In the first year of regulated sales, the state took in $345.2 million in tax revenue from legal cannabis, which is significantly less than the $1 billion projected. It was a fiscal fairytale to believe there would be a smooth enough transition to reap a billion dollars in year one, especially with 75 percent of California’s cities and counties banning cannabis commerce.
The state bludgeoned the industry to death with regulation, pushing whatever additional tax revenue out of state coffers and into the wallets of the illicit market. The cannabis industry can’t even bank, so how could one assume it’s sophisticated enough to divvy out $1 billion to bureaucrats who can’t build the infrastructure to make it all possible?
Luckily, some folks in Sacramento are cognizant of the industry’s needs and has been trying to address them for years. Oakland’s Assemblymember Rob Bonta (D) is famously pro-cannabis and 2019 is looking to be no exception with the introduction of Assembly Bill 286, the Temporary Cannabis Tax Reduction bill.
If passed, AB 286 would decrease the excise tax on cannabis retailers to 11 percent from 15 and eliminate all cultivation taxes through 2022. Tax relief will mean lower prices for consumers which generates more revenue for the state, increases public safety and the overall quality of cannabis products.
Bonta’s bill is a vital step – one he attempted to pass last year foreseeing the coming pitfalls – if the legal market is to have a fighting chance against the more established illicit one. Another important cannabis bill on its second round is State Senator Scott Wiener’s re-introduced Senate Bill 34, which exempts all donations of cannabis and cannabis products to medical patients from the use and cultivation taxes enacted by Proposition 64. If passed, it also allows compassionate care programs to facilitate the donations from a licensed retailer.
California State Treasurer Fiona Ma testified before a House Financial Services subcommittee earlier this year to speak on the public safety implications of banking access (or lack thereof) for cannabis-related businesses and creating a paper trail for tax purposes. While Congress continues debating the obvious political and economic win-win, cities like ours are dealing with the growing pains of post-legalization lessons. (The WHO is on board, though.)
Newsom’s administration is at the forefront of cannabis advocacy nationally. Nicole Elliott, who has led the Office of Cannabis since its forming last year, has been tapped by Governor Newsom (her former boss) to be his senior advisor on cannabis in the Governor’s Office of Business and Economic Development. While I have been critical of her experience in other respects, her work with the Office of Cannabis gives her a unique perspective on how California Cannabis Equity Act – a $10 million state fund meant to support equity programs – can be implemented immediately to see the greatest gains. Although, the unexplained delay in said equity funding leaves much to be desired.
As of 2019, legal cannabis has created 211,000 full-time jobs and generated billions in profits. It is imperative to the moral standing of our industry, and our nation, to include the communities most targeted by the War on Drugs in that wealth creation.
It is unjust for us to revel in piles of greenbacks while swaths of Black and brown communities rot behind the bars of modern American slavery. Even my home state of Alabama is considering a medical marijuana program, but we’ve already seen the cracks from other states appearing to swallow opportunities whole for locals residents of color.
We’re trying, but the people who need help most don’t have time for good enough.
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