Tag Archives: local

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 1

By Carl Silverberg
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Core values often get wrapped into buzzwords such as sustainability, locally sourced and organic. In the first part of a series of four articles exploring greenhouses and the environment, we’re going to take a look at indoor vs. outdoor farming in terms of resource management.

Full disclosure; I love the fact that I can eat fresh blueberries in February when my bushes outside are just sticks. Is there a better way to do it than trucking the berries from the farm to a distribution plant to the airport, where they’re flown from the airport to a distribution center, to the grocery store and finally to my kitchen table? That’s a lot of trucking and a lot of energy being wasted for my $3.99 pint of blueberries.The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. 

If those same blueberries were grown at a local greenhouse then trucked from the greenhouse directly to the grocery store, that would save diesel fuel and a lot of carbon emissions. People who can only afford to live near a highway, a port or an airport don’t need to ask a pulmonary specialist why their family has a higher rate of COPD than a family who lives on a cul-de-sac in the suburbs.

Fact: 55% of vegetables in the U.S. are grown under cover. The same energy saving principles apply to indoor cannabis and the reasons are consumer driven and producer driven. The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. They want it for themselves and they want it for their kids.

The rapid proliferation of greenhouses over the past ten years is no coincidence. Millennials are forcing changes: organic fruit and vegetables now account for almost 15% of the produce market. A CNN poll last month revealed that 8 of 10 of registered Democrats listed climate change as a “very important” priority for presidential candidates. The issue is not party I.D.; the issue is that a large chunk of Americans are saying they’re worried about the direct and indirect impacts of climate change, such as increased flooding and wildfires.

So how does the consumer side tie into the cannabis industry? Consumers like doing business with companies who share their values. The hard part is balancing consumer values with investor values, which is why many indoor growers are turning to cultivation management platforms to help them satisfy both constituencies. They get the efficiency and they get to show their customers that they are good stewards of their environment. The goal is to catch things before it’s too late to save the plants. If you do that, you save the labor it costs to fix the problem, the labor and the expense of throwing away plants and you reduce pesticide and chemical usage. When that happens, your greenhouse makes more money and shows your customers you care about their values.

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers.Let’s add some more facts to the indoor-outdoor argument. According to an NCBI study of lettuce growing, “hydroponic lettuce production had an estimated water demand of 20 liters/kg, while conventional lettuce production had an estimated water demand of 250 liters/kg.”  Even if the ratio is only 10:1, that’s a huge impact on a precious resource.

Looking at the pesticide issue, people often forget about the direct impact on people who farm. “Rates in the agricultural industry are the highest of any industrial sector and pesticide-related skin conditions represent between 15 and 25% of pesticide illness reports,” a 2016 article in The Journal of Cogent Medicine states. Given the recent reports about the chemicals in Roundup, do we even need to continue the conversation and talk about the effects of fertilizer?

I’ll finish up with a quote from a former grower. “The estimates I saw were in the range of between 25%-40% of produce being lost with outdoor farming while most greenhouse growers operate with a 10% loss ratio.”

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers. Lastly, most Americans simply have a moral aversion to seeing farms throw away food when so many other people are lined up at food banks.

Wyoming Legalizes Hemp, CBD Oil

By Aaron G. Biros
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Governor Mark Gordon signed HB0171/ HEA No. 0110 into law today, officially legalizing the cultivation and sales of hemp and CBD oil in the state of Wyoming. According to Buckrail.com, a Jackson, Wyoming news publication, the bill passed through the state legislature with ease, moving forward in the House on a 56-3 vote and through the Senate with a 26-3 vote.

President Trump signed the Agriculture Improvement Act of 2018 (the Farm Bill) into law late in December of 2018, which removed hemp-derived cannabidiol (CBD) from the Controlled Substances Act in states that choose to regulate it. Wyoming Governor Mark Gordon signing HB0171 means that the state intends to regulate the cultivation and sales of hemp-derived CBD.

Wyoming Governor Mark Gordon

Scott McDonald with the Wyoming Department of Agriculture told Wyoming Public Media that once the bill is signed, the state has 30 days to show their plans for regulation to the federal government. “We were kind of hoping to get something in place this spring for this growing season,” McDonald told Wyoming Public Media. “But we’re not sure that’s going to happen or not. There’s some uncertainty there, so it might be next year.”

McDonald also discussed the next steps that the WY Department of Agriculture needs to take to follow through on the bill’s promises, including figuring out a way to distribute licenses to hemp farmers, licensing laboratories to test hemp, insuring it has less than 0.3% THC and implementing a remediation plan for when crops test above that threshold.

According to Charlotte Peyton, a consultant with 30 years of experience in FDA regulations and experience working in the hemp industry, it is important to keep in mind that as soon as products containing hemp-derived CBD are sold across state lines, the FDA maintains regulatory authority. “If you manufacture and sell hemp products inside of a state with a state mandated hemp program, you are legal and protected under state laws, but the minute you sell across state lines, it becomes the jurisdiction of the federal government and, more specifically, the FDA,” says Peyton.

According to some farmers, this is good news for the local economy. Many say this could be give a much-needed boost to the state’s agricultural economy, citing hemp’s suitability to grow in Wyoming’s climate and a perceived high demand throughout the state.

5 Compliance Reporting and Notification Requirements That You May Not Know About

By Anne Conn
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New cannabis businesses must demonstrate proof of compliance to myriad laws and regulations as part of the initial license application process. And once a license is issued, it is easy to prioritize day-to-day business operations over ongoing compliance reporting requirements especially when sales are booming and compliance requirements are multi-layered, vague or obscured in non-cannabis specific programs and regulations.

But seemingly benign neglect of some minor reporting requirements can have major consequences to new and established businesses alike.

This article explores five compliance reporting requirements that cannabis businesses may not know about, and suggests ways to maintain a strong compliance posture across all regulatory agencies.

Pesticide Reporting

All licensed growers are required to prove compliance to state pesticide usage regulations. However, expectations on how and when to provide that proof of compliance vary greatly from state to state.  Furthermore, the responsibility of education and enforcement for pesticide usage in the cannabis industry often falls to non-cannabis specific agencies such as state departments of agriculture or environmental compliance.

