The California Cannabis Authority Gains Momentum
In a small conference room in Yolo County last week, a number of County Supervisors, Treasurer Tax Collectors and Auditor-Controllers from around the state gathered together to talk pot. More specifically, they gathered together to talk about the numbers – cannabis permits, state cannabis licenses, tax proceeds, and how they are going to use this data to better regulate cannabis businesses in their jurisdictions.
This is the California Cannabis Authority (CCA), a new Joint Powers Authority established by county governments to develop and manage a statewide database to consolidate state and local information and provide easy access to cannabis regulatory and taxation data to local regulators. This type of gathering is not a new occurrence since the passage of Proposition 64 in 2016, which legalized the adult-use of cannabis in California and allowed cities and counties to develop their own regulatory programs. However, this innovative organization is a new way to approach regulation.
With more and more local jurisdictions regulating commercial cannabis activity, we knew cities and counties needed additional tools at the local level to ensure for a safe and well-regulated marketplace. Data is “key” for a number of different reasons. Having actionable information at your fingertips can help local regulators focus their energy and compliance efforts on businesses that are not playing by the rules, while building trust with the industry that is permitted and paying taxes in their community.
The California Cannabis Authority has been gaining momentum over the past six months. Since Monterey and San Luis Obispo counties established the JPA earlier this year, Humboldt, Mendocino, and Yolo have also joined, with more counties coming soon.
In August, the organization, which is led by Humboldt County Supervisor Estelle Fennell, announced a partnership with NCS Analytics, a Denver- based technology firm to establish a statewide data analytics platform for cities and counties to monitor and regulate cannabis licenses (cities can participate, but not sit on the governing board of the JPA).
The system is designed to pull information from a number of different data sources, and compare information, analyze and evaluate. This means that local governments will have a more complete picture of what is happening in their jurisdiction and a higher degree of confidence that what is being reported by cannabis businesses and what is occurring are truly one in the same. When they are not the same, the platform creates an alert. This additional tool will equip local regulators with timely information to perform data-driven code enforcement, help to enable greater tax compliance, and open the doors for cannabis banking in California. This last benefit is a secondary goal of the organization – to help facilitate banking services to the cannabis industry.
One of the biggest challenges with cannabis legalization and regulatory compliance is the lack of adequate financial services to the industry.
“Businesses that are following the law, and paying their taxes still have challenges opening bank accounts, accessing business loans and other services due to the conflict between state and federal law,” said Humboldt County Supervisor Estelle Fennell.
There are a number of community banks and credit unions that are interested in working with the industry and approximately 400 banking the industry across the country. But they need accurate and on-going information from regulators to fulfill their reporting and compliance obligations. CCA aims to work also with interested financial institutions and their prospective cannabis clients to provide accurate and cost-effective licensing and compliance information so banks can have confidence and data to prove that all deposits are from legal transactions.
As Supervisor Fennell gaveled-down the CCA Board meeting last week, she remarked on the potential this new organization brings to local government and cannabis businesses. “We are excited about the formation of CCA and this new and innovative approach to government oversight. Data-driven regulation will help local governments be more efficient and cost-effective in their approach to cannabis and help ensure for a safe and well- regulated market in California.”