OP-ED: A Future for a Sustainable Industry

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Courtesy California Cannabis CPA

Cannabis taxes are a joke, but it’s not a laughing matter. The Long Beach Collective Association has been advocating for safe access and fair industry policy since 2010…so much and so little has changed over the last decade.

We learned to fight defense with reactive organization; advocating for local regulations to allow for retail and other type supply-chain licenses (still more work to do), for safe access for patients and consumers (still more work to do), for fair workforce rights (still more work to do), for policy change in administration and planning regulations that meet practical functions in cannabis businesses rather than prevent and drain successful development (still more work to do), for the return of compassion cannabis (still more work to do), for community education and credible trade learning at a collegiate level
(still more work to do), for a social equity program that actually works by incorporating funds, shared licenses, and mentoring while blocking and vetting investing vultures (enormous amount of work to do), and fighting to prevent an increase on local cannabis taxes while working on outside-the-box ideas to increase more cannabis taxes revenues for programs (gigantic amount of work to do here).

Governor Gavin Newsom signed a bill into law last week that prohibits the California Department of Tax and Fee Administration from adjusting the cannabis excise tax markup amount until July 1, 2021. This bill also prohibits the cultivation tax rates for the 2021 calendar year from being adjusted for inflation, unless that adjustment would result in an inflation rate less than zero.

We see leadership on the highest state levels take a tremendously cautious approach when it comes to increasing cannabis taxes. We have heard and continue to hear calls of alarm about the state tax structure since the establishment of these new regulations. Currently, state sales taxes are being compounded on top of local city sales taxes and the state excise tax is being compounded by the city tax. Cultivators, manufactures, distributors, and lab-testing facilities are also being taxed separately on transactions and ultimately being collected at the retail level in addition to the required sales tax, literally layers of taxes on the same product and it is simply unnecessarily complicated.

While Covid-Culture has deemed cannabis essential, the illicit-traditional market thrives exponentially during these times. Without any real data on the illicit market, it is rumored that the illicit plane has more than 70% of the market while the legal plane battles with less than 30%. At the same time, the legal industry’s over-taxed, high-regulatory costs, and under-licensed environment creates the biggest barrier in legal cannabis—license access; especially to social equity applicants.

On the brink of an economic recession, a social equity lens should be placed in every industry and every institution both private and public sectors. Any increase on cannabis tax enhances the barriers for any real social equity startups and increases the cost of medicine and cannabis products for Long Beach residents especially the most economically disadvantaged communities. With this, we need to remember that cannabis was deemed essential due to the need for cannabis products by residents. During the pandemic and beyond we should do our best in the city and industry to keep costs down and cannabis products affordable. In a time before commercialized cannabis, the fight and advocacy were for safe and affordable access to cannabis; today, it’s the same fight
extending into every facet. Cannabis legalization brings safe access to medicinal patients and adult-use consumers; however, the same legalization also brings over-taxed products that creates barriers to safe access.

The time is never right for misinformation or political positioning especially when Long Beach is uniquely positioned to lead the way to create the model for a thriving legal cannabis industry state-wide.

Any increase in cannabis tax will directly tax the residents of Long Beach on top of the 10.25% sales tax (highest in the nation) and additional existing 8% adult-use and 6% medicinal tax on cannabis products. As an industry and community in the city, we are proud to be deemed essential and be able to generate tax revenue to help with the financial damages caused by the pandemic. We want to continue to grow that revenue besides just the old approach of raising taxes. We feel confident by increasing the hours of operations, the industry will hire more staff, allow more time for consumers to shop which will help with foot traffic and avoidance of Covid-19 transmission while generating additional tax revenues for needed programs.

Any tax increase will be paid by Long Beach residents, that’s no joke. As the city prepares to initiate an economic study on cannabis taxes let us continue to be the model for cannabis legislation, let the authentic and essential partnerships carve a healthy, vigorous industry and workforce that elevates the community. Helping to create a thriving legal industry in light of the current conditions is going to take partnership with the City, community, and industry professionals. The ball is in our court, Long Beach, and the state and nation are watching.