CA's Cannabis Industry Is Considering a Financial Revolt In Protest of Tax Regime
Things are coming to a head with the cannabis taxes in California. While tensions are high, one thing is certain: If the weed law doesn't change, Prop. 64 will go down in history as an abject failure.
Published on December 7, 2021

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Imagine if California's cannabis growers stopped paying taxes. If cultivators held a financial revolt, chaos would obviously ensue for the Golden State's overlords. According to Mercury News, a mass exodus on tax payments might actually be in the cards. 

Some cannabis operators are saying this tax boycott is on par with the Boston Tea Party, but, you know — for weed instead of tea. People are calling it the "California Weed Party," and rather than dumping or destroying their cannabis crops, the industry would withhold tax payments in protest of the state's unfair treatment.

The plan was proposed in protest of California's recent decision to raise cultivation taxes by roughly 4.5 percent starting in 2022, further demolishing small weed businesses. The Golden State's cannabis tax rate already exceeds the national average, reaching as high as 45 percent in some areas. And, while there are hundreds of licensees in operation, the industry is also competing with the state's massive and resilient illicit market.

The current interpretation of Prop. 64 states that the tax hike scheduled for Jan. 1 is non-negotiable. It's based on overall inflation in the economy, and in recent months prices for everything have increased.

Jerred Kiloh, who owns a cannabis retailer and serves as president of the United Cannabis Business Association, said he considered a mass withholding of industry taxes a while ago, but was told it would be "too drastic." After many years of inaction by the state, the strategy of mass withholding is being reconsidered.

"This is the response you get when you feel like you're being taxed and you don't have representation," Kiloh told the Mercury News. "That's really how it feels right now in cannabis. Everyone is taking the money and no one is doing anything to protect our industry."

The cannabis industry hoped it had an ally in Gov. Gavin Newsom, who campaigned for Prop. 64 while he was Lieutenant Governor. So far, Newsom hasn't devised a practical solution regarding the illegal cannabis market — no, sending out the national guard isn't a good solution — nor has he acknowledged how it might be impacting cannabis taxes.

Newsom's press office spokesman said Friday that the governor supports "cannabis tax reform, which would require additional partnership from the Legislature." The spokesman added that the state has allocated hundreds of millions of dollars to licensing and enforcement, and has established the Department of Cannabis Control.

It's unclear if Newsom or the Department of Cannabis Regulation has a plan to address California's overbearing tax regime. But 2022 is less than four weeks away, and hundreds of small farms are on the verge of folding.

Many operators are also being targeted for armed robbery, vandalism, and burglary — the holidays often bring robberies and crime, but 2021 has been especially bad. In particular, dispensaries are getting blindsided by armed robberies. Amber Senter, the co-founder of Supernova Women, an Oakland-based non-profit that helps women of color in the cannabis business, said robberies could be a death knell for dispensaries because insurance coverage is hard for them to get.

"A lot of these folks are not open and won't be open for a while, because they can't bounce back from these things," Senter said during a Nov. 29 news conference about the Oakland robberies. "They don't have the runway and the extra capital and the war chest of cash to come back from something like this."

The Bay Area and Los Angeles have been hit the hardest in a series of robberies. In fact, LAPD recently announced 14 arrests on Thursday in connection with 11 smash-and-grab robberies at stores where nearly $340,000 worth of merchandise was stolen. All the suspects have been released, however.

Michel Moore, Los Angeles' Police Chief, said that most of the accused robbers suspected of ransacking businesses between November 18 and 28 were bailed out or met no-bail criteria, and one is a juvenile.

The cannabis industry needs governmental assistance immediately while Prop.64 is amended, or California's weed law will go down in history as a total abject failure. "We need to break up these crime rings, and we need to make an example out of these folks," Newsom said last month. "We cannot allow [these break-ins] to continue."

Agreed, dude! Now put your money where your mouth is.

MERRY JANE is based in Los Angeles, California and is dedicated to elevating the discussion around cannabis culture.
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