Legislation

A Review Of California's 2019 Legislative Session: What Are The New Cannabis Laws? (UPDATED)

California’s 2019 legislative session closed on September 13, 2019. In addition to the three (3) new laws from this session, there are eleven (11) bills that will be presented to Governor Newsom for his signature before October 13, 2019, or they will automatically become law.

So, what is the status of the cannabis and hemp-related bills from 2019? We have analyzed over forty (40) cannabis and hemp-related bills that were introduced during the 2019 legislative session. Below we provide a high-level status for the bills, a summary of the impact and next steps for those that have successfully made it through the process.

  • New Laws: Governor Newsom has signed three (3) new laws related that, among other things, establish an organic cannabis program and establish cannabis and hemp as agricultural commodities.

  • Bills Passed by the California Legislature: There are eleven (11) bills that are waiting to be presented to the Governor to be signed into law or vetoed by October 13, 2019. One bill will allow individuals to deduct cannabis business-related expenses from personal taxes in California.

  • Bills Close to the Finish Line (Did Not Pass): Two (2) bills must pass the third reading by September 13, 2019 in order to be presented to the Governor including a bill requiring the disclosure of licensee disciplinary information.

  • Bills Rendered Inactive or in Committee: Twenty-five (25) bills will not be moving forward as they have been rendered inactive or are in a committee including AB-228 Food, beverage, and cosmetic adulterants: industrial hemp products.

New Laws

  • AB-97 Cannabis. (07/01/2019) Various changes to cannabis regulations including establishing a fine structure that a $5,000 per violation for licensees and $30,000 per violation for an unlicensed person, per day, and requires the state to establish an organic certification program for cannabis no later than July 1, 2021.

  • SB-657 Cannabis cultivation: county agricultural commissioners: reporting. (09/05/2019) Requires the county agricultural commissioner to report to the secretary of state the total acreage, production of value of cannabis produced in the commissioner’s county.

  • SB-527 Local government: Williamson Act: cultivation of cannabis and hemp. (09/06/2019) Includes cannabis and hemp in the definition of an agricultural commodity that qualifies as an appropriate use in an agricultural preserve.

Bills Passed by the California Legislature (Bills waiting to be engrossed or presented to the Governor)

  • AB-37: Personal income taxes: deductions: business expenses: commercial cannabis activity. (09/09/2019) The bill allows individuals to deduct cannabis business expenses from personal tax liabilities under the California Tax Code. Governor Brown vetoed a similar bill last year due to the fiscal impact, which is estimated to be tens of millions of dollars a year.

  • AB-397 Vehicles: driving under the influence. (09/09/2019) Requires state courts to indicate that a driver was under the influence of cannabis when convicted for driving under the influence by January 1, 2022. Governor Brown vetoed a similar bill last year due to the costs associated with retrofitting state technology.

  • AB-404 Commercial cannabis activity: testing laboratories. The bill allows independent testing facilities to amend a certificate of analysis to correct minor errors. The bill also allows the testing facility to retest samples due to equipment malfunction or employee errors after receiving approval from the Bureau of Cannabis Control.

  • AB-420 The California Cannabis Research Program. (09/09/2019) Authorizes the cultivation of cannabis pursuant to federal and state laws by the University of California San Diego Center for Medicinal Cannabis Research to study the effects of cannabis, cannabinoids and other related constituents.

  • AB-858 Cannabis: cultivation. (09/09/2019) Amend the Type 1C outdoor cultivation licenses to permit a maximum of 2,500 or fewer feet of canopy size or up to 25 mature plants.

  • AB-1291 Adult-use cannabis and medicinal cannabis: license application: labor peace agreements. (09/09/2019) The bill requires applicants for a medical or adult-use cannabis license to provide a notarized statement that it will enter into a labor peace agreement if the entity employs 20 or more persons or applicants must provide a notarized statement agreeing to abide by the terms of a labor peace agreement within 60 days of hiring the 20th employee.

  • SB-34 Cannabis: donations. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019) The bill permits cannabis retailers to provide free medical cannabis to patients and caregivers under certain circumstances.