For example in California, cultivators must report detailed monthly pesticide use reports via the State’s Agriculture Weights/Measures Division reporting portal, while Washington State regulators simply expect cultivators to keep records locally on site and provide them when requested.

With so many places to look, the best place to start your pesticide reporting requirement search is with your local agriculture department. They should be able to answer your questions and provide you with a list of resources to help you better understand how to comply with state pesticide usage and reporting regulations.

Hazardous Materials Reporting

Like pesticide use and reporting, hazardous waste handling and reporting requirements are complex and vary state to state. In fact, there may even be nuanced variations in handling requirements at the county level. The best approach to ensure compliance with a complicated set of regulations is to start by consulting your local county fire department. They will have the most specific set of rules for hazardous materials handling and reporting and can help you develop a site-specific compliance plan.

Two OSHA reporting requirements

Depending on how your cannabis business is classified, you may be required to keep injury and illness incident records and provide reports to the Occupational Health and Safety Organization (OSHA) for specific time periods.

Contact your business insurance provider’s loss prevention representative for more information about how your business is classified, which specific OSHA reporting requirements apply to you, and how to stay in compliance with applicable OSHA requirements.

Click here to learn more about how OSHA organizes reporting requirements by business type.

A note of caution here: OSHA non-compliance penalties can be steep and “I didn’t know I was supposed to do that” is not an acceptable defense when it comes to explaining any OSHA violations.

Labor Law Notification Requirements

Federal labor law requires that you notify employees of their rights. At a minimum, you post information regarding wages and hours, child labor, unemployment benefits, safety and health/workers’ compensation and discrimination in a conspicuous place where they are easily visible to all employees. Some states requires additional information be posted in a similar manner, so it’s important to be sure that those notices are posted along with the federal requirements.

This is a simple, yet easily overlooked, requirement for all businesses, regardless of industry. Ask your insurance provider for a copy of the notice to print and post right away (if you have not already) for a quick compliance win!

These five reporting and notification requirements may seem tedious, overly complicated and burdensome in the face of day-to-day business operations, but compliance to these requirements not only protects your business and employees, it also enhances the overall reputation of the industry. The good news is that regulatory agencies welcome a proactive approach and are happy to work with cannabis businesses to provide guidance and information for developing compliance plans.

New Taxes for California Cannabis Industry

By Jasmine Davaloo
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Welcome to the evolving world of cannabis legislation and taxation in California. With the recent 2018 midterm election, a green wave of new laws and regulations has washed ashore, and Taxnexus, a cannabis tax compliance service provider for cannabis businesses, has analyzed the results, looking for insights to guide cannabis business owners in 2019.

In summary, the trend of local counties and cities imposing new cannabis taxes on dispensaries, distributors and cultivators continues, but with some important lessons being learned.

A Brief History of California Cannabis Tax Regulations.

The legalization of cannabis in California brought with it cannabis excise tax and cultivation taxes with the hope of bringing in significant amounts of income in cannabis taxes. The state had projected $185M in cannabis tax revenue for the first six months of 2018. Although California has since collected tens of millions of dollars fewer than anticipated, it did bring in over $135M in the first and second quarters from a brand new industry.

Local governments are able to collect these taxes directly from cannabis businesses.  With the green light from the state and the need for a new source of revenue, many local governments followed suit and passed laws to impose taxes on cannabis businesses operating in their jurisdictions. The need for additional revenue is even greater for localities that allow cannabis business operations given that the state takes virtually all of the state-imposed cannabis taxes while the local government entities are burdened by the related costs of regulations and enforcement at the local level.

Cannabis business taxes have an extra allure for local jurisdictions. Unlike local sales and use taxes, the state does not require local cannabis business taxes to go through the state before a portion of it gets funneled back to the localities. Local governments are able to collect these taxes directly from cannabis businesses.

Since January 1, 2018, many local jurisdictions have come onboard and placed ballot measures for their voters to decide whether to tax cannabis businesses. According to research conducted by Taxnexus, by the end of the second quarter this year, there were over 500 different local cannabis tax rates in California.The new cannabis tax measures are also continuing the trend of widely ranging local cannabis tax laws.

Midterm Results Continue Overwhelming Support for Cannabis Industry

With over 50 cannabis tax measures placed on the November 6 local ballots, most of which passed with overwhelming support from voters, the number and variation of local cannabis business taxes continue to grow. This demonstrates the continuing trend of local governments welcoming cannabis businesses, the evolving voter attitude toward recreational cannabis, and perhaps most importantly, the localities’ desire to take their cut of the new industry’s tax revenue.

The new cannabis tax measures are also continuing the trend of widely ranging local cannabis tax laws. Given that the Medicinal and Adult-Use Cannabis Regulation and Safety Act granted local jurisdictions control over deciding their own cannabis business regulations, there is no statewide uniformity. Here are a few examples of the cannabis business tax measures that were on local ballots on November 6:

San Francisco

While some local jurisdictions were quick to impose cannabis taxes, others have delayed in taxing their local cannabis businesses. San Francisco’s Proposition D, which received a 66% voter approval, won’t go into effect until January 1, 2021. It imposes taxes on cannabis businesses that do business in the city, whether or not they are physically located there. The new cannabis business taxes are as follows:

  • For cannabis retail businesses, 2.5% of gross receipts up to $1M and 5% of gross receipts over $1M.
  • For cannabis non-retail businesses, 1% tax of gross receipts up to $1M and 1.5% of gross receipts over $1M.

These taxes do not apply to the first $500,000 of recreational cannabis gross receipts nor revenues from medical cannabis retail sales. The measure allows the Board of Supervisors to adjust the tax rates up to 7%. The cannabis businesses taxes are expected to generate $5M to $12M in cannabis tax revenue, and will go into the City’s general fund.The new tax measures underscore the lack of uniformity in local cannabis business taxes throughout the state. 

