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Update on Local Government Challenges in Implementing Proposition 64

Recently, the California Assembly’s Committee on Local Government held an informational hearing titled “How Local Governments are Implementing Proposition 64 – the Adult Use of Marijuana Act (AUMA).”  The purpose was to learn how cities and counties are preparing to implement Proposition 64 and to discuss challenges they may face while developing and administering their rules for marijuana activities within their jurisdictions.  The information shared at the hearing provides important insight for all private and public entities that are or plan to be involved in the new and rapidly developing Proposition 64 landscape throughout California.

Meyers Nave attorneys Kate A. Cook and Denise S. Bazzano presented to the Committee and prepared this summary of the highlights of the hearing.  Representatives from the counties of Monterey, Yolo and Humboldt, as well as the cities of Sacramento and Arcata presented case studies on implementing Proposition 64.  The League of California Cities, California State Association of Counties, Rural County Representatives of California and the Legislative Analyst’s Office also made presentations.  In attendance were Committee Chair Aguiar-Curry, Vice-Chair Waldron, and Committee Members Caballero, Lackey, Ridley-Thomas and Voepel.  The hearing agenda is available here.

Although every city and county is unique and is responding to AUMA in a variety of ways, the following common challenges were expressed at the hearing.

  • Banking/cash industry:  A number of presenters addressed concerns over the lack of banking available to the marijuana industry and the large intake of cash by cities and counties.  The State Treasurer’s banking working group was discussed and its efforts to find a solution to this state-wide problem.
  • Testing:  A county agricultural commissioner expressed the need to utilize state laboratories to test for chemicals on marijuana plants in order for the county to be able to prosecute for violations.
  • Utilities:  A presenter raised concerns about the potential for “excessive users” of gas and/or electricity and the possibility of working with utility companies to identify such users.
  • Licensing system:  A number of presenters discussed the complex licensing system and the numerous agencies responsible for issuing licenses, the differences between the dual licensing structure of the Medical Cannabis Regulation and Safety Act (MCRSA), and the obligation of the state to determine conformity with local laws under Propostion 64.  Assembly Member Caballero questioned what the state was doing to become aware of local jurisdictions’ regulations and recommended that some sort of database be created to keep track of each city’s and county’s regulations before a state license is issued.
  • Tax:  Many presenters discussed taxation and the need to recover significant funds for local enforcement purposes.  Assembly Member Lackey cautioned local jurisdictions to keep the taxes low to avoid a resurgence of the black market for marijuana.
  • Butane:  County representatives expressed concerns over the rapidly increasing number of butane canisters being utilized and dumped illegally.  Butane is used primarily for the production of marijuana extracts, such as hash oil.  Butane is highly flammable and is oftentimes being utilized and stored improperly for marijuana activities, which can cause serious risk to the public.  One city instituted a butane ban in the cultivation of marijuana.  However, butane is legally sold over the internet and is not in and of itself an illegal product to possess; therefore, it is difficult to effectively ban or restrict butane.  Assembly Member Voepel indicated that he is drafting AB 1244, which will address some of the issues relating to butane use for marijuana cultivation.
  • Land use:  Attorney Kate Cook addressed section 11362.2(b)(4) of the Health and Safety Code. It provides that, if the California Attorney General determines that nonmedical use of marijuana is lawful under federal law, cities and counties could no longer prohibit outdoor personal cultivation of nonmedical marijuana.  Ms. Cook indicated that this provision is contradictory to the police and land use powers of cities and counties to regulate land uses within their jurisdictions.
  • Land values:  Several presenters expressed concern that land values in areas where marijuana cultivation or other related activity is allowed are becoming extremely high, which is negatively impacting local farmers in those areas.
  • Code enforcement:  Presenters also discussed the burdens placed on code enforcement officers as a result of Proposition 64, particularly because the criminal penalties for marijuana violations have been reduced and many district attorneys are no longer prosecuting these violations.
  • Grants:  AUMA prohibits the state from making certain grants to local jurisdictions to assist with law enforcement, fire protection or other local programs addressing public health and safety associated with the implementation of the AUMA, if that local jurisdiction has a ban on personal outdoor cultivation and/or retail sale of marijuana or marijuana products.  Attorney Denise Bazzano urged Committee Members to review that prohibition as it unnecessarily penalizes jurisdictions that choose to prohibit either outdoor cultivation or retail sale of marijuana but may still be tasked with enforcing marijuana regulations.

The hearing created an opportunity for representatives of cities and counties to provide input to their legislative leaders on a wide range of practical and regulatory challenges.  The input is imperative for assisting the Legislature in crafting future legislation relating to marijuana.  Currently there are approximately 17 bills that relate to AUMA and over 40 bills relating to marijuana in the 2017/2018 session.  It is critical that cities and counties continue to provide input to their representatives during the rapid evolution of this new area of law and commerce.  More information about the Assembly Committee on Local Government can be found here.

Meyers Nave will continue to provide updates on developments relating to Proposition 64 throughout California.  Please click here for information about recordings of Proposition 64 related webinars from Meyers Nave.