traditional Foods
Alice B. Toklas and Gertrude Stein

Today: Vaping

Today: Consumables

Retail Dispensaries

Retail Dispensaries

Cannabis Labelling

Delivery Services

Cannabis Concentrate Manufacturing

Cumberland, Maryland

Cannabis Concentrate Manufacturing

Cannabis Concentrate

Packaged Concentrates

The Cannabis Plant

Varieties
Properties

Cultivation

California Watering Guide

Outdoor Cannabis Watering Guide

15 Gallons Per Ounce

Water Usage in California Vineyards:

6-10 gallons per 4 oz. glass

http://www.sacbee.com/food-drink/wine/dunne-on-wine/article2622749.html#storylink=cpy
http://www.canorml.org/news/Cal_NORML_Challenges_Fish_and_Wildlife_Figures_on_Marijuana_Water_Co
nsumption.html

Cannabis Cultivation Yields

A study released in March by the University of Washington estimated that the entire States supply of
cannabis could be cultivated on 230 acres. In Alberta, Canada, Aurora Cannabis, Inc. just announced the
construction of a 14-acre facility that will produce 77 tons of cannabis per year. Thats almost 2.5 million
ounces.
To put that production in perspective: in 2015, even in a severe drought, California had 380,000 acres of
rice; 430,000 acres of corn and 918,000 acres of grapes. Granted, much of the cannabis grown is strain
specific but even assuming a generous 40% of non-flowering plants, the total acreage under production
is still much less than most people anticipate or expect.

Drafting a Regulatory Ordinance

Local and unique

Dovetail with Prop 64 (AUMA) if approved
Address local Health and Safety priorities
Ensure State and Federal (Cole memo) compliance

Ordinance Goals and Structure

Political & legal support considerations

Typical length and level of detail
One or many
Vs. voter initiative

Emphasis
Health and Safety
Fees
Monitoring and Compliance

Next Steps
1. Create a Cannabis committee within your municipality
2. Conduct a Public Opinion Survey of your broader community
3. Draft a Cannabis Health and Safety Ordinanceand get it
approved
4. Implement a Cannabis Tax through a local ballot measure
5. Implement a rigorous monitoring and compliance program