Los Angeles hiring cannabis social equity program manager

The Department of Cannabis Regulation (DCR) in the city of Los Angeles is looking for someone to run its social equity program.

The project is part of a handful of efforts in California intended to get minorities and those negatively affected by the war on drugs involved directly in the state’s legal marijuana industry.

According to an online job posting, the position pays $95,776 to $140,021, requires a master’s degree and at least three years of experience with either economic and community development or providing services to low-income, minority or underserved communities.

The L.A. social equity program has been a point of contention for many in the city’s struggling legal cannabis market and has not yet been fully rolled out.

Other California cities that have social equity programs include Oakland, Sacramento and San Francisco.

California state marijuana excise tax could go up July 1

California state marijuana excise tax could go up July 1

Although the California marijuana industry has hoped for tax relief as it struggles to compete with a thriving illicit market, a tax increase could be on the way.

A tax hike would hit cannabis companies’ bottom line and could drive more consumers into the illicit market in search of cheaper marijuana products.

But an increase isn’t a foregone conclusion. Moreover, a tax cut could occur.

The California Department of Tax and Fee Administration (CDTFA) uses a 60% markup rate, along with the average market price of wholesale marijuana, as a basis for the state’s 15% marijuana excise tax.

That markup rate has to be recalculated every six months, and CDTFA Director Nicolas Maduros told an industry conference this week in Sacramento the excise tax may go up this summer.

“We’re responsible for resetting that markup rate every six months, so it will be reset July 1,” Maduros said, when asked during a panel with other MJ regulators.

“It’s based on market data, and I think particularly once …track-and-traceis more fully utilized, that we’ll have some better pricing data to figure out what that markup rate should be,” Maduros said.

The state track-and-trace system launched in January but is only used by cannabis companies with annual business licenses.

And so far just a fraction of the legal companies have obtained those permits, which means most of the industry isn’t feeding data into the track-and-trace system.

“We’re administrators, so it’s not up to us to sort of use that as a way to lower or increase the tax burden. We’re simply looking at what the facts are. It’s up to the legislature … to determine what the actual tax rate is,” he said.

When asked if the markup rate – and therefore the excise tax – could increase, Maduros said: “It could.”

It’s worth noting, however, that the rate also could either decrease or stay the same.

A CDTFA spokesman said in an email that there’s also no cap on how much the markup rate could increase – or decrease.

What a markup could mean

Maduros said after the panel that any decision on the markup rate and the excise tax will not be made until June at the earliest.

The markup recalculation would not affect the state cultivation tax, which is $9.25 per ounce of flower, $2.75 per ounce of leaves and $1.29 per ounce of fresh plant.

California Cannabis Industry Association Spokesman Josh Drayton said that a tax increase “would only further damage the supply chain as it competes against the illicit market.”

But, Drayton emphasized, it’s possible the excise tax may either stay the same or even decrease, and said it’s too early to tell what will happen with the CDTFA’s recalculation.

“I think we need full implementation of Metrc and track-and-trace before we consider any increase,” Drayton said.

“We have not seen any data that would support an increase in the excise tax for any part of the supply chain.”

Separately, a state bill to temporarily reduce state cannabis taxes is awaiting hearings in the California Legislature.

If successful, Assembly Bill 286 would reduce the excise tax from 15% to 11% and suspend the cultivation tax until 2022.

Wall Street Analyst Estimates US Cannabis Market Will Reach $47 Billion

For years, “$20 billion by 2020” was an oft-heard refrain from market analysts who saw a bright and prosperous future for the legal cannabis industry. Now, with that horizon fast-approaching, analysts are setting their sights on what the next decade has in store. And one analyst, RBC Capital Markets’ Nik Modi, is seeing green.

Analyst Says Concentrates and Edibles Could Propel Sales To $47 Billion Annually

RBC Capital Markets, an investment bank that’s part of Royal Bank of Canada, issued a memo to clients outlining the rapid growth of the U.S. marijuana sector. The memo, authored by Nik Modi, shows how cannabis sales in the U.S. are gaining ground on beer and wine sales.

