Jeff Slack

What is a “Distributor” Under the California Medical and Adult Use Regulation and Safety Act?

The governor of California’s trailer bill known as Senate Bill 94 passed, which married the Medical Cannabis Regulation and Safety Act (MCRSA) and the Adult Use of Marijuana Act (AUMA). The regulations under the MCRSA have been scrapped and state regulators are furiously trying to draft emergency regulations for the cannabis industry. State licensing is fast approaching, with regulators informing the public that they will be open for business by January 1, 2018. Things are complicated.
 

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State Withdraws MCRSA Regulations

As a result of the passage of the Medicinal and Adult Use Cannabis Regulation and Safety Act, signed into law by Governor Jerry Brown on June 27, 2017, the Department of Consumer Affairs’ Bureau of Cannabis Control, Department of Public Health, and Department of Food and Agriculture withdrew the proposed regulations developed under the prior Adult Use of Marijuana Act (AUMA) and the Medical Marijuana Regulation and Safety Act that were noticed for public comment on April 28th and May 5th of this year. The withdrawal was effective July 27th.
 

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Local Permitting Requirement Change to State Cannabis License Law

Yesterday, June 27, Governor Jerry Brown signed into law Senate Bill No. 94. Senate Bill No. 94 amends the Medical Cannabis Regulation and Safety Act and the Adult Use Cannabis Act (MCRSA) to create a single regulatory framework for both medical and recreational cannabis.
 
The bill amends MCRSA significantly by repealing the vertical integration requirements under MCRSA, amends the tax structure for cannabis, directs the California Department of Food and Agriculture to promulgate standards for “organic” cannabis and “origin” standards for cannabis.
 

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Proposed Cannabis Regulations Released

On Friday, April 28th, the California Department of Food and Agriculture released the initial draft of its medical cannabis cultivation regulations. There will now be a 45-day comment period on the draft.
 
The proposed rules regulate how to apply for licenses to cultivate, the type of licenses that will be available, vertical integration, site requirements, cannabis waste management, cleanliness standards for cultivation sites, processing, records and reporting requirements, inspections, investigations, and audits, and enforcement.
 

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Planning and Building Department Letter

Happy New Year! The deadline to submit an application for the County of Humboldt Medical Marijuana Land Use Ordinance expired on December 31, 2016 at 4 pm. The planning department received 2,337 application packets and over 1500 were received in the last two weeks!
 
The County received over 2,000 incomplete applications, meaning that not all of the required documentation for a complete application packet was submitted. Recall that to accept an application, the County was only requiring a site plan, a completed application form, and the fee deposit.
 

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California Passes Proposition 64

Last Tuesday, California passed Proposition 64 with fifty-six percent (56%) voting in favor of legalizing the recreational use of marijuana in California. Proposition 64 allows adults aged 21 years or older to possess and use marijuana for recreational purposes. The measure created two new taxes, one levied on cultivation and the other on retail sales. The cultivation tax is $9.25 per ounce for flowers and $2.75 for leaves. Medical marijuana sales and cultivation are excepted. The sales tax is 15% on the retail sale of marijuana.

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City of Eureka Passes Medical Marijuana Land Use Ordinance

On September 20th, the Eureka City Council voted 3-2 to allow medical marijuana businesses to operate within the city limits. The California Coastal Commission must still approve the planned changes to the municipal code and the local coastal plan, with implementation expected by the middle of next year assuming it is approved.
 

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Permitting Existing Cultivation Sites Under Humboldt County’s Medical Marijuana Land Use Ordinance

Under Humboldt County’s Medical Marijuana Land Use Ordinance (MMLUO), existing cultivator sites can be permitted. The permit path for existing cultivation sites depends on two things: the size of the existing grow, and the evidence demonstrating the grow was in existence prior to January 1, 2016.

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New Environmental Regulations on Cannabis Cultivation

Are you growing cannabis? By February 15, 2016, cultivators with 2000 square feet or more of cultivated area are required to enroll in a new water quality regulatory program with the North Coast Water Quality Control Board (NCWQCB).
 
NCWQCB’s Order No. R1-2015-0023 (Order) includes enforceable requirements which cultivators need to become familiar with to ensure their operations do not impact water resources. The primary elements of the Order are listed below.
 
A Tiered Enrollment Structure
 

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Proposed Local Zoning Regulations Regarding Medical Marijuana: What’s Being Proposed?

