Inland Empire Outlook - Fall 2018 - Decision 2018

A P ublic Polic y Jo urnal

Fall 2018

PHOTO CREDIT: Pete Bobb | Wikimedia Commons

Decision 2018

Video Voter Series

pg. 2 - 6

Time Served

pg. 7 -17

Proposition 64

pg. 18 - 24

Job Market Snapshot pg. 25 - 27

We begin this issue of the Inland Empire Outlook with an overview of the Rose Institute of State and Local Government’s Video Voter: A Guide to California Ballot Measures, a set of videos and papers explaining the eleven California ballot measures. We present here a compact guide to the measures, but have on our website a detailed background paper and a video explaining each ballot proposition.

Our third article is an examination of how Prop 64 is being implemented in Southern California. Prop 64 was passed by the voters in 2016. It legalized marijuana for recreational use in California and established a structure to regulate and tax the industry. We look at Los Angeles and Moreno Valley to see how two cities, very different in many ways, are implementing Prop 64.

Next we present excerpts from a comprehensive study of time served in state prisons. The study examines almost 30 years of data from the Bureau of Justice Statistics for thirteen crimes. It is a wonderful piece of work by two Rose Institute research assistants, under the direction of Rose Faculty Fellow Joseph M. Bessette. The full study is available on our website, www.RoseInstitute.org.

Our final article is a snapshot of the Inland Empire’s labor market. The unemployment rate for the region is a healthy 4.1%, not that much higher that the state’s unemployment rate of 3.9%.

We hope you find this edition of Inland Empire Outlook a useful guide. Please visit our website, www.RoseInstitute.org, for much more information on the 2018 ballot measures, the full report on time served, and other Rose Institute research.

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Rose Institute of State and Local Government

Video Voter Series

PHOTO CREDITt: Wikimedia Commons

A Guide to California Ballot Measures

By William Frankel ’21

C

alifornia voters will be confronted with a total of eleven ballot propositions this November.

The Rose Institute of State and Local Government’s Video Voter: A Guide to California Ballot Measures is designed to help voters make informed decisions on each of these measures. The non-partisan project explains each ballot measure with an educational video and a brief written analysis. Both make clear what a yes or no vote means, present major arguments from both proponents and opponents, and identify main supporters and opponents. Video Voter: A Guide to California Ballot Measures is available at www.RoseInstitute.org.

Most of the measures Californians will consider in this election cycle were put on the ballot by petition signatures. For ballot measures classified as initiative statutes, organizers must obtain signatures equivalent to either 5% of the votes cast in the most recent gubernatorial election for initiatives and referenda, or 8% for constitutional amendments. Due to low turnout in the 2014 gubernatorial race, the 2016 and 2018 election cycles have had the lowest signature requirement since 1982. The

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number of signatures required is 585,407 for a constitutional amendment and 365,880 for a statute. Eight of the eleven measures on the ballot qualified through petition signatures. Of those eight, six are classified as initiative statutes, including measures on water infrastructure, dialysis clinics, and rent control, among others.

Two measures are classified as constitutional amendments, dealing with taxes on property and fuel, respectively.

Notably, one proposed initiative statute that had gathered the necessary signatures would have divided the state of California into three separate states. That measure was tentatively titled Proposition 9. The California Supreme Court, however, removed Prop 9 from the ballot in July. The court stated that it was acting “because significant questions have been raised regarding the proposition’s validity and because we conclude that the potential harm in permitting the measure to remain on the ballot outweighs the potential harm in delaying the proposition to a future election.” Measures 1012 retained their original numbering.

The second way to place a measure on the ballot is by legislative referral, whereby the legislature asks the voters to ratify or reject a bill. Only three of the eleven ballot measures – Propositions 1, 2, and 7 – this year are the result of a legislative referral. Two of those measures deal with funding for affordable housing programs, and the other one would allow the state legislature to begin the process of changing California’s daylight-saving time period.

Ken Miller, Associate Director of the Rose Institute and a member of the Government Department at Claremont McKenna College, was in charge of the project. He worked in partnership with Bob Stern, retired co-founder and president of the Center for Governmental Studies, a California-based political think tank.

CMC sophomore William Frankel led a team of seven undergraduate students to research and produce the eleven videos. They also wrote short background papers for each video. Watch the videos and read the background papers at www.RoseInstitute.org.

Melia Wong ’19

PHOTO CREDIT: Elise London

Bryn Miller ’19

PHOTO CREDIT: Elise London

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Taxes & State Borrowing Proposition

1

Description

Supporting

Opposing

• Affordable housing advocates • Veterans groups Authorizes $4 billion in bonds to affordable housing and housing for • Developers • Attorney Gary Wesley • Construction unions veterans.

• Silicon Valley Leadership Group

2

Authorizes $2 billion in bonds for housing for mentally ill; diverts treatment funds to pay off the bonds.