  • SB-153 Industrial hemp. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019)The bill aligns the existing industrial hemp law to the state plan that California will submit to the USDA by May 1, 2020. The bill also requires county agricultural commissioners to perform additional responsibilities including enforcement.

  • SB-185 Cannabis: marketing. Assembly-In Floor Process-Third Reading (Scheduled 09/10/2019). The bill will only be enacted if SB-34 is enacted. The bill prohibits cultivators from misrepresenting the county where cannabis was grown.

  • SB-223 Pupil health: administration of medicinal cannabis: schoolsites. (09/06/2019) Permits a school nurse or other school administrator to provide a student with medical cannabis in accordance with written instructions provided by a doctor.

  • SB-595 Cannabis: state licensing fee waivers: needs-based applicants and licensees: local equity applicants and licensees. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019)The bill provides a waiver or deferral of licensing or renewal fees for needs-based applicants.

Bills Close to the Finish Line (Did Not Pass)

  • AB-545 Cannabis: Bureau of Cannabis Control. Senate-In Floor Process-Third Reading. The bill requires the Joint Sunset Review Committee to perform a review as if the MAUCRSA was repealed as of January 1, 2023.

  • SB-581 Cannabis: licensing: public records. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019) The bill requires regulators to make information about licensees publicly available including disciplinary information.

Bills Rendered Inactive

  • SB-51 Financial institutions: cannabis. (09/09/2019) - The bill created the Cannabis Limited Charter Banking and Credit Union Law to provide banking services to cannabis businesses.

  • SB-625 Party buses: cannabis. (09/05/2019) The bill required cannabis party buses to install a sealed off compartment for the driver that contained a ventilation system.

  • AB-1356 Cannabis: local jurisdictions: retail commercial cannabis activity. (05/30/2019) Required local municipalities to permit a specific number of retail cannabis establishments based on the voter's support of Proposition 64.

Bills in the Appropriations Committee (Bills will not be presented to the floor for a vote)

  • AB-228 Food, beverage, and cosmetic adulterants: industrial hemp products.

  • AB-286 Taxation: cannabis.

  • AB-1288 Cannabis: track and trace.

  • AB-1417 Cannabis advertisement and marketing.

  • AB-1420 Cannabis: licensing fees.

  • AB-1465 Cannabis: consumption cafe/lounge license.

  • SB-475 Cannabis: trade samples.

  • SB-658 Cannabis: licensing: cannabis retail business emblem: track and trace.

  • SB-627 Cannabis and cannabis products: medicinal use on an animal: veterinary medicine.

Bills in Other Committees (Committees ceased meeting as of September 3, 2019)

  • AB-953 Cannabis: state and local taxes: payment by digital asset.

  • AB-1458 Cannabis testing laboratories.Assembly-In Committee Process-Business and Professions

  • AB-1461 Cannabis: testing laboratories.Assembly-In Committee Process-Business and Professions

  • AB-1470 Cannabis testing.Assembly-In Committee Process-Business and Professions

  • AB-1529 Cannabis vaporizing cartridges: universal symbol.Assembly-In Committee Process-Business and Professions

  • AB-1530 Unauthorized cannabis activity reduction grants: local jurisdiction restrictions on cannabis delivery.Assembly-In Committee Process-Business and Professions

  • AB-1569 Sales and use tax: medicinal cannabis: veterans.Assembly-In Committee Process-Revenue and Taxation

  • AB-1678 Indoor-Grown Cannabis Commission.Assembly-In Committee Process-Agriculture

  • AB-1710 Cannabis.Senate-In Committee Process-Business, Professions and Economic Development

  • SB-67 Cannabis: temporary licenses.Assembly-In Committee Process-Business and Professions

  • SB-97 Cannabis.Assembly-In Committee Process-Budget

  • SB-684 Traffic safety: driving under the influence of cannabis pilot program.Senate-In Committee Process-Public Safety

  • SJR-10 Cannabis: federal schedules.Senate-In Committee Process-Public Safety

A Review of California's 2019 Legislative Session: What are the New Cannabis Laws?

California’s 2019 legislative session will close on September 13, 2019. The California Legislature has three (3) days left to pass bills that are on the floor as is. The last day for amendments was August 6, 2019. The bills that are currently in the committee are effectively dead as committees stopped meeting as of September 3, 2019.