Emeryville

Emeryville passed a new cannabis business tax measure to increase its current nominal rate. Measure S imposes a cannabis business tax of up to 6% of gross receipts. This is estimated to generate $2M in tax revenue to be used for unrestricted governmental purposes.

Oakland

Oakland is among the few local jurisdictions that placed a measure on its November 6 ballot to lower its existing cannabis business tax rates. Previously, Oakland imposed a 5% tax on medical cannabis and a 10% tax on recreational cannabis, for all cannabis activities throughout the supply chain. These are among some of the highest cannabis tax rates in the state and are squeezing out small operators. Although Oakland has long been seen as the leader in California’s cannabis industry, the high taxes are making it difficult for its cannabis businesses to compete with nearby cities that charge lower taxes. While the city acknowledged the hardship its high taxes imposed, it maintained that it could not lower the rates on its own and required the voter approval. On November 6th, Oakland voters passed Measure V by 78%, which gives the City Council the authority to lower the city’s cannabis tax rates through an ordinance. To give additional relief to the cannabis businesses in the city, this measure also allows them to deduct the cost of raw materials from their gross receipts- something they cannot do on their federal tax returns. Furthermore, local cannabis business taxes can now be paid on a quarterly basis instead of one annual payment at the beginning of each year, which was severely burdensome for most businesses.

Lake County

Voters in Lake County approved Measure K by a majority vote to tax cannabis businesses in the unincorporated county effecting January 1, 2021. The county was previously only taxing cultivators at $1 to $3 per square footage depending on the method of cultivation. These rates will be reduced to $1 per square footage for cultivators and nurseries, and other cannabis businesses will be taxes between 2.5% and 4% of their gross receipts.

Mountain View

While there is a maximum of four cannabis businesses permitted to operate in Mountain View, over 80% of voters approved Measure Q to tax them. The measure imposes up to 9% of gross receipts to fund general city purposes, with an estimated annual revenue of $1M.Some have even set the effective dates of their cannabis tax laws several years out to allow their local cannabis businesses an opportunity to establish roots and drive out the black market.

Lompoc

Some jurisdictions have passed more creative cannabis business tax regimens than one rate applicable to the entire supply chain. Voters in Lompoc in Santa Barbara County approved Measure D2018 to authorize the city to impose following cannabis business taxes:

  • Up to $0.06 per $1 (6%) of recreational retail sales proceeds;
  • Up to $0.01 per $1 (1%) of cultivation and nursery proceeds;
  • An annual flat fee tax of $15,000 if net income is less than $2M of manufacturing and distribution proceeds;
  • An annual flat fee tax of $30,000 if net income is $2 Million or more of manufacturing and distribution proceeds;
  • A total aggregate tax of $0.06 per $1.00 (6%) of microbusinesses proceeds, not including medical cannabis transaction proceeds; and
  • No tax on testing.

Riverbank

There are signs that other localities that waited to jump onboard have learned from these high-taxing jurisdictions and opted for lower rates. There are even those localities that although they do not statutorily permit cannabis businesses to operate in their jurisdictions, they still want a piece of the action when it comes to cannabis taxes. The city of Riverbank in Stanislaus County currently does not allow cannabis businesses to operate without first obtaining a permit from City Hall and entering into a development agreement with the city that negotiates how much of their revenue the city would take. However, the voters just passed Measure B, which authorizes Riverbank’s City Council to impose a business license tax of up to 10% of gross receipts on cannabis businesses in the event the city allows cannabis businesses to operate within its city limits in the future. This tax has incentives other than the apparent potential of tax revenue. This guarantees the city a cut of the earnings of any illegal cannabis businesses, and serves as a protection in the event the permit and development agreement scheme the city has enacted is later found to be invalid.

The Chaos Continues

The new tax measures underscore the lack of uniformity in local cannabis business taxes throughout the state. Compliance is especially burdensome for delivery companies and multi-location and multi-license cannabis businesses. Cannabis businesses are required to keep up with new and evolving cannabis tax regimens, which, judging by the shortfall in cannabis tax revenues compared to their projections so far, is a difficult feat for these highly-regulated businesses.Of course, there are still some local governments that appear to have missed all the signs and have passed new high taxes. 

The overall trend in 2018, persisting through the midterm elections, is that more local jurisdictions are joining the cannabis tax bandwagon, and while the tax rates and structures are still all over the map, there appears to be some movement toward honing the cannabis business rates toward that “sweet spot.”

Cities like Oakland and Berkeley that immediately began to tax cannabis businesses at high rates have lowered or taken steps to lower their tax rates to keep their competitive edge and retain cannabis businesses within their jurisdictions. There are signs that other localities that waited to jump onboard have learned from these high-taxing jurisdictions and opted for lower rates. Some have even set the effective dates of their cannabis tax laws several years out to allow their local cannabis businesses an opportunity to establish roots and drive out the black market.

Of course, there are still some local governments that appear to have missed all the signs and have passed new high taxes. In due time, they, too, will give in to the market pressures and make necessary adjustments if they want to continue to benefit from the legal cannabis industry in their jurisdictions.


Taxnexus is an automated transaction-to-treasury cannabis tax compliance solution for the entire cannabis supply chain that provides point-of-sale state and local cannabis tax calculation, sales and use tax calculation, tax data management as the authority of record, and timely filing of returns with all applicable taxing authorities.

California Midterm Ballots To Bring Green Wave of Cannabis Tax Regulations

By Jasmine Davaloo
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As state and local jurisdictions rake in millions of dollars in tax revenue from the state’s legal cannabis industry, new states, counties and cities are piling onto the cannabis tax bandwagon. There are currently hundreds of local cannabis business taxes in place in California. On the November ballots, there are 47 new local cannabis tax measures. In fact, even some local jurisdictions that outlaw cannabis operations want a piece of the green pie and are asking voters to impose cannabis business taxes.