• Sacramento Mayor Darrell Steinberg • Affordable housing advocates • Low income housing developers • Construction unions • Silicon Valley donors

• National Alliance on Mental Illness of Contra Costa County

3

Authorizes $8.9 billion in bonds to fund projects for water supply and quality, watershed, fish, wildlife, water conveyance, and groundwater sustainability and storage.

• • • • • •

• Sierra Club of CA • League of Women Voters of CA

4

Authorizes $1.5 billion in bonds funding construction and renovation at hospitals providing children’s health care.

Conservationists Environmentalists Agriculture Local government Labor Business

• Children’s Hospital Los Angeles • Miller Children’s & Women’s Hospital Long Beach • Valley Children’s Hospital • Children’s Hospital of • David Wolfe, Orange County legislative director • Children’s Hospital and of the Howard Jarvis Research Center Oakland Taxpayers Association • Lucile Packard Children’s Hospital • Rady Children’s Hospital - San Diego • Loma Linda University Children’s Hospital

Taxes & State Borrowing (cont.)

5

• Homeownership for Families and Tax Savings for Seniors • California Association of Allows certain property owners to Realtors transfer the tax assessment value of • California Chamber of a current home to a new home.

Commerce • California Republican Party

• Educators, • Public safety officials, • Health care organizations • California Democratic Party • YIMBY Action

6

• California Republican Party • National Federation of Independent Business • Howard Jarvis Taxpayers Association • Americans for Tax Reform

• California Democratic Party • League of California Cities • California Chamber of Commerce • Construction labor unions

Eliminates most recent increase in the gas tax. Requires certain fuel taxes and vehicle fees be approved by the electorate.

Watch the videos and read the background papers at www.RoseInstitute.org

Healthcare Proposition

8

11

Description

Regulates amounts outpatient kidney dialysis clinics can charge for dialysis treatment.

Supporting

• Service Employees International UnionUnited Health Care Workers

Requires private-sector emergency • American Medical ambulance employees to remain Response on-call during work breaks. Eliminates certain employer liability.

Opposing • Dialysis clinics • The American Nurses Association, California • California Medical Association • American College of Emergency Physicians, California Chapter • California Labor Federation • Service Employees International Union

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Other measures Proposition

7

10

12

Description

Supporting

Opposing

• Assemblyman Kansan • Senator Hannah-Beth Authorizes legislature to initiate the Chu Jackson process to change to year-round • Governor Jerry Brown • Senator Jim Nielsen Daylight Saving Time.

Expands local governments’ authority to enact rent control on residential property.

Establishes new standards for confinement of specified farm animals; bans sale of noncomplying products.

• California Apartment • Coalition for Association Affordable Housing • California Rental • California Democratic Housing Association Party • California Republican • AIDS Healthcare Party Foundation • Real estate owners and firms • Humane Society of the United States • American Society for the Prevention of Cruelty to Animals • Animal Equality

• Egg farmers • Pork producers

Watch the videos and read the background papers at www.RoseInstitute.org

TIME SERVED IN STATE PRISONS FOR SERIOUS OFFENSES: 1981 - 2009

By Lane Corrigan ’17, and Wesley Whitaker ’18

Photo Credit: Pearce | Flickr https://creativecommons.org/licenses/by-nc-nd/2.0/legalcode

This article presents excerpts from a longer report published by the Rose Institute of State and Local Government. It is available at www.RoseInstitute.org.

The full report analyzes data for thirteen crimes: criminal homicide, forcible rape, robbery, aggravated assault, kidnapping, burglary, larceny-theft, motor vehicle theft, arson, fraud, stolen property (buying, receiving, possessing), drug trafficking, and drug possession.

The report is based on data compiled by the Bureau of Justice Statistics, part of the United States Department of Justice. The full report has a detailed appendix with links to all the data tables used as sources for this analysis.

T

he Rose Institute of State and Local Government presents its second comprehensive report on crime and criminal justice in the United States, which tracks the length of prison sentences actually served for a number of serious crimes.

Our previous research, The Crime Funnel, displayed the drop-off in number of persons at each level as they progress through the state criminal justice systems, including how many convicted offenders are

sentenced to state prison. This report focuses on the severity of the punishment inflicted by measuring the length of time served in state prison before the inmate’s first release from his crime sentence.

The length of the sentence imposed and resulting time served broadly indicates how seriously the community judges the severity of each crime.

First, the greater the harm caused, the longer the state typically seeks to imprison an individual in the interest of protecting members of the public from further acts.

Second, longer sentences may deter this offender or others from committing other serious crimes and may also reinforce moral judgments that inhibit citizens from considering crime in the first place.

After compiling data from the U.S. Bureau of Justice Statistics’ National Corrections Reporting Program (NCRP), which collects offender-level administrative data annually on prison admissions and releases from a coalition of participating states, our team compiled 19 graphs to display and analyze the changes in the criminal justice system over the last

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two decades. By displaying average (mean) and median time served for the period of 1986 to 2009 (with some data back to 1981), we are able to look at overall trends in punishment for a number of different crimes and crime categories, and thus gain some insight into the punishment priorities of our criminal justice system.

