'On the brink of collapse,' California pot businesses call for tax overhaul

  

Category:  News & Politics

Via:  perrie-halpern  •  6 days ago  •  34 comments

By:   Alicia Victoria Lozano

'On the brink of collapse,' California pot businesses call for tax overhaul
Cannabis advocates, small farmers and business owners called Thursday for an overhaul of the California marijuana tax system as they struggle to keep afloat.

S E E D E D   C O N T E N T



LOS ANGELES — Cannabis advocates, small farmers and business owners called Thursday for an overhaul of the California marijuana tax system as they struggle to keep afloat amid rising operating and regulatory costs.

They gathered outside the State Capitol in Sacramento to make their case and warn that the industry could collapse if steps aren't taken soon.

"We're here today because the craft cannabis industry here in California is in crisis and on the brink of collapse," said Amber Senter, a co-founder and the executive director of Supernova Women, a nonprofit organization that works to create opportunities for people of color in the industry.

"Not only has the state fallen short in promises to right the wrongs inflicted upon Black and brown communities impacted by the war on drugs, but it has also perpetuated regressive war-on-drugs 2.0 policies through oppressive taxation, which must end," Senter said in a statement. "This is our cry and plea for help."

Senter and others are asking the Legislature and Gov. Gavin Newsom to eliminate the cultivation tax and repeal the state's excise tax for social equity retailers.

Thursday's rally built on momentum created by industry leaders who also demand that California change the way it taxes cannabis. Last month, marijuana companies warned Newsom in a letter that immediate tax cuts and a rapid expansion of retail outlets were needed to steady an increasingly unstable marketplace shaken by illicit dealers and growers.

More than two dozen cannabis executives and legalization advocates signed the letter after years of complaints that the heavily taxed industry is unable to compete with the widespread illegal economy, which offers far lower consumer prices and has double or triple the sales of the legal market.

Proposition 64, which voters approved in 2016 and legalized cannabis, "was not passed simply to raise tax revenue, but to end the illicit market, protect public health and safety, and create an accountable legal industry," the executives said in the letter. "Yet today, four years after the start of legal sales, our industry is collapsing and our global leadership and legacy is at the brink of disappearing forever.

"The opportunity to create a robust legal market has been squandered as a result of excessive taxation," they continued. "75% of cannabis in California is consumed in the illicit market and is untested and unsafe."

The state's tax system has burdened small businesses from the start, operators and experts say. As of Jan. 1, cannabis is taxed at a flat rate of about $161 a pound, on top of a 15 percent excise tax, as well as local cultivation, manufacturing, processing, distribution and retail taxes.

Newsom, who supported Proposition 64 as lieutenant governor, signaled this week that help may be on the way. Unveiling his 2022-23 budget proposal Monday, he said he supported cannabis tax reform and planned to work with the Legislature to modify policy.

"It is my goal to look at tax policy to stabilize the market," he said. "At the same time, it is also my goal to get these municipalities to wake up to the opportunities to get rid of the illegal market, the illicit market, and provide support in a regulatory framework for the legal market."

Assembly member Mia Bonta, a Democrat who represents the eastern San Francisco Bay area, said at Thursday's rally that reforming the cannabis regulations is about ensuring social justice, equity and representation in an industry that has been dominated for years by white men but has harmed predominantly Black and Latino people.

Several cannabis businesses in Bonta's district were robbed at gunpoint in November, losing about $5 million in the days leading up to Thanksgiving. Henry Alston, a co-founder and the chief operating officer of James Henry SF, a cannabis company in Oakland, said his businesses were broken into five times in the spate of robberies.

"They took everything," he said. "They dragged our safe with our tax money right out the front door."

Casey O'Neill, the owner and operator of Happy Day Farms in Mendocino County, said he experienced the drug war firsthand as a legacy grower who learned the trade from his parents. In 1985, law enforcement officers "stormed our home for 30 plants," forcing his family to flee for safety, he said.

"My pregnant mother escaped with me and my brother into the creek bed to the north," O'Neill said. "The trauma of that day formed some of my earliest memories."

More than 30 years later, O'Neill sees parallels between California's highly regulated cannabis market and the prohibitionist attitudes of his youth. High taxes, he said, prevent small operators from joining the industry and exclude the communities hardest hit by the war on drugs.

"The system is not working," he said. "The unfair taxation spells the end of the dream for so many."

The Associated Press contributed.


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al Jizzerror
Sophomore Expert
1  al Jizzerror    6 days ago

"The opportunity to create a robust legal market has been squandered as a result of excessive taxation," they continued. "75% of cannabis in California is consumed in the illicit market and is untested and unsafe."

The high taxes create crime.  Bootleg weed is much more affordable.  Legal weed is a great idea butt the high taxes are killing it.

