California lawmakers on Tuesday peppered state regulators with questions, and a few complaints, about the nearly two-months-old marijuana licensing program.

The three agencies charged with overseeing the market have issued more than 3,300 permits to date to growers, retailers, distributors and manufacturers—with hundreds more applications in the pipeline.

While the green rush is on for some, others testified Tuesday the current emergency licensing scheme is too expensive, too burdensome or too lax in cracking down on those still operating outside the law.

Here are three nagging issues that surfaced during Tuesday’s hearing at the Capitol.

There are many complaints about advertising.

Assemblyman Evan Low, D-Campbell, held up the Feb. 8 edition of a Sacramento weekly newspaper from the dais. One page contained four ads for dispensaries, he said. Three of them did not display the sellers’ license numbers as required by the regulations. Other ads, he said, appeared to contain “fictitious” license numbers.

“This is a complete disregard and gross negligence of the law,” Low said.

Lori Ajax, Bureau of Cannabis Control. Credit: Jason Doiy/ Recorder

Advertising bought by unlicensed operators in print and online was also a big complaint among dispensary owners who testified before various Cannabis Advisory Committee panels in Sacramento last week. License-holders said they can’t compete with black-market operations that don’t have to follow the same rules or pay the same fees.

Lori Ajax, chief of the Bureau of Cannabis Control, acknowledged hearing numerous complaints about advertising. Her agency, she said, has sent more than 500 warning letters and emails to people believed to be working without a required license. Hearing from the bureau, she said, is “a powerful message.”

“We are already dedicating a lot of our enforcement staff just on advertising because it is that important,” Ajax said. “It is prevalent, not just in Sacramento but across the state and it is jeopardizing the regulated market. We want to get this right.”

Asked if publications and platforms could be at risk for advertising that doesn’t meet bureau regulations, Ajax said the answer would depend on the situation.

And many more questions about grow size.

Few issues have been as contentious as the state Department of Food and Agriculture’s decision to allow growers to obtain multiple small-scale cultivation licenses to boost the size of their crop.The California Growers Association sued the state last month to stop the practice known as “stacking.” (No court hearing has been set yet.)

On Tuesday, Assemblyman Jim Wood, D-Healdsburg, tried to ask Richard Parrott, head of the Department of Food and Agriculture’s cultivation licensing program why provisions limiting the size of small-scale grows were included in an environmental study of proposed regulations but did not appear in the emergency rules issued in December.

“In the spirit of Prop 64, which promised an opportunity for small growers to get a foothold into this market, that blew a huge hole in that opportunity,” Wood said. “This allows the opportunity for largely capitalized people to come in and take this market away from people who have been doing this for years. There’s a disconnect here. Can you explain that?”

Parrott said he could not answer on the advice of agency counsel “because this is the subject of current litigation.”

How to bring the industry out of the shadows.

A report issued Monday by the California Growers Association concluded that fewer than 1 percent of the state’s estimated 68,150 marijuana cultivators have obtained licenses. The market is only weeks old and some growers will never choose to be part of a licensed system, the report said.

But the growers group and others at Tuesday’s hearings listed numerous potential barriers to joining the state’s scheme: high taxes charged at multiple points in the supply chain; concerns about Internal Revenue Service audits, local agencies’ bans or limits on grows and sales; costly licensing fees; and restrictions on product marketing and sampling.

Casey O’Neil, co-owner of a small farm in Mendocino County, said he pays $35 for a state license to sell vegetables. He’ll pay thousands of dollars for his tiny marijuana plot. The costs have led many of his neighbors, he said, to shun the licensing process.

“We are in a crisis,” O’Neil said. “The emergency is caused by a thousand paper cuts.”

The state is expected to issue final regulations for legal cannabis sales later this year after the Cannabis Advisory Committee releases its recommendations.



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