Bills that are presented to Governor Newsom must be signed or vetoed by October 13, 2019, or they will automatically become law.

So, what is the status of the cannabis and hemp-related bills from 2019? We have analyzed over forty (40) cannabis and hemp-related bills that were introduced during the 2019 legislative session. Below we provide a high-level status for the bills, a summary of the impact and next steps for those that have successfully made it through the process.

  • New Laws: Governor Newsom has signed three (3) new laws related that, among other things, establish an organic cannabis program and establish cannabis and hemp as agricultural commodities.

  • Bills Passed by the California Legislature: There are seven (7) bills that are waiting to be presented to the Governor to be signed into law or vetoed by October 13, 2019. One bill will allow individuals to deduct cannabis business-related expenses from personal taxes in California.

  • Bills Close to the Finish Line: Six (6) bills must pass the third reading by September 13, 2019 in order to be presented to the Governor including a bill that authorizes the state to submit an industrial hemp plan to the USDA.

  • Bills Rendered Inactive or in Committee: Twenty-five (25) bills will not be moving forward as they have been rendered inactive or are in a committee including AB-228 Food, beverage, and cosmetic adulterants: industrial hemp products.

New Laws

  • AB-97 Cannabis. (07/01/2019) Various changes to cannabis regulations including establishing a fine structure that a $5,000 per violation for licensees and $30,000 per violation for an unlicensed person, per day, and requires the state to establish an organic certification program for cannabis no later than July 1, 2021.

  • SB-657 Cannabis cultivation: county agricultural commissioners: reporting. (09/05/2019) Requires the county agricultural commissioner to report to the secretary of state the total acreage, production of value of cannabis produced in the commissioner’s county.

  • SB-527 Local government: Williamson Act: cultivation of cannabis and hemp. (09/06/2019) Includes cannabis and hemp in the definition of an agricultural commodity that qualifies as an appropriate use in an agricultural preserve.

Bills Passed by the California Legislature (Bills waiting to be engrossed or presented to the Governor)

  • AB-37: Personal income taxes: deductions: business expenses: commercial cannabis activity. (09/09/2019) The bill allows individuals to deduct cannabis business expenses from personal tax liabilities under the California Tax Code. Governor Brown vetoed a similar bill last year due to the fiscal impact, which is estimated to be tens of millions of dollars a year.

  • AB-858 Cannabis: cultivation. (09/09/2019) Amend the Type 1C outdoor cultivation licenses to permit a maximum of 2,500 or fewer feet of canopy size or up to 25 mature plants.

  • AB-404 Commercial cannabis activity: testing laboratories. The bill allows independent testing facilities to amend a certificate of analysis to correct minor errors. The bill also allows the testing facility to retest samples due to equipment malfunction or employee errors after receiving approval from the Bureau of Cannabis Control.

  • AB-420 The California Cannabis Research Program. (09/09/2019) Authorizes the cultivation of cannabis pursuant to federal and state laws by the University of California San Diego Center for Medicinal Cannabis Research to study the effects of cannabis, cannabinoids and other related constituents.

  • AB-397 Vehicles: driving under the influence. (09/09/2019) Requires state courts to indicate that a driver was under the influence of cannabis when convicted for driving under the influence by January 1, 2022. Governor Brown vetoed a similar bill last year due to the costs associated with retrofitting state technology.

  • AB-1291 Adult-use cannabis and medicinal cannabis: license application: labor peace agreements. (09/09/2019) The bill requires applicants for a medical or adult-use cannabis license to provide a notarized statement that it will enter into a labor peace agreement if the entity employs 20 or more persons or applicants must provide a notarized statement agreeing to abide by the terms of a labor peace agreement within 60 days of hiring the 20th employee.

  • SB-223 Pupil health: administration of medicinal cannabis: schoolsites. (09/06/2019) Permits a school nurse or other school administrator to provide a student with medical cannabis in accordance with written instructions provided by a doctor.