More cannabis tax measures being passed means more regulations and compliance responsibilities for cannabis businesses. This is especially taxing (pun intended) for multi-licensed and multi-location cannabis businesses. With hefty monetary penalties and even revocation of business licenses as consequences of noncompliance, adherence to state and local tax regulations is of paramount concern to cannabis businesses. Below is a list that Taxnexus has put together showing all of the cannabis tax measures on the November 6 ballots in California:

Taxnexus is an automated transaction-to-treasury cannabis tax compliance solution for the entire cannabis supply chain that provides point-of-sale state and local cannabis sales and use tax calculation, tax data management as the authority of record, and timely filing of returns with all applicable taxing authorities.

California City and County Cannabis Tax Measures November 6, 2018 Ballots

City County Measure Name Proposal
Adelanto San Bernardino S Adelanto Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $5.00 per square foot on nurseries and up to 5% on other businesses.
Atascadero San Luis Obispo E-18 Atascadero Cannabis Business Tax To impose a tax on cannabis businesses at annual rates not to exceed $10.00 per canopy square foot for cultivation, 10% of gross receipts for retail cannabis businesses, 2.5% for testing laboratories, 3% for distribution businesses, and 6% of gross receipts for all other cannabis businesses.
Atwater Merced A Atwater Marijuana Tax To authorize the city to impose a 15% tax on marijuana businesses.
Benicia Solano E Benicia Marijuana Business Tax To authorize the city to impose a tax of up to $10 per square foot for marijuana nurseries and 6% of gross receipts for other marijuana businesses.
Capitola Santa Cruz I Capitola Marijuana Business Tax To authorize the city to tax marijuana businesses at a rate of up to 7% with no expiration date to fund general city purposes.
Chula Vista San Diego Q Chula Vista Marijuana Business Tax To authorize the city to tax marijuana businesses at the following rates: 5% to 15% of gross receipts or $5 to $25 per square foot for cultivation.
Colfax Placer C City of Colfax Cannabis Business Tax To tax cannabis businesses at annual rates not to exceed $10.00 per canopy square foot for cultivation (adjustable for inflation), 6% of gross receipts for retail cannabis businesses, and 4% for all other cannabis businesses.
Colton San Bernardino U Colton Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $25.00 per square foot on nurseries and up to 10% on other businesses.
Emeryville Alameda S Emeryville Marijuana Business Tax To enact a marijuana business tax at a rate of up to 6% of gross receipts to fund general city purposes.
Fresno Fresno A Fresno Marijuana Business Tax To tax marijuana businesses at rates of up to $12 per canopy square foot and up to 10% of gross receipts for medical dispensaries and other marijuana businesses, with revenue dedicated to the city’s general fund an a community benefit fund.
Goleta Santa Barbara Z2018 Goleta Marijuana Business Tax To authorize the city to tax marijuana businesses at the following initial rates with a cap at 10% of sales: 5% for retailers; 4% for cultivators; 2% for manufacturers; and 1% for distributors/nurseries.
Hanford Kings C Hanford Cannabis Business Tax To tax cannabis businesses at an annual maximum rate of $7 per square foot of canopy for cultivation businesses using artificial lighting only, $4 per square foot of canopy for cultivation businesses using a combination of artificial and natural lighting, $2 per square foot of canopy for cultivation businesses using natural lighting only, and $1 per square foot of canopy for nurseries, 1% of gross receipts of laboratories, 4% of gross receipts of retail sales, 2% of gross receipts of distribution and 2.5% of gross receipts of all other types of cannabis businesses.
Hesperia San Bernardino T Hesperia Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $15.00 per square foot on nurseries and up to 6% on other businesses.
La Mesa San Diego V La Mesa Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of up to 6% gross receipts and up to $10 per square foot of cultivation.
Lassen Lassen M Lassen County Commercial Marijuana Business Tax To authorize the county to enact a tax on commercial marijuana at rates of between $0.50 to $3.00 per square foot for cultivation and 2.5% to 8% on gross receipts for other businesses, such as retail, distribution, manufacturing, processing, and testing.
Lompoc Santa Barbara D2018 Lompoc Marijuana Business Tax To authorize the city tax marijuana businesses at the following rates: $0.06 per $1 of non-medical retail sales proceeds; $0.01 per $1 of cultivation proceeds; $15,000 for net income less than $2 million of manufacturing/distribution proceeds; $30,000 for net income $2 Million or more of manufacturing/distribution proceeds; a total aggregate tax of $0.06 per $1.00 of microbusinesses proceeds; and no tax on testing.
Malibu Los Angeles G Malibu Marijuana Business Authorization and Tax To authorize the sale of recreational marijuana in the city and imposing a general tax at the rate of 2.5% of gross receipts on the sale of recreational marijuana.
Marina Monterey V Marina Marijuana Business Tax To authorize marijuana businesses to operate in the city and authorizing the city to tax marijuana businesses at rates of up to 5% of gross receipts, with revenue funding general city purposes.
Maywood Los Angeles CT Maywood Marijuana Business Tax To authorize the city to tax marijuana businesses at a maximum rate of 10% of gross receipts to fund general city purposes.
Moreno Valley Riverside M City of Moreno Valley Commercial Cannabis Activity Tax To enact a tax on cannabis sales and cultivation, not exceeding 8% of gross receipts and $15 per square foot of cultivation.
Morgan Hill Santa Clara I Morgan Hill Marijuana Business Tax To authorize the city to tax marijuana businesses at annual rates up to $15.00 per canopy square foot for cultivation and up to 10% of gross receipts for all other marijuana businesses.
Mountain View Santa Clara Q Mountain View Marijuana Business Tax To enact a tax on marijuana businesses of up to 9% of gross receipts to fund general city purposes.
Oakland Alameda V Oakland Marijuana Business Tax Amendments To amend the marijuana business tax law to: allow marijuana business to deduct the cost of raw materials from their gross receipts and to pay taxes on a quarterly basis; and allow the city council to amend the law in any manner that does not increase the tax rate.
Oroville Butte T Oroville Marijuana Tax To authorize an annual gross receipts tax on cannabis businesses at rate not to exceed 1%, with initial rates of 5% on retailers and manufacturers; 4% on cultivators; 3% on distributors; 2% on nurseries; 0% on testing laboratories; and 7% on microbusiness to generate approximately $300,000 to $600,000 in annual revenue.
Paso Robles San Luis Obispo I-18 Paso Robles Cannabis Business Tax To impose a maximum tax rate on every person or entity operating or conducting a cannabis business within the City a cultivation tax of up to$20.00 per square foot of space utilized in connection with the cultivation and processing of cannabis; a gross receipts tax of up to 10% for all cannabis transportation; a gross receipts tax of up to 15% for all cannabis manufacturing, testing, and distribution; and a gross receipts tax of up to 10% for dispensaries.
Pomona Los Angeles PC Pomona Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of $10.00 per canopy square foot for cultivation and up to 6% of gross receipts for all other marijuana businesses to fund general city purposes.
Riverbank Stanislaus B City of Riverbank Cannabis Business License Tax To authorize the City Council of the City to impose a business license tax at a rate of up to 10% of gross receipts on cannabis businesses and dispensaries, to help fund general municipal services.
San Bernardino San Bernardino W San Bernardino Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $10.00 per square foot on nurseries and up to 6% on other businesses.
San Diego San Diego AA City Council Marijuana Business Tax Measure To authorize the city to tax marijuana businesses at the following rates: $14 per square foot; up to 8% on manufacturing and distribution; up to 10% on medicinal retail; up to 12% on adult-use retail; and up to 3.5% on testing.
San Francisco San Francisco D San Francisco Marijuana Business Tax Increase To tax marijuana businesses with gross receipts over $500,000 at a rate between 1% and 5%, exempting retail sales of medical marijuana, and expanding the marijuana business tax to businesses not physically located in San Francisco.
Santa Ana Orange Y Santa Ana Recreational Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of $0.25 to $35.00 for gross square footage and up to 10 percent for cultivating, manufacturing, distributing, selling, or testing.
Santa Clara Santa Clara M Santa Clara Marijuana Business Tax To authorize the city to tax commercial marijuana businesses up to 10% of gross receipts and up to $25 per square foot for cultivation.
Simi Valley Ventura Q Cannabis Business Tax To enact a maximum tax on gross receipts of cannabis businesses in the City after January 1, 2019, as follows: for testing, 2.5%; for retail sales, retail delivery, or microbusiness retail, 6%; for distribution not to consumers, 3%; for manufacturing, processing or nonretail microbusiness, and any other type of business not otherwise specified, 4%; and for cultivation, a tax per square foot of canopy ranging from $2.00 per square foot of canopy to $10.00 per square foot of canopy, depending on the type of lighting (artificial or natural) used.
Solvang Santa Barbara F2018 Solvang Marijuana Business Tax To authorize the city to tax marijuana businesses at an initial rate of 5 percent of gross receipts with a cap of 10 percent and a maximum annual increase of 1 percent.
Sonora Tuolumne N City of Sonora Cannabis Business License Tax To enact a business license tax at a rate of up to 15% of gross receipts on cannabis businesses, to help fund general municipal services; and increasing the City’s appropriations limit for the Fiscal Years 2019-2023 by the amount of tax proceeds received.
Suisun Solano C Suisun Marijuana Business Tax To authorize the city to impose a tax of up to $25 per square foot and 15% gross receipts for marijuana businesses.
Union City Alameda DD Union City Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of $12.00 per square foot for cultivation and 6 percent of gross receipts for other businesses to fund general municipal services.
Vista San Diego Z Vista Retail Medical Marijuana Sales and Tax Initiative (November 2018) To authorize commercial retails sales of medicinal marijuana for up to 11 retailers and enacting a 7% tax on the business’ gross receipts.
Contra Costa R Contra Costa County Marijuana Business Tax To authorize Contra Costa County to tax commercial marijuana businesses in the unincorporated area in the amount of up to $7.00 per canopy square foot for cultivation and up to 4 percent gross receipts for all other cannabis businesses to fund general County expenses.
El Dorado N, P, Q, R, S Commercial Cannabis Tax Measures To impose a general tax on any independently authorized commercial cannabis activity in the unincorporated areas of El Dorado County at rates up to: $30 per square foot or 15% for cultivation; 10% for distribution, manufacturing, and retail; and 5% for testing laboratories, effective until amended or repealed, with estimated annual revenue of $1,900,000 to $52,800,000.

