The Brief

The U.S. Drug Enforcement Administration is considering reclassifying marijuana from a Schedule I drug to Schedule III. Schedule III drugs, while still controlled substances, are treated differently under the law from Schedule I drugs, which, according to the DEA, have “no currently accepted medical use and a high potential for abuse.”

How could this new classification affect California’s legal cannabis industry? On LAist’s daily news show AirTalk, host Larry Mantle spoke with stakeholders to find out.

The tax man cometh

The biggest benefit of the reclassification of marijuana could come from the IRS. A new classification could allow cannabis businesses to deduct expenses that they currently can’t.

“Right now, they tax these businesses as illegal businesses, and they're not allowed to depreciate or deduct most of their costs,” said Richard Ormond, shareholder at Buchalter, a West Coast-based law firm, where he founded their cannabis law practice group.

Jerred Kiloh, owner of the Higher Path Collective in Sherman Oaks and chairman of the United Cannabis Business Association, is optimistic.

“I just look at my own individual business and I see probably around ... $250,000 a year in federal taxes that I will be able to deduct like a normal business expense, which seems like a really big deal for a company that is just a mom-and-pop trying to make it.”

But Ormond sounded a note of caution. “Until the tax scheme changes, a lot of these businesses are going to be overburdened with licensing fees, taxes, and other government obligations that they have to pay,” he said. “I don't think the tax code is going to be reformed for quite a while.”

Unlocking research

In a statement, Director of the California Department of Cannabis Control Nicole Elliot applauded the DEA’s move, “It will enable new scientific research, so that we can better understand cannabis’ medical value—and also its potential risks.”

UCBA's Kiloh echoed the potential benefits of new research.

“This can only signal to consumers that we're doing more to protect you, we're doing more to understand this plant and its effects on your body, and then that will then signal people to enter the industry with a little less trepidation.”

All the way to the bank

Banking is a significant pain point for businesses selling marijuana, as major banks and payment processors don’t allow cannabis transactions. Kiloh thinks the federal government softening its attitude towards cannabis could “start to signal to credit card companies and banks and processors that … they can move some of their policies away from being so stringent.”

Baby steps

“[Reclassification] is step one of about eight steps that the federal government needs to take to make this a real viable industry,” explained Ormond. According to him, crucial next steps towards a thriving cannabis industry include Congress enacting a safe banking statute and robust interstate commerce. “For this to be a real viable industry, you have to open up those interstate commerce channels.”

What's next

The proposal will be studied by the White House Office of Management and Budget before entering a 60-day public comment period. Lastly, an administrative judge would need to sign off on the decision.

Listen to the conversation

State and local lawmakers are joining immigrant rights groups in urging Gov. Gavin Newsom to sign a bill that would bar California law enforcement from moonlighting for ICE.

Assemblymember Isaac Bryan, who represents Angelenos from South L.A. to Mar Vista, introduced AB 1537 in January. If implemented, the bill would ban California police, sheriffs and other law enforcement from taking on second jobs that involve “arresting, detaining, transporting, or deporting” people.

The bill has made its way through the state legislature and is now on the governor’s desk. Newsom has until Sept. 30 to sign or veto it.

At a press conference outside L.A. City Hall on Wednesday, José Madera, who directs the Pasadena Job Center, pointed to multiple deaths involving federal immigration agents in recent months — from Minneapolis to Houston — and to a recent shooting in Austin. “We don't need our local police to be part of that violence,” he said.

“ICE is a lawless, rogue agency that is terrorizing our communities, separating our families and kidnapping our neighbors,” said Bruno Huizar, supervising policy manager at the California Immigrant Policy Center. “Governor Newsom must sign AB 1537 into law to protect Californians.”

L.A. City councilmember Hugo Soto-Martínez, whose own parents were undocumented, said it pained him to see immigrant parents go to work and to church in fear of being separated from their children.

“If you’re a public servant, you should be serving the public — not helping ICE tear families apart,” he added in a follow-up email statement.

The bill, dubbed “No side jobs for ICE” by its proponents, would also require officers to report secondary employment offers relating to immigration to their employers.

“If a law enforcement agent gets a conditional offer from an immigration enforcement agency, that will be part of their employment records. And that will be subject to a public records act request,” said Shiu-Ming Cheer, a licensed attorney at the California Immigration Policy Center. “This is aimed at bringing transparency, so that we know how many officers are actually getting offers to work as an ICE agent or a Border Patrol agent.”

The Peace Officers Research Association of California, which represents officers across the state, has spoken out against the bill, arguing that “policies like this don’t improve public safety.” The Los Angeles Police Protective League did not immediately respond to LAist’s request for comment.