Projecting a compound annual growth rate (CAGR) of 17 percent, Modi estimates that the legal cannabis category could reach $47 billion in sales annually in the United States within the next decade, according to Business Insider.

Yet the cannabis market in the U.S. faces uncertainties that Canada does not. Regulatory environments are constantly and rapidly shifting as states implement legalization and adopt different approaches to dealing with federal prohibition. Investing in the industry still carries risk.

But RBC Capital Markets analyst Nik Modi brushed off concerns about the unpredictability of legal cannabis in the U.S.. Instead, he drew clients’ attention to a shift in consumer trends that is already having a major impact on domestic retail markets.

Data from BDS Analytics, included in Modi’s memo, shows that the margin on cannabis flower has steadily declined since the beginning of recreational sales in Colorado in 2012. That’s indicative of a larger national move away from flower and toward cannabis edibles and concentrates.

In Colorado, flower made up 70 percent of legal sales when shops opened in 2014. By the end of Q4 2017, flower accounted for just 46 percent of total sales. Picking up the slack were edibles and concentrates. Both are surging in popularity everywhere, and Modi thinks those forms of cannabis can propel total sales beyond $47 billion a year by 2027.

Including Illegal Cannabis Sales Drastically Shifts Financial Forecasts

Another eye-catching aspect of Modi’s analysis is another BDS Analytics chart showing the estimated U.S cannabis market size. The chart compares cannabis sales to spirits, wine, cigarettes, and beer. From spirits at $58 billion to beer $117 billion, all four categories best cannabis at $50 billion. But interestingly, the chart includes total legal and illegal cannabis sales to arrive at the $50 billion figure. It’s unclear what proportion of that amount is made up by illegal sales.

Other cannabis market analysts say that illegal sales still account for the majority of total marijuana purchases in the U.S. But as legalization continues to channel consumers into the legal market, illegal sales are slowly declining.

While access to legal cannabis expands nationwide, the size of the illegal market remains difficult to measure. So does predicting how much of it will move aboveboard in the coming years.

RBC Capital Analyst Praises Big Investment in Canadian Cannabis

The letter RBC Capital Markets sent to clients also lauded Constellation Brands’ recent $4 billion investment in one of Canada’s largest medical cannabis producer Canopy Growth Corp. Constellation Brands is the firm behind the popular beverage companies Modelo, Corona and Svedka. The company has been moving incrementally into the Canadian cannabis market, upping its stake each time. Nik Modi says he’d like to see more companies make similar moves in the cannabis space.

Report Shows Teen Marijuana Use in California Has Declined

A statewide study in California has found that cannabis use by teens in the state has declined. Results of the California Healthy Kids Survey were released by the California Department of Education on Monday. The study is funded by the state’s health and education departments and is conducted every two years.

According to the research, 4.2 percent of 7th graders reported that they had used cannabis at any time between 2015 and 2017. That figure represents a 47 percent drop from the last survey when 7.9 percent of 7th graders reported using marijuana from 2013 to 2015.

Among 9th graders, 17.4 percent reported that they had used cannabis at some time during 2015 to 2017. That is a 25 percent decline from the 23.1 percent who reported using marijuana in the previous study.

Eleventh graders also showed a reduction in marijuana use. In the last survey, 37.9 percent of high school juniors said they had used cannabis between 2013 and 2015 while this year’s result for 2015 to 2017 recorded a 16 percent decline with 31.9 percent claiming cannabis use.

The percentage of teens who had used cannabis in the 30 days prior to the survey also declined. For 7th graders, the figure dropped from 5.0 percent in the last survey to 2.3 percent for the latest one. For 9th graders, the drop was from 13.4 percent to 9.5 percent, and for 11th graders, the number declined from 20.1 percent to 16.7 percent.

Will Legalization Affect Future Results?

The study’s authors noted that the survey was conducted prior to the legalization of recreational marijuana sales, which began in California at the beginning of 2018.