To authorize outdoor and mixed-light (greenhouse) commercial cannabis cultivation for medicinal use on parcels of at least 10 acres zoned Rural Lands, Planned Agricultural, Limited Agricultural, and Agricultural Grazing that are restricted in canopy size, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

To authorize outdoor and mixed-light (greenhouse) commercial cannabis cultivation for recreational adult use on parcels of at least 10 acres zoned Rural Lands, Planned Agricultural, Limited Agricultural, and Agricultural Grazing that are restricted in canopy size, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

To authorize the retail sale, delivery, distribution, and indoor cultivation of commercial cannabis for medicinal use on parcels zoned Community Commercial, Regional Commercial, General Commercial, Industrial High, and Industrial Low that are restricted in number and concentration, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

To authorize the retail sale, delivery, distribution, and indoor cultivation of commercial cannabis for recreational adult use on parcels zoned Community Commercial, Regional Commercial, General Commercial, Industrial High, and Industrial Low that are restricted in number and concentration, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

Lake K Lake County Marijuana Business Tax To authorize the county to enact a marijuana business tax at the rates of $1.00 per square foot for nurseries and cultivators and between 2.5% and 4% for other businesses.
San Joaquin B Unincorporated County of San Joaquin Cannabis Business Tax To impose a special tax on commercial cannabis businesses in unincorporated San Joaquin County at a rate of 3.5% to 8% of gross receipts, with an additional cultivation tax of $2.00 per square foot of cultivation space.
Tuolumne M Tuolumne County Commercial Cannabis Business Tax The County to impose a 0%-15% gross receipts tax on commercial cannabis businesses (but no less than $0-$15 per square foot for cultivation businesses as annually increased by a consumer price index) in the unincorporated area of Tuolumne County, and to authorize the Board of Supervisors to implement and adjust the tax at its discretion, with funds staying local for unrestricted general revenue purposes, including but not limited to public safety, health,environmental protection and addressing industry impacts, unless repealed or amended by voters.
Radojka Barycki picture

Food Safety: Do You Know What Is In Your Water?

