California's legal cannabis market is 'on the brink of collapse.' Can the governor help?

[mahatmakanejeeves]

FINDINGS

California’s legal cannabis market is ‘on the brink of collapse.’ Can the governor help?

Industry says heap of taxes put it at a disadvantage with the state’s illicit market

By Alexei Koseff • January 31, 2022 3:00 pm - Updated February 1, 2022 10:05 am

CalMatters

When California voters legalized marijuana for recreational use in November 2016, it was also a victory for Gavin Newsom, who spent months traveling the state as the face of the campaign. At an Election Night party at a San Francisco nightclub, the then-lieutenant governor celebrated this “point of pride,” telling attendees California had sent a “message powerfully to the rest of the nation.”

It was an important resume-building moment for Newsom, already deep into his first run for governor, who during decades in office has put himself at the forefront of political change. In a profile in Billboard magazine a few months later, he acknowledged that his legacy and that of Proposition 64, the legalization measure, were now tied together: ... “Put it this way: Everything that goes wrong, you’re looking at the poster child.”

Five years later, Newsom is governor, and farmers, dispensary owners and other advocates are calling on him to rescue a legal market they say has been pushed to the brink of collapse by a steep drop in prices — and the inattention of a man who was once its most prominent proponent.

“He championed our message and he rode our coattails all the way to the top,” said Michael “Mikey” Steinmetz, co-founder of Flow Cannabis Co., a manufacturer and distributor. “We feel that he has turned his back in some capacity.” ... The cannabis industry’s appeal for help is aggressively aimed at the heap of taxes that put it at a disadvantage with the robust illicit market in California. Steinmetz has proposed a boycott of the state’s cultivation tax unless there is financial relief in the upcoming state budget.

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CalMatters is a nonprofit newsroom committed to explaining California politics and policy.

[underpants]

1. Strange to read. I do wonder about the expenses of cash handling

It was mentioned in the article but from what I understand it’s a cash business. They can’t open bank accounts because it’s still a federal crime. I heard a guy years ago on NPR say that 20% of his time and money going to moving and storing cash.

I actually went in to a dispensary a few days ago and there were at least 12 people. I’m pretty sure I was the youngest customer there.

[captain queeg]

3. Up in WA and OR marijuana stores are increasingly robbed.

Everyone knows they have a lot of cash. Who could have forseen that? Really need to get the federal restrictions lifted.

[underpants]

4. It can't be that hard to track and figure out their system.

I did see a Penske truck back up to the local dispensary a few weeks ago. Inventory in and cash out???? Maybe they rent out trucks so it’s not the same truck all the time.

[captain queeg]

5. A lot of them have video surveillance. It seems like the minimum that they all should do.

Fortunately I haven’t heard of any actual violence though often guns are used. Just a matter of time till that happens.

[underpants]

7. The logistics are interesting

Vans - fleet or rental
Storage - I’m thinking industrial park.
Video surveillance as you said and guns
Real trust between workers and management
That’s just collection and storage. I’m guessing they have to have payment system too.

[3Hotdogs]

2. The government should just say, "Fuck it." Drop all regulation and let the free market

prevail, as it already is prevailing.

But they hoped the taxes would be a windfall.

[IbogaProject]

6. Two part, state and federal

Its two layers of tax, the state taxes and fees, and federal section 230 rules that make most normal taxes non-deductible. Common sense expenses like facility rents. Sec 230 was conjured up to have a method to create a tax bill for an illicit dealer. It allows deducting cost of product but none of the relevant costs that a licenced grower might face. The now governor was backed by corporate players who can afford the long game. The scene came together as a partnership between patients and collective operators who were both tossed aside. This is an example where the government trying to avoid broad taxes using fees and use based taxes are bound to fail.

We need a single nationwide income and property taxes which include investments. These would need exemptions and credits and they would need to be on a progressive scale so Paris Hilton pays a much larger share of income & property as a teacher or nurse.

[MichMan]

8. Just how would a national property tax get taxes paid by the illegal marijuana business ?

Or for that matter, any other illegal criminal enterprise.

[IbogaProject]

9. My comment was about all use taxes

It wasn't to suggest this remedy just for cannabis businesses, which are currently covered under IRS section 280E https://www.benzinga.com/markets/cannabis/20/09/17630566/irs-greenlights-tax-loophole-for-cannabis-businesses I was refering to how states use these things and a myriad of fees and surcharges to avoid simply having an income tax. I was suggesting one single National income and property tax overall for everyone to fund both the federal government and to fund the individual state and local governments. That way all states get their cut and don't compete on a race to the bottom with varying taxes.

[MichMan]

10. What states would ever agree to cede all state & local taxing authority to the federal government ?

State and local governments, whose residents agreed on higher taxes to fund things like K-12 schools, colleges, police & fire, parks & recreation, and roads, among others, would be prohibited from doing so, and be bound by whatever the Federal government decided they deserved? Not even remotely constitutional.

No state would ever agree to anything like that nor should they. Might as well say to dissolve all the state boundaries and just have one big single country.

[IbogaProject]

11. How we fund education needs reform

Our property tax system way of funding different levels of public education is a major problem in America. I'm proposing funding the whole country w the services of high ticket states not reducing them. We need a list if societal obligations and duties to our citizens and fund them universally.