Managing California Cannabis Businesses


Keeping Proposition 215’s Promise

Keeping Proposition 215’s Promise

Keeping Proposition 215’s Promise – we are going to do something unusual today. Rather than inundating with you with facts, we are going to share our views on a topic that is central to much of what we do, helping to do our part to make the promise of Proposition 215 a reality.

California Proposition 215, also known as the Medical Use of Cannabis Initiative or the Compassionate Use Act, was Keeping Proposition 215's Promiseapproved by California voters as an initiative amendment to the California Constitution in the November 5, 1996, general election.

The passage of Proposition 215 in California was a watershed victory for medical cannabis. Proposition 215 exempts patients and defined caregivers who possess or cultivate cannabis for medical treatment recommended by a physician from criminal laws which otherwise prohibit possession or cultivation of cannabis.

In May 2009, the United States Supreme Court declined to hear an appeal of a California state appellate ruling from 2008 that upheld Proposition 215 and concluded that California can decide whether to eliminate its own criminal penalties for medical cannabis regardless of federal law. The appellate court decision came in a lawsuit against Proposition 215 filed by San Diego and San Bernardino counties.

These counties objected to Proposition 215 on the grounds that it requires the counties to condone drug use that is illegal under federal law. The two counties also challenged a law that requires counties to issue identification cards to medical cannabis patients so these patients can identify themselves to law enforcement officials as legally entitled to possess small amounts of cannabis. [ San Francisco Chronicle, “Solano to allow medical cannabis ID cards,” June 24, 2009]

Proposition 215 also led to the lawsuit, People v. Kelly.  The Kelly case was decided in January 2010 by the California Supreme Court.  In the Kelly case, the Court held the state of California cannot, through the legislative process, impose a state limit on medical cannabis that is more restrictive than what is allowed under Proposition 215. The Kelly case also limits the extent to which California’s initiative process is protected against legislative tampering.

The language that appeared on the ballot stated:

Exempts patients and defined caregivers who possess or cultivate cannabis for medical treatment recommended by a physician from criminal laws which otherwise prohibit possession or cultivation of cannabis.

Provides that physicians who recommend the use of cannabis for medical treatment shall not be punished or denied any right or privilege for making such a recommendation.

Declares that the measure is not be construed to supersede prohibitions of conduct endangering others or to condone the diversion of cannabis for non-medical purposes.

In addition, Proposition 215 contains severability clause. The exact language of Proposition 215 added §11362.5 to the Health & Safety Code and is contained in Endnote [1].

Keeping Proposition 215’s Promise

Thus, the people of California choose to amend the state Constitution to preclude restrictions on access to their fellow citizens for medical use. All of which means that:

The cities, municipalities, and counties of California need to cease and desist immediately from any and all efforts to create local impediments to the local retail sale or delivery of medical cannabis to anyone in California, as it is an exercise in FUTILITY as ultimately any such legislation should be declared unconstitutional in California. 

The cities, municipalities, and counties of California need to cease and desist immediately from any and all efforts to impose local sales, gross receipts or license fees on medical cannabis as it is an exercise in FUTILITY as ultimately any such legislation should be declared unconstitutional in California. 

Not only are those efforts counter to the spirit and intent of both Proposition 215 and the California Constitution, but the Legislature could even do better. A couple of suggestions come to mind.

The Legislature could provide an exemption from the Cannabis Cultivation Tax [“CCT”] and the Cannabis Excise Tax [“CET”] for valid, medical use of cannabis in California. There is a system already in existence with county-issued medical cards that provides a tightly controlled registration system that eliminates much of the “lax controls” under the older physician referral system. Further, the California Legislature could look to New York and pick up on the

 New York Bill Would Require Medical Marijuana Be Covered By Public Health Insurance – Public health insurance programs would be required to cover medical marijuana in New York if a new Assembly bill is enacted.

“Cost is the primary barrier to patient access in New York’s medical marijuana program,” reads a memo attached to the legislation. “Medicaid, other public health plans, and commercial health insurance plans do not cover medical marijuana, forcing patients to pay out of pocket. Some patients begin treatment only to stop due to inability to pay, while others turn to the black market.”

“For thousands of patients, medical marijuana is a safer and more effective medication than other drugs, especially opioids.”

