We don’t want to be Amsterdam, or Denver or even Humboldt County. But we don’t want to be left out, either. Editorial, Modesto Bee, Dec. 11, 2017
Following the will of the people of California, it has been -- as they used to say -- a trip watching state and local bureaucracies and hustling entrepreneurs large and small attempting to legalize the production, sale and distribution of recreational marijuana after more than 80 years of illegality and under the cloud of continual federal intransigence on the subject.
This is particularly comic when it comes to Modesto, home of Gallo Wine Co., the world's largest privately held winery. But if you're looking for a trip, follow the zany twists in two recent articles below. Warning: there may be headaches in every paragraph.
California tax officials float state-run bank for marijuana industry
With legalized recreational marijuana possibly on the horizon in California, tax board officials signaled their interest Friday in forming a state-run bank that would allow pot-industry operators to transition from what has traditionally been a cash business.
Access to financial institutions is difficult given the federal prohibition on the drug.
Democrat Fiona Ma, of the state Board of Equalization, said that under the state’s nearly two-decade-old medical marijuana program, growers and dispensary operators typically pay their state taxes in cash, creating concerns about public safety.
With state initiatives to legitimize recreational pot aiming for next year’s ballot, and with federal lawmakers taking up legislative solutions, Ma said the time is right for officials here to begin assessing the details of what a state-run bank might look like.
“We’re a big state, and we have very creative minds,” Ma said at a meeting on the topic she called Friday with fellow board member George Runner. “We lead in many first-in-the-nation initiatives, and I believe we could create some sort of state depository that could handle cash deposits and also be available for the industry to make electronic transfers to make their payments.”
Laws designed to combat drug trafficking and money laundering have long restricted bank access. However, Obama administration officials have begun adjusting certain rules to extend banking services to state-approved marijuana companies.
Last week, the U.S. Senate Appropriations Committee passed an amendment allowing banks to serve marijuana sellers in states where the drug is legal. At the same time, the Federal Reserve Board this month denied an application by a Colorado credit union seeking to provide banking for the pot industry.
In California, the lack of access to banking has hampered the state’s ability to collect taxes. A recent study of Ma’s San Francisco-based district that stretches across 23 counties found just 35 percent of the medical marijuana dispensaries paid sales taxes, totaling about $27 million last year.
Board of Equalization Chairman Jerome E. Horton this month said he supports an “Eliot Ness Plan” that enforces collection of taxes on cannabis. A Horton-supported bill by Assemblyman Mike Gipson, D-Carson, would create a state tax amnesty program for pot operators.
Storefront businesses that are paying taxes often carry the money in large sacks to field offices that state officials say are not equipped with money counters or other tools and safety measures associated with banks. Many do not have access to credit and use cash to obtain marijuana, pay employees and make transactions.
Runner said a recent tax delivery to his district office in Sacramento involved about $200,000 in cash.
A conservative Republican and former state senator from the Antelope Valley, Runner said he didn’t envision dedicating so much energy to marijuana. He has traveled to pot-rich Humboldt County to study the issue, and met with officials from the Federal Bureau of Investigation and U.S. Drug Enforcement Administration.
“If a couple of years ago somebody would have told me we would be coming and spending this much time on cannabis ... I’d say ‘you must be smoking something,’” Runner said. But it’s clear “this is an industry that we’ve got to figure out how to deal with; how to make it legitimate, and try to help them in that process.”
Tax board members have yet to commit a plan to writing but say it would likely take the form of state legislation to be introduced in the next session.
City can’t delay any longer on weed rules
The Editorial Board
We don’t want to be Amsterdam, or Denver or even Humboldt County. But we don’t want to be left out, either.
At Tuesday’s 5:30 p.m. meeting, the Modesto City Council is expected to approve rules – established in consultation with Stanislaus County – for growing, processing, taxing and selling marijuana.
The rules will limit the number of pot shops the city will tolerate (10), where they can locate (3 downtown; the rest in commercial and industrial zones) and how far they must be from parks, schools and homes. Outdoor grows will be outlawed entirely.
Most other cities allowing cannabis sales – and at least two in Stanislaus County will not – have already established their basic parameters. Modesto has taken it slow; glacially slow. Finally, councilman Mani Grewal, Mayor Ted Brandvold, County Supervisor Vito Chiesa and staff members from both sides of 10th Street Place hammered out an agreement. A first reading could be waived and the entire council should vote in favor of the ordinance.
The proposal requires all commercial marijuana grown in Modesto be cultivated indoors with 24/7 security. Facilities would need top-flight surveillance and robust air-exchange systems preventing that skunky smell from exiting the building. Storefronts would have to be “car-proofed,” and no one would see any cannabis from a sidewalk or alley.
A few councilmembers, like former police officer Doug Ridenour, have deep antipathy toward marijuana. Their fears – increased cost for law enforcement, code enforcement, mental health services, addiction treatment and overdoses – are valid.
But we can’t pretend marijuana isn’t already in wide use. The most current retail marijuana locator shows some 27 Modesto-area storefronts offering weed to those with medical cards; several have been open for years. The Sacramento Bee published data showing 11 to 13 percent of Stanislaus County residents used cannabis last year. That was well behind San Francisco’s 17 percent, but ahead of Fresno’s 10 percent.
You might worry that easily available weed will entice more young people into an addiction. We worry, too, since their adolescent brains are at particular risk. But this ordinance will likely help. The city’s proposal will outlaw delivery services, and 10 dispensaries could run most corner dope dealers out of business.
Since selling to minors could result in losing the city sales permit – aka, “Golden Ticket” – retailers would be stone-cold stupid to do it.
Some cities have dreams of municipal jackpots. While substantial taxes will be collected, this isn’t the end of the rainbow. In fact, it’s just the beginning of a lot of work by a lot more people to make certain this business doesn’t become a civic catastrophe.
That’s why we’ll suggest something else for the ordinance: A series of mandatory “check-ins” on how the ordinance is working with defined opportunities to fix whatever isn’t.
What could go wrong? Perhaps a 100-foot buffer between commercial grows and the nearest home isn’t enough (Humboldt County requires 300 feet). It could also be that we won’t like having three weed outlets downtown, or maybe we’ll want one or two more. In six months, we might have a better idea of what council members meant in discussing “luxury” dispensaries at their November weed workshop.
A lot of work (and politicking) has gone into this and a similar ordinance the county approved 5-0. Having a uniform approach on taxation, revenue splits and store locations makes a lot of sense.
Waiting any longer to establish the rules for a business that will skyrocket in just 19 days is foolish.