2022 has been the year of Cannabis Legislation, with a significant number of cannabis bills proposed in California Legislature. So far this year, lawmakers have introduced bills addressing everything from what cannabis packaging must look like and where cannabis products can be sold, to changes to state licensing regarding cannabis and cannabis tax credits. We are here to give you the most up-to-date information regarding what important legislature your businesses should watch out for regarding California cannabis!
Employment and Cannabis Use
The California Fair Employment and Housing Act protects the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or harassment on a number of statuses including (but not limited to) race, national origin, gender, sex, and physical or mental disability. Changes to this Act would potentially make it unlawful for an employer to discriminate against or penalize a person when hiring, terminating, or making changes to any term or condition of employment, based on the person’s use of cannabis off the job and away from the workplace upon an employer-required drug screening test. Although this does not apply to employees within the construction trades and does not preempt state or federal laws requiring employees to be tested for controlled substances, this is a major addition to the California Fair Employment and Housing Act. These changes have gone through two committee votes, both of which have passed, and will now be moving along on to the next steps within the California Assembly and Senate. You can find more information on this act here.
Business Tax Credits!
Income taxes and qualified expenses are also subject to change in cannabis business as a new tax credit has been proposed. The cannabis business tax credit would allow California Licensed commercial cannabis businesses a tax credit reimbursement for certain qualified expenses. This would be a gamechanger for many California cannabis businesses going forward, as it would allow a credit against the Personal Income Tax Law and the Corporation Tax Law for each taxable year beginning on or after January 1, 2022, taking effect immediately as a tax levy. This bill is set for hearing May 4, 2022 and you can find more information about it here.
Similarly, regarding cannabis taxes, the Control Regulate and Tax Adult Use of Marijuana Act (AUMA) has the potential to see changes to its existing legislature. Currently AUMA pertains to those who engage in commercial cannabis activity such as the cultivation, distribution, and selling of cannabis products. The proposed changes to AUMA would discontinue the use of the cultivation tax, reduce the excise tax to 5%, and remove the requirement that the cannabis distributer collect the excise tax from the cannabis retailer. These tax changes would save a great deal of money for those who deal in commercial cannabis businesses. This change is currently in committee process and also slated for hearing on May 4, 2022. If passed, it could go into effect as soon as January 1, 2023. You can find more information about this bill here.
Once a legislative bill is signed by both the California Assembly and Senate, it is sent to the Governor, who may then sign it into law or veto the bill. Most bills will go into effect the following year; however, urgency measures (such as the cannabis business tax credit) go into effect immediately. As we close in on hearing dates and potential changes, we hope for good things for the California cannabis industry in 2021 and 2022!