The bill, filed on Monday by Assemblyman Richard Gottfried and 17 cosponsors, would add medical cannabis coverage to four publicly funded health programs—Medicaid, Child Health Plus, workers compensation and EPIC, as well as the largest publicly funded Essential Plan.

“For Medicaid and Child Health Plus, there would presumably not be federal matching funds until the federal government changes its policies, but New York’s Medicaid and Child Health Plus programs have always covered people and services for which we do not receive the federal match,” the Assembly memo says.

The bill also clarifies that while commercial health insurance programs are not required to cover medical marijuana, they are free to do so. And it would allow state regulators to certify medical marijuana dispensaries as Medicaid providers solely for the purpose of dispensing cannabis.

California has a tremendous opportunity to both keep the promise of Proposition 215 and fulfill a commitment to its most vulnerable citizens who are least able to afford medical cannabis due to the imposition of taxes and efforts to impede access and delivery. It’s time to end the obstructionist behavior and do the right thing.

Keeping Proposition 215 [this link provides detailed background history] Promise

[1] §11362.5

(a) This section shall be known and may be cited as the Compassionate Use Act of 1996.


(1) The people of the State of California hereby find and declare that the purposes of the Compassionate Use Act of 1996 are as follows:

(A) To ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person’s health would benefit from the use of marijuana in the treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief.

(B) To ensure that patients and their primary caregivers who obtain and use marijuana for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction.

(C) To encourage the federal and state governments to implement a plan to provide for the safe and affordable distribution of marijuana to all patients in medical need of marijuana.

(2) Nothing in this section shall be construed to supersede legislation prohibiting persons from engaging in conduct that endangers others, nor to condone the diversion of marijuana for nonmedical purposes.

(c) Notwithstanding any other provision of law, no physician in this state shall be punished, or denied any right or privilege, for having recommended marijuana to a patient for medical purposes.

(d) Section 11357, relating to the possession of marijuana, and Section 11358, relating to the cultivation of marijuana, shall not apply to a patient, or to a patient’s primary caregiver, who possesses or cultivates marijuana for the personal medical purposes of the patient upon the written or oral recommendation or approval of a physician.

(e) For the purposes of this section, “primary caregiver” means the individual designated by the person exempted under this section who has consistently assumed responsibility for the housing, health, or safety of that person.

(Added November 5, 1996, by initiative Proposition 215, Sec. 1.)


Cannabis – Gumballs Bad Combination

Cannabis – Gumballs Bad Combination

Cannabis – Gumballs Bad Combination is a post that is very likely going to land yours truly in a substantial amount of “hot water”. However after some reflection, to hell with it,Cannabis - Gumballs Bad Combination the passing of Senator John S. McCain, III who is an American hero and an icon of the values that represent American individualism and of beliefs and values about doing what is right, for a greater good, even if it isn’t in our immediate self-interest makes this an easy one. The success or failure of the legal, commercial cannabis industry depends, in large measure, on four factors. They are:

  • Regulated Markets

The creation and development of regulated, legal markets that are perceived as fair, having a reasonable cost without the complexity that so onerous that compliance is impossible [Our view is that California is well on its way to achieving that goal, though there are some significant corrections, notably with respect to compassionate medical use, compliance, and lab testing, and banking to be addressed.]

  • Licensed Professionals

The development of a significant pool of licensed professionals, particularly attorneys, certified public accountants, enrolled agents [yep, that group that I poke at all the time is critical here assuming that they have the requisite thirty hours or accounting], and scientists [my term for the chemists, healthcare, and others with graduate-level degrees and professional licenses that are critical to demonstrating the integrity of the industry to the regulators.

  • Competent Skilled Workforce

The workforce that performs substantially all of the labor and services [distinct from Licensed Professionals] that provides skilled, semi-skilled and manual labor for the cannabis industry [akin the enlisted ranks in the military] are critical. The workforce needs to be recognized as performing legal, legitimate services that feed families and contribute to communities, part of the legal immigration, taxation, and healthcare systems [free from the scourges of human trafficking and scourges of discrimination, sexual harassment and abuse]. Cannabis needs to lose its status as “a plant with an attitude” and be recognized for what has become, legal agricultural activity in California and other states. [The larger discussion includes, delisting from DEA Schedule I, acceptance by FinCEN and the banking system and a change in IRC Sec. 280E, possible replacement with an excise tax.].