Bills Close to the Finish Line (Bills must be passed by September 13)

  • AB-545 Cannabis: Bureau of Cannabis Control. Senate-In Floor Process-Third Reading. The bill requires the Joint Sunset Review Committee to perform a review as if the MAUCRSA was repealed as of January 1, 2023.

  • SB-34 Cannabis: donations. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019) The bill permits cannabis retailers to provide free medical cannabis to patients and caregivers under certain circumstances.

  • SB-153 Industrial hemp. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019)The bill aligns the existing industrial hemp law to the state plan that California will submit to the USDA by May 1, 2020. The bill also requires county agricultural commissioners to perform additional responsibilities including enforcement.

  • SB-185 Cannabis: marketing. Assembly-In Floor Process-Third Reading (Scheduled 09/10/2019). The bill will only be enacted if SB-34 is enacted. The bill prohibits cultivators from misrepresenting the county where cannabis was grown.

  • SB-581 Cannabis: licensing: public records. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019) The bill requires regulators to make information about licensees publicly available including disciplinary information.

  • SB-595 Cannabis: state licensing fee waivers: needs-based applicants and licensees: local equity applicants and licensees. Assembly-In Floor Process-Third Reading. (Scheduled 09/10/2019)The bill provides a waiver or deferral of licensing or renewal fees for needs-based applicants.

Bills Rendered Inactive

  • SB-51 Financial institutions: cannabis. (09/09/2019) - The bill created the Cannabis Limited Charter Banking and Credit Union Law to provide banking services to cannabis businesses.

  • SB-625 Party buses: cannabis. (09/05/2019) The bill required cannabis party buses to install a sealed off compartment for the driver that contained a ventilation system.

  • AB-1356 Cannabis: local jurisdictions: retail commercial cannabis activity. (05/30/2019) Required local municipalities to permit a specific number of retail cannabis establishments based on the voter's support of Proposition 64.

Bills in the Appropriations Committee (Bills will not be presented to the floor for a vote)

  • AB-228 Food, beverage, and cosmetic adulterants: industrial hemp products.

  • AB-286 Taxation: cannabis.

  • AB-1288 Cannabis: track and trace.

  • AB-1417 Cannabis advertisement and marketing.

  • AB-1420 Cannabis: licensing fees.

  • AB-1465 Cannabis: consumption cafe/lounge license.

  • SB-475 Cannabis: trade samples.

  • SB-658 Cannabis: licensing: cannabis retail business emblem: track and trace.

  • SB-627 Cannabis and cannabis products: medicinal use on an animal: veterinary medicine.

Bills in Other Committees (Committees ceased meeting as of September 3, 2019)

  • AB-953 Cannabis: state and local taxes: payment by digital asset.

  • AB-1458 Cannabis testing laboratories.Assembly-In Committee Process-Business and Professions

  • AB-1461 Cannabis: testing laboratories.Assembly-In Committee Process-Business and Professions

  • AB-1470 Cannabis testing.Assembly-In Committee Process-Business and Professions

  • AB-1529 Cannabis vaporizing cartridges: universal symbol.Assembly-In Committee Process-Business and Professions

  • AB-1530 Unauthorized cannabis activity reduction grants: local jurisdiction restrictions on cannabis delivery.Assembly-In Committee Process-Business and Professions

  • AB-1569 Sales and use tax: medicinal cannabis: veterans.Assembly-In Committee Process-Revenue and Taxation

  • AB-1678 Indoor-Grown Cannabis Commission.Assembly-In Committee Process-Agriculture

  • AB-1710 Cannabis.Senate-In Committee Process-Business, Professions and Economic Development

  • SB-67 Cannabis: temporary licenses.Assembly-In Committee Process-Business and Professions

  • SB-97 Cannabis.Assembly-In Committee Process-Budget

  • SB-684 Traffic safety: driving under the influence of cannabis pilot program.Senate-In Committee Process-Public Safety

  • SJR-10 Cannabis: federal schedules.Senate-In Committee Process-Public Safety

California Legislature Fails to Legalize CBD Products in 2019

The California Senate Appropriations Committee failed to move AB-228 out of the committee during its final hearing of the 2019 legislative session on August 30, 2019. The Committee’s action means that the sale of CBD products will remain illegal in California until at least the 2020 legislative session.

