cannabis cultivators and implementing a robust track-andtrace system to record the movement of cannabis through the distribution chain. Cultivation licenses are broken down by size and location (indoor, outdoor, mixed). CalCannabis also issues cannabis nursery licenses. Existing, non-licensed medical marijuana collectives, which are currently authorized by Senate Bill 420, will cease to be lawful starting one year after the Bureau of Cannabis Control posts a notice that it has begun licensing (Health and Safety Code 11362.775(d-e)). The Bureau posted the notice on its website on January 9, 2018 and thus the protection against state criminal sanctions for cannabis collectives and cooperatives ends January 9, 2019. Nevertheless, a combination of extremely high taxes (in addition to the cultivation tax and excise tax, municipalities that license cannabis companies are imposing their own local taxes, often raising the effective tax rate for the consumer to over 40%), and the substantial aforementioned regulations have caused many cannabis companies to be slow to embrace this new licensing system. According to a recent report produced by the California Growers Association, a small-farmers advocacy group, fewer than one percent of California’s estimated 68,150 cannabis growers have secured state
licenses to continue their businesses legally. Time will tell whether California will accede to the cannabis industry’s claims that the barrier to entry into the legitimate market is too high and modify the regulatory regime accordingly. Daniel Leahy is the principal at Bay Area Cannabis Law. His practice consists of representing cannabis businesses of all sizes on matters relating to licensing, entity formation, real estate, and civil litigation. Leahy’s keen analytical approach provides his clients with the tools that they need to achieve success in the ever changing cannabis regulatory environment. He can be reached at daniel@leahy-law.com
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