 
 
 
Hal A. Lujah
Professor Expert
1.1  Hal A. Lujah  replied to  al Jizzerror @1    6 days ago

Untested and unsafe - lol!  40 years of untested and unsafe weed hasn’t had any impact on me.  I hate these types of boogey man claims.

 
 
 
Buzz of the Orient
Professor Principal
2  Buzz of the Orient    6 days ago

If the weed business were taxed similarly to the alcoholic beverage business would that solve the problem?  I believe that if it has to pay excessive taxes then what the government has done is enhance the illegal drug trade, because how does anybody know is a resident is in possession of legal or illegal weed?

 
 
 
zuksam
Junior Silent
2.1  zuksam  replied to  Buzz of the Orient @2    6 days ago

With alcohol you need a lot of skill to make a good product and facilities to produce a high volume to make it profitable and then it's still illegal to buy or sell untaxed booze. Pot on the other hand has been decriminalized and if you can grow good Tomatoes you can grow good weed. I know people who grow and sell "non-taxed" weed and they make about 40 grand a year from a 12x12 grow room and a 4x6 nursery. I don't know how much electric costs them, they have solar panels but I doubt they cover much. I think they use LEDs because I went in the main room and it wasn't hot even though the lights were on so they must be LED. They could make more money but they only sell 1/4 pounds or more because they don't want lots of traffic at their home since that's where they're growing it. I don't smoke the stuff but I've been told they make a great product, it certainly smells good (I love the smell of weed).

 
 
 
Buzz of the Orient
Professor Principal
2.1.1  Buzz of the Orient  replied to  zuksam @2.1    6 days ago

If you love the smell of weed, you could still get high from smelling it.  LOL

 
 
 
zuksam
Junior Silent
2.1.2  zuksam  replied to  Buzz of the Orient @2.1.1    6 days ago

While I like the smell of the smoke I prefer the smell of the unburned Buds. I used to smoke it but I stopped many many years ago because I just didn't enjoy the high anymore. I enjoy a double of Scotch much more.

 
 
 
Ed-NavDoc
Professor Quiet
2.1.3  Ed-NavDoc  replied to  zuksam @2.1    6 days ago

I unfortunately have the sad rare misfortune of being allergic to weed. I break out in hives and get respiratory problems when I am around somebody smoking weed. I got laughed at quite a bit by my friends growing up in the 60's and 70's...

 
 
 
Sister Mary Agnes Ample Bottom
Professor Expert
2.1.4  Sister Mary Agnes Ample Bottom  replied to  Ed-NavDoc @2.1.3    4 days ago

But you had options!!!

eat-it-761x1024.jpg

image source

Also, the article in which I found the image is hugely entertaining.  I had no idea there were so many options.  The history of Weed Brownies

 
 
 
Greg Jones
Professor Guide
3  Greg Jones    5 days ago

It's working in Colorado.

 
 
 
Nowhere Man
Junior Expert
4  Nowhere Man    5 days ago

Washington as well...

 
 
 
Nerm_L
Masters Principal
5  Nerm_L    5 days ago

These pot growers sound like Republicans, don't they?  They are complaining about taxes and regulations, after all.

 
 
 
Krishna
Professor Principal
5.1  Krishna  replied to  Nerm_L @5    4 days ago

This may come as a shock to you, but I personally have known Democrats who have complained of high taxes!

Pretty amazing, eh?

(Who knew...)

 
 
 
Texan1211
Professor Principal
5.1.1  Texan1211  replied to  Krishna @5.1    4 days ago
This may come as a shock to you, but I personally have known Democrats who have complained of high taxes!

yes, we all saw many Democrats complaining about those high taxes some rich people would have to pay when the SALT cap was reduced!

Man, they tried and tried to lower the taxes for the rich!

 
 
 
SteevieGee
Senior Silent
5.2  SteevieGee  replied to  Nerm_L @5    4 days ago

If you get a medical marijuana card you can buy it tax free.

 
 
 
Texan1211
Professor Principal
6  Texan1211    5 days ago

Looks like the geniuses in Cali have shot themselves in the foot.

Gee, who'd a thunk it?

 
 
 
Dismayed Patriot
Professor Participates
7  Dismayed Patriot    5 days ago

We need to lower the taxes and the federal government should start giving out free weed along with the KN95 masks.

" Hemp compounds identified by Oregon State University research via a chemical screening technique invented at OSU show the ability to prevent the virus that causes COVID-19 from entering human cells ." " our research showed the hemp compounds were equally effective against variants of SARS-CoV-2, including variant B.1.1.7, which was first detected in the United Kingdom, and variant B.1.351, first detected in South Africa.”

" Researchers at the University of South Carolina say that THC might be an effective way to treat some potentially lethal COVID-19 complications."

