Gathering to discuss a letter that was drafted collectively and is supported by operators in California, 20 cannabis leaders, among CEOs, policy analysts, advocates, employment experts, dispensary owners, manufacturers, distributors and farmers, are calling upon Gov. Gavin Newsom and other state legislators to address circumstances that they say are severely undermining the $4.4 billion legal industry and to take action in order to prevent what they are calling “an imminent market collapse”
Beginning Jan. 1, 2022, the cultivation tax rates will reflect an adjustment for inflation as required by the Cannabis Tax Law, as stated the California Department of Tax and Fee Administration (CDTFA).
“We are looking for an immediate suspension of the cultivation tax, which is an incredibly burdensome tax that compounds throughout the legal supply chain. We’d also like the lawmakers, through the legislative process, or the budget process, consider suspending the excise tax or reducing the excise tax for the foreseeable future until the legal market can really start to grow and thrive. Those are two actions that we would like it done in the very near future,” said Executive Director of California Cannabis Industry Association, Lindsay Robinson.
The letter addressed to the Governor was shared during a press conference on December 17. The document notes that four years after the start of legal sales, the industry is “collapsing, and our leadership and legacy is on the brink of disappearing forever.” It also mentioned “the current regulatory environment threatens to violate the viability of California legal cannabis operators.”
For the group, the opportunity to create a robust legal market has been squandered as a result of excessive taxation, making the products 50% more expensive at retail and increasing the illicit market, which they group says is currently three times the size of the legal market. “The illicit market threatens the health and safety of medical patients and consumers,” the document noted. The letter also claims 75% of cannabis in California is taken over by illegal commerce, unsafe grows that “often use banned pesticides that poison our streams, rivers and lakes, and illicit products for consumers.”
Co-founder of Flow Cannabis Co, Mikey Steinmetz, emphasized that “the broken tax structure is driving us all to literally bankruptcy. We understand as an industry that we need to be taxed. We’re not saying that we don’t get an exemption for the rest of our lives. But what we’re trying to say is right now we can’t compete with the illicit market. We have not built a stable, sustainable industry and a stable foundation for our industry. With the state recently announcing $31 billion of surplus on the budget, there’s no need right now to tax our industry. Let’s work together with government to basically eliminate the illicit market.”
The letter’s signees believe the state’s legislative inaction is perpetuating “a failed and regressive War on Drugs, inflicting significant harm upon Black, Brown, and Latinx communities. The California cannabis system is a nation-wide mockery; a public policy lesson in what not to do. Despite decades of persecution by the government, we have been willing and adaptable partners in the struggle to regulate cannabis. We have asked tirelessly for change, with countless appeals to lawmakers that have gone unheard. We have collectively reached a point of intolerable tension.”
Among the signees are Dale Gieringer, California National Organization for the Reform of Marijuana Laws director, Amy Jenkins, president of Precision Advocacy, Flavia Cassani and Steinmetz, co-founders of Flow Cannabis Co.