By Radojka Barycki
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Radojka Barycki picture

Water is essential for life and it is an important part of agriculture and food manufacturing. Water has many uses in the cannabis industry. Among the most common uses are irrigation, ingredient/product processing and cleaning processes.

Water can be the carrier of pathogenic microorganisms and chemicals that can be transferred to food through agriculture and manufacturing practices. Poor quality water may have a negative impact in food processing and potentially on public health. Therefore, development and implementation of risk management plans that ensure the safety of water through the controls of hazardous constituents is essential to maintain the safety of agricultural and manufactured food or cannabis products.

Chemicals can enter the water stream through several sources such as storm water, direct discharge into fields and city water treatment plans.Although there no current regulations regarding the water used in cannabis cultivation and processing, it is highly recommended that the industry uses potable water as standard practice. Potable water is water that is safe for drinking and therefore for use in agriculture and food manufacturing. In the United States, the Environmental Protection Agency (EPA) sets the standards for water systems under the Safe Drinking Water Act (SDWA.)The regulations include the mandatory levels defined as Maximum Contaminant Levels (MCLs) for each contaminant that can be found in water. Federal Drinking Water Standards are organized into six groups: Microorganisms, Disinfectants, Disinfection Byproducts, Inorganic Chemicals, Organic Chemicals and Radionuclides. The agriculture and food manufacturing industry use the SDWA as a standard to determine water potability. Therefore, water testing forms part of their routine programs. Sampling points for water sources are identified, and samples are taken and sent to a reputable laboratory to determine its quality and safety.

Microbiological Testing

Petri dish containing the fungus Aspergillus flavus
Petri dish containing the fungus Aspergillus flavus.
Photo courtesy of USDA ARS & Peggy Greb.

Determining the safety of the water through microbiological testing is very important. Pathogens of concern such as E. coli, Salmonella, Cryptosporidium parvum and Cyclospora sp. can be transmitted to food through water. These pathogens have been known to be lethal to humans, especially when a consumer’s immune system is compromised (e.g. cancer patients, elderly, etc.) If your water source is well, the local state agency may come to your facility and test the water regularly for indicator organisms such as coliforms. If the levels are outside the limit, a warning will be given to your company. If your water source is the city, regular testing at the facility for indicator microorganisms is recommended. In each case, an action plan must be in place if results are unfavorable to ensure that only potable water is used in the operations.

Chemical Testing (Disinfectants, Disinfection Byproducts, Inorganic Chemicals, Organic Chemicals and Radionuclides) 

Chemicals can enter the water stream through several sources such as storm water, direct discharge into fields and city water treatment plans. Although, there are several regulations governing the discharge of chemicals into storm water, fields and even into city water treatment plants, it is important that you test your incoming water for these chemicals on a regular basis. In addition, it is important that a risk assessment of your water source is conducted since you may be at a higher risk for certain components that require testing. For example, if your manufacturing facility is near an agricultural area, pesticides may enter the surface water (lakes, streams, and rivers) or the aquifer (ground water) through absorption into the ground or pollution. In this case, you may be at higher risk for Tetrahalomethanes (THMs), which are a byproduct of pesticides. Therefore, you should increase the testing for these components in comparison to other less likely to occur chemicals in this situation. Also, if your agriculture operation is near a nuclear plant, then radionuclides may become a higher risk than any of the other components.

GMPFinally, in addition to the implementation of risk management plans to ensure the safety of water, it is highly recommended that companies working in food manufacturing facilities become familiar with their water source to ensure adequate supply to carry on their operations, which is one of the requirements under the 21 CFR 117. Subpart B – Current Good Manufacturing Practices (cGMPs) for food manufacturers under the Preventive Controls for Human Foods Rule that was enacted under the Food Safety Modernization Act in 2015. Also, adequate supply is part of the Good Agricultural Practices (GAP) The EPA has created a program that allows you to conduct a risk assessment on your water source. This program is called Source Water Protection. It has six steps that are followed to develop a plan that not only protect sourcing but also ensures safety by identifying threats for the water supply. These six steps are:

  1. Delineate the Source Water Protection Area (SWPA): In this step a map of the land area that could contribute pollutants to the water is created. States are required to create these maps, so you should check with local and/or state offices for these.
  2. Inventory known and potential sources of contamination: Operations within the area may contribute contaminants into the water source. States usually delineates these operations in their maps as part of their efforts to ensure public safety. Some examples of operations that may contribute to contaminants into the water are: landfill, mining operations, nuclear plants, residential septic systems, golf courses, etc. When looking at these maps, be sure that you verify the identified sources by conducting your own survey. Some agencies may not have the resources to update the maps on a regular basis.
  3. Determine the susceptibility of the Public Water Source (PWS) to contaminate sources or activities within the SWPA: This is basically a risk assessment. In here you will characterize the risk based on the severity of the threat and the likelihood of the source water contamination. There are risk matrices that are used as tools for this purpose.
  4. Notify the public about threats identified in the contaminant source inventory and what they mean to the PWS: Create a communication plan to make the State and local agencies aware of any findings or accidents in your operation that may lead to contamination of the PWS.
  5. Implement management measures to prevent, reduce or eliminate risks to your water supply: Once risks are characterized, a plan must be developed and implemented to keep risks under control and ensure the safety of your water.
  6. Develop contingency planning strategies that address water supply contamination or service interruption emergencies: OSHA requires you to have an Emergency Preparedness Plan (EPP). This plans outlines what to do in case of an emergency to ensure the safety of the people working in the operation and the continuity of the business. This same approach should be taken when it comes to water supply. The main questions to ask are: a) What would we do if we find out the water has been contaminated? b) What plan is in place to keep the business running while ensure the safety of the products? c) How can we get the operation back up and running on site once the water source is re-stablished?

The main goal of all these programs is having safe water for the operations while keeping continuity of the business in case of water contamination.