Beginning with an overall picture, this report looks at the four main offense categories: violent, property, drug related, and public order. Violent crimes are then broken down by specific offense, starting with homicide, which includes murder, non-negligent manslaughter, and negligent manslaughter. Rape, kidnapping, assault, and robbery round out the list of violent crimes. The report then examines property crimes, drug offenses, and public-order offenses. The final section of the report presents data on the number of prisoners released each year for the various crimes.

It is our hope that these graphs will assist readers and researchers in shedding light on how the nature of punishment in our criminal justice system changed over the past two decades.

Methodology Since the early 1980s, the Bureau of Justice Statistics (BJS) has administered the National Corrections Reporting Program (NCRP) which relies on data provided from state corrections and probation departments. It collects offender-level administrative data annually on prison admissions and releases, and yearend custody populations from a coalition of participating states. The number of states submitting data has varied over time (from 29 to 41), as has the ability of states to provide each piece of information requested. The table below provides the number of participating states for each year contained in this report.

To construct the time served graphs, our team plotted the mean and median time served in state prison before first release for each crime recorded in each year’s published report. Our team also plotted the number of prisoners released each year for each crime type, deriving the data from each year’s published report.

In order to overcome discrepancies between states in the exact classification of crimes, BJS has mapped specific state crimes to match the crime

categories used in the FBI’s Uniform Crime Reporting Program (UCR). Crime definitions are listed on the following pages.

First releases are persons released for the first time on their current sentence. Thus, it excludes any additional time that an offender might serve by violating parole conditions and being returned to prison. Data on time served in prison are based on all first releases for whom the most serious offense and time served were reported. All data exclude persons released from prison by escape, death, transfer, appeal or detainer.

Our research used actual time served data, rather than the reported maximum sentence length, as the vast majority of inmates do not serve the maximum sentence for a variety of reasons. Thus, our data reflect the actual punishments imposed by the state. But note that some offenders are incarcerated in local jails for some number of weeks or months awaiting or pending trial, Year # of and judges typically credit States this time towards their 1981 33 sentence. This report does 1986 36 not capture time in jail 1987 35 awaiting or pending trial.

1988 36

Also, this report covers only the 40% or so of convicted felons who are sentenced to state prison each year. The rest are roughly equally divided between those sentenced to local jail for up to a year and those sentenced to supervision in the community (probation in lieu of incarceration).

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

36 35 35 38 38 39 38 38 38 38 38 38 37 38 41 31 31 31 29 31 31

CRIME DEFINITIONS

I

n administering the National Corrections Reporting Program (NCRP), the Bureau of Justice Statistics (BJS) gathers offender-level administrative data from corrections departments from states across the country. Because crime definitions vary by state, BJS standardizes the raw data to match the FBI’s crime definitions from the Uniform Crime Reporting program, shown here.

Crime

Definition

Violent Offenses Criminal Homicide

a.) Murder and nonnegligent manslaughter: the willful (nonnegligent) killing of one human being by another. Deaths caused by negligence, attempts to kill, assaults to kill, suicides, and accidental deaths are excluded. The program classifies justifiable homicides separately and limits the definition to: (1) the killing of a felon by a law enforcement officer in the line of duty; or (2) the killing of a felon, during the commission of a felony, by a private citizen. b.) Negligent manslaughter: the killing of another person through gross negligence.

Deaths of persons due to their own negligence, accidental deaths not resulting from gross negligence, and traffic fatalities are not included in the category Negligent manslaughter.

Forcible Rape*

Penetration, no matter how slight, of the vagina or anus with any body part or object, or oral penetration by a sex organ of another person, without the consent of the victim.

Rapes by force and attempts or assaults to rape, regardless of the age of the victim, are included. Statutory offenses (no force used/victim under age of consent) are excluded.

Robbery

The taking or attempting to take anything of value from the care, custody, or control of a person or persons by force or threat of force or violence and/or by putting the victim in fear.

Aggravated Assault

An unlawful attack by one person upon another for the purpose of inflicting severe or aggravated bodily injury. This type of assault usually is accompanied by the use of a weapon or by means likely to produce death or great bodily harm. (Although BJS data use the crime category assault for prison inmates, in nearly all cases these prisoners were convicted of felony, or aggravated, assault. Simple assaults are excluded.

Kidnapping

The seizure and abduction of someone by force or threat of force and against the victim’s will.

*Definition of Rape The carnal knowledge of a female forcibly and against her will. Rapes by force and attempts prior to January 1, or assaults to rape, regardless of the age of the victim, are included. Statutory offenses (no 2013 force used/victim under age of consent) are excluded.

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Crime

Definition

Property Offenses Burglary

The unlawful entry of a structure to commit a felony or a theft. Attempted forcible entry is included. Includes breaking and entering.