  • Industry Self-Governance, Guidelines, and Process

The commercial cannabis industry needs to follow through on the creation of organizations, standards, and procedures to demonstrate its integrity. The process is going to have to include leadership from industry associations that take a long view with respect to lobbying activity, an objective process for the selection and sponsorship of content providers at trade shows and on websites. The abhorrent practices of “pay for play” for platform speakers, and tolerance of incompetence, outright criminal conduct, and the pontification of rubbish, blather, and gibberish as “expert knowledge” needs to cease. Pseudo-scientific claims and self-aggrandizement can NOT be tolerated if the industry is going to have credibility.

Cannabis – Gumballs Bad Combination

Our next several articles are going to dig into the practices and conditions that attention for the four prongs to develop. Specific examples that we will explore include:

  • Pay to Play – Financial costs, beyond association membership for platform speaking slots at trade shows and conferences.
  • Toxic Spew – The willingness by the website owners, community and forum managers overlook criminality, incompetence, and the ramblings of soothsayers and “tossers” [collectively “Toxic Spew“] merely because they provide financial recompense. If posted content falls within that definition, it is rubbish and should NOT be published for sake of filling space.
  • Whistleblowers and anyone else with the requisite expertise that identifies Toxic Spew must be protected, acknowledged and valued by the owners, sponsors, and managers for their role in bringing integrity to the industry. The banning, muzzling, shunning and castigation needs to end immediately, and any one individual or entity that engages in such practices scorned, sanctioned, subject to penalties that include reporting to regulatory authorities and law enforcement.
  • Respect, Dignity and Safe Environment – Everyone is entitled to expect that their interactions with colleagues, agents, suppliers, and clients will be non-threatening and respectful [that doesn’t preclude spirited disagreement or even argument] on a reciprocal basis. A safe, healthy, and productive work environment is a right, and in many jurisdictions, the law. Everyone needs to commit to eliminating any actions or circumstances that undermine such an environment. Unlawful discrimination, verbal or physical harassment or abuse, or offensive behavior (whether or not sexually related) is unacceptable and requires immediate, clear and consistent consequences.

We have chosen to label the unwillingness or lack of fortitude on the part of anyone with the responsibility to be part of the solution to these issues as Gumballs [which is hereby stipulated to be gender neutral]. We are going to spare everyone the mental images that would come with my effort to elucidate the definition.

We all need to be part of the solution, otherwise, we are part of the problem.

Cannabis – Gumballs Bad Combination

aBIZinaBOX Cannabis Licensing FAQ’s

aBIZinaBOX Publishes Cannabis Licensing FAQ’s

aBIZinaBOX Publishes Cannabis Licensing FAQ’s covering a substantial number of BCC issues.

What are the requirements for Cultivation licenses?

What are the fees and requirements for Cultivation licenses?

What are Cultivation site requirements?

What are the record-keeping and reporting requirements for Cultivation?

What are inspection, investigation, and audit requirements for a Cultivation license?

Who do the Manufacturer definitions apply to?

What are definitions for Cannabis Manufacturing?

What are the Manufacturer licenses and types?

What are the requirements for Manufacturer’s premises?

What are rules regarding changing a Manufacturer License?

What are the security requirements for a Manufacturer?

What are permissible extracts for a Manufacturer?

What are the rules for Manufacturer’s extraction systems?

What are operational best practices for a Manufacturer?

What are production and process controls for a Manufacturer?

What are a Manufacturer’s other responsibilities?

What are special processing requirements for a Manufacturer?

What are prohibited products for a Manufacturer?

What are Manufacturer requirements for edible products?

What are Manufacturer requirements for topical products and concentrates?

What are Manufacturer requirements for failed batches?

What are the general requirements for a Manufacturer for labeling and packaging?

What are the Manufacturer labeling requirements?

What are the Manufacturer packaging requirements?

What are Manufacturer recordkeeping requirements?

What are the Manufacturer Track and Trace requirements?

What are the Manufacturer advertising requirements?

What are the Manufacturer inspection requirements?

What are the Manufacturer transitional requirements?

What are Standard Conditions of Probation?

