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California Proposition 64, Part III: Revenue - who benefits?

Posted by Ken Tapman on Sep 14, 2016 10:30:00 AM
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Part III: With upcoming elections and the launch of Canopy's Berkeley, CA, cannabis startup accelerator, we've followed California's regulatory environment closely. The following blog post is part of a series dissecting California’s November 8th ballot initiative commonly referred to as the “Adult Use of Marijuana Act (AUMA)", or Proposition 64. Parts I and II discussed the AUMA's major objectives and next steps for regulated cannabis businesses; as well as highlighted several of the Act's provisions, such as the allowance of hemp as an agricultural product, and the Act's intensive licensing schedule.  Part III reviews where revenue will be allocated, and limits set on marijuana businesses in order to discourage underage access and use.An Unusual Advancement of Funds

The Adult Use of Marijuana Act will tax both the growth and sale of marijuana to generate hundreds of millions of dollars annually. These revenues will cover the cost of administering the new law and, in part, will provide funds to:

  1. Invest in public health programs that educate youth to prevent and treat serious substance abuse;
  2. Train local law enforcement to enforce the new law with a focus on DUI enforcement;
  3. Invest in communities to reduce the illicit market and create job opportunities; and
  4. Provide for environmental cleanup and restoration of public lands damaged by illegal marijuana cultivation.

It is highly unusual for a state to “advance” funds to state agencies. As mentioned above, however, AUMA would authorize doing this up to $30 million dollars. This approach evidences the intent of the drafters of the Act to make sure that state agencies act as quickly as possible to implement the new law. Of course, any funds advanced in 2017 or 2018 would be repaid out of future taxes.

Discouraging Underage Access

Currently, children under the age of 18 can just as easily purchase marijuana on the black market as adults can. By legalizing marijuana, AUMA will incapacitate the black market and move marijuana purchases into a legal structure with strict safeguards against children being able to get access to marijuana, specifically the Act:

  1. Prohibits the sale of non-medical marijuana to anyone under 21 years old;
  2. Bars marijuana businesses from being located within 600 feet of schools and other areas where children congregate
  3. Establishes strict mandatory packaging and labeling requirements for marijuana and marijuana products; and
  4. Mandates that marijuana and marijuana products not be advertised or marketed towards children.

In Part IV, we'll look at the roles state government agencies will play in rolling out the AUMA.

Topics: Legal