Cannabis business owners are grappling with a regulatory minefield in the wake of seemingly contradictory federal and state rules.
Josh Eisenberg, who is one of the managers of On Deck Cooperative, a medicinal marijuana co-op in Santa Clarita, said he was disappointed by the Cole Memo decision by Attorney General Jeff Sessions, but his business would continue to operate.
A medical marijuana co-op is a facility for people who have medical marijuana cards, as opposed to recreational marijuana, which California voters approved in 2016, with plans for it to take effect Jan. 1.
“We’re going to continue to do medicinal marijuana,” he said. “It seemed like a slap in the face to everything the Trump Administration came in and promised. A lot of people voted for the administration based on a freedom vote knowing the Republican Party is for state’s rights. The Cole Memorandum did a good job of ensuring state’s rights, so when you reverse that…”
There have been discussions with potential business investors to see if the federal action affects their decision-making process, a sentiment shared by City Councilman Cameron Smyth.
“It will impact people who are considering investing into the cannabis industry,” Smyth said of the Cole Memo.
Smyth said the cannabis industry is “very nuanced,” citing variations like industrial hemp, medical marijuana and recreational marijuana, and said each type should be discussed separately.
“The issue should be bifurcated from one another and dealt with on their own,” he said.
Eisenberg said he has been working with Smyth, and is drafting a medicinal marijuana ordinance for the city he hopes will be passed by the City Council later this year. Smyth said Monday that Eisenberg had sent the draft to him, but he was still working through it.
“They should be able to operate and continue to provide those deliveries in the city,” Smyth said of Eisenberg’s company.
Calls to a half-dozen other marijuana delivery services and cooperatives in Santa Clarita, according to Weedmaps.com, were not returned.
The California Department of Tax and Fee Administration, the agency that regulates taxation of marijuana, announced the cultivation tax rates Wednesday for cannabis: $1.29 per ounce of fresh cannabis plant, $2.75 per dry-weight ounce of cannabis leaves and $9.25 per dry-weight ounce of cannabis flowers. The administration, which said the taxation was established as part of voter-approved Proposition 64, also said cannabis plants must be weighed within two hours after harvesting.
Last week, Sen. Scott Wilk, R-Santa Clarita, and Assemblyman Tom Lackey, R-Palmdale, signed onto a letter to four U.S. Attorneys expressing concern about a federal decision to rescind the Cole Memo, a 2014 policy that allowed states that had legalized cannabis to operate free of federal enforcement — as long as public safety is prioritized and illicit market transactions are prevented.
In November, the Santa Clarita City Council extended their moratorium to prevent cannabis businesses from setting up shop in the city and said they will pass an ordinance to permanently ban them this year.
The decision came in light of city staff’s recommendation to do so, after staffers conducted nearly a year’s worth of research on how other cities have dealt with marijuana legalization and storefronts.
Lieutenant Governor Gavin Newsom blasted the decision made by Attorney General Jeff Sessions, calling it an “ideological temper tantrum.”
The decision to rescind the Cole Memo came four days after Proposition 64, the state measure to legalize marijuana that passed in November 2016 by a 57 percent approval rate, went into effect. The measure passed by a 14-point margin.
The proposition established a method for tracking and taxing marijuana, according to Newsom’s office. California is one of eight states to legalize recreational marijuana and one of 29 states to legalize medical marijuana.