What are core Disciplinary Guidelines?

What is covered by required testing by a Testing Laboratory?

What are the phase-in requirements for Testing Laboratories?

What are the operating requirements for a Testing Laboratory?

What are the definitions applicable to Testing Laboratories?

What are the disciplinary provisions contained in the Emergency Regulations?

What is the Chain of Custody requirements for a Testing Laboratory?

What is contained in a Testing Laboratory Certificate of Analysis?

What are procedures for Samples obtained by a Testing Laboratory from a Distributor?

LA Cannabis Licensing – Mess

LA Cannabis Licensing – Mess

LA Cannabis Licensing – Mess  As the marijuana market in the Golden State grows and matures, business LA Cannabis Licensing - Mess owners are facing dueling challenges:

  • MJ entrepreneurs are finding it’s particularly tough to obtain a business permit in Los Angeles.
  • Lawsuits involving trademarks and proprietary business information are popping around the state.

L.A. stuck in neutral?

Los Angeles has long been touted as among the biggest municipal markets in the world for the cannabis industry. However, it remains in a “hurry-up-and-wait” mode, which is frustrating hundreds of businesses waiting to tap the city’s potential for commercial marijuana rollouts.

In short, MJ business owners are facing a licensing quagmire.

The city issued permits for 169 retailers, but zero for growers, distributors, edibles makers, testing labs or other types of plant-touching businesses.

According to the L.A. Department of Cannabis Regulation (DCR), the city received nearly 600 applications for business permits for its second round of licensing – which opened in August and closed Sept. 13.

The licensing involves businesses that qualify under L.A.’s social equity program and are part of the existing MJ supply chain.

Of those, 334 paid application fees and are being processed. Also, 11 testing labs were “granted temporary approval,” a DCR spokeswoman wrote in an email to MJBizDaily.

LA Cannabis Licensing – Mess

But to date, no Phase 2 licenses have been issued, according to an email from Jason Killeen, a DCR assistant executive director.

“We are working very closely with the State to ensure that our Phase 2 applicants have an opportunity to apply for a temporary license before the end of the year,” Killeen wrote to MJBizDaily.

Here’s why the timing of the temporary licensing is important:

  • Temporary cannabis business licenses from the state won’t be available to new industry entrants after Dec. 31. And the three state agencies that grant permits are warning potential applicants they may not get a temporary license if their applications are turned in after Dec. 1.
  • Why the warning? The agencies report they may not have enough time to process applications to issue temporary licenses before the end-of-the-year deadline.
  • This is important because local authorization is still required for any state license. Consequently, any of the hopeful L.A. marijuana business owners that don’t have a city permit before 2019 could be forced to apply for a full annual state permit instead of a temporary state license.

LA Cannabis Licensing – Mess

Applying for a full annual license, however, is far more complicated.

“Applying for a temp license is like filling out a sandwich form, but the annual license is like applying for college,” said Terra Carver, executive director of the Humboldt County Growers Alliance.

Moreover, the city will be launching a third round of licensing.

It will involve “general” applicants – basically, everyone else that doesn’t yet have a permit and doesn’t qualify for a social equity license. There’s no word on when that may begin. But it won’t be easy to get such a permit.

Lawsuits abound

More lawsuits involving business competitors are emerging as the California cannabis industry grows.

There’s the ongoing litigation between L.A. consultancies SIVA Enterprises and Cirrata Ventures.

More recently, longtime Humboldt County cannabis businessman Craig Nejedly filed suit on Nov. 2against Santa Rosa-based CannaCraft.

Nejedly runs Talking Trees Farms, a licensed grow, and a hemp clothing line, Satori Movement. He alleges in his civil lawsuit that CannaCraft infringed on his trademark of the word “Satori” by debuting an edibles line bearing the same name.

CannaCraft executives did not immediately respond to a request for comment. (CannaCraft also controls at least two other cannabis businesses, according to its website: Care By Design, which specializes in CBD tinctures, and AbsoluteXtracts, a concentrate, and vape cartridge maker.)

The suit asks the U.S. District Court in Northern California to bar CannaCraft from using the name “Satori” and related trademarks in the future. It’s seeking monetary damages. What the Satori lawsuit drives home, once more, is how dicey legal issues will proliferate for marijuana businesses.