Larceny-theft (except motor vehicle theft)

The unlawful taking, carrying, leading, or riding away of property from the possession or constructive possession of another. Examples are thefts of bicycles, motor vehicle parts and accessories, shoplifting, pocket-picking, or the stealing of any property or article that is not taken by force and violence or by fraud. Attempted larcenies are included. Embezzlement, confidence games, forgery, check fraud, etc., are excluded.

Motor vehicle theft

The theft or attempted theft of a motor vehicle. A motor vehicle is self-propelled and runs on land surface and not on rails. Motorboats, construction equipment, airplanes, and farming equipment are specifically excluded from this category.

Arson

Fraud

Any willful or malicious burning or attempt to burn, with or without intent to defraud, a dwelling house, public building, motor vehicle or aircraft, personal property of another, etc.

The intentional perversion of the truth for the purpose of inducing another person or other entity in reliance upon it to part with something of value or to surrender a legal right.

Fraudulent conversion and obtaining of money or property by false pretenses. Confidence games and bad checks, except forgeries and counterfeiting, are included.

Stolen property: buying, receiving, possessing

Buying, receiving, possessing, selling, concealing, or transporting any property with the knowledge that it has been unlawfully taken, as by burglary, embezzlement, fraud, larceny, robbery, etc. Attempts are included.

Drug Offenses Trafficking

Possession

The violation of laws prohibiting the production and distribution of certain controlled substances. The unlawful cultivation, manufacture, distribution, sale, purchase, possession with intent to sell, transportation, or importation of any controlled drug or narcotic substance.

The violation of laws prohibiting the use or simple possession controlled substances.

Most drug offenses that do not qualify as trafficking are included in possession, excluding possession with intent to sell.

Public Order Offenses Weapons offenses

Includes the unlawful sale, distribution, manufacture, alteration, transportation, possession, or use of a deadly weapon or accessory.

Driving-related offenses

Includes driving under the influence of drugs or alcohol, driving with a suspended or revoked license, and any other felony in the motor vehicle code.

Other public order offenses

Includes flight/escape, parole or probation violations, prison contraband, habitual offender, obstruction of justice, rioting, libel, slander, perjury, prostitution, pandering, and bribery.

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Figure 1. All Crime Categories -- Median Time Served, 1986-2009

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Looking at the median time served for all crimes by category, we see time served is relatively constant or even decreasing slightly during the latter half of the 1980s (except for public-order offenses) before consistently increasing for approximately 10 years, starting in 1993. The increase in time served is most dramatic for violent and public order offenses, while the increase is more moderate for drug and property offenses. Starting in the early 2000s, time served levels off and even slightly decreases for all crimes except public order offenses.

Punishment for violent offenses of those leaving prison was least severe in 1993 -- the only point where the median fell below two years -- and was most severe in 2001 where the median reached 2.75 years. For public order offenses, punishment was least severe in 1992, with a typical offender serving six months in prison. After increasing steadily, the median time served for public order offenses has been over one year since 1996.

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Figure 2. All Crime Categories -- Mean Time Served, 1986-2009

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Mean time served in prison for all crime categories is higher than the median time served. This demonstrates that some offenders serve considerably longer than the typical offender, raising the mean compared to the median. The overall trends however, are similar for the median and mean time served data.

There are several differences in the trends. Mean time served for violent offenses began to level off in 2000 followed by a slight increase, but median time served decreased slightly after the year 2000.

Mean time served for property offenses dropped after 2001, at a more rapid rate than the drop in median time served. Mean time served for all offenses is mostly flat after 2001, compared to a decrease in the median time served.

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Figure 3. Homicide -- Mean Time Served, 1986-2009

16.0

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Time served for all homicides, for murder, and for non-negligent manslaughter all more than doubled between 1986 and 2009. The slope is steepest for murder during the 2000s, where it increased from approximately nine years time served to approximately 15 years by 2009.

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Figure 4. Rape -- Time Served, 1981-2009

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Punishment for rape increased nearly every year between 1986 and 2009, whether measured by the median or mean time served. As noted above, that the mean is larger than the median for every year indicates that the distribution of time served is positively skewed, with a significant number of offenders serving particularly long sentences.

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Figure 5. Property Crimes -- Mean Time Served, 1986-2009

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Larceny, fraud, motor vehicle theft, and stolen property offenses all very closely track the mean time served for all property crimes. Arson and burglary once again show the greatest divergence, which is to be expected as they are the most serious property crimes. The mean time served for arson has not decreased, but rather has remained relatively constant since 2000 with offenders typically serving three years. Mean time served for burglary, on the other hand, dropped about 18% from its peak in 2001.

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Figure 6. Drug Crimes -- Mean Time Served, 1986-2009

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Mean time served for trafficking sees the greatest increase, peaking in 2003 before declining slightly.

On the other hand, there is a smaller increase during the same period for mean time served for possession, and it even declines to almost the same level as recorded in 1986. The fact that the gap between trafficking and possession increased during this indicates that trafficking became punished more severely compared to possession.