“How the recent legalization of marijuana use for adults in California [affects] the declining trend among youth warrants attention,” they wrote.

“The next biennial survey will be of particular interest to shed light on whether the change in state marijuana laws [affects] these findings,” researchers added.

Tom Torlakson, the State Superintendent of Public Instruction, said in a press release that educators have a role in making sure that cannabis legalization does not lead to increased use by young people.

“We must continue to be diligent in our efforts to prevent, or at least limit, marijuana use in light of the potential effect of the legalization for adults as a result of the passage of Proposition 64 two years ago,” Torlakson said.

Cannabis Activist Responds

Ellen Komp, deputy director of California NORML, said in a blog post from the advocacy group that the legalization of recreational cannabis is actually a factor in the decline of use by teens.

“These initial reports confirm that legalizing and regulating cannabis doesn’t increase youth marijuana use, but rather it has the opposite effect,” said Komp. “The fact that the biggest drop in reported use came from younger age groups is a particularly encouraging indicator of the success of regulation.”

Komp also said that sound cannabis policy reforms are the best way to keep California residents and their communities safe.

“It’s time to stop trying to ‘send a message’ to young people about drugs and instead implement sound, science-based policies that best protect our children and public safety, along with our privacy and human rights,” Komp said.

California Lawmakers Pass Bill to Overturn Pre-Legalization Marijuana Convictions

California lawmakers have passed a bill directing prosecutors throughout the state to overturn convictions for acts that are no longer illegal under the state’s Prop 64 cannabis legalization initiative. The bill would also reduce many felony convictions for marijuana-related crimes to misdemeanors.

The measure, Assembly Bill 1793, was passed by the California Senate Wednesday with a bipartisan vote of 22-8 after being approved by the California State Assembly on May 31 by a vote of 43-28.

If the bill is signed into law by Gov. Jerry Brown, it will direct the state Department of Justice to identify cases from between 1975 and 2016 that are eligible to be overturned or reduced by July 31, 2019, and notify the appropriate district attorney for action. Prosecutors will then have until July 1, 2020 to decide if they want to challenge the reduction or elimination of any of those convictions.

Prop 64, passed by voters in 2016, legalized the recreational use and sale of cannabis and eliminated many marijuana-related crimes. That decriminalization also applied retroactively, making many eligible for a reduction or elimination of past cannabis convictions. Those with convictions for non-violent felonies including possession or distribution of less than one ounce of cannabis are eligible for reduction to misdemeanors. Prosecutors have the right to challenge relief based on the criminal history of affected individuals.

Thousands of Cases Eligible For Relief

The justice department estimates that 220,000 convictions qualify to be reduced or eliminated.  Prosecutors in San Diego and San Francisco have begun to proactively reduce or eliminate convictions, but many other district attorneys in the state have said that they do not have the resources to follow suit. That puts the burden of relief on those with the convictions, many of whom may not be aware that they are eligible. Some with convictions that qualify for a reduction or elimination have taken it upon themselves to petition the court for relief, but only a small minority of those who are eligible have done so.

Sen. Scott Wiener, a Democrat from San Francisco who voted for the measure, said it “creates a simpler pathway for Californians to turn the page,” according to an Associated Press report.

State Sen. Joel Anderson, a Republican from San Diego County, said that reducing felony convictions to misdemeanors will allow people to regain lost civil rights, including gun ownership.

“This bill will take those people off the prohibited list, save us time and money,” Anderson said.

AB 1793 was introduced by Democratic Assembly Rob Bonta of Oakland. He said that “the role of government should be to ease burdens and expedite the operation of law — not create unneeded obstacles, barriers, and delay.”

Although AB 1793 received broad bipartisan support, not all lawmakers agreed with the elimination of past convictions. Republican Sen. Jim Nielsen of Gerber argued against passage of the measure by his colleagues in the Senate.

“This directs us to forget any prior behavior that was illegal,” Nielsen said. “They should not be given a pass.”

With the approval of AB 1793 by both houses of the California legislature, the bill now heads to Gov. Jerry Brown for his approval.