It’s no longer a game for rulebreakers. Rather, it’s a highly regulated industry that will be governed by the courts and lawmakers – not rebel entrepreneurs who invent their own business rules.

Source: California Marijuana Notebook: L.A.’s licensing logjam & mounting lawsuits for MJ businesses

LA Cannabis Licensing – Mess

Recent Blog Articles

Recent Blog Articles

Recent Blog Articles published on aBIZinaBOX Cannabis

Sessions Get Great Cornholio

Election Results – Cannabis Wins

Fontana Ordinance Struck Down

Cannabis Distributor Gets Federal Prison

aBIZinaBOX Midterm Election Contest

Grow – Neighboring Properties Unaffected

LA Cannabis Regulators Warn

Financial – Owner Interest Update

Management Companies – Cannabis Operations

CalCannabis Temporary License Cut-off

California Local Elections

Cannabis Investment Fraud – Illinois

BCC Regulates Technology Platforms

NCIA Nearly Doubles Funds

CCIA Selects Indiva Advisors – Official CPA Firm

Welcome Canadian Reefer Madness

Northern California Cannabis Harvest 2018

DEA Reiterates Cannabis Federally Illegal

ICE – What Canadians Should Expect

Mendocino Appellations Project Update

Chicago – Stop – Frisk – Trump – Says

Cannabis Busts – US Borders

MRR Ancillary Product Report

IRS Updates Biz Meal Guidelines

Structuring Transactions To Evade

Structuring Inbound Investments

California Legislative Update 10 2 2018 – Interworking Tool

Where Do You Put Your Cannabis?

Legal Mumbo-Jumbo – Advisors Certifications ??

Employee Payroll – 1099 Contractors – IRC Sec. 199A Pass-Thru Deductions

California Seed-Sale Halloween

SF Cannabis Consumption Permit Regs

California Extends Privacy Rules – Adult Use

METRC Frequently Asked Questions

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Coke With Your Cannabis?

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Check Out Wake – Bake Daily

Los Angeles – Transactions under Prop. M

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Sessions Get Great Cornholio

Sessions Get Great Cornholio

Sessions Get Great Cornholio – Attorney General Jeff Sessions was pushed out Wednesday as the country’s chief law enforcement officer.

Cannabis stocks, already bolstered by wins in the midterm elections, got an added boost when anti-pot Sessions Get Great CornholioAttorney General Jeff Sessions announced his resignation Wednesday afternoon.

Exchange-traded funds that track marijuana stocks, including the Horizons Marijuana Life Sciences Index ETF in Toronto and the U.S.-listed ETFMG Alternative Harvest ETF, jumped to fresh highs on the news, gaining 7 percent and 6.2 percent respectively.

Tilray Inc. saw the biggest surge, climbing as much as 25 percent in its biggest gain since Sept. 19, when the stock almost doubled before giving back most of the gains in a wild ride for investors. Other cannabis-related stocks in both the U.S. and Canada also gained.

Sessions was a major foe of marijuana legalization, moving last January to rescind an Obama-era policy that allowed states to make their own decisions on cannabis without interference from the federal government. That announcement sent pot shares plunging three days after California became the largest jurisdiction to legalize recreational use.

Cannabis stocks were broadly higher Wednesday after Michigan voted to legalize recreational marijuana and Missouri approved medical pot. The Democrats’ House of Representatives win was also thought to be a positive catalyst for stocks, making legal reform more likely.

Sessions told the president in a one-page letter that he was submitting his resignation “at your request.”

Trump announced in a tweet that he was naming Sessions’ chief of staff Matthew Whitaker, a former United States attorney from Iowa, as acting attorney general.

The resignation was the culmination of a toxic relationship that frayed just weeks into the attorney general’s tumultuous tenure when he stepped aside from the investigation into potential coordination between the president’s Republican campaign and Russia.

Trump blamed the decision for opening the door to the appointment of special counsel Robert Mueller, who took over the Russia investigation and began examining whether Trump’s hectoring of Sessions was part of a broader effort to obstruct justice and stymie the probe.

The implications for Mueller’s investigation were not immediately clear. The Justice Department did not announce a departure for Deputy Attorney General Rod Rosenstein, who appointed Mueller more than a year and a half ago and has closely overseen his work since then.