Massachusetts Prepares for Adult-Use

By Aaron G. Biros
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Last month, the Cannabis Control Commission, the regulatory body overseeing Massachusetts’ newest industry, finalized their regulations for the market. At the beginning of this month, the state began accepting applications for business licenses. Now with the full implementation of adult-use sales on the horizon, businesses, regulators, consumers and local governments are preparing themselves for the legalization of adult-use cannabis. Sales are expected to begin June 1st.

On March 29th, the Cannabis Control Commission announced their finalized rules were filed, published and took effect. Leading up to the filing, the Commission reports they held 10 listening sessions, received roughly 500 public comments and conducted 7 hearings for roughly 150 policy decisions. The license categories that businesses can apply for include cultivator, craft marijuana cooperative, microbusiness, product manufacturer, independent testing laboratory, storefront retailer, third-party transporter, existing licensee transporter, and research facility, according to the press release.

What separates Massachusetts’ rules from other states’ rules are a few of the license categories as well as environmental regulations, as Kris Kane highlights in this Forbes article. Experimental policies, like the microbusiness and craft marijuana co-op licenses, Kane says, are some tactics the Commission hopes may help those affected by the drug war and those who don’t have the capital and funding required for the larger license types.This is a groundbreaking reform previously unseen in states that have legalized cannabis. 

The Commission will also establish a Social Equity Program, as outlined in the final rules (section 17 of 500.105). That program is designed to help those who have been arrested of a cannabis-related crime previously or lived in a neighborhood adversely affected by the drug war. “The committee makes specific recommendations as to the use of community reinvestment funds in the areas of programming, restorative justice, jail diversion, workforce development, industry-specific technical assistance, and mentoring services, in areas of disproportionate impact,” reads one excerpt from the rules (section 500.002) identifying the need for a Citizen Review Committee, which advises on the implementation of that Social Equity Program.

This is a groundbreaking reform previously unseen in states that have legalized cannabis. Massachusetts may very well be the first state to actively help victims of the prohibition of cannabis.Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.

For environmental rules, Kane notes the Commission is taking unprecedented steps to address energy usage in the cultivation process, pushing the industry to think about environmental sustainability in their bottom line and as part of their routine regulatory compliance. He says the Commission mandates a 36 watts-per-square-foot maximum for indoor cannabis cultivators.

On Monday, April 2nd the state began accepting applications for businesses seeking licensure. Within a few days, nearly 200 businesses have applied. That number is expected to grow significantly over the next few weeks.

While businesses continue applying for licenses, local governments are preparing in their own way. Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.

A couple weeks ago, the City Council of Springfield, Massachusetts passed a six-month moratorium on cannabis sales, citing the need for more time to draft local regulations for businesses first. “I believe the moratorium is in place to make sure that we get it right the first time,” Councilor Adam Gomez, chairman of the council’s Economic Development Committee told MassLive. “We don’t have a chance to get it right the second time. The residents of Springfield supported this.” There are also talks of a potential temporary ban in Truro, MA.

Meanwhile in the city of Attleboro, ABC6 News reports Mayor Paul Heroux is “working to make his city marijuana friendly as city councilors work to draft regulation ordinances.” In Peabody, two businesses just received approval to begin operating as medical dispensaries.

Open For Business: California Market Launches

By Aaron G. Biros
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California’s full legal cannabis market officially opened its doors for business on January 1st, 2018. Following a relatively short time frame when they announced the first licenses awarded less than a month ago, retail stores were open for business in counties throughout California. Customers came out in full force, with long lines on the opening day, with some hundreds deep stretching around blocks.

For the quick turn around time between implementing regulations and awarding temporary licenses, the grand opening of the cannabis market in the nation’s most populous state proceeded smoothly. Only a handful of minor hiccups associated with the launch were reported throughout the state. In the grand scheme of things, that’s a pretty good job for a new regulatory agency (The Bureau) tasked with regulating such a massive fledgling market.

One major and definitely foreseeable hiccup in the launch of California’s new medical and adult use markets was the failure to implement tracking software. According to Michael Blood with The Associated Press, licensed businesses are being asked by the California Department of Food and Agriculture to manually document sales and transfers of cannabis with paper invoices.

Los Angeles
Image: Kevin Stanchfield, Flickr

While the Department said the traceability system was implemented Tuesday, Blood says, cannabis businesses are not required to use it and will be trained on how to operate it before it becomes required to use later in 2018.

Local control regulations in California means that businesses must first seek approval from local authorities before attaining a temporary license from the state to operate. That coupled with the rolling process of awarding licenses meant that only some cannabis businesses could officially open their doors. Municipalities throughout California handle regulating cannabis differently.

The handful of adult use dispensaries with temporary licenses in the Los Angeles area received a massive influx of customers on opening day. Residents of LA came in droves to the four West Hollywood dispensaries open for adult use business.

California Rolls Out Licensing For Cannabis Businesses

By Aaron G. Biros
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Last week, the Bureau of Cannabis Control issued the first licenses for California’s new market. The first license went to Moxie, a cannabis distribution company out of Lynwood.

The search feature for the list of licenses issued so far

As of the publication of this article, the Bureau, the state authority tasked with leading the regulation of the industry, has issued 43 temporary licenses. So far, four laboratories have received licenses, along with a number of retailers, distributors, microbusinesses in both medical and adult-use markets.

The labs to receive their temporary licenses so far are pH Solutions, Steep Hill Labs, Pure Analytics and ORCA Cannalytics. Judging by the number of temporary medical and adult-use licenses awarded so far, it appears the Bureau is trying to issue a similar amount for each sector, distributing the number of licenses between the two equitably.

You can find the list of licensees here, and search between the dates of 12/15/17 to 1/2/18 to get the most up-to-date list of licenses awarded. “Last week, we officially launched our online licensing system, and today we’re pleased to issue the first group of temporary licenses to cannabis businesses that fall under the Bureau’s jurisdiction,” says Lori Ajax, Bureau of Cannabis Control Chief. “We plan to issue many more before January 1.”

