Schwass Law Firm

06/23/2022

Congratulations to Greenshock Farms, Mendocino Family Farms, Arcanna Flowers/River Txai Farms, and Talking Trees Farms for the numerous awards from the California State Fair's first annual cannabis awards. Well deserved!

If you are interested in learning more about those farmers, their genetics, and/or their growing process, check out the California Cannabis Report at https://schwasslaw.com/california-cannabis-report/



https://castatefaircannabisawards.com/award-winners/?fbclid=IwAR20TI0m8SKqf2TWsT5fqS5hvQooR7jQgbAeGRWW3_20ZcGBdxiq8qbMJr8

2022 Award Winners Best of California Outdoor Indoor Mixed Light Congratulations to our inaugural Award Winners! With over 300 submissions representing some of the finest cannabis and cultivators t…

06/21/2022

Last Friday, the DCC released its proposed regulations to begin issuing large cultivation licenses, which would allow outdoor cultivation of over 1 acre of outdoor canopy and over 22,000 sq. ft. of indoor canopy and allow for the consolidation of smaller licenses.

The consolidation is added because the state jumped the gun in allowing large cultivation operations by allowing businesses to stack smaller cultivation licenses on one property with no limits.

MAUCRSA (Medical and Adult-Use Cannabis Regulation and Safety Act, 2017) states that large cultivation licenses are to be issued starting January 1, 2023. The state is beginning the process of establishing that issuance process.

By allowing companies to consolidate licenses, the state estimates that companies will save $9.336 million per year on licensing fees. However, those savings will likely be limited to large companies that have had significant capital to build and license large operations by stacking small licenses.

Ultimately, the issuance of large licenses will be another hit to craft cultivators.

The DCC is accepting public comment until August 2, 2022.

You can comment on the proposed regulations until 5 p.m. on August 2, 2022. You can submit comments by mail or email. You only need to submit your comment by one method.

Send your comment to DCC, and reference the rulemaking topic (“license fee waiver and deferral regulations”):

By mail: DCC Legal Affairs Division, 2920 Kilgore Road, Rancho Cordova, CA 95670
By email: [email protected]

You can also submit your comment verbally through a public comment hearing which will be held: August 1, 2022, 1 p.m. to 4 p.m.

State of California

06/10/2022

When Prop 64 passed in 2016 many people thought a new green rush was upon us and that there were large amounts of money to be made in the newly legal recreational cannabis market.

Fast forward to 2022, the majority of cannabis businesses are barely surviving on razor-thin margins while the state collected over $1 Billion in tax revenue in 2021.

Major reform is needed to ensure the California cannabis market isn't consolidated into just a few companies and this article highlights a few of the required changes.

State and local governments have made some tax reforms but most changes are too little and/or too late.

If the state wants to fight the growth of the "black market" it needs to lower the barriers of entry to the legal cannabis market and significantly reduce all cannabis taxes across the board.

Cannabis operators across the state say lawmakers and regulators must address several key issues for the market to prosper. Government officials are proposing changes, but will they be enough?

05/20/2022

***NEW EPISODE ALERT***

Episode 12 with Doc Ray from Doc Ray Genetics and Terps by Doc and Bentley.

In the episode, we discuss the terpene profiles of his patented strains and more.

Link to watch the full episode: https://schwasslaw.com/california-cannabis-report-episode-12-doc-ray-from-terps/

05/20/2022

California Cannabis Report - Episode 12 is now live!

In this episode, we go back up to Mendocino County to interview award-winning cannabis breeder Doc Ray from Doc Ray Genetics and Terps by Doc and Bentley.

We discuss Doc's exotic genetics that he's been growing for decades, what Terps is all about, and a bit about future Terps drops.

Come along with us up to Mendocino and see what has been growing up in the mountains.

Episode 12 of the California Cannabis Report we interview Doc Ray from Terps and Doc Ray Genetics. We discuss the exotic genetics that he's been growing for decades, what Terps is all about, and a bit about future Terp drops.

05/17/2022

Recent reports have shown that many cannabis businesses are struggling with the current market situation. However, a down market can provide clever entrepreneurs with an opportunity to break into the industry. If that is you, or if you are already in the industry and looking to raise capital for the first time, there are some options when looking to raise seed financing for your startup.

The most common are convertible notes, simple agreements for future equity (“SAFE”), convertible preferred stock, and common stock. Below we provide a high-level introduction to each financing instrument along with some pros and cons of each.

An introduction to the most common financing instruments; convertible notes, simple agreements for future equity (“SAFE”), convertible preferred stock, and common stock.

05/16/2022

As a follow-up to a previous post, Governor Newsom proposes to cut the cultivation tax. However, the state would then increase the excise tax after three years from 15% to 19%.

Give with one hand, take from another. This seems like the story with the regulatory rollout of Prop 64.

There is also a proposal to give local government grants to assist with issuing retail licenses in their jurisdiction. The hope is that grants will help cities and counties open up to cannabis businesses. One thing we've learned over the year is that retail license caps must not be allowed to get access to the grant money. Otherwise, this will be a major boom for large corporations who will likely win competitive RFP processes that will occur if there is a license cap.

California Gov. Gavin Newsom on Friday recommended ending the tax of $161 per pound of flower that ma*****na growers currently pay.

05/13/2022

Governor Newsom's May Revision Budget proposes statutory changes to reform cannabis taxes including setting the cultivation tax rate at zero beginning July 1, 2022.

This would be a significant lifeline to cultivators throughout the state.

05/13/2022

Glass House has a facility with 5.5 million square feet of canopy space. They are now buying retail locations.

“We were attracted to these licenses because each of these permits is domiciled in a limited license jurisdiction of California,” Glass House Chair and CEO Kyle Kazan in a statement.

While small operators fight for more competition and an increase in the number of retail locations, large corporations are actively pursuing limited jurisdiction. Are they scared of competition?

What are your thoughts on limiting retail locations?

Glass House Brands is acquiring three California retail locations from Natural Healing Center in a deal worth more than $22.6 million.

05/12/2022

The California cannabis market has been tough for many operators and some may be looking for an exit. To maximize the value of the company being sold, sellers should take steps to prepare before seeking a buyer or starting the negotiation process.

This checklist will provide some guidance on preparing a company for sale and highlight issues to consider.

In short, there are three major actions needed to prepare your company 1) assemble a transaction team, 2) conduct self-due diligence, and 3) find an appropriate valuation.

Click the link below for more details on each step.

This checklist will provide some guidance on preparing a cannabis company for sale and highlight issues to consider.

05/09/2022

It is in everyone's best interest if California cut its cultivation tax. Cultivators could receive some much-needed tax relief and lower prices would greatly expand the number of consumers in the regulated market.

A win-win is hard to find. Elected officials need to act.

California could potentially double its cannabis tax revenue by eliminating the state’s cannabis cultivation tax, according to a new report… Read More

05/06/2022

California Cannabis Report - Episode 11 is now live!

Check out the interview with Mendocino County cannabis farmer Nate Hayward from Higher Heights. We talk about the exotic genetics he has been cultivating for decades, his growing methods, and much more!

Come on up to Mendocino and see what's growing up in the mountains!

Interview with California cannabis farmer Nate Hayward from Higher Heights. We discuss the exotic genetics that he's been growing for decades, his growing methods, and a bit about cannabis culture and its future.