The City of Hollister and San Benito County government have formed ad hoc subcommittees to study whether or not to revise existing ordinances that ban medical marijuana dispensaries in those respective jurisdictions. At present, there is only one medical marijuana cultivation and manufacturing facility legally operating under a settlement with San Benito County: Purple Cross RX on Bolsa Rd/Hwy 25. However, under the terms of the legal agreement, Purple Cross RX is not allowed to dispense/sell its products to patients in the county and thus pays no retail sales taxes to local government.
Of course, there are other medical marijuana cultivation operations in San Benito County known to elected officials and law enforcement, but those operations are not officially approved or sanctioned by local government or subject to taxes, fees, assessments, planning, zoning, public health or environmental regulations. As such, they operate with impunity in a virtual “grey zone” of local governments acquiescent to their existence, but do not pay any taxes on the revenue they generate as a known enterprise within those respective spheres of influence of local government.
At the state level in 2015, Gov. Jerry Brown signed into law three bills to regulate the medical marijuana industry: SB 643, AB 266, and AB 243, known collectively as the Medical Marijuana Regulation and Safety Act (MMRSA). Coming 20 years after passage of Proposition 215, the laws established a new Bureau of Medical Marijuana Regulation under the Department of Consumer Affairs and laid out requirements for tracking medical marijuana distribution from seed-to-sale effective January 2018. This framework was also intended to provide guidance and regulation for recreational marijuana if voters support ballot box legislation to legalize, tax and regulate adult use in the forthcoming November election.
Marijuana law has been evolving for more than 100 years. California first passed legislation restricting its use in 1913. Since then, the state has made several changes to its marijuana laws, sometimes increasing, and at other times relaxing, restrictions on marijuana independent from the federal Controlled Substance Act (CSA) enacted under president Richard Nixon in 1970.
In 2013 under the leadership of Lt. Gov. Gavin Newsom, California created a Blue Ribbon Commission on Marijuana Policy with the express intent to “facilitate a comprehensive understanding of various policy questions related to the possibility of legalizing, taxing and regulating marijuana for adults in California. The Commission will also endeavor to identify the range of solutions that might be deployed to resolve those questions, address the pros and cons of various approaches, and disseminate this information to California voters, policy-makers and those likely to fund and draft a ballot initiative to tax and regulate marijuana for adults.” https://www.safeandsmartpolicy.org/
The Blue Ribbon Commission on Marijuana Policy was formed in light of the likelihood that a marijuana legalization initiative will be placed on the 2016 California ballot, and that serious and thoughtful analysis must be conducted in order to identify significant policy challenges and offer possible solutions. The Commission is comprised of leading policymakers, public health experts and academics from across the state and the nation that have done significant work and research related to marijuana.
In fact, Prop. 64 — the Adult Use of Marijuana Act — has been placed on the November ballot as an initiative to legalize, tax and regulate marijuana in California (http://www.yeson64.org/) similar in many ways to other states that have legalized marijuana for adult use in Colorado, Washington, Alaska, Oregon and Washington, D.C. If approved by voters, California — the nation’s largest producer of marijuana — will bring a multi-billion dollar industry out of the shadows and into the light of government taxation and regulation. The proposition will bring forth many new challenges and opportunities to local and state government as well as the statewide economy.
The federal government still recognizes marijuana as a Schedule 1 controlled substance under the CSA as a highly addictive drug prone to abuse with no medical value. However, the federal Drug Enforcement Agency (DEA) is expected to reschedule marijuana to a lower class of controlled substances this year according to national media reports. Canada, Mexico and other countries have also stated that they expect to move toward legalization which would contradict certain international treaties related to marijuana criminalization to which those countries are co-signatories.
Some people believe that local government should — or indeed are compelled by law — to follow federal government laws with the logic that federal laws supersede state and local laws. However, James M. Cole, Deputy Attorney General with the U.S. Department of Justice wrote in a memo dated Aug. 29, 2013 “Outside of these enforcement priorities, the federal government has traditionally relied on states and local law enforcement agencies to address marijuana activity through enforcement of their own narcotics laws.”
Further, Cole wrote: “The enactment of state laws that endeavor to authorize marijuana production, distribution, and possession by establishing a regulatory scheme for these purposes …The Department’s guidance in this memorandum rests on its expectations that state and local governments that have enacted laws authorizing marijuana-related conduct will implement strong and effective regulatory and enforcement systems that will address the threat those state laws could pose to public safety, public health, and other law enforcement interests.”
It would follow that Gov. Jerry Brown was confident that the MMRSA laws he signed into law last year met such a high criteria with local governments granted the authority to customize local laws and regulations to meet the needs and desires of the community including administrative oversight to control planning, zoning, security, limitation of available permits, taxes, fees and statutes pursuant to state and federal laws and regulations; i.e. distance from schools and/or other sensitive facilities.
Federal banking laws also restrict and undermine medical and adult-use in states that have legalized medical and/or recreational marijuana operations. The result is that those businesses must operate as cash-only enterprises which creates a high risk security liability for crimes of opportunity such as armed robbery and murder. For these reasons, the marijuana industry is lobbying the federal government to relax banking laws and tax laws relative to how all other businesses are allowed to operate in order to reduce crime targeted at the industry.
More facts, data and evidence should be presented to city and county governments from experts at the state level or the Blue Ribbon Commission on Marijuana Policy itself to ensure that local government is fully informed about policy initiatives and analysis by experts with no vested interest in the outcome of local ordinances. Thus far, it is recognized that medical marijuana industry interests have lobbied local government realizing an opportunity to expand their operations in Hollister and San Benito County. Conversely, little is known about the actual market size of patients in San Benito County who are also protected by the HIPAA Privacy Rule. Opponents of marijuana often disparage and denigrate Prop. 215 patients who may or may not use medical marijuana products for treatment of disease or simply skirting laws to enable recreational use of those products.
The HIPAA Privacy Rule establishes national standards to protect individuals’ medical records and other personal health information and applies to health plans, health care clearinghouses, and those health care providers that conduct certain health care transactions electronically. The rule requires appropriate safeguards to protect the privacy of personal health information, and sets limits and conditions on the uses and disclosures that may be made of such information without patient authorization. The rule also gives patients rights over their health information, including rights to examine and obtain a copy of their health records, and to request corrections.
From a public policy perspective, it has become clear that the so-called “War on Drugs” has failed and an increasing number of states are moving forward away from prohibition toward improved public health and safety programs subsidized by taxes, fees and assessments imposed on the marijuana industry nationwide.
View the complete Blue Ribbon Commission Pathways Report: Policy Options for Regulating Marijuana in California by clicking here.