Together, Assembly Bills 266 and 243, along with Senate Bill 643, were dubbed the Medical Marijuana Regulation and Safety Act — the culmination of an unprecedented effort to “draft regulations for an industry entirely from scratch,” as Assemblyman Reggie Jones-Sawyer, D-Los Angeles, put it, according to the influential Smell the Truth blog.

“Patients will still need a doctor’s recommendation to use cannabis, and can have caregivers. But the state will do away with collectives and cooperatives in favor of licensed, background checked, commercial growers, distributors and sellers. The laws call for 12 types of state industry licenses, and dual local and state licensing. City and counties can ban medical cannabis activity, or tax it.”

Brown was widely expected to sign the bills. According to Courthouse News Service, Assemblyman Rob Bonta, D-Oakland, observed that his administration was “highly involved in shaping” the legislation. “We take that as a very good sign,” he said.

Winners and losers

Despite liberalizing the state’s marijuana regime, the new rules would bar felons convicted of drug crimes from starting pot businesses. That measure, which law enforcement groups required for their support of the bills, has raised fresh concerns among some pro-legalization groups. “With few prospects of other employment and a potential ban from the legal pot market,” the San Francisco Chronicle noted, “felons may choose to sell it illegally, activists say.”

According to the relevant bill’s key language, the state’s new “licensing authority may deny the application for licensure or renewal of a state license” should an applicant already possess a “felony conviction for the illegal possession for sale, manufacture, transportation, or cultivation of a controlled substance.”

Last year, the Chronicle noted, “felony marijuana arrestees in California were 31 percent white, 39.5 percent Hispanic, 18.5 percent African American and 11 percent of some other demographic, according to the ACLU.” This July, meanwhile, latinos passed whites as the largest ethnic group in California — 14.99 million to 14.92 million, according to the Los Angeles Times.

A divided community

Some activists have found a much different sort of reason to file a lawsuit against the legislation: its constitutionality. “The American Medical Marijuana Association has announced that it is filing a lawsuit over the violation of Prop. 215 by the California Legislature and Governor Brown,” as The Weed Blog reported. “The recent adoption of the Medical Marijuana Regulation and Safety Act attempts to modify a voter initiative, Prop. 215, something specifically forbidden by the California constitution.”

But, in general, Golden State pot advocates appeared heartened by the legislative overhaul. Importantly, lawmakers endeavored to encourage small growers willing to play fair — and discourage large-scale corporate participants. As The Weed Blog observed separately, “growers using the ambiguity of the state’s current lack of regulation as a cover for grey or black market production will probably find their wiggle-room decreased.” On the other hand, “‘Big Marijuana,’ that favorite bogey-man of prohibitionists, doesn’t fare so well. There are constraints on vertical integration within the industry, and the licensing scheme foreseen is tilted toward small and medium producers.”

Federal fault lines

California’s giant leap forward on standardizing marijuana regulation played out against the backdrop of a fractious debate among Republican candidates for president gathered in Simi Valley. Disagreement has emerged in the wake of President Obama’s willingness to let states depart to a degree from the strictures of federal drug law. “The West’s experiment with legalization — so far, a major boost to Colorado’s tax revenue — has been treated with benign neglect. Just three months ago, the administration lifted a public health review requirement that had prevented some research into marijuana’s medicinal properties,” the Washington Post noted. But laws such as California’s could wind up on shaky ground: “A new president could reverse all of that with a pen stroke.”

Assemblymen Mike Gatto, D-Glendale, and Reggies Jones-Sawyer, D-Los Angeles, have introduced separate proposals to allow online poker in the largest potential gaming market in the country. As many as 2 million Californians already play online poker, according to e-gaming company Vista Global Media, Inc., using websites located in other states or countries.

Both bills would take advantage of new federal rules that allow states to legalize and regulate online poker. Delaware, Nevada and New Jersey have already granted gamblers the right to ante up online. The two bills proposed in California would establish the basic regulatory structure, set licensing requirements for online poker providers and levy taxes on gross online gaming revenue.

While the bills share much in common, their subtle differences foretell a bruising battle between the state’s biggest and most powerful gambling interests.

Gatto’s AB9: Limited to card rooms, tribal casinos

Back in December, Gatto was first out of the gate, arguing that California lets millions of dollars in potential tax revenue flow to other jurisdictions.

“The status quo is a lost opportunity,” Gatto said last month when he introduced his legislation. “California could receive significant revenue for merely regulating and legitimizing an industry that Californians already participate in but send their dollars overseas.”

His proposal, Assembly Bill 9, includes a one-time license deposit of $5 million, which “would be credited against quarterly fees equivalent to 5 percent of the licensee’s gross gaming revenue proceeds.” It limits licenses to tribal gaming establishments and card rooms, excluding the horse racing industry, from the market.

