Cannabis banking, horse racing deaths, college sports, and cigarette butts

Good morning, California.

“California in the 1990s is a lot like America in 2019, 2020, 2021. And here’s the real story. The Republican Party was walked off a cliff. They’re third party status. That’s exactly what Donald Trump is doing, and Mitch McConnell, who is completely complicit, is doing to the Republican Party nationally. They don’t even know what is about to hit them.”—Gov. Gavin Newsom, speaking to Axios’ Jim VandeHei and continuing to raise his profile nationally.

Banking on cannabis

Banks can be prosecuted for conducting business with cannabis growers.

California’s cannabis industry, a cash-only business now, could start using specially chartered state banks, under legislation that passed another hurdle Monday.

  • Background: Because marijuana is illegal under federal law, banks could be prosecuted if they conduct business with cannabis growers and retailers. As a result, the weed business operates on cash.

Democratic Senator Bob Hertzberg of Los Angeles is carrying Senate Bill 51, which is intended to give state banks and credit unions a limited charter to provide some services to state-licensed cannabis businesses. It would:

  • Authorize banks and credit unions to accept deposits and issue special-purpose checks.
  • Allow cannabis business owners to use those checks to pay fees or taxes and rent on property they lease.

The Assembly Banking Committee approved it 8-0.

Herzberg: “Receipts will only continue to grow in the coming years, and it is unacceptable for cannabis businesses to have to continue arriving to government offices with duffel bags of cash to fulfill their tax obligations.”

The U.S. House of Representatives is considering the Secure And Fair Enforcement Banking Act to permit banks to do business with cannabis operators. The bill has 206 co-sponsors, including 44 members of California’s congressional delegation. 

Like the federal legislation, Hertzberg’s bill has Democratic and Republican support.

Lobbyist Amy Jenkins, of the California Cannabis Industry Association: “It’s important to move this bill forward as that debate in Congress continues. We tend to move a little faster in California.”

For CALmatters’ backgrounder on the issue, please click here.

Cannabis growers to get a reprieve

A budget trailer bill aims to solve the cannabis licensing backlog.

Reaction against the proliferation of cannabis operations in Carpinteria spread to Sacramento on Monday—not that it was enough to slow legislation allowing for the business to continue its expansion.

By a 28-9 vote, the Senate approved budget-related legislation—known as a budget trailer bill—to solve the licensing backlog by allowing growers and retailers to operate legally with provisional permits until 2025. 

  • Previously,  the business owners faced the prospect of breaking the law or ceasing operations this year because various state departments are unable to vet and license them quickly enough.

Sen. Hannah-Beth Jackson, a Santa Barbara Democrat whose district includes Carpinteria, joined eight Republicans in voting against the measure.

Jackson: “I had hoped that this trailer bill language might be better refined to help us get at bad actors, ensure adequate environmental review, and provide greater safeguards. Unfortunately, those changes were not made, and for that reason, I am not able to support this legislation.”

Santa Barbara County has authorized more marijuana acreage than any county in the state. Residents in Carpinteria, known for its sea breeze and avocado orchards, are fuming about the skunk-like scent emanating from cannabis hothouses.

Channeling her constituents, Jackson said the cannabis industry, “in the absence of adequate oversight and enforcement, is encroaching on our communities, schools, public spaces, vital agricultural industries, our tourism economy and our quality of life in Santa Barbara County.”

  • The Assembly is expected to approve the bill this week and send it to Gov Gavin Newsom for his signature.

Taking aim at cigarette butts

A bill aiming to ban cigarette filters still faces a tough hurdle.

Cigarette filters would be banned and e-cigarette companies would become responsible for nonrecyclable parts of their devices under legislation awaiting an Assembly vote, CALmatters environmental reporter Rachel Becker reports.  

Democratic Sen. Hannah Beth Jackson of Santa Barbara is pushing Senate Bill 424 to ban:

  • Cigarettes with single-use filters, which are toxic to wildlife when smokers leave them behind. 
  • Disposable plastic cigarette or cigar holders.
  • Single-use electronic cigarettes. Manufacturers would need to take back the non-recyclable parts of reusable tobacco and e-cigarette products. 