Currently, cannabis licensees may only sell CBD products that are extracted from cannabis rather than industrial hemp. Although CBD products are widely available in California, the California Department of Health issued a guidance in 2018 that prohibited the sale of CBD as an approved food, food ingredient, food additive, or dietary supplement until the US FDA determined that CBD products can be used as a food or California made the determination that CBD was safe.

California’s Department of Finance opposed the bill as the cost of implementation, which is estimated to be around $6.7 million, was not included in the 2019 budget. The failure to pass AB-228 is not the only challenge that the industry faces in California. Local governments are adopting regulations to prohibit or regulate the industrial hemp and CBD industries.

Over half of the counties in California have implemented ordinances to prohibit the cultivation of industrial hemp, and others are regulating hemp like cannabis. Also, individual cities have adopted ordinances to prohibit hemp cultivation include Blue Lake, Furtuna, Hollister, Lake Forest, Pittsburg, and San Jacinto.

This week alone the cities of Sacramento, King City, and Lynwood will hold public hearings on ordinances that temporarily prohibit industrial hemp cultivation and industrial hemp CBD business activities. King City will also regulate hemp manufacturing activities.

We expect that the list will increase until more information is available on the impact that hemp cultivation has on local communities and whether effective buffering zones can mitigate the pungency of hemp odors and cross-pollination concerns raised by existing cannabis cultivators.

As the new hemp and CBD market evolves in California, municipalities may see hemp and CBD as another revenue source and a means of reducing taxes for the cannabis industry. We expect that the hemp and CBD industries in California will face challenges that are similar to the cannabis industry including limited real estate due to zoning restrictions, higher operating costs due to local regulatory requirements, and educational hurdles. CBD brands will need to absorb these costs in order to obtain access to the largest market in the US.

What the Senate Banking Hearing on the SAFE Banking Act Really Means

The Senate Banking Committee held a hearing on July 23, 2019, on the lack of financial services available to the cannabis industry and the challenges this creates. The hearing shifted the conversation around cannabis at the federal level to one of support and concern. The Chairman of the Senate Banking Committee, Senator Crapo who is a Republican from Idaho, opened the hearing with a statement that voiced his concern that federal regulators are choking off the ability for lawful businesses, such as the cannabis industry, to obtain banking services.

Senator Cory Gardner from Colorado and Senator Jeff Merkley from Oregon spoke about the safety issues that exist in their states that are caused by the lack of banking services. Senator Gardner stated that the situation is untenable as hundreds of millions of dollars in cash are being driven in cars through the state.

The Senators also focused on the individual hardships faced by industry employees including the loss of bank accounts, credit cards the inability of cannabis employees to obtain a mortgage. The hearing also highlighted the impact on ancillary service providers such as plumbers, electricians, and union members.

Both Senators demanded that the federal government respect the state’s rights to develop a lawful cannabis industry. Senator Cory Gardner thoughtfully stated that the federal government must recognize the majority of citizens support cannabis and it is the one issue that the country can unite around. Senator Gardner remarked that we are a government of the people and the people have changed their point of view with regards to this issue. 

The tone of the hearing along with sentiment expressed in Senator Crapo’s statement reveal that Congress is finally listening. The tables may be turning in a positive manner for the cannabis industry.

So what is the SAFE Banking Act and how will it help the cannabis industry?

Under the Act, banks can provide financial services to the cannabis industry, and federal regulators may not initiate an action against the bank because cannabis is classified as a Schedule 1 drug. The banking regulator, FinCen, must also revise guidance to the banks within 6 months of the law’s effective date as to the type of activity a bank should report to it as suspicious or indicative of money laundering.

The SAFE Banking Act is a great start to bringing the cannabis industry into the mainstream commercial market. The devil will be in the details as to how federal regulators will treat the legacy money that will be brought into the banking system. Cannabis businesses should ensure to have appropriate documentation as to the origin of all investments and revenues. All new investments should be vetted to ensure that an audit trail exists to demonstrate that the money is derived from legal sources.

