As the top pot-producing state in the nation, California could be on thin ice with the federal government

Thanks to Andrew Sacks of SWD law firm for the pointer on this must read piece from the LA Times

California produced at least 13.5 million pounds of marijuana last year — five times more than the 2.5 million pounds it consumed.

Where did all that extra pot go?

The answer, experts say, is that much of it ended up in other states — some where marijuana is still illegal.

As California prepares to allow cannabis sale for recreational use, that surplus has become a problem.


“If we want to avoid intervention from the federal government, we need to do everything we can to crack down on illegal activity and prevent cannabis from being exported out of state,” Assemblyman Tom Lackey (R-Palmdale) said.


LA Times: Why some pot businesses hide their cash — and others truck it straight to a federal vault (Published July 2017),amp.html

“It’s the early stages of the Wild West,” said California Treasurer John Chiang, who is leading an effort to reform cannabis banking, a problem dating back to 1996 when California legalized medical marijuana.

With recreational use set to become legal next year under Proposition 64, cannabis sales in the state are expected to top $7.5 billion in 2020, up from about $3.3 billion last year, according to data provider New Frontier and cannabis investor network Arcview Group.

LA Times: Pot legalization in California brings a bonanza of government jobs

Scientists. Tax collectors. Typists. Analysts. Lawyers. And more scientists.

Recreational marijuana use becomes legal in California in 2018, and one of the things to blossom in the emerging industry isn’t green and leafy, it’s government jobs.

The state is on a hiring binge to fill what eventually will be hundreds of new government positions by 2019 intended to bring order to the legal pot economy, from keeping watch on what’s seeping into streams near cannabis grows to running background checks on storefront sellers who want government licenses. Thousands of additional jobs are expected to be added by local governments.

The swiftly expanding bureaucracy represents just one aspect of the complex challenge faced by California: Come January, the state will unite its longstanding medical cannabis industry with the newly legalized recreational one, creating what will be the United States’ largest legal pot economy.




Encinitas council cannabis subcommittee hosts its final meeting

Council cannabis subcommittee hosts its final meeting

ENCINITAS — Encinitas officials have two draft ordinances regarding cannabis that essentially create a fork in the road and a need to make a choice.

The first ordinance, 13 pages long, provides the framework that would allow farmers to grow the plant on agriculturally zoned properties. The other ordinance, five pages, would ban cannabis cultivation, storefronts and medicinal dispensaries citywide.

A subcommittee composed of Councilmen Tony Kranz and Joe Mosca will discuss the two options at the final meeting of the committee formed to determine whether the city should allow cannabis cultivation or other cannabis-related activities.

Encinitas voters supported Proposition 64, the California Marijuana Legalization Initiative, by a 64-36 margin, the largest margin in the county. But voters two years earlier voted against medical cannabis storefronts. The city formed the subcommittee earlier this year to explore the dichotomy and determine if cultivation would be appropriate.

A large crowd is expected to attend the final meeting, held Sept. 28, as in the month leading up to the meeting, residents and stakeholders on both side of the divide have crowded council meetings and spoken for hours about the subject during the council’s oral communications period.

At recent meetings, Mayor Catherine Blakespear has had to instruct the large crowds to wave rather than applaud and limit redundant speakers, as the oral communications period — which is supposed to last a half hour — has stretched for nearly two hours.

“There are a lot of opinions and emotions on both sides,” Blakespear said.

Following Thursday’s meeting, the subcommittee will determine which ordinance to forward to the full council, which would resume deliberations later this year or in early 2018.

The ordinance that would allow cultivation would require those who want to grow the plant to obtain a permit annually. Anyone who had violated state cannabis cultivation laws within three years of trying to obtain a permit would be ineligible to receive one.

Grow sites would have to be indoors or in greenhouses, with security cameras at all entry and exit points, 6-foot-high opaque fencing, security guards (armed and unarmed), and have odor-control systems to limit off-site odors.

Growers would not be allowed to grow mature plants and or grow on greater than four acres of land. Smoking or using marijuana would be prohibited within 100 feet of the site.

The second ordinance would essentially reaffirm the status quo in the city — no storefronts, dispensaries or cultivation.

Both options would also prohibit commercial cannabis delivery unless it was being delivered by a primary caregiver to a patient or a person with an identification card delivering medical cannabis for their own personal use.

The council subcommittee will also consider information from the city of Vista, which polled its residents to ascertain residential opinion on cannabis-related topics.


SACRAMENTO, Calif. (KCRA) — Audit: Sacramento medical marijuana dispensaries don’t follow laws

A scathing city audit looking into Sacramento’s medical marijuana industry concluded dispensaries may be underreporting revenue and receipts, not paying enough in taxes and are underregulated by the city.

Of the six dispensaries whose finances were audited, four did not provide any information whatsoever.

The city auditor asked the dispensaries for information on monthly receipt records, financial statements, tax returns, memberships and vendor list and more.

Courtesy: Sacramento City Auditor

Sacramento Auditor Jorge Oseguera led the investigation and said his staff went to dispensaries to kept track of purchases. Based on what they observed, they were able to estimate how much the dispensaries should be reporting in revenue and paying in taxes.

In one case, a dispensary was more than $100,000 short in taxes owed.



Good to see the likes of Slate no covering this story

Slate Report: District Attorneys Gone Wild.  The anti-marijuana San Diego Prosecutor’s office is out of control.

McElfresh was accused of being an accessory to a crime related to her representation of Med-West, a licensed cannabis manufacturer and distributor, and its owner James Slatic, who had been simultaneously indicted for more than a dozen related felonies for fraud and money laundering that could lead to 15 years in prison. The case against not only Slatic’s business but also his lawyer appears to have been a broad assault by a prosecutor’s office determined to charge as excessively as possible and win, even if it meant being hazy about the facts behind the case.

The criminal indictment for McElfresh has hinged on an email she wrote to her client about a regulatory inspection, where she discusses giving the inspector “plausible deniability.” McElfresh and her client Slatic have both said this email was taken out of context, and it’s not clear from the charging documents how the email relates to the alleged crime. McElfresh told me in a phone interview this month that at the time of her arrest, it was clear she was being charged, “But with what?” she asked rhetorically. She said that certain attachments to the indictment were sealed, meaning she was unable to see them, and those attachments pertained to an unknown informant.

Tanya Sierra, the San Diego DA’s public affairs officer, gave an enigmatic response when I asked about the charges against McElfresh: “When it comes to prosecuting illegal activity by any business, if a crime is committed and we believe we can prove it beyond a reasonable doubt, we file charges.” The spokeswoman would not clarify under what theory McElfresh was accused nor why her other clients are relevant—the state has sought to force out information about other McElfresh clients in blatant violation of attorney-client privilege. “Attorneys who do not break the law should have no concerns about attorney-client privilege,” Sierra offered, without going into further detail.