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Figure 7. Proportion of State Prisoners Released -- All Crimes, 1988-2009

100% 90% 29.8 29

25.3 24.4 24.6 24.6 24.3 24.8 24.3 25.3 25.6 27.3 27.5 27.4 27.3 26.3 27.2 26.3 26.3 26 26.6 26.8

80%

PERCENT OF RELEASES

70% 60% 37.7 50%

42

31.8 32 31.2 31 29.5 28.6 28 28.1 28.7 28.5 28.8 28.7 28.2 28 28.4 35.9 34 34.5 33.5 Violent offenses

38.5

Property offenses Drug offenses

40%

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30.8 30 28.7 31.9 32 31.2 31.2 31.1 32.2 32.7 32.7 32.5 32.4 32.7 32.7 30.5 29.3 30.7 30.1

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1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 YEAR

The above graph displays the proportion of releases for each crime category for each year from the 2941 reporting states. Violent offenders accounted for roughly the same proportion of releases on any given year, with the exception of being slightly lower during the 1990s. Property offenses consistently decreased in terms of overall proportion of offenders released since 1988, dropping from 42% to 28.4%.

Drug offenses, on the other hand, grew steadily in terms of overall proportion of offenders released, increasing from just under 20% in 1988 to over 30% in 1992. Since then, however, the proportion has remained steady with minimal fluctuation. Public order offenses have more than doubled since 1988, accounting for over 15% of total offenders released.

The authors wish to thank Joseph M. Bessette, Ph.D., of Claremont McKenna College, for designing this project and supervising our research.

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Proposition 64 in SoCAl

By Charlie Harris ’19

I

n 2016, California voters passed Proposition 64, The Adult Use of Marijuana Act or AUMA. Fifty-six percent of voters across the state, and majorities in Los Angeles, Orange, Riverside, and San Bernardino Counties, voted in favor of the ballot initiative. The widely publicized result of the measure was the legalization of recreational cannabis for adults over the age of 21. Californians demonstrated that they wanted to legalize and regulate marijuana, just like alcohol and tobacco.

However, bringing the existing illegal marijuana industry into the light is no mean feat. This drug would need an entirely new regulatory structure to address business regulation and taxation of an entirely new product. At the state level, Proposition 64 gave California’s Bureau of Cannabis Control authority to impose state regulations on the marijuana industry and established a 15% tax on retail sales, but it also gave local governments the power of final regulatory authority over the marijuana industry in their jurisdictions. That meant local governments across the state were free to determine exactly what they wanted to allow or

Photo Credit: Jennifer Martin | Wikimedia Commons

prohibit in their communities. Since then, cities across the state have been wrestling with how to approach this thorny public policy question.

Recreational sale became legal on January 1, 2018, but many cities have yet to finalize, or even begin drafting, marijuana business regulations. This article will examine the regulatory structures of two cities in Southern California, Los Angeles and Moreno Valley, with an eye towards the broader applicability of their policies.

Prop 64 Voting in Southern California Yes No Los Angeles County 59.5% 40.5% Orange County 52.0% 48.0% San Bernardino County 52.5% 47.5% Riverside County 52.9% 47.1% Statewide 57.1% 42.9% Source: California Secretary of State, Statement of Vote, https://www. sos.ca.gov/elections/prior-elections/statewide-election-results/generalelection-november-8-2016/statement-vote/

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Each municipality will be facing a choice between regulating (and taxing) commercial activities related to marijuana or prohibiting them. Southern California, with over a hundred cities and four large counties, is a perfect place to observe and analyze the range of approaches local governments are taking to the task the AUMA sets out for them. Designing and implementing a new regulatory framework and taxation scheme is, however, a daunting task even for experienced policy makers. Many local governments do not have the wherewithal to undertake this project from scratch. Instead, they will be looking to sister municipalities that have taken the lead on this issue and are already implementing regulations.

The cities that do take on this task have a wide range of options for dealing with marijuana sales in their jurisdiction. The choices range from exceptionally permissive policies allowing for commercial cultivation, distribution, sales, and grows for personal consumption, to banning nearly every action permitted under state law.

Proposition 64 was designed to allow for this wide range of permissiveness so that local communities could retain some control over cannabis in their communities. According to an analysis of marijuana ordinances conducted by the Orange County Register, nearly all of the 35 cities in Orange County have essentially banned cannabis businesses. The only portion of Prop 64 that they allow is indoor cultivation for personal use. The city of Santa Ana, however, has gone in a different direction than its neighbors and has allowed nearly all forms of cannabis business permitted by Proposition 64. Santa Ana joins Los Angeles, Moreno Valley, San Bernardino, and a few other Southern California cities, aggressively leaning in to this new industry. Examining the regulatory framework of these early adopters is helpful to see how cities are approaching this task.