The bill is part of a growing effort to bar local law enforcement from engaging in the ongoing mass deportation effort. The L.A. City Council approved a motion in March, barring city employees from holding second jobs with federal immigration enforcement agencies.

In Santa Ana, the City Council recently adopted a policy that prohibits employees from obtaining outside work that involves federal immigration enforcement activities.

Gov. Gavin Newsom has signed a bill aimed at protecting children who are abused.

The law, which went into effect this week, is named “Gabriel’s Law,” after Gabriel Fernandez — an 8-year-old boy in Palmdale who died in 2013 after being tortured and abused by his mother and her boyfriend.

“It devastated the community. Still has,” said State Assemblymember Tom Lackey (R-Palmdale), who worked on legislation related to Gabriel’s case for years. “It hasn't gone away, right? It’s something we still acknowledge.”

Since Fernandez’s death, the Antelope Valley has seen a number of high-profile child deaths at the hands of their parents.

The new law requires social workers to make sure a child gets emergency medical care when needed, and it makes it easier to prosecute social workers who knowingly falsify records.

Officials said there had been warning signs about Fernandez’s abuse, but social workers with the L.A. County Department of Children and Family Services failed to follow up on them. The high-profile case prompted internal reforms in the agency.

What happened to Gabriel

Gabriel died in May 2013, after months of abuse from his mother and her boyfriend. He was found with a number of injuries, including a fractured skull, broken ribs and BB pellets lodged in his body. His mother and her boyfriend were both sentenced.

A teacher had reported signs of abuse to the county, but social workers did not remove him from the home. Then they ended the investigation. Prosecutors charged the social workers with child abuse, but the charges were later dismissed.

“He was literally tortured. And there were many, many, many documented events, and there are many encounters that he had with people that lacked follow-up,” Lackey said.

What does the law change?

Before this week, the law said that social workers may authorize care if a child needs immediate emergency care, but did not require it. Gabriel’s law requires a social worker to secure medical care for a child.

“ They call for an ambulance or escort the child to an emergency room— make sure a physician has the opportunity to provide some level of remedy and documentation of the injury,” Lackey said.

It also clarifies the law so that social workers who are guilty of falsifying or destroying public records can be imprisoned or fined.

Why did the law take so long to change?

Lackey’s previous legislative efforts related to Fernandez’s case failed over the years. He introduced at least five different pieces of legislation that failed to advance.

“I'm not even saying that I blame the pushback and the concern, because if you're too aggressive, there's a tendency to accuse people of wrongdoing when they are not guilty of wrongdoing, so we wanted to make sure that the balance was reasonable,” he said.

Lackey terms out this year. “We're trying to do something as a community to not only pay tribute to [Gabriel], but to prevent it from reoccurring,” he said.

The Los Angeles Fire Department has completed its investigation into the cause of the Lineage warehouse fire in Boyle Heights but was unable to determine what caused it. 

In a press release, LAFD said the June 17 fire was caused by an “electrical event” that occurred on the roof of the building, “adjacent to a section of solar panels.” Despite a “comprehensive investigation,” the department could not determine what caused the electrical event.

“The Department’s thoughts remain with all those impacted by this deeply tragic incident,” Arson and Fire Investigation Chief Thomas Raymond said in a release.

In response to the inconclusive investigation, District 14 Councilmember Ysabel Jurado said, “LAFD’s finding that the cause remains undetermined does nothing to alleviate what Boyle Heights residents have endured and are still carrying: months of health concerns and disruption, along with unanswered questions about whether this site can safely operate again.”

“The fact that we still cannot explain how this catastrophe began is yet another reason I will continue opposing any permits to rebuild this facility,” Jurado said.

Recently, the LA City Council voted to withhold rebuilding permits for the Lineage warehouse until after the Los Angeles Fire Department completed its investigation. Earlier this month, Lineage Chief Executive Officer Greg Lehmkuhl told Boyle Heights Beat and The LA Local that the company had not decided whether to rebuild, saying, “We’re still focused on holding the right people accountable here and making sure that we’re continuing to support the community.”

The CEO’s comments came after Lineage sued solar power provider Altus Power, Inc. and its contractor, blaming them for the fire. Altus Power and its contractor dispute those claims.

In a statement following the completed investigation, Lineage said, “Today’s report from the Los Angeles Fire Department validates what we have known all along: This was a solar fire.”

The fire and subsequent cleanup of millions of pounds of rotting food caused a flood of issues for residents living in Boyle Heights, East LA and surrounding communities, including an infestation of flies and pests, nausea and headaches, higher utility bills and other health concerns. 

This is a developing story and will be updated.

Boyle Heights Beat senior reporter Alejandra Molina and LA Local reporter Christopher Damien contributed to this report.

The post LAFD closes investigation into Lineage warehouse fire without determining a cause appeared first on LA Local.