California Cannabis Bills Await Governor’s Signature: Implications for Social Equity and Business

LOS ANGELES— A recent session saw California lawmakers passing multiple cannabis-related bills, with the industry carefully watching provisions that address social equity concerns, consumption lounges, and product labeling. Governor Gavin Newsom has until October 14 to take a stance on these legislative actions.

One significant measure proposes to assist social equity entrepreneurs and consumption lounge operators, a move widely supported by the industry. However, the bill addressing labeling restrictions has met with strong opposition from industry stakeholders, many of whom hope Governor Newsom will heed their concerns.

Spotlight on Major Bills

1. Senate Bill 51: Addressing Historical Injustices This bill, championed by prominent Democrat Sen. Steven Brandford of Los Angeles, aims to support social equity operators, giving them additional time to establish their ventures. The legislation would extend the Department of Cannabis Control’s provisional license scheme, letting retail equity candidates and license holders renew or acquire provisional licenses for up to five years under specific conditions. The goal is to ease the transition for businesses to obtain permanent annual permits, especially given the backlog faced by thousands in California due to the state’s dual licensing prerequisites.

“The bill’s refusal could erect significant obstacles for Black and brown retail operators, solidifying corporate dominance in the cannabis sector,” remarked Kika Keith, an advocate for cannabis equity in Los Angeles.

2. Assembly Bill 374: A Win for Retailers? This proposed legislation could herald a significant change for cannabis retailers in the state. Drafted by Assembly Member Matt Haney from San Francisco, the bill would authorize cannabis stores to maintain traditional kitchens and organize events on-site. If signed into law, it would pave the way for potential revenue streams, serving as a blueprint for other states mulling the establishment of consumption lounges.

3. Assembly Bill 1207: Labeling Concerns This bill, proposed by Democratic Assembly Member Jacqui Irwin, would implement stringent product labeling and packaging constraints. The legislation mandates the exclusion of various images, including cartoons, fictional characters, and certain fruits, unless describing ingredients explicitly.

“The proposed restrictions would curtail the ability of small operators to distinguish their brands effectively,” stated Allan Bach, a legal expert in the cannabis industry.

While AB 1207 cleared both chambers of the state Legislature, the cannabis industry awaits Governor Newsom’s final decision on the matter.

Tax Reform Still Unaddressed Despite these legislative developments, the industry’s long-standing plea for substantial tax reform remains unfulfilled. A bipartisan bill, Senate Bill 512, which aimed to curtail California’s double taxation system, didn’t progress beyond the committee stage. This continued lack of action underscores the challenges the legal cannabis industry faces in the state.

As the deadline nears, the cannabis sector in California remains hopeful yet cautious, with significant implications for social equity and business operations hanging in the balance.