Source: BREAKING: Anti-cannabis advocate Jeff Sessions forced out as attorney general by Trump

Sessions Get Great Cornholio

Election Results – Cannabis Wins

Election Results – Cannabis Wins Election Results – Cannabis Wins – The marijuana election results are in! Michigan legalized marijuana.  North Dakota rejected a marijuana legalization measure. The measure failed by a margin of 41 percent in favor to 59 percent againUnlike cannabis legalization laws approved in a number of other states to date, the North Dakota initiative would have set no … Continue reading “Election Results – Cannabis Wins”

Election Results – Cannabis Wins Election Results – Cannabis Wins – The marijuana election results are in! Michigan legalized marijuana.  North Dakota rejected a marijuana legalization measure. The measure failed by a margin of 41 percent in favor to 59 percent againUnlike cannabis legalization laws approved in a number of other states to date, the North Dakota initiative would have set no … Continue reading "Election Results – Cannabis Wins"

Fontana Ordinance Struck Down

Fontana Ordinance Struck Down

Fontana Ordinance Struck Down – San Bernardino County Superior Court Judge David Cohn has issued a ruling striking down parts of a City of Fontana ordinance placing restrictions on residential marijuana growers in the first court case limiting aFontana Ordinance Struck Down local jurisdiction’s ability to regulate personal cultivation rights in California under Proposition 64 (AUMA).

The ruling is the result of a lawsuit filed against the city by the Drug Policy Alliance and the ACLU (at the urging of Cal NORML) on behalf of plaintiff Mike Harris, a retired ironworker and registered nurse seeking to cultivate marijuana in his Fontana home to ease his arthritis and pain from past injuries.

“The issue, in this case, is how far a city can restrict the category of persons who are entitled to grow marijuana plants, and the circumstances under which they may grow the plants, without running afoul of the AUMA’s requirement that the regulations be ‘reasonable.’ The City of Fontana has gone too far,” wrote the judge.

The ruling leaves in place the requirement to obtain a permit for indoor cultivation but disallows the $411 initial permit fee and the $230 annual renewal fee, instead of requiring the city to re-evaluate the cost of permitting based on the required changes to its ordinance.

Fontana Ordinance Struck Down

The ruling eliminates virtually all of the permit requirements plaintiffs objected to. Specifically, it:

• Eliminates all qualifications for the applicant other than that they be at least 21 years old. Gone are the requirements that a person not have certain felony convictions, be live-scanned, and not have any outstanding code enforcement actions or payments owed to the City.

• Eliminates the requirement that there be only one “cultivation area” in a dwelling.

• Eliminates the requirement that a “cultivation area” be used exclusively for growing marijuana.

• Eliminates the prohibition on storing chemicals and explosive gases in the “cultivation area”.

• Eliminates the requirement that the cultivation area is accessible by only one locked door, and that all windows, skylights, etc. in the area be lockable.

• Eliminates the requirement that the cultivation area is accessible only by a permit holder.

• Eliminates the requirement that the residence where cultivation takes place have all plumbing, electrical and other utilities “properly permitted by the City”.

• Eliminates the requirement for a building inspection of the premises prior to issuing a permit.

Fontana Ordinance Struck Down

“The remainder of the Ordinance may remain, although Fontana may wish to draft a less onerous ordinance instead,” the ruling states.

“We hope that this lawsuit serves as an example for other cities that have passed or are considering similar ordinances,” said Joy Haviland, staff attorney at DPA.

Prop. 64 requires local jurisdictions to allow 6-plant marijuana gardens for personal use but permits them to “reasonably regulate” the gardens. Regulations can include forcing gardens indoors; however, locals lose the ability to apply for grants to pay for law enforcement and other services if they ban personal outdoor gardens.

Source: Local Restrictions on Personal Cannabis Cultivation Struck Down in Court

Fontana Ordinance Struck Down

Cannabis Distributor Gets Federal Prison

Cannabis Distributor Gets Federal Prison

Cannabis Distributor Gets Federal Prison – for failing to report over $1 million in revenue from cannabis distribution activities.

A Santa Rosa, California, real estate salesperson was sentenced to 24 months in prison yesterday for filing a false income tax return that did not report income earned from the sale of marijuana, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney Alex G. Tse of the Northern District of California.