According to the press release, temporary licenses are only issued to applicants with prior local authorization in the form of a license or permit from the jurisdiction where the business is. Those licenses will become effective on January 1, 2018. The temporary licenses will work for 120 days, or May 1, 2018, after which businesses will need to have a permanent license to continue operating.

More than 1,900 users have registered with the Bureau’s online system, and more than 200 applications have been submitted, according to the press release.

The various regulatory bodies in California have worked diligently for months now to roll out proposed emergency regulations, setting strict requirements for manufacturers, growers, retailers and testing labs. Manufacturing regulations, including specific labeling, packaging and processing requirements, give a good snapshot of how regulators plan to move forward. Testing requirements could also be significantly firmer, with rules for documentation, sample sizes, sampling procedures, storage and transportation.

Yet when the adult-use sales become fully legal on January 1, 2018, those regulations will not be fully implemented.

Donald Land, a UC Davis chemistry professor and chief scientific consultant at Steep Hill Labs Inc., told The Associated Press, “Buyer beware.” There will be a six-month range where existing inventory will be allowed on the shelves, products that might not meet the standards of the new rules. So dispensaries will get half a year of sales before all products have to meet the new, stricter testing requirements.

California Manufacturing Regulations: What You Need To Know

By Aaron G. Biros
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In late November, California released their proposed emergency regulations for the cannabis industry, ahead of the full 2018 medical and adult use legalization for the state. We highlighted some of the key takeaways from the California Bureau of Cannabis Control’s regulations for the entire industry earlier. Now, we are going to take a look at the California Department of Public Health (CDPH) cannabis manufacturing regulations.

According to the summary published by the CDPH, business can have an A-type license (for products sold on the adult use market) and an M-type license (products sold on the medical market). The four license types in extraction are as follows:

  • Type 7: Extraction using volatile solvents (butane, hexane, pentane)
  • Type 6: Extraction using a non-volatile solvent or mechanical method
    (food-grade butter, oil, water, ethanol, or carbon dioxide)
  • Type N: Infusions (using pre-extracted oils to create edibles, beverages,
  • capsules, vape cartridges, tinctures or topicals)
  • Type P: Packaging and labeling only

As we discussed in out initial breakdown of the overall rules, California’s dual licensing system means applicants must get local approval before getting a state license to operate.

The rules dictate a close-loop system certified by a California-licensed engineer when using carbon dioxide or a volatile solvent in extraction. They require 99% purity for hydrocarbon solvents. Local fire code officials must certify all extraction facilities.

In the realm of edibles, much like the rule that Colorado recently implemented, infused products cannot be shaped like a human, animal, insect, or fruit. No more than 10mg of THC per serving and 100mg of THC per package is allowed in infused products, with the exception of tinctures, capsules or topicals that are limited to 1,000 mg of THC for the adult use market and 2,000 mg in the medical market. This is a rule very similar to what we have seen Washington, Oregon and Colorado implement.

On a somewhat interesting note, no cannabis infused products can contain nicotine, caffeine or alcohol. California already has brewers and winemakers using cannabis in beer and wine, so it will be interesting to see how this rule might change, if at all.

CA Universal Symbol (JPG)

The rules for packaging and labeling are indicative of a major push for product safety, disclosure and differentiating cannabis products from other foods. Packaging must be opaque, cannot resemble other foods packaged, not attractive to children, tamper-evident, re-sealable if it has multiple servings and child-resistant. The label has to include nutrition facts, a full ingredient list and the universal symbol, demonstrating that it contains cannabis in it. “Statute requires that labels not be attractive to individuals under age 21 and include mandated warning statements and the amount of THC content,” reads the summary. Also, manufacturers cannot call their product a candy.

Foods that require refrigeration and any potentially hazardous food, like meat and seafood, cannot be used in cannabis product manufacturing. They do allow juice and dried meat and perishable ingredients like milk and eggs as long as the final product is up to standards. This will seemingly allow for baked goods to be sold, as long as they are packaged prior to distribution.

Perhaps the most interesting of the proposed rules are requiring written standard operating procedures (SOPs) and following good manufacturing practices (GMPs). Per the new rules, the state will require manufacturers to have written SOPs for waste disposal, inventory and quality control, transportation and security.

Donavan Bennett, co-founder and CEO of the Cannabis Quality Group

According to Donavan Bennett, co-founder and chief executive officer of the Cannabis Quality Group, California is taking a page from the manufacturing and life science industry by requiring SOPs. “The purpose of an SOP is straightforward: to ensure that essential job tasks are performed correctly, consistently, and in conformance with internally approved procedures,” says Bennett. “Without having robust SOPs, how can department managers ensure their employees are trained effectively? Or, how will these department managers know their harvest is consistently being grown? No matter the employee or location.” California requiring written SOPs can potentially help a large number of cannabis businesses improve their operations. “SOPs set the tempo and standard for your organization,” says Bennett. “Without effective training and continuous improvement of SOPs, operators are losing efficiency and their likelihood of having a recall is greater.”

Bennett also says GMPs, now required by the state, can help companies keep track of their sanitation and cleanliness overall. “GMPs address a wide range of production activities, including raw material, sanitation and cleanliness of the premises, and facility design,” says Bennett. “Auditing internal and supplier GMPs should be conducted to ensure any deficiencies are identified and addressed. The company is responsible for the whole process and products, even for the used and unused products which are produced by others.” Bennett recommends auditing your suppliers at least twice annually, checking their GMPs and quality of raw materials, such as cannabis flower or trim prior to extraction.

“These regulations are only the beginning,” says Bennett. “As the consumer becomes more educated on quality cannabis and as more states come online who derives a significant amount of their revenue from the manufacturing and/or life science industries (e.g. New Jersey), regulations like these will become the norm.” Bennett’s Cannabis Quality Group is a provider of cloud quality management software for the cannabis industry.

“Think about it this way: Anything you eat today or any medicine you should take today, is following set and stringent SOPs and GMPs to ensure you are safe and consuming the highest quality product. Why should the cannabis industry be any different?”