Gift California’s Cannabis Industry
Gift California’s Cannabis Industry – this is a follow-up to a criticism of California NORML that was included in a Post late in 2018. We criticized California NORML for pointing to the looming January 9, 2019, the deadline by
which Proposition 215 Collectives are supposed to have secured licenses. We criticized California NORML for failing to offer any solutions to such collectives. No one appears to have stepped into this breach so we will suggest one of several solutions that are available.
We are also going to do something with this post that is not consistent with our business model. We are in the business of selling information and advice. We are not in the business of giving away the same. However, today we are going to give away information and advice. It is the right thing to do under the circumstances.
In 2017 the California legislature passed a related group of laws designed to –
1.“Promote, foster, and encourage the intelligent and orderly marketing of cannabis product through cooperation.”
2.“Eliminate speculation and waste.”
3. “Make the distribution of cannabis product as direct as can be efficiently done.”
4. “Stabilize the marketing of cannabis product.”
The California Legislature passed this group of laws after Proposition 64; after the creation of the Bureau of Cannabis Control; and after the myriad of regulations, ordinances and taxes that are drowning California’s medical and recreational cannabis industry.
Proposition 215 Collectives were originally organized to accomplish Items 1 and 3, although no such a Collective would have explained its organization and operation in such terminology. Items 2 and 4 flow from operating as a Proposition 215 Collective.
So where is this group of laws hidden? How does a Proposition 215 Collective use these laws? Ask yourself, Where is the best place to hide something of great value? The best place to hide something of value is in plain sight where its value will not be recognized. The quoted language is the California legislature’s statement of the purpose of the enabling legislation that created Cannabis Cooperative Associations (“CCAs”) as a separate form of corporation expressly for California’s cannabis industry. The quoted language is from Section 26222 of the California Business and Professions Code, which is the heart of the enabling legislation for CCAs.
The California Legislature gave Proposition 215 Collectives the tools to survive and prosper with its enactment of the legislation that created CCAs. The Legislature was visionary in enacting this legislation. The Legislature gave collectives this box of tools in order to secure the votes of the members both cultivators and consumers. The Legislature, however, failed to explain how collectives could use this box of tools.
Gift California’s Cannabis Industry
The Legislature has no incentive to explain how to use these tools. As an individual, you are important for your vote. As an individual, even as a collective of individuals, you lack the financial power to have a significant influence at a state-wide level. The Legislature primarily passed legislation relating to California’s cannabis industry for the perceived tax revenue it could exact from the industry. The members of collectives and the consumers of their wares generally lack the financial resources to be well-represented in the legislature. If the members of collectives had substantial financial resources, they would not have needed to form collectives.
All readers of this post are aware that those individuals and businesses with substantial financial interests are usually well-represented. Those who have the knowledge to teach Proposition 215 Collectives how to use CCAs do so for their own interests which are primarily financial. Anyone who is old enough to be reading this Post knows that moneyed interests are always well advised. Few, if any, collectives have the financial resources to have a significant influence on legislative policy.
The preceding is a long explanation for why we decided to give away information and advice for free in this post. CCAs can be utilized to preserve the form, the spirit and the principles of Proposition 215 Collectives. The California Legislature gave Proposition 215 Collectives a Noah’s Ark to survive the great flood of the regulation of California cannabis. Get out and do it!
But wait there is more! The California legislature was very likely even more visionary than it intended. Proposition 215 Collectives received with CCAs even more than the Legislature intended. The Legislature gave Proposition 215 Collectives an opportunity to neutralize the impact of IRC Sec. 280E. Think of a CCA as a cooperative of backyard growers of heritage organic tomatoes instead of cannabis. Suppose this cooperative allows its consumers of organic heritage tomatoes become consumer members of the cooperative who contribute capital to the cooperative to be used by the cooperative to pay any non-deductible business expenses of the cooperative (Read IRC §280E) in exchange for receiving tomatoes at a lower price. Both cultivators and consumers benefit from such an arrangement. Only for the IRS suffers because IRC Sec.280E is neutralized.
We enjoyed giving it away so much that it is likely we will do it again soon.