The Senate Banking Hearing was remarkable in that both sides of the aisle appear to be uniting around cannabis. Republicans will have a hard time arguing that state rights don’t matter. Democrats will be able to provide their constituents with a win that has been in the wings for a long time. A remarkable outcome in a contentious political environment.

California Passes Cannabis Bill that Includes Organic Cannabis Certification

The California Legislature passed cannabis legislation that includes an organic certification program that will be implemented by July 1, 2021. The organic certification program will be comparable to the National Organic Program and the California Organic Food and Farming Act. The organic certification program will help differentiate the California cannabis market and brands from national competitors.

The bill that was sent to Governor Newsom for his signature also contains the following changes to cannabis regulations:

  • The legislation allows a California licensing regulator to fine a licensee or unlicensed cannabis business for violations of the state regulatory requirements up to $5,000 per day per violation for licensees and $30,000 per day per violation for unlicensed cannabis businesses.

  • The Bureau of Cannabis Control Bureau may provide funding to local jurisdictions seeking help implementing social equity programs. The new law increases the amount of funding that is available to local jurisdictions, and permits the Bureau to utilize the Governor’s Office of Business and Economic Development to help administer the program.

  • The new law extends the repeal date for provisional licenses to January 1, 2022, and allows state regulators to revoke or suspend provisional licenses if the holder is not actively and diligently pursuing an annual license.

Delaware Legislature Moves 4 Marijuana Bills

The Delaware Legislature has moved four (4) marijuana bills during the last weeks of the 2019 legislative session. The hope of legalizing adult use marijuana in Delaware ahead of the June 30th closing date has faded. However, the state legislature has made progress on bills that expand the medical marijuana program and decriminalizes the possession, consumption, and use of marijuana by juveniles.

Details on the four marijuana bills are provided below.

  • SB 170 - CBD-Rich Card The bill was introduced on June 19, 2019, and creates a new medical marijuana card that allows patients suffering from anxiety to obtain products containing elevated levels of CBD or CBD and THC. The patient’s doctor must provide a written certification recommending medical marijuana for the anxiety or any other condition approved by the state.

  • Senate Substitute 1 for SB 24 - Compassionate Use Card The bill broadens access to medical marijuana by allowing a patient or a designated caregiver for an adult or pediatric patient to obtain a compassionate use card for a severe and debilitating condition after presenting a signed statement from a physician indicating that there is no other effective treatment available.

  • HB 243 -The Delaware Patient Right to Grow Act- The bill was introduced on June 20, 2019, and permits the home cultivation of marijuana for personal use. Under the legislation, patients may grow and possess up to six flowering plants and six non-flowering plants. The patient or caregiver must tag the plants and report seed-to-sale information to the state on a monthly basis. Landlords and Homeowner Associations may prohibit the cultivation of marijuana authorized under the Act.

  • SB 45 - Civil Penalties for Juvenile Use of Marijuana The bill decriminalizes the possession, use or consumption of marijuana by juveniles. The bill makes it a civil violation for juveniles to possess, use or consume marijuana.

California Bill Will Allow Individuals to Deduct Cannabis Expenses

The California Senate will vote to pass a bill that allows individuals to deduct business expenses associated with legal commercial cannabis activity. The proposed amendments to the Personal Income Tax Law ensures that the cannabis industry is treated like all other businesses, and provides a stepping stone for industry growth.

Currently, California’s Corporation Tax law permits the deduction of cannabis business expenses even though these deductions are prohibited under federal law by Section 280E of the Internal Revenue Code. Under federal law, expenses associated with the illegal sale of drugs are not allowed to be deducted. California’s personal tax law currently refers to this portion of the Internal Revenue Code. The bill removes the reference to the federal regulations, which will allow persons to deduct cannabis business expenses in California.

Governor Jerry Brown vetoed the a similar bill during the 2018 legislative session due to the loss of state revenues. The Franchise Tax Board estimates the loss in tax revenues to be in the tens of millions of dollars.

Colorado's 7 New Cannabis Laws Will Propel Industry Forward

The Governor of Colorado, Jared Polis, signed seven (7) new cannabis laws into effect. The laws will propel Colorado’s cannabis industry forward by opening doors to public capital, allowing on-site consumption and delivery licenses, and making strides in the development of a robust hemp industry.