According to court documents, Charles T. Woods, from 2012 to 2014, deposited more than $1 million dollars in cash earned from his marijuana distribution business into over 25 bank accounts he controlled.  Woods hid this income from his tax return preparers by providing them with incomplete financial information, which in turn caused the filing of false tax returns for tax years 2012, 2013, and 2014.  The total tax loss caused by Woods’ conduct was over $450,000.

Cannabis Distributor Gets Federal Prison

There is a lesson here everyone…just because cannabis has become legal in California, the rules with respect to income tax evasion haven’t changed at all. Expensive watches, cars, furnishings are one of the first clues that will attract the IRS Criminal Investigation Division’s eyes. The IRS manual identifies social media as a great starting point for investigation.

Cannabis Distributor Gets Federal Prison


Assholes Love Cannabis

Assholes Love Cannabis

Assholes Love Cannabis  – the Great Cornholio who is a very high profile asshole, and an expert on TP and the bunghole has endorsed hemp toilet paper for a litany of reasons. Now the is no excuse that anyone can make not to support the legalization of cannabis. Our sole remaining question is whether hemp toilet paper falls under medicinal or recreational use.

Assholes Love Cannabis
Assholes Love Cannabis

People say hemp produces more pulp than trees. Hemp is much higher in cellulose, the component used to make paper – and has less lignin (which is removed pre-pulping) than timber. So, is there a way to measure cellulose content in plants? Maybe we can rate the paper according to how much land was used to make it, the effects on the ecosystem and how it affects the atmosphere…for 6-month-old hemp plants with higher cellulose than trees, how much trees would be killed for the same amount of let’s say an acre of high fiber cultivar hemp seeded generously.

Assholes Love Cannabis

How are the air and soil quality affected, how many animals and have lost their home and food source, how much topsoil may now blow away, and will there be more flooding as a result? There must also be a rating for how toxic the water becomes and what chemicals are used in processing, as they inevitably end up in the water and surrounding land. How does this compare to recycled paper? Is it worth looking into making items such as toilet paper and paper towels from raw hemp, or is continuing to make more of those products with recycled paper a better idea? Eventually, when more hemp paper is available en masse, the recycled paper will be made with hemp. The great benefit of hemp is that it is such a strong fiber and can be recycled many more times than tree paper.

Assholes Love Cannabis

aBIZinaBOX Midterm Election Contest

aBIZinaBOX Midterm Election Contest

aBIZinaBOX Midterm Election Contest is our rather small attempt to divert everyone’s attention from the gruesome reality we are currently facing in the United States.

  • POTUS is mentally defective and unfit to hold the office
  • We have more troops guarding the US – Mexican border than we have in Afghanistan
  • POTUS is tweeting overtly bigoted, racist messages to distract from everything else that is going on.
  • While POTUS talks a good game on cannabis, he hasn’t delivered on his promises and has spawned a working group that is hostile to the industry.

So how about a contest to give everyone something to look forward to, will announce the winner at 10 PM PST on Tuesday evening

aBIZinaBOX Midterm Election Contest
aBIZinaBOX Midterm Election Contest

You can use the contact form below to enter.

While you are at it check “According to Zoot!” our weekly column on Cannabis Law Report

Cannabis Cooperative Associations Intro

Cannabis Cooperative Associations Intro

Cannabis Cooperative Associations Intro marks our effort to introduce our clients and friends in the cannabis industry in California to a newly created form of business entity. Cannabis Cooperative Associations IntroCCA’s are an excellent vehicle for small, craft-oriented California cannabis cultivators [CalCannabis Cultivation Type 1A, 1B, 2A or 2B] to increase their operating efficiency and lower the cost of doing business.

  • CCA’s are an organization that is owned and controlled by licensed cultivators to grow, harvest and move cannabis products into the marketplace. Cannabis cooperatives share in the common purpose of supporting growers to meet their objectives of having thriving and sustainable businesses that are resilient and can adapt to member’s changing needs. Self-reliance and self-help are the features of cooperatives.


  • Changes in California law in 2018 relating to cannabis allow small outdoor growers to organize Cannabis Cooperative Associations (CCAs”).


