Quick Question Friday: California Cannabis Answers, Part 1
Updated: Aug 16, 2019
A provision tucked into a budget trailer bill imposes penalties of up to $30,000 per day for illegal operators in California
In addition to writing on matters involving artificial intelligence, lobbying techniques, and communications strategies, I also write for and serve as the chief editor of my blog, The Cannabis File. I created The Cannabis File in 2018 to serve as a website that is dedicated to exploring the challenges and opportunities that business people, entrepreneurs, investors and stakeholders face when entering and operating in the legal cannabis and hemp industry.
Because of this blog and our relationships in the industry, I receive a fairly steady stream of questions related to cannabis legislation and regulations.
I had a conversation with a hemp operator the other day that is having difficulty obtaining a cultivation permit from the County. The cultivation, she said is legal under a research grant provided by the state university system, and after investing significant capital in the operation, this cultivator was understandably frustrated and anxious to get her business off the ground.
After discussing her options, she said, "they have no interest in being reasonable. We may try it and see how it goes. What would be the penalty if we operate with out a license?"
Earlier this summer, the California State Legislature passed a bill that extended provisional licenses for cannabis companies through 2022. The industry hailed this as a major victory, in that it saved thousands of businesses from becoming non-compliant with state law due to the expiration of temporary permits at the state level. But, tucked away inside Assembly Bill (AB) 97, was a set of penalties for escalating penalties for legal and illegal operators.
More specifically, AB 97 (Budget Committee) would allow the state's main licensing entities - the Bureau of Cannabis Control (BCC), California Department of Food and Agriculture (CDFA), and the California Department of Public Health (CDPH) - to penalize licensed business up to $5,000 per violation per day, and unlicensed could face up to $30,000 per violation.
In addition to this new law, a bill that is currently moving through the California State Legislature, AB 1417, by Assembly Member Blanco Rubio, would give the State Attorney General the ability to bring an action against a person violating the state's marijuana laws, including those aiding and abetting a person running a cannabis business without the proper licenses. The penalty for aiding and abetting is up to three times the amount of the violation.
I shared this recent development with the cultivator, and although she has the money to pay these fees, ultimately she decided it was not worth the additional legal fees she would have to spend fighting against the state.
This is a common issue that I hear from operators in the industry - "Do I take my chances and risk getting caught or do I move on and take the loss?"
The price for operating illegally just became a lot higher which may make this question easier to answer.
Do you have a question regarding cannabis or hemp cultivation in California? Please contact me at firstname.lastname@example.org to discuss.