By Rich Henrich
According to The Origins of Cannabis Prohibition in California by Dale H. Gieringer, California led the states as a national leader in the war on narcotics, outlawing marijuana in 1913. This law was passed as an obscure amendment, to the state’s Poison Law by the California Board of Pharmacy, an aggressive leader in the anti-narcotics campaign. In 1875, San Francisco, inspired by anti-Chinese sentiment adopted the first known anti-narcotics law in the nation to suppress opium dens. This was later instituted by the state legislature in 1881. By 1907, seven years prior to the U.S. Congress restricting the sale of narcotics through the Harrison Act, the State Board of Pharmacy amended the poison laws once again to prohibit the sale of opium, marijuana, morphine and cocaine without a doctor’s prescription. Then the raids began, undercover agents and informants were employed and soon the criminalization of users as the Board flaunted its power with well-publicized raids on Chinese “dope-dens” and “dope-peddling” pharmacists. These early tactics soon became the standard for drug enforcement. The U.S. Government then passed the Marihuana Tax Act of 1937, outlawing “marihuana” at a national level.
Now, over one hundred years have passed and with it a new law that will allow for recreational use of marijuana. California Proposition 64, the California Marijuana Legalization Initiative (also known as the Adult Use of Marijuana Act…adult is defined as an individual 21 years of age or older) was passed on November 8, 2016. The initiative passed with 57% voter approval and allowed for immediate growth and possession of marijuana. However, people will not have the ability to legally purchase nonmedical marijuana until the State issues licenses to stores. The State has until January 1, 2018 to begin issuing retail licenses. Officials estimate it will take up to a year to develop the regulations that will be placed upon those businesses that grow, sell, test, and transport marijuana. You will not be able to smoke in public unless a local ordinance allows it but still must follow laws in place, the state laws already prohibit smoking tobacco in places such as restaurants, theaters or within 1,000 feet of a school, youth center or day care facility.
According to a University of California Agricultural Issues Center study, California could see a $5 billion dollar boon to the economy with current sales of medical marijuana at $2 billion annually. Marijuana will be strongly regulated by the state for anyone desiring to grow or sell marijuana. It will also be taxed by the state and possibly municipalities, cities and counties. Prop 64 allows the state to impose a 15% excise tax on the retail sale and a cultivation tax of $9.25 per ounce for flowers and $2.75 per ounce for leaves. Cities and counties will have the ability to impose their own taxes as well. It is important to note that medical marijuana patients would be exempt from paying sales tax. State officials estimate the taxes could generate up to $1 billion annually to be used for various expenses including running the program and enforcing its regulation as well as the study of the impact of Prop 64 on issues including health and safety. Still questions remain.
Locally, we have gone through similar phases, transitions and challenges and while no one can predict exactly the outcome, several of the Coachella Valley’s cannabis businesses are hopeful that the passage of Prop 64 will be a benefit to those seeking access to the medicine, but there are several concerns over policing and enforcement of those participating in illegal dispensing or delivery of cannabis. President of Operations at Desert Hot Springs based Inland Valley Therapeutic Health Center (IVTHC), Abe Robbin, says he is “not a fan of 64” stating his thoughts on what is to come for the industry is more uncertainty than celebration. “The way (the law) was written is not very clear and can be misleading on several aspects,” he says. “A lot of people think they can do what they want and buy it anywhere or smoke it where ever. That’s not accurate. I’ve seen shops open up and advertise that they are Prop 64 compliant. What does that even mean? There needs to be more specifics on the recreational side on how you can purchase. The way (Prop 64) was written, too much information is missing,” he stresses. He fears that for those individuals and businesses who have worked hard to be licensed and to pay taxes and work with the cities to not only be compliant but to work together for deeper understanding and community benefit, that Prop 64 could have some negative impact on the existing businesses as well as the city not receiving the taxes from pop up shops that do not understand the laws. “There just isn’t enough representation in 64 and that’s going to lead to lots of misunderstandings and a lot of misinformed people. From the tax side of things, there isn’t enough clear information to define how much tax is to be paid and how much is going back to schools for education,” he states with obvious concern. “There are too many illegal shops and delivery services opening up without a clue. This will need to be policed and enforced more.”