As the largest city in the state, Los Angeles has the resources and expertise to enact a complex new regulatory structure. Of course, the significant differences between LA and many other cities means that its policies are not the

easiest model to apply to other jurisdictions.

Still, there are valuable takeaways from LA’s approach. Sixty-five percent of voters in LA voted in favor of Proposition 64, handing city leaders a substantial mandate to permit and regulate cannabis business. However, the mayor and city council went back to the voters a few months later with a local initiative, Measure M, to affirm the voters’ desire to permit, regulate, and tax cannabis within the city. Measure M passed with 80% support on March 7, 2017.

Measure M levied a 10% gross receipts tax on the sale of recreational marijuana, a 5% gross receipts tax on medical marijuana, a 2% tax on gross receipts by cultivators, and a 1% gross receipts

Proposition 64 was designed to allow for this wide range of permissiveness so that local communities could retain some control over cannabis in their communities.

tax on delivery businesses. In addition to the taxes, Measure M granted LA the authority to create a Department of Cannabis Regulation (DCR) and an appointed Cannabis Commission. The Commission was intended to study other cannabis regulations and make recommendations to the city council about which policies to implement. The DCR is the agency charged with issuing licenses, inspecting licensed businesses, and enforcing the laws against violators. A key difference between LA and many other cities is that it has the resources and capability to form an entire commission and department to oversee these regulations. The scale of its operation is much larger, so it needs a correspondingly larger bureaucratic apparatus.

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Marijuana Permissiveness Compared to Prop 64 Support

Source: Orange County Register, Scores based on Southern California News Group database, as of April 2, 2018 (Ian Wheeler, SCNG).

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After the creation of the DCR and Cannabis Commission, regulators in LA drafted a final set of rules that was passed by the city council in December of 2017. The final rules outlined the requirements for getting a business license and established an online portal for filing applications. Applicants are required to submit standard information like a business plan and proof of ownership for their premises. In addition, there are a few requirements that are unique to marijuana businesses. Retail locations are required to be licensed businesses and are required to have video surveillance equipment that monitors all entrances, exits, and any other interior area where marijuana would be handled. They also need to hire or contract security personnel to guard the premises. Licensees also need to designate a “neighborhood liaison” whose contact information will be posted publicly and who can address issues raised by community members 24 hours a day. Businesses will also be inspected for compliance with all regulations

by DCR employees before receiving final approval for a license and thereafter on a regular basis established by the DCR. To date, Los Angeles has licensed 167 commercial cannabis businesses, with more to come.

Of particular note in LA’s regulations is the inclusion of a social equity program. This program is intended to use the new legalized marijuana businesses to help offset historical negative effects of cannabis related criminal convictions. The social equity program gives priority licensing to two groups of people, low income individuals with previous cannabis related criminal convictions prior to the passage of the AUMA and low-income individuals who are residents of communities disproportionately impacted by cannabis arrests.

LA is mandating that two-thirds of new licenses for retail stores and half of all other businesses receive a social equity license. Non-social equity business owners can still qualify for a social equity license if they pay additional fees to the city that will go towards assisting the social equity owners. Social equity licensees receive expedited processing and renewal of their licenses, assistance with regulatory compliance, and potential access to an “Industry Investment Fund.” That industry fund will be comprised of the fees paid by non-qualifying owners who still wish to receive a license under the social equity quotas. The goal of this program is to use the legal cannabis industry to benefit communities who have been disproportionately impacted by the War on Drugs. To that end, the city is doing what it can to redirect some of the capital flowing into

View of ‘M’ on Box Springs Mountain from RCC: Moreno Valley Photo Credit: Livingdead90 | Wikimedia Commons

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Cities that Allow at Least One Type of Recreational Marijuana

Source: Orange County Register, Scores based on Southern California News Group database, as of April 2, 2018 (Ian Wheeler, SCNG).

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this growing industry towards developing business to support the disadvantaged communities. Los Angeles is the only city in Southern California whose marijuana regulations include a social equity program. However, in September of 2018 Governor Jerry Brown signed legislation sponsored by Steven Bradford (D-Gardena) to provide technical and financial support to local governments wishing to implement their own cannabis social equity programs. SB 1294 would require the California Bureau of Cannabis Control to draft a model ordinance by July of 2019 for local governments to use.

While Los Angeles is at the forefront of this regulatory task, small and mid-size cities have different needs than those of a metropolis. The city of Moreno Valley, 60 miles to the east, has also moved quickly to establish commercial marijuana regulations. With a population of 205,000 people, Moreno Valley is easier to compare with the average city in Southern California. Its regulatory regime is comparatively much simpler than LA’s. Moreno Valley passed its final regulations in April of 2018, and the city council placed a measure on the November 2018 ballot asking for authority to levy a tax on recreational marijuana sales. The ordinance allows for a maximum of 27 cannabis businesses in the city, including eight dispensaries, two testing facilities, eight indoor cultivation facilities, five manufacturing facilities, two distribution centers, and two microbusinesses.

