The cannabis laws of the 2024 state legislative session

From the much talked-about "cannabis cafes" bill, to the extension of a tax exemption supporting California's cannabis compassion programs, to prohibitions on advertising for industrial hemp that mirror advertising prohibitions on cannabis, Gov. Gavin Newsom signed into law a number of bills that will put in motion changes to, clarifications and continuations of the status quo for commercial cannabis and hemp in California.

AB 2841 - Clearing out a cannabis research backlog

To address a pernicious backlog in applications to proceed with research into cannabis in California, in July, Gov. Newsom signed AB 2841 to authorize California's Research Advisory Panel (established under Health and Safety Code sections §11480 and §11481) to hold closed sessions to discuss research projects that require the sharing of trade secrets, intellectual property, or proprietary information in the Panel's possession, the public disclosure of which is not only undesired by research sponsors but also prohibited by law. To resolve conflicts between the requirements of California's open meetings law (Bagley-Keene), which arguably applies to the Panel's activities, AB 2841 has created a limited exemption to Bagley-Keene for the Research Advisory Panel. With this limited exception created and this conflict now resolved, the Legislature wants to see the current backlog in the Panel's research applications cleared over the next year.

SB 1511 - A technical correction to an expansion of Ryan's Law

SB 1511, to authorize a general acute care hospital to allow terminally ill patients to use medicinal cannabis, is a technical fix to an unintended ambiguity created by the recent expansion to the Compassionate Access to Medical Cannabis Act ("Ryan's Law"). Last year, Ryan's Law was bolstered under SB 302 (Stern) by expanding the type of facilities where medicinal cannabis was permitted and by permitting patients over 65 years of age with a chronic disease to have access to their medical cannabis in addition to the terminally ill. SB 302 bill was amended late in last year's legislative session in a way that created an ambiguity, and Senator Stern, the sponsor of SB 302 made known that creating this ambiguity was not his intent, and that legislation in 2024 would correct the ambiguity. With Gov. Newsom's signature on SB 1511, that correction has now been made, and acute care hospitals are now authorized to allow terminally ill patients to use medicinal cannabis.

SB 1498 - Expanding enforcement on advertising prohibitions

As part of the MAUCRSA framework, California cannabis licensees are prohibited from advertising cannabis or cannabis products in any way intended to encourage persons under 21 years of age to consume cannabis or cannabis products. Business and Professions Code §26152 specifically prohibits the following with respect to cannabis or cannabis products:

●     Advertising on a billboard located on a highway that crosses the California border.

●     Advertising cannabis in a way intended to encourage under-age persons to consume.

●     Publishing or disseminating attractive-to-children advertising or marketing.

●     Advertising cannabis on a sign within 1000 feet of school, playground or day care center.

DCC discipline was previously the only enforcement pathway for these prohibitions. SB 1498 will now allow the California Attorney General, a city attorney, or county counsel to bring an action against a licensee who has violated the specific advertising prohibitions noted above. Moreover, SB 1498 adds manufacturers, distributors, or sellers of industrial hemp to the same prohibitions on advertising, consistent with those established under existing law for MAUCRSA and similarly authorizes the California Attorney General, a city attorney, or a county counsel to bring and maintain an action for a violation of the advertising prohibitions, against both licensed and non-licensed individuals.

SB 1059 - Eliminating the tax-upon-a-tax confusion for cannabis operators

Even with the California Department of Tax and Fee Administration largely disputing the need for this legislation, Gov. Newsom signed SB 1059 to eliminate any local government's collection of a tax-upon-a-tax for cannabis goods sold. Proponents of SB 1059 argued successfully that current tax calculation methods are unfair to consumers and disadvantageous to licensed retailers continuing to struggle against a thriving illicit market. In some jurisdictions, including the City of Los Angeles (a charter city), local cannabis taxes or fees are being calculated after the state excise tax is applied, even though this appears to be in conflict with guidance provided by the CDTFA. To resolve confusion, SB 1059 ensures taxes are based on the actual goods being sold by clarifying that the sales and use tax is the final tax. Despite the CDTFA's position that SB 1059 may not be of sufficient statewide concern to warrant preemption of any charter city's taxing power, Gov. Newsom agreed SB 1059 is a necessary change to the existing tax laws.

