Happy new year all!

Some housekeeping news: For the last couple month, we were dealing with a tech issue that disrupted our subscription management, including the delivery of some subscriptions.

Happily, the situation is resolved. We’re on a new system and will be running at full steam in a week or two. I’ll reach out to some of you whose subscriptions may have been affected. But if you have had any problems drop a line and we’ll get those resolved. 

The coming year promises to be tumultuous for the cannabiz, but WeedWeek has never been better prepared to support our readers with timely, credible news and information that matters to your business.

We’ve also got some exciting things coming. Here’s to a good one.

In the newsletter:

• What to expect as lawmakers return to Sacramento

Alex

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As the state legislature’s session convened this week, the struggling cannabiz is looking for tax cuts and regulatory changes to help reduce costs. I spoke to industry lobbyist Amy O’Gorman Jenkins of Precision Advocacy about her priorities for this year’s session.  

Last year the legislature zeroed out the hated cultivation tax. While the new tax regime has created a new set of problems, Jenkins said one of her top priorities this year will be “protecting the integrity” of last year’s tax law (AB 195).  

• AB 195 ensures that the state’s 15% excise tax won’t be raised for three fiscal years. However, after that it leaves open the option of raising it to 19%.

In early summer when the bill was signed, California had a massive budget surplus. That has since cratered into a $24B deficit, with additional deficits projected for coming years.

• To support AB 195 the state set aside $150M to support funding guarantees for youth programs, law enforcement, environmental protection and other pot tax beneficiaries. With money tighter this year, Jenkins said it’s a priority to ensure the cannabiz can hold on to its hard fought tax cut. 

With more than 30 newly elected lawmakers coming to Sacramento this year, Jenkins said she’ll also want to focus on educating them on the industry and its concerns. (The California Senate has 40 members, the State Assembly has 80.)

Jenkins’ additional priorities include:

1. With intoxicating hemp products “flooding the market,” the cannabiz is concerned about competing with unregulated and intoxicating hemp-derived cannabinoids. Some states, require these products to go through the cannabis supply chain.

   State law AB 45 requires the Department of Cannabis Control (DCC) to produce a report on this issue. It’s several months late.       

2. Last year the industry narrowly defeated a bill, supported by public health groups, that would have added big, yellow warning labels and “graphic” language about health risks, to cannabis packaging. With similar bills likely to arise this year, Jenkins said she is exploring a “pre-emptive” bill that would propose new warning labels.

   She’d like any new labels to be in language the industry can live with; and not create extra costs to produce.

LA tax headache ongoing…

Last week, I wrote about a tax conflict between the state and the city of LA. Now that the excise tax is paid by retailers, there’s a disagreement over which jurisdiction gets to tax the other’s tax, and therefore collect more.  The new tax law has taken effect and the conflict appears to be ongoing. Several retailers didn’t respond to questions about how they’re calculating tax in their LA stores.

“Nothing has been fixed yet,” said Jonatan Cvetko of trade group United Cannabis Business Association, which has been calling attention to the issue. “And no one is explaining it.”  Similar disputes may exist in other jurisdictions as well.

Beware the debt bubble…

We’ve been hearing about the California debt bubble for a while but Wesley Hein, president of the Cannabis Distribution Association and an executive with Mammoth Distribution rang the alarm to WeedWeek. It’s “becoming unsustainable. Payment plans are made and then broken within a few months,” he wrote.

“We are going to see some big defaults in the coming months,” he said. “The legal cannabis industry will not go away, but it will be smaller, more concentrated, and less diverse, hurting all stakeholders.” (Mammoth’s in house brands include Heavy Hitters and Almora.) 

Business: 

• Taxes and regulations are “killing” small, legal farms in the Emerald Triangle, the L.A. Times reports.
• Struggling “west coast MSO” Unrivaled announced it has binding letters of intent to acquire Cookies stores in Redding and Oakland.
• Unrivaled also sold two Oregon assets, is reopening its Blum San Leandro dispensary (Alameda Co.) with an operator partner, and revamped its executive team. Now in place: CEO Sabas Carrillo. Chief Revenue Officer Tracy McCourt and COO Jim Miller.
• Law firm Dovel & Luner has filed what’s at least it’s fifth lawsuit alleging potency inflation, this one against Cannabiotix.
• The Parent Company‘s equity venture is launching a 12-week “brand success program” to support minority owned brands and provide them with shelf space. The first brands will be CRONJA from CEO and co-founder Bryant Bowens and Disco Jays by MAKR House, from Activist and entrepreneur Amber Senter.
  @itsmeambere

Local:

• Following storms and earthquakes, the Emerald Triangle is facing “a lot of trauma.”  State regulator DCC’s Eureka office is temporarily closed.
  North Coast Journal
• Fresno is weighing whether to award Stiiizy the city’s third dispensary permit.

Fun and interesting:

• Arizona Republic columnist Phil Boas weighs in on the stigma.
• “The vibes are off,” Jackie Bryant writes in High Times. 
• “No, I don’t want to smoke weed with you.”
  The Bluntness
• “Wait, is my dog stoned?”
  N.Y.Times

Company milestones:

• Snoop Dogg is launching Death Row Cannabis. He acquired the legendary hip-hop label — which launched him 30 years ago — last February.
  Forbes
• Uncle Arnie’s, the state’s bestselling high-dose beverage, has launched a crowdfunding campaign at a pre-money valuation of $20M.
• Brand accelerator PetalFast added Emerald Sun, a house of sungrown brands, to its portfolio.
• Lowell Farms is expanding to Arizona, in partnership with The Pharm.
• Brand Yummi Karma partnered with distributor Nabis.
• Publicly traded Glass House sold $4.7M in Series C preferred stock. 

Job Moves:

• Cultivator Kristian Andreassen joined Conception Nurseries.