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Cannabis fee waivers made available starting next month under an equity program

Under fire for its cannabis taxes, the state is offering to grant waivers on license fees to cannabis entrepreneurs of color “affected by the War on Drugs,” the California Department of Cannabis Control announced late Monday.

The launch date for the application program is Jan. 1.

The two issues — taxes and license fees — are unrelated but top of mind for an industry in flux and recently critical of the state for red tape and what they view as harsh taxation policy.

The state established the rules change as a concession for years of injustices, with minorities disproportionately targeted by law enforcement.

The California Legislature has set aside $30 million to allow certain groups to receive fee waivers and deferrals.

“This is about getting financial assistance to equity operators,” Director Nicole Elliott told the Business Journal, calling access to capital the “No. 1 challenge for equity operators.”

While the concession is considered “a critical first step,” Elliott admitted there’s room for improvement on refining the rules and getting the program off the ground.

Marley Lovell, a Black co-owner of Esensia Gardens in Mendocino County, wondered if he even qualifies since it’s questionable whether he was impacted by the War on Drugs. Still, Lovell — a grower — remains optimistic he may qualify later on.

“It’s a microcosm of a lot of things in this industry,” Lovell said. “The bureaucracy is painful. It’s just complicated.

Local governments run their own equity programs involving permits to those who qualify. The state may use this information to determine eligibility for its fee waiver program.

“It’s a dual-purpose licensing program,” Mendocino County Cannabis Program Director Kristin Nevedal said.

From the state’s standpoint, the change in cannabis regulations allowing for fee waivers and deferrals came about by the passage of Senate Bill 166. The legislation, which was sprung out of 2016’s Proposition 64 allowing for adult, recreational cannabis use, was signed by Gov. Gavin Newsom in September.

The language of SB 166 reads: “The California Cannabis Equity Act of 2018 requires the Department of Cannabis Control, on or before Jan. 1, 2021, to develop and implement a program to provide a deferral or waiver for an application fee, a licensing fee or renewal fee otherwise required by (Medicinal and Adult-Use Cannabis Regulation and Safety Act) for a needs-based applicant or needs-based licensee.”

“Some relief is helpful, but we still have major issues,” California Cannabis Industry Association Executive Director Lindsay Robinson said, listing access to banking services as yet another for cannabis equity operators.

Late last week, a letter signed by more than 400 industry leaders petitioned the state legislature and the governor for tax relief saying taxes, lower product prices and an illegal market were threatening the future of the cannabis business in the state.

Susan Wood covers law, cannabis, production, biotech, energy, transportation, agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times, now a part of the Union Tribune in San Diego County, along with the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com

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