Changes are coming to local regulation of the medical marijuana industry. Both the Humboldt County Board of Supervisors and the Arcata City Council are both considering ordinances governing the cultivation, manufacturing, and retail distribution of medical marijuana here on the North Coast.
 
In response to the enactment of SB 643, AB 266, and AB 243, Humboldt County released a draft ordinance for the outdoor cultivation of medical marijuana in early October, 2015. The following are a few of the highlights from the draft ordinance: 

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Ouch!! Federal Court Holds That Marijuana Dispensary May Not Deduct Business Expenses When Determining its Income for Income Tax Purposes

In Olive v. Commissioner of Internal Revenue 792 F. 3d 1146 (7/9/15), the Ninth Circuit recently upheld the decision of the U.S. Tax Court which precluded a marijuana dispensary from deducting any ordinary or necessary business expenses when determining its income for income tax purposes. 
 

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The Phantom Income Issue

When starting a new business, the question that every new venture faces is how to fund the operations of the business. Often times, one person agrees to contribute money, while the other person agrees to contribute services. This can lead to an issue known as “phantom income.”  Presently, the tax code places a value on capital contributed to a business, but not labor or “sweat equity” (the future services a partner in the business will perform for the business).

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Lessons in Equitable Easements

What is an equitable easement? An equitable easement is a judicially created doctrine that authorizes a trespasser to continue his or her trespass on another’s property in exchange for paying damages, where the hardship on the trespasser in ceasing the trespass is “greatly disproportionate” to the hardship on the land’s owner in losing use of the trespassed upon portion of his or her land
 

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Land Use Law - Judge Twice?

With the ongoing drought and the endless debate over responsible development, land use law is a fertile field of confusion, controversy, and contempt. Municipalities, counties, community services districts, and the state each have their own set of rules and regulations, and navigating the myriad laws can be the bane of anyone taking on a development project or petitioning a city or county for a special use permit.

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The CIDER Act “Presses” Onward

The United States House of Representatives has decided to turn cider into (sparkling) wine. The reason for this near miraculous action: taxes. Presently, “hard cider” is defined as “a still wine derived primarily from apples or apple concentrate and water, containing no other fruit product, and containing at least one-half of 1 percent and less than 7 percent alcohol by volume.” Hard cider is taxed at 22.6 cents per wine gallon. 26 U.S.C. §5401.

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Tis the Revocable Trust Season

The holiday season is upon us! It is finally looking like winter should look in Humboldt County, with major winter storms forecasted for the rest of the week. It's a time for hunkering down with friends and family, for eating great food, spreading good cheer, and exchanging gifts.

One of the best gifts you can give both yourself and your family is a revocable trust. A revocable trust gives you peace of mind and has a number of advantages over more traditional estate plans, such as a will, including:

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Update - Misclassification Class Actions

As promised, here is an update on the misclassification class action case we highlighted back on March 12, 2014. As you might recall, the case was Duran v. U.S. Bank (2012) 275 P. 3d 1266 in which loan officers sued U.S. Bank alleging they were misclassified as exempt employees and were entitled to overtime pay. Last Thursday, the Supreme Court issued its decision.

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Changes Are Coming to CA’s Elder Law Regime

As the population of California continues to age, the issue of the level of care provided our seniors in Residential Care Facilities for the Elderly (RCFE) has caught the attention of the California Legislature. Unlike nursing homes, which are more heavily regulated, RCFEs lack sufficient government oversight. Due to this lack of oversight, some of the more egregious cases of elder abuse and mistreatment have occurred at RCFEs.

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New Farm Bill Raises New Questions in Wage Law

If you haven’t heard, President Obama recently signed into law the new Agricultural Act of 2014, otherwise known as the Farm Bill. While being generally well-received, the bill has a few wrinkles in response to recent controversies regarding wages paid to agricultural workers. Prior to the recent Farm Bill, the Labor Department, with authority from the “hot goods” provision of the Fair Labor Standards Act of 1938, had the power to block the transportation, shipment, delivery or sale of goods produced by workers not being paid minimum wage or required overtime.

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Overtime and Misclassification Class Actions

Here at Janssen Malloy LLP, we have handled overtime class actions on behalf of local workers, obtaining in excess of $1 million dollars for clients.  Currently, oral argument is being heard on a case that could have a tremendous impact on overtime and misclassification class actions that we are watching very closely.

The case is Duran v. U.S. Bank Nat. Assn., (2012) 275 P. 3d 1266 (granting cert.). One of the issues presented to the court is whether a statistical sample of class members may be used to prove class-wide liability in a wage and hour misclassification case.

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