Manzuri Law Firm : California Summer 2022 Update

Read more about these developments below.

The bill implements significant cannabis tax changes such as the suspension of all cultivation tax and freezing excise tax at 15% for the next 3 years. It also allows high-road operators who meet certain workplace standards related to employee compensation and benefits to be rewarded with rebates. Equity operators are also eligible for rebates under the new law. 

In addition to substantial tax policy reform, AB-195 imposes new compliance requirements for operators including those related to Labor Peace Agreements (LPAs) and delivery trips in METRC. The bill also provides increased state oversight of the cannabis industry and establishes a task force aiming to bridge the communication gap between local and state licensing agencies. 

California law now requires industrial hemp manufacturers of particular products to register with the state and obtain IHEO Authorization. Applicants must designate one or more of the following commodity types depending on the nature of their business:

• Extract Manufacturer
• Human Food Manufacturer
• Human Food Manufacturer with Cannery License
• Processed Pet Food Manufacturer
• Cosmetics Manufacturer
• Industrial Hemp Inhalable Authorization (*Out of state sales only)

IHEO Authorization is required to manufacture, package, or hold these commodities. Failure to comply with this requirement may result in public health advisory warnings, civiil penalties, or the recall, seizure, or embargo of products.

A number of Senate and Assembly bills that remain outstanding would have significant implications for commercial cannabis operators. These range, in substance, from bills that propose stricter packaging, labeling, and advertising guidelines, to those that would open the door for California entities to trade with licensed cannabis industries in other states. 

Legislation related to the use and consumption of cannabis is also pending in the current session. If passed, these bills could codify increased protections for parents, employees, and patients who use cannabis into California state law.