California activists are urging lawmakers to pass a bill this week to delay the implementation of an planned hike on marijuana taxes—a policy change advocates argue would detract from efforts to mitigate the illicit market.
Tax increases that Governor Gavin Newsom signed into law would raise the rate from 15% to 19%, starting July 1. The tax increase that Gov. The increase in the rate would take place on July 1, but under a bill from Assemblymember Matt Haney, (D), it will be deferred for 5 years. This gives legislators time to study and consider this issue.
The Assembly is expected to take up the measure this week, but advocates are hoping to see its language incorporated into a separate budget trailer bill that would take effect upon enactment—as opposed to the beginning of next year under Haney’s bill.
Dale Gieringer told MEDCAN24 that California NORML’s director, Dale Gieringer was pleased with the strong support they have received in this committee. “We are hopeful of a positive result.”
California NORML was proud to be the leader in sponsoring this legislation, and I have co-sponsors on all sides of the issue,” he stated.
Although the original legislation would have repealed outright the proposed tax hikes, the amended version has been delayed its implementation to the 2020-2021 fiscal year.
California NORML, in an email to its supporters, said that cannabis is heavily taxed in California compared to similar products such as beer, wine and tobacco. They urged them to speak to their elected representatives in support of Haney’s legislation.
The industry does not need a tax increase, but rather a reduction. It is difficult for the industry to compete due to overtaxation, an illicit market, opposition to licensing at local level, and the proliferation hemp-derived goods. “Medical marijuana patients are particularly unable to purchase cannabis products at the current price.”
According to the proposed legislation, California Department of Tax and Fee Administration will be working closely with Department of Finance to adjust the tax rates on cannabis and cannabis products. This adjustment would take into account the additional percentage of retail sales that a cannabis retailer makes that generates revenue that is equal to what would have been collected the prior year, according to the text of the bill.
According to information that is available, the department will need to “estimate” the amount that was collected under the weight-based tax during the prior fiscal year.
According to the legislation, “The cannabis excise rate reduction has the specific purpose of providing immediate tax relief to cannabis industries.” “The effectiveness of this goal can be measured by lawmakers by the amount in gain or losses of cannabis excise revenue resulting from cannabis tax reductions allowed by this measure.”
It also mandates that CDTFA, on or before December 1, 2026 and each subsequent year the California “submit a report to the Legislature…detailing the amount of gain or loss in cannabis excise tax revenues resulting from the cannabis excise tax rate reduction allowed by this act.”
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California officials also awarded another set of grants funded from marijuana tax proceeds to non-profits and health departments in the state last month.
California’s Supreme Court delivered an independent victory to the state’s cannabis program in the last month. It ruled against a ruling of a lower-court that implied federal prohibitions could be used locally to undermine the marijuana market.
The state Supreme Court ruling also came just weeks after California officials unveiled a report on the current status and future of the state’s marijuana market—with independent analysts hired by regulators concluding that the federal prohibition on cannabis that prevents interstate commerce is meaningfully bolstering the illicit market.
Newsom did sign a bill in 2022 that would have empowered him to enter into interstate cannabis commerce agreements with other legal states, but that power was incumbent upon federal guidance or an assessment from the state attorney general that sanctioned such activity.
In the meantime, California Senate committees recently rejected a bipartisan proposal that would create a psilocybin-pilot program for veterans and first responders.
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