19E - FED & STATE LOBBYIST SUMMARY

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Unlike 2016, this year the Democrats control two-thirds supermajorities in both the Assembly and the Senate, meaning that they do not need any Republican support to approve a transportation proposal. The Democrats will be negotiating with the Brown Administration to determine what level of transportation funding would be appropriate, as the proposals in the Legislature would generate significantly more money than the proposal put forth by the Governor. Additionally, it will need to be determined if the Legislature is willing to vote for the taxes and fees that they propose to increase to generate revenue or if they may instead opt to place a measure on a statewide ballot for voters to consider. As these discussions take place, there are numerous stakeholders that are applying pressure on the Legislature and Governor to reach agreement and approve a proposal this year. While the exact funding levels are still to be determined, it should be noted that all the proposals contain core elements that would receive funding; one such item in all proposals is funding for local streets and roads. Cannabis — In 2015, the Legislature approved a regulatory framework for medicinal cannabis. Additionally, last November voters approved Proposition 64, which allows for the adult -use of cannabis. The goal of the State is to have regulations in place for both medical and adult -use so that the State may begin issuing licenses in 2018. There have already been several bills introduced in the current legislative session that relate to marijuana. It appears that the primary vehicle in the Legislature for dealing with issues between medical marijuana and adult -use will be AB 64 (Bonta). This measure currently contains several provisions, but will likely be amended several times as it moves through the legislative process to reflect additional issues and negotiations between stakeholders and the Brown Administration. Other legislation deals with varying aspects of cannabis regulation, including rules for marketing, tools for law enforcement to identify and deal with those under the influence of cannabis, and issues related to banking. Additionally, the Brown Administration has indicated that they will be putting forth a budget trailer bill relating to medicinal cannabis and adult -use and how to treat the two systems. The Governor's Office has begun to gather the heads of the state departments together to determine how best to move forward and align the medical and adult -use industries. It is unlikely that specific language will be released until later in Spring, potentially as late as the May Revise. Affordable Housing and Homelessness — The issues of affordable housing and homelessness will continue to be legislative priorities in 2017. Since the dissolution of redevelopment, the Legislature has made several attempts at crafting legislation to develop a permanent source of funding for affordable housing; however, none of these attempts have been successful. At the same time, numerous pieces of legislation have been introduced that have attempted to address issues surrounding homelessness in California. Many of the bills on homelessness have focused on ancillary issues, such as sleeping in vehicles, and not focused on the root causes of homelessness. In addition to the conditions that have led to previous bills being introduced, the cost of housing has continued to rise in many parts of the State, to the point that many traditionally middle class families are struggling to find affordable housing. Last year the Governor attempted to attach a proposal to the state budget that would have made affordable housing funding available on the condition that the Legislature approved the Governor's 2016 Year End Legislative Update February 13, 2017 19E-8 EXHIBIT 1