Below are brief summaries of the 7 new cannabis laws.

Publicly Licensed Marijuana Companies - The new law repeals the ban on investors in marijuana businesses that are publicly traded companies, and repeals the 15 person limit on the number of out-of-state investors. Under the law, controlling beneficial owners must make certain disclosures, and these controlling beneficial owners may be prohibited from becoming a licensee if unsuitable. A controlling beneficial owner is a person that owns 10% of the stock in the marijuana business.

Marijuana Hospitality Establishments - The new law allows retail establishments and mobile hospitality establishments to permit on-site consumption of marijuana products. Retail storefronts may obtain a license from the local jurisdiction where it is located. Colorado’s regulators are charged with adopting new regulations to oversee this new license type.

Regulated Marijuana Delivery - The new law allows medical and adult use retail stores and transporters to apply for a delivery license. The law requires the state to begin permitting medical marijuana delivery licenses by January 2, 2020 and permitting retail marijuana licenses by January 2, 2021. Businesses holding multiple licenses must apply for a separate delivery license for each license held. A $1 dollar charge would be added to each delivery to cover the cost of increased law enforcement needs. The law prohibits the delivery of medical or adult use marijuana in any municipality or jurisdiction that prohibit certain marijuana establishments including retail stores.

Electronic Filing Of Certain Taxes - Requires the electronic filing of state taxes when an electronic filing system is created or for taxes due on or after January 1, 2020, whichever is later. The new electronic filing law will reduce the inefficiencies of manual processing.

Hemp Regulation Alignment With 2018 Federal Farm Bill - The new law aligns Colorado’s Industrial Hemp Regulatory Program with the requirements of the 2018 Farm Bill. Under the law, the Commissioner of Agriculture must establish a hemp management plan and adopt regulations to implement. The new hemp regulations can be structured to address concerns raised by the US FDA at its May 31 hearing on CBD products.

Industrial Hemp Products Regulation - Requires manufacturers of hemp products to register with the state and pay a $300 fee. The new law also authorizes the Commission of Agriculture to establish a working group that will study the regulation of hemp products. Finally, local jurisdictions are authorized to adopt regulations that establish licensing requirements and fees for businesses engaged in extraction, storage, processing or manufacturing of hemp products.

Institute Of Cannabis Research Role And Mission - The law creates the Institute of Cannabis Research that is to be located at the Colorado State University. The role of the institute is to perform research on the effects of marijuana and the efficacy of medical marijuana.

Nevada Legislature Sends Cannabis Electronic Payment Processing Bill To Governor for Signature

The Nevada Legislature has sent a bill authorizing the creation of a closed loop payment processing system for the cannabis industry to Governor Sisolak for his signature.

AB466 authorizes the creation of an electronic payment system for the cannabis industry by July 1, 2020. The closed loop payment processing system will be operated as a pilot program by the State Treasurer.

The voluntary system allows customers, medical marijuana patients, and marijuana establishments to establish accounts using a mobile app or a card. The accounts can be used to engage in financial transactions related to marijuana. The system would provide the state with real time recordkeeping, and will provide the cannabis industry with an electronic business-to-business payment platform.

Nevada will charge fees that are sufficient to cover the cost of administering the pilot program, which will also be used by the industry to electronically pay state taxes.


Colorado Passes Legislation Allowing Municipalities to Create Local Licensing Regime for Hemp Products

The Colorado Legislature passed a bill that allows local municipalities to adopt ordinances to license and regulate businesses that engage in the storage, extraction, processing, or manufacturing of industrial hemp or industrial hemp products. The bill will become law if it is signed by Governor Jared Polis.

The new law allows counties and local municipalities to adopt a local license fee for hemp businesses and establish licensing requirements. The local municipalities may not adopt additional food safety requirements if they conflict with state laws.

The new law also requires wholesale food manufacturers that create hemp products to register with the Department of Agriculture and pay an annual fee. The Department of Agriculture must establish a stakeholder working group to study the regulation of industrial hemp products that will meet on or after December 1, 2019. The working group must provide the Colorado Legislature with written recommendations.