Gary Cherlin, President of Desert Organic Solutions, one of the first medicinal marijuana dispensaries legally sanctioned by the City of Palm Springs back in 2010, says he expects to see substantial growth in the industry with the passage of Prop 64. “I feel we are well positioned for the growth that is about to come from the recreational side of the business. Our billboards along the freeway will be attracting more business for sure. “We are already receiving numerous calls every day, but we have to turn the business away. A lot of people calling don’t realize they still need a state issued license,” he says with anticipation. He believes Prop 64 will create a tremendous growth for not just his business, but the industry as well. “I was reading an article in Forbes (magazine) and the report from New Frontier Data projects the legal cannabis industry will create over a quarter of a million jobs! That’s more than manufacturing, government or the utility industry will create!” The February 22, 2017 Forbes article (Marijuana Industry Projected To Create More Jobs Than Manufacturing By 2020) goes on to state that according to the Bureau of Labor Statistics. The BLS says that by 2024 manufacturing jobs are expected to decline by 814,000, utilities will lose 47,000 jobs and government jobs will decline by 383,000. This dovetails with data that suggests the fastest-growing industries are all healthcare related. He sees the changes in the law as a likely boost to the economy that can help stabilize the seasonal nature of many tourism based jobs across the valley.
Mr. Cherlin would like to see the public continue to be educated on the benefits of the medicine and the industry as a whole. “If you look at the studies, there is less crime in places that have legalized medicinal and recreational. I hope more states adopt the legalization of both. All across the country, states are having major issues with opiates (addiction and abuse) but in all the states with legalization, opiate use and abuse is significantly down,” he says based on his research on the topic. “People are becoming more aware of the true medical aspects of cannabis. I really want to encourage people to do more research, the benefits of CBD oil, (CBD hemp oil is made from high-CBD, low-THC hemp, unlike medical marijuana products, which are usually made from plants with high concentrations of tetrahydrocannabinol (THC). Because hemp contains only trace amounts of THC, these hemp oil products do not have the “high” associated with marijuana). “You don’t have to get high for the benefits,” he states.
As CEO of PSA Organica, a medical marijuana dispensary in Palm Springs (managed by her brother), Julie Montante wants to keep the focus on the medicine and helping those that need access to the medicinal marijuana. “Legalizing recreational marijuana allows more people to have access to the highest grade, tested marijuana. It insures more people can heal and feel better. With illegal delivery services and dispensaries, people do not have that security to know the product has been tested. I welcome everyone to come to PSA Organica to learn and ask questions, even if they are not buying. Our budtenders are extremely knowledgeable and eager to educate,” she says. She also noted that in January delivering marijuana without a license will become a felony.
Montante does not see the addition of more dispensaries as a benefit to the community. “There is only so much population and the businesses don’t need to have the current volume diminished. We need to continue to support the businesses that have been here for the community,” she stresses. Montante says she would like to see the laws relax and allow more people to get the medicine they need and especially for anyone using opiates to be able to get off the drug and get the help they need with the support of marijuana. “Pills are not healthy for the liver and the rate of abuse and addiction of opiates continues to climb in our state. Medical marijuana has been able to be used to assist in helping people get off of these drugs. With recreational marijuana, more people will have access to the medicine that they need.” She believes that dispensaries are critical to community health and need to give back as much as possible to the community. “I’m tired of the people going on shows and talking about the money (in this industry), it is about helping and healing.”
As for the growers interest, Ben Levine, CEO of Del-Gro, a $33 million dollar manufacturing and cultivation facility in the City of Coachella says he has some concerns about the Governor’s Trailer Bill legislation that may impact Type 1 and Type 2 licenses. His facilities are rented out to other growers with strong vetting process and support by Del-Gro to help the independent growers succeed. “Right now, businesses will be grandfathered in before December 31st, but after that it is currently not known. This could impact our ability to rent to future growers. It is definitely putting a rush on us and there is a bit of uncertainty that we have to operate under,” says the head of one of the biggest facilities in North America. He notes that Coachella Mayor Steven Fernandez, the Council, City Manager and the City Planner have all been incredible to work with on this project and he has confidence that they will continue to work through whatever challenges may be ahead as the las shakes out. He adds that Coachella’s leadership has a vision that he is fortunate to be a part of and is very optimistic for what is to come in the next few years in Coachella. “This Mayor and the Council recognize the sensitivity the issues surrounding the Trailer Bill and the unique opportunity we have to help build this project as part of the future for Coachella,” he says. “Enforcement will be key to the health of this industry. We definitely vet our tenets with background checks and check their financials as well. We should be lobbying for more Conditional Use Permits and those working with cities to be screened or already permitted should be given priority at the state level. We want to encourage those businesses that are conducting their businesses in a professional manner and striving to grow better product and protect consumers,” he adds.
As other states experience growing pains, California can learn from states like Colorado and Nevada, who recently legalized recreational marijuana and ran out of supply quickly due to the high demand. In Colorado, the increase in the number of licenses seems to not dilute the market but meet the increased demand for access. Indeed, the second California Gold Rush is upon us and with opportunity comes regulation to hopefully foster growth and not hinder business nor access to medical marijuana.