SB 1064 - Simplifying the commercial license structure and process

In response to significant criticisms of California's current framework that have noted fundamental regulatory challenges impeding the functionality of California's cannabis program, SB 1064, according to a majority of the Legislature and Gov. Newsom, will simplify the state license structure by creating a new license type - the Combined Activities License (CAL) - to allow multiple commercial cannabis activities to take place at the same premises, with the exception of laboratory testing. In another effort to streamline the DCC's licensure review process, SB 1064 deletes a provision in current law that requires the DCC to consider, when determining whether to grant, deny, or renew a retail license or microbusiness license, to consider if an excessive concentration exists in the area where the licensee will operate. The DCC will likely promulgate implementing regulations in 2025 for this new law.

SB 1109 - Voluntary disclosure of demographic data for individual licensees

Cannabis social equity programs specifically aimed at assisting economically disadvantaged communities entering into the cannabis industry through financial assistance have been a focus of advocacy since Prop 64 was approved. The California Cannabis Equity Act of 2018 was chaptered to codify the state's recognition of local equity programs designed to help disproportionately negatively impacted populations become approved participants in the cannabis marketplace. In 2019, SB 595 (Bradford), Chapter 852 was enacted to provide further relief by allowing the DCC to waive or defer fees. However, because the DCC is not currently required to collect demographic information about licensees applying for and receiving licenses, it is difficult to assess whether cannabis licenses are being awarded equitably across the state, and whether programs like the California Cannabis Equity Act are successful. Senator Bradford, to more effectively ascertain whether cannabis licensing in California is meeting the fairness and equity goals promised to the voters when they approved Proposition 64, carried SB 1109 into law to require the Department of Cannabis Control (DCC) to collect voluntarily-provided demographic data about individuals applying for an initial license or license renewal.

AB 2643 - Frame working and funding cannabis-impacted lands restoration

Illegal cannabis cultivation has emerged as a major threat to wildlife throughout California due to the rampant use of pesticides, habitat destruction, and water diversions associated with the trespass grows overlapping the habitats of sensitive species. In counties where cannabis cultivation is prohibited, like Siskiyou County, illicit cannabis farms have devastated wildlife. AB 2643 requires the California Department of Fish and Wildlife (DFW) to conduct a study to create a framework for cannabis site restoration projects, requires DFW to submit a report on illicit cannabis cultivation, clarifies the definition of "controlled substance," and eliminates certain apportionments to the Timber Regulation and Forest Restoration Fund, instead directing those moneys to the newly created Cannabis-Impacted Lands Restoration Fund. Assemblymember Wood, who carried this bill into law, said it builds on his prior efforts to protect and restore lands across California by developing a framework for restoration projects, and improving the efficiency of eradication, reclamation and restoration activities.

AB 2555 - Extending the tax exemption funding cannabis compassion programs

California's Dennis Peron and Brownie Mary Act (SB 34, Wiener, Chapter 837, Statutes of 2019) ("the Peron & Brownie Mary Act") authorizes a use tax exemption for, and relieves use tax liability for, cannabis licensees who donate cannabis or cannabis products to a cannabis retailer for subsequent donation to a medicinal cannabis patient, or to any other licensee for ultimate donation by a cannabis retailer to a medicinal cannabis patient, under certain circumstances. Under the Peron & Brownie Mary Act, this tax exemption is to be repealed in March 2025. Signed by Gov. Newsom, AB 2555 extends - until Jan. 1, 2030 - the use tax exemption for medicinal cannabis or medicinal cannabis products donated by a licensed cannabis retailer to a medicinal cannabis patient, handing a five-year lifeline to California's cannabis compassion programs funded as a result of the use tax exemption and tax relief provided under the Peron & Brownie Mary Act.

AB 1775 - Paving the way for cannabis "coffeeshops" to come to California

While cannabis is officially a controlled substance in the Netherlands and both possession and cultivation of the plant is a crime, the country has long applied what is referred to as gedoogbeleid--a policy of tolerance that effectively decriminalizes recreational consumption of cannabis. As a result of the country's tolerance policy, so-called "coffeeshops" in cities such as Amsterdam have proliferated, providing consumers with spaces to safely purchase and consume cannabis. These establishments serve as social hubs where live music may be performed, and food and beverages not containing cannabis are available for purchase and consumption. Assemblymember Haney, who carried AB 1775 into law, believes California can more effectively market consumption lounges, already contemplated under DCC regulations, as social venues where consumers can enjoy activities that are more inclusive than simply consuming cannabis, by allowing microbusinesses/retailers to prepare or sell non-cannabis food or beverage products, sell pre-packaged, non-cannabis-infused, nonalcoholic food and beverages, and tickets for live musical or other performances, under certain conditions. Although inspired by the Dutch gedoogbeleid, AB 1775 is subject to certain conditions local jurisdictions must meet before it can be implemented.