Moreno Valley is allowing all forms of cannabis businesses authorized under the AUMA. The land use ordinance requires a buffer zone of at least 600 feet between any cannabis business and a school or day care center.

Moreno Valley adopted a fee structure which intends to recoup the costs of licensing and regulating the businesses, which it estimates will be about $58,000 a year for each business. These fees are simply a break even point, and voters must approve the previously mentioned ballot measure before taxes can be levied on recreational cannabis sales. Moreno Valley also hired a government consulting firm, HDL Consultants, to help design

and implement its marijuana program. Consulting firms like HDL supply specific technical expertise that smaller cities often lack. They also charge correspondingly high rates. Moreno Valley is paying HDL $161,500 for the first year and then $281,000 annually for the next five years. While the advice such firms offer is often necessary, costs like that can eat into the tax revenue cities hope to raise.

Only one in seven California cities has decided to allow recreational cannabis dispensaries and only one in three allows any type of cannabis business at all.

The cannabis tax measure on the ballot in Moreno Valley would grant the city council authority to levy a tax of up to 8% on recreational sales. However, city officials have stated that they intended to aim for a tax of around 5% to undercut the rates of neighboring jurisdictions like Perris and San Jacinto. The Press Enterprise reported that at that lower rate, the city expects to raise $2.2 million a year according to Chief Financial Officer Marshall Eyerman. The scale of Moreno Valley’s program is considerably smaller than Los Angeles, with its hundreds of businesses and 10% tax on gross receipts, but that model may be more in line with the capacities of most local governments in California. Even with the support of an outside consulting firm, Moreno Valley is only looking to allow eight dispensaries.

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A study (as of April 2018) by the Southern California News Group found that only one in seven cities allows recreational cannabis dispensaries, and only one in three allows any type of cannabis business at all. Since fewer cities than expected have implemented commercial licensing regulations, statewide marijuana revenue has come in lower than expected for this year. Policymakers at the state and local level have incentives to continue expanding the reach of recreational marijuana so that they can continue to expand this new revenue stream. Local governments that were hesitant to be the first to implement commercial cannabis can now look to cities like Los Angeles and Moreno Valley to get a sense of what an effective

regulatory program looks like. Other cities, like those in Orange County, can continue to ban all commercial activity. Local control was the central component of the commercial side of Proposition 64. Local governments in California are exercising their authority to establish rules that fit their own communities. With many examples of the various paths cities can take, the commercial marijuana industry should continue to develop across the state as more local governments decide how to approach this regulatory challenge.

The author would like to thank Will Frankel ’21 for his contributing research to this article.

IE Job Market snapshot

by Nandeeni Patel ’21

C

Photo Credit: Luke Sharrett_Bloomberg_Getty Images

ontinued improvement in the Inland Empire’s unemployment rate and size of the labor force indicates that the region’s economy is doing well. The most recent data from the California Employment Development Department (issued on October 19, 2018) shows the unemployment rate for the Riverside-San Bernardino-Ontario Metropolitan Statistical Area to be 4.1% in September. This is a decrease from the revised rate of 4.5% in August and well below the estimate from one year ago of 4.9%. The region’s 4.1% unemployment rate (unadjusted) compares favorably with the rates for California, 3.9%, and the United States, 3.6%. The unemployment rate in Riverside County is 4.4%. San Bernardino County’s unemployment rate is 3.8%, edging below the state’s rate as it has been for most of this year.

in the region increased by 41,700 jobs, or 2.9%.

Agricultural employment declined by 1,900 jobs.

The largest increase was in the government sector, with a gain of 10,700 jobs. Three quarters of these were in local government, most of which (6,500 of the 8,200 local government increase) was local government educational services. State government in the region added 2,200 jobs and the federal government added 300.

In the past year, between September 2017 and September 2018, total nonfarm employment

The changes in the last month mirror the year-over-year changes. Between August 2018 and

Trade, transportation, and utilities followed the government sector in job growth in the last year, gaining 10,200 jobs. Professional and business services was not far behind with 9,000 jobs. Leisure and hospitality was up 8,200 and education and health services up 5,500. The information sector is the only one recording a decrease, dropping 400 jobs over the past year.

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Inland Empire Labor Force

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Metropolitan Statistical Area

Riverside County

San Bernardino County

1,764,200 1,773,600 1,773,500 1,866,700 1,867,000 1,879,300 1,893,100 1,921,000 1,956,900 1,984,900 2,022,100

902,000 911,500 915,800 976,400 978,500 987,100 996,400 1,013,500 1,035,700 1,052,600 1,071,900

862,200 862,100 857,700 890,300 888,500 892,200 896,700 907,500 921,200 932,300 950,200

Source: California Employment Development Department, LMI for Riverside-San BernardinoOntario MSA, California, https://www.labormarketinfo.edd.ca.gov/msa/riverbern.html#DEF

September 2018, total non-farm employment decreased from 1,495,000 to 1,494,300, a loss of 700 jobs. Agricultural employment increased by 1,300 jobs. The government sector saw the largest employment increase, adding 4,200 jobs. Most of these, 3,800, were in local government. State government had an increase of 400. There was no change in federal government employment over the last month.