 
 
 
Texan1211
Professor Principal
7.1  Texan1211  replied to  Dismayed Patriot @7    5 days ago

lower taxes????

lol.

 
 
 
al Jizzerror
Sophomore Expert
7.2  al Jizzerror  replied to  Dismayed Patriot @7    5 days ago

jrSmiley_28_smiley_image.gifjrSmiley_13_smiley_image.gif

 
 
 
Krishna
Professor Principal
7.3  Krishna  replied to  Dismayed Patriot @7    4 days ago
We need to lower the taxes and the federal government should start giving out free weed along with the KN95 masks.
" Hemp compounds identified by Oregon State University research via a chemical screening technique invented at OSU show the ability to prevent the virus that causes COVID-19 from entering human cells ." " our research showed the hemp compounds were equally effective against variants of SARS-CoV-2, including variant B.1.1.7, which was first detected in the United Kingdom, and variant B.1.351, first detected in South Africa.”
" Researchers at the University of South Carolina say that THC might be an effective way to treat some potentially lethal COVID-19 complications."

Hopefully this is true. Although I'm a bit skeptical. CBD does have some excellent uses, But while I'm open to new data, I'm skeptical that it can cure-- or even prevent-- COVID. (One of areas its been shown to be quite effective is in cases of Childhood Epilepsy.

How is cannabidiol different from marijuana, cannabis and hemp?

CBD , or cannabidiol, is the second most prevalent active ingredient in cannabis (marijuana). While CBD is an essential component of medical marijuana, it is derived directly from the hemp plant, a cousin of marijuana, or manufactured in a laboratory. One of hundreds of components in marijuana, CBD does not cause a "high" by itself. According to a report from the World Health Organization, "In humans, CBD exhibits no effects indicative of any abuse or dependence potential…. To date, there is no evidence of public health related problems associated with the use of pure CBD."

The evidence for cannabidiol health benefits

CBD has been touted for a wide variety of health issues, but the strongest scientific evidence is for its effectiveness in treating some of the cruelest childhood epilepsy syndromes, such as Dravet syndrome and Lennox-Gastaut syndrome (LGS), which typically don’t respond to antiseizure medications. In numerous studies, CBD was able to reduce the number of seizures, and, in some cases, stop them altogether. Epidiolex, which contains CBD, is the   first cannabis-derived medicine   approved by the FDA for these conditions.

The bottom line on cannabidiol

Some CBD manufacturers have come under government scrutiny for wild, indefensible claims, such that CBD is a cure-all for cancer or   COVID-19, which it is not. We need more research but CBD may prove to be a helpful, relatively non-toxic option for managing anxiety, insomnia, and chronic pain. Without sufficient high-quality evidence in human studies, we can’t pinpoint effective doses, and because CBD currently is typically available as an unregulated supplement, it’s hard to know exactly what you are getting.

If you decide to try CBD, make sure you are getting it from a reputable source. And talk with your doctor to make sure that it won’t affect any other medicines you take.

"Some CBD manufacturers have come under government scrutiny for wild, indefensible claims, such that CBD is a cure-all for cancer or COVID-19, which it is not"

 
 
 
Krishna
Professor Principal
7.4  Krishna  replied to  Dismayed Patriot @7    4 days ago
" Hemp compounds identified by Oregon State University research via a chemical screening technique invented at OSU show the ability to prevent the virus that causes COVID-19 from entering human cells ." " our research showed the hemp compounds were equally effective against variants of SARS-CoV-2, including variant B.1.1.7, which was first detected in the United Kingdom, and variant B.1.351, first detected in South Africa.”

Undoubtedly this will become yet another excuse that the Anti-Vaxxers will use as an excuse to not get vaccinated! jrSmiley_5_smiley_image.png

 
 
 
Sparty On
Professor Principal
8  Sparty On    4 days ago

Lol .... leave it to the country of Calikakistan to take a new, potentially very profitable business, run it into the ground with taxes/regulation before it even has a chance to succeed.

SOSDD for Cali ......

 
 
 
Krishna
Professor Principal
8.1  Krishna  replied to  Sparty On @8    4 days ago
leave it to the country of Calikakistan to take a new, potentially very profitable business, run it into the ground with taxes/regulation

Actually if I'm not mistaken, its not only California-- I believe every state that allows its sale taxes it. 

(Probably also true with gambling)

 
 
 
Krishna
Professor Principal
8.1.1  Krishna  replied to  Krishna @8.1    4 days ago

And don't  forget taxes on liquor. (I believe that there's usually both a Federal tax plus a State tax on the consumer's purchase of liquor?) And probably also a tax on the places that sell it.

