Cluster of new laws giving some cannabis users big headache

Home deliveries
remain unclear


 

 

The passage of Proposition 64 in 2016 legalized recreational cannabis consumption across California, but also gave the state’s more than 480 cities the power to decide for themselves whether to allow the commercialization of the drug within their borders.

Thousand Oaks officials voted to approve one medicinal dispensary business but no deliveries to homes. Agoura Hills has prohibited all marijuana businesses and deliveries. Calabasas and Westlake Village have banned storefronts, but allow deliveries to come in from out of town.

While all the cities prohibit locally based delivery businesses, some suppliers appear to not have gotten the message.

“We had a delivery (recently), and I know they operate out of Westlake Village,” said resident and medical-marijuana user Lisa Krasnoff.

“My boyfriend had a conversation with the guy and he was a local. I think he’s doing it out of his house. We’d never called him before, and I don’t think he’s very legitimate because he didn’t require any pap erwork be shown to him,” Krasnoff said.

The online service Weedmaps provides the locations of storefront dispensaries, delivery services and doctors who recommend medicinal cannabis as a treatment.

A quick search shows nearly two dozen delivery operations between Kanan Road in Agoura Hills and Lynn Road in Thousand Oaks.

Scott Wolfe, deputy city manager for Westlake Village, said the city investigated cannabis delivery businesses before Prop. 64 was passed. His staff determined that some operations were using a mailbox at the city’s UPS store as a business address, but since no business was being conducted from the location there was no violation.

Wolfe said city staff periodically checks for local delivery services. If they find one, they notify the sheriff’s department, but the problem is handled by the city.

“We would approach it from a code enforcement perspective and say, ‘Hey, here’s what our city’s regulations are. If you’re in violation we need to fix this,’” Wolfe said. “If we didn’t get cooperation, the next step in our standard code enforcement process is to bring our prosecutor in. We’re not after punitive action, we just need compliance.”

According to Weedmaps, a delivery company can have a different address from what’s shown on the map.

“A delivery service does not necessarily need an exact address to get their delivery icon on our regional map. The icon should be pinned within the city and ZIP code on their listing page,” a Weedmaps spokesperson said. “We will also not place the map marker in an area that does not coincide with the regional area the client is servicing, for example if the client services Irvine we will not pin their icon in Tustin.”

How did we get here?

Wolfe said the Westlake council reached its 2017 decision to outlaw commercial cannabis quickly. Council members took no issue with local patients having their medical orders filled by an out-of-town delivery service. They are the only city in the Conejo Valley to permit delivery.

Cannabis has been delivered to homes since long before Prop. 64 was passed. Drivers in unmarked cars can make their way onto city streets and deliver pot to local users without raising suspicion.

What’s more, some cannabis retailers forgo the requirements of Prop. 64 and choose instead to operate under Prop. 215, the 1996 law that allows for medicinal cannabis use. The law had previously been criticized as a facade that allowed nearly anyone to qualify as a patient.

Krasnoff got an online recommendation to use medical cannabis for her anxiety. “Who doesn’t have (it)?” Krasnoff said. “People can say they have migraines or anxiety or insomnia. You can say anything.”

A cannabis business needs three things to legally operate in accordance with California state law: a seller’s permit, a local license and a state license.

A seller’s permit is obtained through the California Department of Tax and Fee Administration. A dispensary has to have a seller’s permit to apply for a state license from the Bureau of Cannabis Control. But there’s no framework in place to ensure that a business with a seller’s permit applies for a state license.

Newbury Park resident Joe Kyle, 26, operates Joe Grow Consulting, a consulting firm for cannabis businesses. He said that in his work with state agencies he’s encountered holes in the system that allow businesses to operate in a legal gray area because, while they are unlicensed, they still pay taxes.

“The Prop. 215 market has created all different types of businesses—unincorporated or incorporated, either a nonprofit or an LLC,” Kyle said.

“There’s people that are doing that. They have their nonprofit set up, they get their seller’s permit, get their excise tax, and now they’re just running delivery out of their home, just like you can go on Weedmaps and see all these companies, but they’re not going further with getting the proper licensing that they need,” the business operator said.

But what about the green?

California has levied a 15 percent excise tax on cannabis. An excise tax is a tax paid on the purchase of a specific product, like gasoline, alcohol or tobacco.

The California Department of Tax and Fee Administration reports that the tax revenue from cannabis cultivation and sales has brought in almost $61 million in the first quarter of 2018.

Cities that allow for cannabis businesses can impose their own excise tax to bring in additional revenue for themselves.