What’s ahead: The bill cleared the Senate on a party line vote in May but faces a tough fight in the Assembly Governmental Organization Committee. That’s the graveyard for three cigarette butt ban bills carried by Democratic Assemblyman Mark Stone of Santa Cruz.

Counties and cities could pass ordinances imposing the bans if the state legislation falters. San Francisco already has a litter fee, and the Beverly Hills City Council just voted for a ban that goes well beyond the butt. 

Jackson told Becker: “We’re offering them an opportunity to do this on a statewide basis that frankly will benefit everybody.”

So far, only San Francisco-based vaping giant Juul has joined negotiations over the legislation, according to Heidi Sanborn, executive director of the National Stewardship Action Council, the lobbying group sponsoring the bill. 

Sanborn: “Something is going to happen, whether it’s local or state. And the faster industries come to the table, they won’t be on the menu.”

Housing budget explained

A homeless man sleeps in downtown Sacramento.

California lawmakers have approved more than $2 billion in new state spending on housing and homelessness.

But while lawmakers and Gov. Gavin Newsom have agreed to cut big checks, they’re still fighting over who will actually receive the money and with what strings attached. 

On this episode of Gimme Shelter: The California Housing Crisis Podcast, CALmatters’ Matt Levin and the L.A. Times’ Liam Dillon break down what we know and don’t know about the state housing budget.

Focusing on racehorse deaths

Thirty horses have died at a California race track.

Facing backlash over the deaths of 30 horses at Santa Anita racetrack, the Legislature on Monday gave near-unanimous support to a bill that would permit California’s Horse Racing Board to act immediately to shut down a track.

  • Gov. Gavin Newsom, who had criticized the track over the deaths, is expected to sign the bill, which was authored by Sen. Bill Dodd, a Napa Democrat.

Santa Anita’s racing season ended this weekend. But other tracks will be running races this summer. Horse deaths are a problem that long has plagued racing.

Mike Marten, the board’s spokesman, told me: “We’re committed to getting that number down. The bill is important. It gives us the tool we need if we have a rash of injuries and deaths.”

The L.A. Times: After the 28th horse died at Santa Anita, the chair and vice-chair asked Santa Anita to suspend racing. The track refused, and the board had no recourse. Now it does.

Over the weekend, the Stronach Group, which owns Santa Anita, banished Jerry Hollendorfer, a Hall of Fame trainer, from all its tracks after a fourth horse in his care died at Santa Anita. Hollendorfer had two deaths at Golden Gate Fields in the San Francisco Bay Area, the L.A. Times noted.

NCAA threatens California

The NCAA might ban California schools from participating in championships.

The NCAA is threatening to bar California universities from participating in championships if lawmakers approve a bill that would allow college athletes to earn money from the use of their name, image or likeness, USA Today reports.

  • The bill by Sen. Nancy Skinner, a Berkeley Democrat, passed the Senate last month on a bipartisan vote, and faces a hearing in an Assembly committee today.

USA Today: The NCAA fears it would distort national competition and undermine the nonprofit organization’s rules.

By the numbers:

  • Nearly half a million college student-athletes participate in NCAA sports nationally.
  • In its 2016–17 fiscal year, the NCAA took in approximately $1.06 billion in revenue.
  • Twenty-five public universities in California would be affected, as would 108 community colleges and numerous private universities.
  •  The California State University system estimates that if its campus are banished, the system would lose up to $15 million a year in revenue.

Commentary at CALmatters

Dani Carrillo, UC San Francisco: Undocumented workers comprise 9% of the California labor force and contribute $3 billion in state and local taxes each year. They do some of the most arduous work, including landscaping, construction, restaurant work, and taking care of children and seniors. But if their health is compromised, they have few places to go.

Dan Walters, CALmatters: California politicians dislike Donald Trump’s federal tax overhaul but are adopting portions of it to raise revenue.

Please email or call me with tips, suggestions and insights, [email protected], 916.201.6281. Thanks for reading, please tell a friend and sign up here.

See you tomorrow.

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