Two legal experts on the dizzying array of changes underway in California cannabis laws briefed a sold-out audience at a Marin County Bar Association luncheon this week.
More than 70 people attended the event, which was held Wednesday at the Four Points Sheraton.
“People are shocked to figure out that California still does not have a statewide regulatory licensing regime,” said Habib Bentaleb, an attorney at Harris Bricken in San Francisco. “I can tell attorneys interested in getting into the field the hardest part is staying informed. You’re looking at 58 counties and 482 municipalities. They all have their own regulations.”
The other speaker, Lauren Vazquez, created the nation’s first pro bono legal clinic for medical cannabis patients and is a professor at Oaksterdam University in Oakland.
“This is a huge industry,” Vazquez said. “It touches on every aspect of the legal field. It’s just beginning.”
In June, the California Legislature passed the Medicinal and Adult-Use Cannabis Regulation and Safety Act, which effectively combined a law passed in 2015 to regulate medical cannabis with the Adult Use of Marijuana Act, which legalized the recreational use of cannabis for people over 21.
Beginning in January 2018, the state will begin issuing business licenses. Single operators will be able to obtain licenses for both medical and adult use purposes. In both cases, however, local jurisdictions must give their approval first.
“Local jurisdiction is king,” Bentaleb said. “You will not be able to get a state license unless you’ve got your local approval.”
Bentaleb, who lives in Novato, said Marin jurisdictions are still trying to figure out how they want to regulate medical cannabis. Marin’s only legal medical dispensary is in Fairfax.
“We’re not even scratching the surface of recreational yet,” Bentaleb said.
Bentaleb said he attended the Novato City Council’s Sept. 19 hearing on cannabis.
“It’s nice they’re starting talks, but I wouldn’t even call it a hearing,” Bentaleb said. “It was more like, ‘Let’s start a discussion about having a discussion.’”
By contrast, Bentaleb said, Sonoma County is accepting applications for medical cannabis businesses and has created a working group to explore recreational marijuana — while Humboldt County is considering an ordinance that would allow recreational cannabis tours and on-site consumption at dispensaries.
The speakers said that under the new law three state agencies will issue licenses. The Bureau of Cannabis Control, a part of the Department of Consumer Affairs, will issue licenses to retailers, distributors and testers. The Department of Food and Agriculture will give out licenses to cannabis growers, and the Department of Public Health will regulate manufactured products such as edibles.
But Bentaleb said many levels of uncertainty remain.
“We have the contours of what the regulatory regimes are going to be,” he said, “but we still don’t have actual rules and regulations in place yet.”
Perhaps the biggest uncertainty of all is how the Trump administration and Attorney General Jeff Sessions will react to a growing national, legalization movement. Cannabis remains illegal under federal law.
“There is something going on at 1600 Pennsylvania Avenue,” Bentaleb said, referring to President Trump. “Nobody can feel comfortable saying what is going to happen next.”
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Vazquez said California’s budding cannabis industry faces a number of hurdles because cannabis remains illegal at the federal level.
“Asset forfeiture is a huge risk for landlords,” she said. “That is the primary tool the government has used to close down cannabis dispensaries.”
Vazquez said that because banking is federally regulated, “Banks have pretty much refused to deal with cannabis businesses. That is a huge impediment. It prohibits businesses from taking credit cards.”
“Then there is the Internal Revenue Service,” Vazquez said. “IRS code 280e says that businesses cannot deduct expenses for drug dealing businesses.”
And Vazquez said, “Just because your mom is only helping with the books and not handling the cannabis doesn’t mean she can’t be brought into the RICO (Racketeer Influenced and Corrupt Organizations Act) case with you.”
During the question and answer period, the speakers addressed some other issues that commonly arise when the legalization of cannabis is discussed.
They said no definitive blood test has been developed yet to determine if a person is too high to drive a vehicle, although work is underway to develop one. Courts have so far upheld the rights of employers who fire employees for testing positive for cannabis use.
And Bentaleb said times have changed since 2010, when a court refused to hear a case involving a Hawaii resident whose cannabis plants were stolen from his home. The resident had filed a homeowners’ insurance claim.
Bentaleb said, “Courts are allowing contract disputes and litigation in state court to proceed.”
Laura Bertolli, who recently sold her father’s auto body business in San Rafael to enter the cannabis business, was among those who attended Wednesday’s lunch.
“I definitely feel like there is no leadership in this community right now,” Bertolli said. “The jurisdictions are all saying, ‘We don’t want any marijuana. Ban everything.’ I’ve always had a passion for cannabis. Now recreational is legal. I want to do it.”