CCIA Legislative Update | May 6th, 2022

Senate Governance and Finance Committee

On May 4, the Senate Governance and Finance Committee heard four tax-related cannabis bills. Two of these bills address eliminating the cultivation tax, a key component of the CCIA’s legislative work program. CCIA’s own Amy Jenkins led witness testimony in favor of SB 1281 (Bradford) which would eliminate the cultivation tax, reduce the cannabis excise tax from 15% to 5%, and move the collection of tax to the point of sale. This bill, along with SB 1074 (McGuire) which would eliminate the cultivation tax while increasing the excise tax, were both passed by the committee. The cultivation tax is anticipated to be addressed in the Governor’s Budget Revise sometime this month, but the passage of these bills indicates that our representatives understand and appreciate the need for cannabis tax reform.

SB 1293 (Bradford) was also passed through the committee. This bill would provide a tax credit for social equity applicants to help address the disproportionate challenges that social equity licensees face in the industry. We are honored that Senator Bradford cited the DISE Committee’s Accountability Report to highlight these challenges, and our recommendations for how to alleviate them. SB 1336 (Wiener), which would provide a tax credit to commercial cannabis businesses for qualified expenses up to $250,000, was also heard and passed without robust opposition. Overall, the passage of these four bills through the committee signals that our message about the dire challenges facing the cannabis industry is being recognized by our representatives.

DCC Oversight Hearing

On May 3rd, the Assembly Business & Professions Committee met for the DCC Oversight Hearing, allowing members and industry stakeholders to bring questions to the Department’s leadership about pressing issues. Director Nicole Elliot highlighted enforcement and the phasing out of provisional licenses as two major areas of focus for the DCC. CCIA’s own Amy Jenkins spoke in unison with other members of the industry about the concern that many provisional licensees risk falling out of the legal market if the DCC can’t process their annual license application before the statutory deadline of June 30. Director Elliot acknowledged this concern and affirmed CCIA’s position that duplicative requirements between the state and local level should be removed in order to streamline annual licensing processing.

On enforcement, Director Elliot celebrated the DCC’s recent 200% increase in the number of warrants given out for illegal cannabis operations since the consolidation of the Department. However, she also made it clear throughout the hearing that the DCC is struggling to fill over 100 vacant positions across all of its divisions, which impacts both enforcement capabilities and the ability to process annual licenses.

CCIA is committed to pressing the DCC for greater transparency and increased collaboration with stakeholders. Our members are experts in their chosen fields and are a wealth of information for the DCC. We will continue to engage on these important oversight issues and act as a resource for stakeholder input.

Meetings on Capitol Hill

Last week, CCIA took part in a fly-in hosted by the National Cannabis Roundtable with executives from Cresco Labs, Trulieve, Leafly, the Arizona Dispensaries Association and more as the industry presses hard for marijuana banking provision. NCR chair, former House Speaker John Boehner, hosted a dinner Wednesday at Trattoria Alberto that was attended by Reps. David Joyce (R-Ohio), Troy Carter (D-La.) and Dan Newhouse (R-Wash.) also included CCIA. SAFE Banking was the topic of conversation at the dinner with all three of the Members expressing support.
CCIA also met with Senator Padialla’s staff to discuss the cannabis industry's lack of banking which is a hurdle for small businesses but also poses significant public safety risks.