Operators and small cannabis growers claim that the high taxes in the state are keeping them out of the market, despite promises to make the industry more inclusive and expand it.

By Alicia Victoria Lozano

LOS ANGELES -- California cannabis advocates, small farmers, and business owners called for a reform of the California marijuana tax system on Thursday. They are struggling to stay afloat in a sea of rising regulatory and operating costs.

They met outside Sacramento's State Capitol to present their case.

"We are here today because California's craft cannabis industry is in crisis and on its brink of collapse," Amber Senter, cofounder and executive director of Supernova Women (a non-profit organization that creates opportunities for people of color in the industry), said.

Senter stated that the state has failed to fulfill its promises of a repartee for the harms done to Black and Brown communities affected by the war on drugs. He also said that the state had continued regressive wars-on-drugs 2.0 policies through oppressive taxes, which must be stopped. This is our plea for help.

Senter and others have asked the Legislature and Governor. Gavin Newsom should eliminate the cultivation tax and repeal the excise tax that the state imposes on social equity retailers.

Thursday's rally was built upon the momentum generated by industry leaders, who also demand California change its cannabis tax. In a letter, the marijuana companies informed Newsom last month that they needed immediate tax cuts and increased retail outlets to stabilize an unstable market shaken by illegal growers and dealers.

After years of complaints about the inability of the heavily taxed cannabis industry to compete with the illegal market, more than twenty-six cannabis executives and advocates signed the letter.

The 2016 voters approved Proposition 64 to legalize cannabis. In the letter, the executives stated that it was not passed to increase tax revenue but to end the illegal market, safeguard public health and safety and create an accountable legal sector. "But today, four years later, our industry has collapsed, and our global leadership is on the verge of disappearing forever.

They continued, "The opportunity for a strong legal market has been lost because of excessive taxation." "75% of California's cannabis is consumed on the illegal market, which is unsafe and untested."

Experts and operators agree that the state's tax system has been burdensome for small businesses since its inception. The flat rate for cannabis taxation is $161 per pound as of January 1, along with a 15% excise tax and local cultivation, manufacturing processing distribution taxes.

Newsom, a proponent of Proposition 64 for lieutenant governor, signaled this week that he might be able to help. Newsom revealed Monday's budget proposal for 2022-23. He stated that he supports cannabis tax reform and would work with the Legislature to modify policy.

He stated that his goal was to examine tax policy to stabilize the market. "At the exact same time, I want to get these municipalities to see the potential to get rid of the illegal market, the illicit marketplace, and support a regulatory framework to allow for the legal market."

Mia Bonta (Democrat, Assembly Member) from the Eastern San Francisco Bay Area said that reforming cannabis regulations was about ensuring social justice and equity in an industry that has been dominated by white men for many years but has harmed predominantly Black or Latino people.

Bonta's cannabis businesses were robbed at gunpoint in November. They lost $5 million over the week leading up to Thanksgiving. Henry Alston, a co-founder, and chief operating officer at James Henry SF in Oakland, stated that his businesses were robbed five times during the spate of robberies.

He said, "They took everything." "They took our safe and tax money out of the front door."

Casey O'Neill is the operator of Happy Day Farms, Mendocino County. He said he first experienced the drug trade as a legacy grower and learned it from his parents. He said that law enforcement officers had "stormed our house for 30 plants" in 1985, forcing his family to flee.

O'Neill stated that O'Neill could recall the moment when O'Neill and his brother escaped with my mother, who was pregnant, into the creek bed to their north. "The trauma of that day shaped some of my earliest memories."

More than 30 years later, O'Neill sees similarities between California's highly regulated cannabis industry and the prohibitionist attitudes of his youth. He said that high taxes prevent small operators from entering the cannabis industry and exclude communities most affected by the war on drugs.

He stated, "The system isn't working." "The unfair taxation is the end of many people's dream."

 

Article credits: https://www.nbcnews.com/news/us-news/-brink-collapse-california-pot-businesses-call-tax-overhaul-rcna12175