P.S; I'm not opposed to these so-called "Sin Taxes"-- its only when they are excessive do they pose a problem

 
 
 
Texan1211
Professor Principal
8.1.2  Texan1211  replied to  Krishna @8.1.1    4 days ago
I'm not opposed to these so-called "Sin Taxes"-- its only when they are excessive do they pose a problem

Kind of the WHOLE point of the article!!!!

 
 
 
Krishna
Professor Principal
8.1.3  Krishna  replied to  Krishna @8.1.1    4 days ago

And let's not forget Cigarette taxes-- a great source of revenue for some states . . . which has arguably decreased smoking tremendously:

Cigarette Taxes By State; also " How Much Every State Can Make From Legalized Marijuana"

 
 
 
Krishna
Professor Principal
8.1.4  Krishna  replied to  Texan1211 @8.1.2    4 days ago
I'm not opposed to these so-called "Sin Taxes"-- its only when they are excessive do they pose a problem
Kind of the WHOLE point of the article!!!!

Well, some people are a little slow...and rather than looking for actual facts, they only look at those that support their political biases,. In addition I placed link to some fact filled articles.

(P,S: I own small amounts of a Cannibis stock plus (perhaps even more speculative) a stock of a company exploring the medicinal uses of Hallucinogens)

 
 
 
Texan1211
Professor Principal
8.1.5  Texan1211  replied to  Krishna @8.1.4    4 days ago
and rather than looking for actual facts, they only look at those that support their political biases,. In addition I placed link to some fact filled articles.

Well, the FACT is that the illegal sales of weed is a problem in Cali. When you add the high cost of taxes to the legal sellers, it is hard for them to compete with the black market sellers.

yes, you posted a bunch of "facts" about taxes but few were related to the topic.

Nothing political about it, only morons would believe it is.

Great job.

 
 
 
Krishna
Professor Principal
8.1.6  Krishna  replied to  Krishna @8.1.4    4 days ago
Well, some people are a little slow...and rather than looking for actual facts, they only look at those that support their political biases,. In addition I placed link to some fact filled articles. (P,S: I own small amounts of a Cannibis stock plus (perhaps even more speculative) a stock of a company exploring the medicinal uses of Hallucinogens)

Here's an interesting opinion by "Mr. Wonderful" re the future of Medical Cannibis vs Psychedelic Medicine. (At this point I don't if he's right or not):

(opinion!)

#ShroomBoom # WeedStocks # MidasLetter

Why Kevin O'Leary Chose Psychedelics Over Cannabis | MindMed (MNMD) & COMPASS Pathways (CMPS)

(I would not necessarily recommend inexperienced investors buying any of these stocks at this time...unless you have a very high risk tolerance and significant experience in The Stock Market),

 
 
 
Texan1211
Professor Principal
8.1.7  Texan1211  replied to  Krishna @8.1.6    4 days ago
Here's an interesting opinion by "Mr. Wonderful" re the future of Medical Cannibis vs Psychedelic Medicine. (At this point I don't if he's right or not):

What does any of that have to do with the article?

 
 
 
Paula Bartholomew
Professor Guide
8.1.8  Paula Bartholomew  replied to  Krishna @8.1.6    4 days ago

Is he related to Timothy O'Leary?  I have two great stories about Timothy.

 
 
 
Ender
Professor Principal
8.1.9  Ender  replied to  Paula Bartholomew @8.1.8    4 days ago

I saw him in my window. He was outside, looking in....

 
 
 
Krishna
Professor Principal
8.1.10  Krishna  replied to  Paula Bartholomew @8.1.8    4 days ago

I don't think they're related but not sure. (But iId be leary of making any assumptions in that regard 

BTW FWIW I did find Kevin O'Leary's real full name:

Kevin O'Leary, in full Terence Thomas Kevin O'Leary, (born July 9, 1954, Montreal, Quebec, Canada), Canadian entrepreneur, financier, and television personality who was perhaps best known as a panelist on the reality series Dragons' Den and Shark Tank.

 
 
 
Krishna
Professor Principal
8.1.11  Krishna  replied to  Ender @8.1.9    4 days ago

I saw him in my window. He was outside, looking in....

Not to worry-- it was probably just a hallucination!

 
 
 
Sparty On
Professor Principal
8.1.12  Sparty On  replied to  Krishna @8.1    3 days ago

You need to study up on your states pot taxation policies.

Michigan for example has a 10% excise tax and 6% sale tax on pot.    That’s it.    

California on the other hand taxes the flowers, taxes the leaves and taxes the plant, all by weight.    Plus it has a 15% excise tax, plus a 7.25% sales tax.    Plus local municipalities can levy their own fees and restriction

One doesn’t need to be Pulitzer Prize winning economist to figure out which is worse.    Far worse and this doesn’t take into account regulation which be even more financially excessive for business.

 
 

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