“The state’s interests are best met, therefore, by licensing only those entities in California that have experience operating card rooms and tribal gaming facilities that are currently permitted to offer live real-money poker games and are in good standing with the appropriate state, federal and tribal regulatory agencies,” Gatto’s bill states.

Understandably, Joe Morris, president of Thoroughbred Owners of California, objected to Gatto’s exclusion, saying his industry wants a piece of the action.

“We want a seat at the table, on a level playing field,” Morris told Dave Palermo of Pechanga.net. “If there are licenses out for sites, we want a site also.”

Jones-Sawyer embraces horse racing industry

Gatto’s exclusion of the horse racing industry is one of several major differences with Jones-Sawyer’s proposal.

Assembly Bill 167 explicitly includes “in-state horse racing associations” in the list of potential online poker providers. Jones-Sawyer, who serves as chair of the California Legislative Black Caucus, also calls for a higher deposit, $10 million, and higher tax rate of 8.5 percent of “the licensee’s gross gaming revenue proceeds.”

“The reintroduction of this legislation comes on the heels of very thoughtful and collaborative discussion, including substantial input from both the state Department of Justice and the Gambling Control Commission,” Jones-Sawyer said in a press release announcing the bill’s introduction. “It is absolutely essential that we have a proper regulatory structure in place that provides safe and compliant internet poker access.”

While Jones-Sawyer has curried favor with horse tracks, he’s drawn the ire of the state’s most powerful gambling interest, the Pechanga Band of Luiseno Indians.

Debate over “bad actors”

Pechanga is concerned that Jones-Sawyer’s legislation would allow “bad actors” to enter the online poker market. The concern is similar to its opposition to Proposition 48, which voters rejected in 2014 and would have allowed off-reservation casinos.

“There is much for tribes to dislike about this bill,” Pechanga Tribal Chairman Mark Macarro said in reference to AB167. “We are disappointed that the bill disregards important principles from a broad coalition of respected tribes and card rooms that help prevent corporations and entities that previously violated federal law from profiting from tainted software, brands and databases derived from illegal activity.”

Macarro’s reference to “entities that previously violated federal law” is directed at PokerStars, a popular online poker site that defied the 2006 federal Unlawful Internet Gambling Enforcement Act. In 2011, the U.S. Department of Justice used UIGEA to seize the Internet domains and freeze the accounts for several online poker sites, including PokerStars. The following year, the company reached a settlement with the Justice Department that dismissed the charges without admitting any wrongdoing.

Gatto’s bill includes language that could qualify PokerStars as a “bad actor” for its role in violating the 2006 law. According to OnlinePokerReport.com, Jones-Sawyer’s bill “appears to lack any UIGEA brightline or similar conditionals designed to explicitly exclude PokerStars.”

In addition to PokerStars, several tribes and card rooms are opposed to the tougher standards for blocking “bad actors.” Amaya Gaming Group, which owns and operates PokerStars, has partnered with two tribes, Morongo and San Manual, and three card rooms, Bicycle, Commerce and Hawaiian Gardens, to develop an online poker venture.

“The bill seeks to establish a vibrant, competitive, fully inclusive marketplace with choices for consumers that enacts strong consumer protections; requires strict oversight and regulation of operators and licensees; and ensures a financial return for the state,” the PokerStars coalition said in reference to Jones-Sawyer’s bill.

Potential for compromise?

What are the chances for a compromise?

“If this gets done, and it’s a big if, it’s going to be a year-long process,” Gatto told PokerNews. “It’s not a bill that’s just going to be amended a little bit. It will be amended at every committee stop, and it would probably appear in six committees before it passed.”

He added that he looks forward to working with Jones-Sawyer to forge a compromise bill.

“My goal remains creating a sensible framework for a new California industry,” Gatto said. “That will involve a thoughtful process of consultation with all of the key stakeholders. I pride myself in listening; I expect this process will continue throughout the year.”

Both measures need a two-thirds majority in both houses of the Legislature.

A new report by California Common Cause shows that elected officials in California accepted hundreds of thousands of dollars worth of gifts in 2012. The gifts to lawmakers, according to the non-partisan citizens’ lobby organization, came primarily from special interest groups that routinely lobby state officials.

“Christmas came early for many of the Capitol’s most powerful,” said Phillip Ung, author of the report and outgoing policy advocate for California Common Cause. “When gifts are exchanged, a feeling of gratitude is natural, but voters should be concerned how policymakers show their gratitude towards powerful interest groups.”

In 2012, state elected officials accepted approximately $216,000 in gifts and travel payments, including $41,000 in hotels and lodging; $30,000 for tickets to entertainment and sporting events; and more than $100,000 for meals and receptions, according to the report.