Trade, transportation, and utilities increased by 1,700 jobs since August. Most of these, 1,400, were in transportation and warehousing.

Wholesale trade contributed another 200 and retail trade another 100. There were no changes in utilities employment.

Job losses were spread over several sectors, with construction taking the biggest hit, losing 3,200 jobs. Specialty trade contractors account for most of those, 2,600. Construction of buildings was down by 400 jobs. Heavy and civil engineering construction lost 200 jobs. Six other nonfarm employment sectors also edged down for the month.

Leisure and hospitality was down 1,900, manufacturing down 500, and professional and business services down 400.

Despite the job losses in the past month, employment in the region is still up by 41,700 for the year. The Riverside-San Bernardino-Ontario MSA’s unemployment rate of 4.1% is just over California’s rate, as reported by the California Employment Development Department on October 19, 2018. The September rate of 3.9% is a new record low for California. The state’s employers added 13,200 nonfarm payroll jobs last month – 10% of these in the Inland Empire – for a total of 17,202,900 nonfarm payroll jobs in California.

San Bernardino County’s unemployment rate is 3.8%, just under California’s rate of 3.9%.

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The current unemployment rate is a significant improvement over one year ago, when it was at 4.5%.

The numbers of jobs increased by 339,600, a 2% improvement. There were 803,000 unemployed Californians in September, no change since August, but down by 76,000 compared to September 2017.

tion down 2,000. The other services sector was down 1,800, manufacturing down 1,500, and transportation and utilities down 300.

Nine of the California’s industry sectors had job gains compared to one year ago. Professional and business services had the largest increase, adding 78,200 jobs. Education and health services was a close second, with 77,900 new jobs. Leisure and hospitality added 68,600. The following sectors also increased: government, trade, transportation and utilities, construction, information, financial activities, and manufacturing.

Two industry sectors posted job losses in comparison to one year ago. Other services was down 4,500 and mining and logging down 300.

Four of California’s industry sectors reported job gains in the past month. Professional and business services had the largest increase, up 11,800. Leisure and hospitality added 8,500 jobs, the government sector was up 5,100, and mining and logging gained 100. Six industry sectors reported losses. Education and health services led this category with a decrease of 3,700 jobs. Information was down 3,000 and construc-

Unemployment rate 2008-2018 16.0%

14.0%

12.0%

Unemployment Rate

10.0%

8.0%

Riverside County San Bernandino County California

6.0%

4.0%

2.0%

Nov-18

Jan-18

Jun-18

Aug-17

Oct-16

Mar-17

May-16

Jul-15

Dec-15

Feb-15

Apr-14

Sep-14

Jun-13

Nov-13

Jan-13

Aug-12

Mar-12

Oct-11

Dec-10

May-11

Jul-10

Feb-10

Apr-09

Sep-09

Nov-08

Jan-08

Jun-08

0.0%

Date

Source: California Employment Development Department, Labor Market Information, https://www.labormarketinfo.edd.ca.gov/. Data not seasonally adjusted.

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Inland Empire Outlook Fall 2018 Student Authors. From left: Nandeeni Patel ’21, Charlie Harris ’19, and Will Frankel ’21; Wes Whitaker ’18 and Lane Corrigan ’17 are not in the picture.

PHOTO CREDIT: Zach Wong ’19

EDI TOR I A L BOAR D Andrew E. Busch, PhD

About the Rose Institute

Director

Kenneth P. Miller, PhD, JD Associate Director

Bipasa Nadon, JD Assistant Director

Marionette Moore Administrative Assistant

ST U DE N T STAFF Lane Corrigan ’17 Nicholas Fedorochko ’19 Will Frankel ’21 Charlie Harris ’19 Jake Leischner ’21 Nandeeni Patel ’21 Wesley Whitaker ’18 Zachary Wong ’19

The Rose Institute of State and Local Government at Claremont McKenna College was founded in 1973. An unmatched resource for information on California state and local governments, the Institute maintains extensive demographic, economic, and political databases on the Southern California region. Under the direction of nationally-recognized faculty and staff, students from Claremont McKenna College play a significant role in researching, interpreting, and presenting data. The Institute specializes in four areas: survey research, criminal justice analysis, demographic studies, and legal and regulatory analysis.

The mission of the Rose Institute of State and Local Government is to enhance the education of students at CMC, to produce high quality research, and to promote public understanding on issues of state and local government, politics, and policy, with an emphasis on California. The Institute employs close to 30 student research assistants each year, almost all of whom stay for the duration of their time at Claremont McKenna College.

To receive issues of this publication electronically and news from the Rose Institute, please e-mail us at roseinstitute@cmc.edu.

Learn more about us at www.RoseInstitute.org