  • CCAs are a special form of California corporation that is similar to a farmers’ agricultural cooperative.


  • The new statute specifies that certain license types may pool their resources for cannabis farming of no more than four acres total and all Members of the Association must be disclosed to the licensing agencies.


  • Specifically, the cooperatives must include three or more Members (that have not been licensed to operate a cannabis business in another state or country) and form an Association for the purpose of:

i) The cultivation, marketing, or selling of the cannabis products of its Members.

ii) The growing, harvesting, curing, drying, trimming, packing, grading, storing, or handling of any product of its Members.

iii) The manufacturing, selling, or supplying to its Members of machinery, equipment, or supplies.

  • CCAs can engage in all of the functions that take place in the movement of cannabis from the cultivator to consumer – processing, extracting, packaging, transportation, etc.


  • A CCA that engages in other functions must have licenses for such businesses, but if such business is conducted through entities that are wholly owned by the CCA, all of the business is deemed conducted by the cooperative association.


  • The special treatment of CCAs impacts regulation of cannabis businesses at both the local level and at the California level.


  • Local jurisdictions can regulate cannabis businesses conducted through CCAs only with respect to land use and public health and safety issues.


  • California law specifically authorizes CCAs to engage in distributor and manufacturer functions through wholly-owned entities [both corporate and non-corporate].


  • At the California level, all of the business activities are considered to be conducted by the cooperative association under a single umbrella of cultivators and the cultivator owned and operated businesses.


  • For example, a CCA that engages in processing as a wholly owned incorporated distributor is treated as if the grower/owners of the CCA are directly engaged in the business activity collectively.


  • California specific authorization of a CCA ’s business activities preempts local regulatory requirements regarding the operation of cannabis businesses except for land use and public health and safety.

If you would like information about the mechanics of organizing a CCA, we recommend you check out Emerald Grown which is a run by the former Executive Director of the California Grower’s Association, Hezekiah Allen who played a significant role in the development of CCA’s.

CCA’s help

  • Consumers enjoy affordable access to premium-quality, farm-fresh cannabis products.
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Grow – Neighboring Properties Unaffected

Grow – Neighboring Properties Unaffected

Grow – Neighboring Properties Unaffected A southern Colorado marijuana grow facility did not hurt Grow - Neighboring Properties Unaffectedthe property values of a neighboring couple, a jury in Denver decided Wednesday, ending a closely watched lawsuit that had hung like a dark cloud over the state’s cannabis industry.

If the lawsuit had been successful, it could have created a blueprint for opponents of marijuana legalization to dismantle the industry through civil cases brought under federal anti-racketeering laws. The Racketeer Influenced and Corrupt Organizations Act, better known as the RICO act, allows plaintiffs to collect three times the amount of damages that jurors find plus attorneys’ fees, meaning that marijuana businesses — which are illegal under federal law and, thus, in violation of RICO — could be on the hook for million-dollar payouts over simple property disputes.

Instead, jurors deliberated for about half a day before reaching a verdict in favor of the facility, which sits about 2 miles east of Interstate 25 near the town of Colorado City.

“They found that we were not responsible for any of the alleged damages,” said attorney Matthew Buck, who represented the grow and its owner, Parker Walton.

“A loss, in this case, would have meant the loss of his business,” Buck said.

The lawsuit was brought by Michael P. and Phillis Windy Hope Reilly, who own and live on land adjacent to the grow facility. They said the grow damaged their property values because of noise and odor, because it harmed their views, and because no one wants to live near illegal activity.

The Reillys were represented by a Washington, D.C.-based law firm with ties to U.S. Attorney General Jeff Sessions. An anti-drug organization called Safe Streets Alliance had also originally been a plaintiff in the case, but it was dismissed during the litigation.

The Reillys declined to comment as they left the courthouse Wednesday.

University of Denver law professor Sam Kamin, an expert on cannabis law, said the verdict is a cautious victory for Colorado’s marijuana industry. Had the Reillys prevailed, it could have created incentives for plaintiffs and lawyers to bring many more RICO cases against marijuana businesses — something a Safe Streets attorney had suggested was the plan.

Source: Jury finds in favor of Colorado marijuana grow in a closely watched federal lawsuit

Grow – Neighboring Properties Unaffected