Top Gift Recipients in 2012

California Democrats may claim a supermajority in both houses of the state legislature, but an Orange County Republican lawmaker topped the list of gift recipients in 2012. State Senator Mimi Walters, R-Laguna Niguel, accepted $15,810.80 worth of gifts in 2012, almost double the amount of the next highest legislator. Rounding out the top five were:

* Speaker of the Assembly John Perez, D-Los Angeles;

* Sen. Ron Calderon, D-Montebello;

* Sen. Alex Padilla, D-Pacoima;

* Assemblyman Luis Alejo, D-Salinas.

To compile its report on overall gifts, Common Cause used publicly available financial disclosure reports that are filed annually with the state. That means the figures are likely to be lower than the actual total. State law does not require gifts under $50 in value to be reported on these Statement of Economic Interest forms.

“At a time when federal investigators are looking for potential illegal actions by California legislators, this report shows that many legal activities raise suspicions about the influence of special interest in the State Capitol,” said Kathay Feng, executive director for California Common Cause.

Gifts to state lawmakers ranged from lavish meals to expensive tickets to entertainment venues, all paid for by powerful special interest groups. Under state law, most gifts are subject to a $420 limit.

Some of the gifts to state lawmakers included a $69.78 breakfast for Assemblyman Reggie Jones-Sawyer, D-Los Angeles, paid for by the California Independent Petroleum Association; $420 worth of Disneyland tickets for Assemblyman Don Wagner, R-Irvine; and a $420 round of golf for Calderon.

“The prolific providers of entertainment and sports tickets were special interest groups with business before the Legislature,” the report stated.

Long-Standing Travel Loophole

Despite the state’s $420 gift limit, Jones-Sawyer, Wagner and Calderon were among those who also accepted thousands of dollars worth of accommodation, meals and airfare as participants at a special interest-funded junket to Maui. The Common Cause report criticized the longstanding travel loophole that allows public officials to be reimbursed for travel expenses if connected to a non-profit conference.

In 2012, 17 California legislators attended such trips to Maui that were funded by special interest groups. According to the Sacramento Bee, the list of legislators that traveled to Maui included:

*Assembly GOP leader Connie Conway, R-Tulare;

* Assemblyman Jeff Gorell, R-Camarillo;

* Sen. Tom Berryhill, R-Oakdale;

* Assemblyman Isadore Hall, D-Compton;

* Assemblyman Paul Fong, D-Cupertino;

* Sen. Steve Knight, R-Palmdale;

* Assemblywoman Bonnie Lowenthal, D-Long Beach;

* Assemblyman Manny Perez, D-Coachella;

* Sen. Rod Wright, D-Inglewood;

* Assemblywoman Susan Bonilla, D-Concord;

* Assemblyman Bob Wieckowski, D-Fremont;

* Assemblywoman Holly Mitchell, D-Los Angeles;

* Sen. Noreen Evans, D-Santa Rosa;

* Sen. Marty Block, D-San Diego.

Campaign Committees Used as Slush Funds

Special interest-funded junkets weren’t the only gift loophole highlighted by Common Cause. The report also identified lawmakers’ use of campaign committees as slush funds.

Assemblyman Adam Gray of Merced and State Sen. Ricardo Lara of Long Beach, both Democrats, used campaign funds to buy gifts for Perez. Assembly Majority Leader Toni Atkins, D-San Diego, also used $231.85 of her campaign funds on meals and dinners for other legislators.

CalWatchdog.com has previously reported on lawmakers’ use of campaign funds for travel expenses. Earlier this year, six state lawmakers used campaign funds for a spring break trip to Cuba organized by a Capitol lobbyist. Legislators using campaign funds on the trip included Atkins, Calderon and Mitchell; as well as Assemblyman Katcho Achadjian, R-San Luis Obispo; Assemblywoman Nancy Skinner, D-Berkeley; and Sen. Cathleen Galgiani, D-Stockton.

$6.7 Million in Behested Payments to Pet Causes

In addition to gifts, Common Cause analyzed contributions made at the request of legislators and statewide officers. These “behested payments” to politicians pet causes totaled $6.7 million in  2013. Ethics experts say these payments offer another form of influence.

“We call it an end run around contributions limits,” Bob Stern of the nonprofit Center for Governmental Studies told the San Francisco Chronicle in 2009.

Gov. Jerry Brown has been the state’s top fundraiser for non-profits. “From 2006 through September of 2013, he has raised a total of $22.5 million through behested payments for his favorite charitable causes,” Capitol Weekly reported earlier this year. “As a point of comparison, the amount is more than half the price-tag of his 2010 gubernatorial campaign, which racked up some $40.5 million in political contributions.”

Common Cause, one of the nation’s most effective grassroots advocacy groups, promotes good government issues and tracks special interest involvement in politics. A copy of the report is available at Gifts, Influence, and Power: A Report on Gifts Given to California’s Elected Officials.