Latest news with #Proposition64
Associated Press
01-07-2025
- Business
- Associated Press
‘This tax could kill this industry.' California cannabis operators brace for increase
A substantial tax hike for California's faltering legal cannabis market is set to take effect despite an aggressive industry campaign to suspend the increase that won the support of Gov. Gavin Newsom and other political leaders. The excise tax for weed is 19% as of July 1, up from 15% — the result of a political deal three years ago that was intended to buy more time for the legal market to stabilize but which cannabis business operators now warn could chase away customers and push them over the edge. 'I've never experienced collective malaise like this,' said Genine Coleman, founder of the Origins Council, which represents small farmers in the historic Northern California growing region known as the Emerald Triangle. 'People are so concerned with their survival and so deflated. It's a dangerous space.' An excise tax is a levy imposed on a good by the state before sales taxes are applied. While a push to freeze the cannabis excise tax through the state budget failed last month, a bill that would lower the rate back to 15% for the next six years is still moving through the Legislature. Newsom has pledged to sign a proposal halting the tax increase if it reaches his desk. 'I'm intimately familiar with the conversations around that and have great confidence that we'll achieve our stated goals,' Newsom said during a press conference Monday. Cannabis growers, dispensary owners and consumer advocates rallied for months at the state Capitol to avert the tax increase, which they argue could deal a fatal blow to businesses already operating with slim margins. The price of weed has plummeted since voters legalized recreational cannabis through Proposition 64 in 2016, the result of a rush to overproduction even as most cities and counties in the state remain closed off to retail sales. Meanwhile, California is struggling to bring its market out of the shadows; the state Department of Cannabis Control estimates that legal sales still comprise less than 40% of weed consumption in California, which the industry attributes to state and local excise and sales taxes that can increase prices for consumers by a third. Taxable cannabis sales in California dropped to $1.09 billion for the first quarter of 2025, down 30% from their peak in early 2021 and the lowest quarterly sales in five years. Tax was intended to offset cannabis harms It's a crisis for the industry — communities that traditionally relied on cannabis production have collapsed economically — but also a problem for the state's finances. Tax revenues from weed sales provide guaranteed funding for child care slots, environmental cleanup, substance abuse education and impaired driving prevention efforts as California faces a growing budget deficit. 'This was a poor time to say, 'let's starve the state even more,'' said Tom Wheeler, the executive director of the Humboldt County-based Environmental Protection Information Center, which joined a coalition of child care, environmental and tribal advocacy groups to lobby against a tax freeze. He said it was important to uphold the promise of Proposition 64, which includes using cannabis tax revenue for programs that offset the harms caused by the cannabis industry, and expressed skepticism that the tax increase would hurt sales. 'I think the average consumer would not notice that,' Wheeler said. 'At what point do we stop cutting taxes to benefit the industry?' The 2022 agreement offered relief to growers by eliminating a cultivation tax, but it allowed state regulators, after a three-year pause, to raise the excise tax to make up for the lost revenue. During budget negotiations last month, Newsom — who also wants to begin using cannabis tax revenue for enforcement against illegal cultivation — and Assembly Speaker Robert Rivas, a Democrat from Salinas, supported extending the pause on the excise tax. They could not reach a compromise with Senate President Pro Tem Mike McGuire, a Healdsburg Democrat who notably represents the Emerald Triangle. In a statement, McGuire said 'taxes on California's overregulated cannabis industry have been a train wreck for years,' but he raised concerns about the fiscal implications of freezing the tax. State analysts estimate that increasing it to 19% could yield about $180 million per year for the state. 'It's important to acknowledge that any freeze will create a budget shortfall which would impact critical community programs funded by cannabis tax dollars,' he said. California could 'forfeit a huge opportunity' Industry representatives warn that further raising taxes will push price-sensitive customers back into the illicit market, hurting businesses teetering on the edge and actually lowering cannabis tax revenue in the long run. 'The math isn't there,' said Amy O'Gorman Jenkins, executive director and lobbyist for the California Cannabis Operators Association. 'We have no objections to how cannabis tax revenues are being spent. All we're maintaining is that you can't squeeze blood from a stone.' They haven't given up, though repealing the tax increase now that it's taken effect will be even more challenging. Assembly Bill 564, which would set the cannabis excise tax at 15% through the end of June 2031, passed the Assembly unanimously in May and now awaits consideration in the Senate. Assemblymember Matt Haney, the San Francisco Democrat who introduced the measure, said he will keep fighting to get it to the governor. But he was furious that the Senate allowed the tax hike to take effect, which he said sent a message to legal cannabis operators that there is no incentive to follow the rules. 'This tax could kill this industry and there's still not enough being done,' he said. 'California is going to forfeit what should have been a huge opportunity for our state.' ___ This story was originally published by CalMatters and distributed through a partnership with The Associated Press.
Yahoo
05-06-2025
- Business
- Yahoo
California State Assembly Approves Bill Pausing Tax Hike on Legal Cannabis Retailers
California State Assembly Approves Bill Pausing Tax Hike on Legal Cannabis Retailers originally appeared on L.A. Mag. The California State Assembly unanimously voted on Monday to halt a slated 25% tax increase on the cannabis industry from going into effect on July a 74-0 vote, the Assembly approved AB564 by Asm. Matt Haney (D-San Francisco). The bill would prevent the retail excise tax from increasing to 19% from its current 15%."If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California's cannabis culture is under serious threat of extinction," Haney said in a to SFGATE, taxable cannabis sales in California amounted to $1.088 billion in 2025's first quarter, the lowest in five years. The figure also represents an 11% drop compared to the same quarter in 2024, marking the largest decline in legal cannabis sales in state are responsible for paying the tax regardless of consumer sales. Haney attributes the steady growth of cannabis sales in other states, such as Colorado and Michigan, to lower taxes and fewer barriers for businesses and consumers. "If we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense," said Haney."Nearly a decade after Californians overwhelmingly approved cannabis legalization, the industry is struggling under the crushing weight of a 15% excise tax,' said Caren Woodson, president of the California Cannabis Industry Association. 'Any increase, particularly a 25% increase, would not only be bad public policy, but devastating to operators already on the brink.'In 2016, voters passed Proposition 64 to legalize the possession, cultivation and sale of cannabis for recreational use with an initial retail excise tax of 15%.A 2022 law eliminated California's cultivation tax, making the excise tax adjustable to generate equivalent revenue. The new bill would eliminate the law's requirement to adjust the excise tax will go to the State Senate for consideration. This story was originally reported by L.A. Mag on Jun 4, 2025, where it first appeared.
CBS News
03-06-2025
- Business
- CBS News
California lawmakers approve pausing 25% tax increase on legal cannabis industry
California lawmakers on Monday unanimously approved a bill that would pause an impending 25% tax increase on the state's legal cannabis industry, as it struggles to compete with the black market. In a 74-0 vote, the Assembly approved AB564 by Asm. Matt Haney (D-San Francisco). AB654 would prevent the tax increase, scheduled for July 1, from going into effect. "If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California's cannabis culture is under serious threat of extinction," Haney said in a statement. According to Haney's office, the state's licensed cannabis market is in a "sharp decline" with plummeting sales and tax revenue. Other states such as Michigan, are reporting steady growth in cannabis sales, which he credits to lower taxes and fewer barriers. "If we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense," the assemblymember added. In 2016, voters approved Proposition 64, which legalized the possession, cultivation and sale of cannabis for recreational use, along with a 15% retail excise tax. "Nearly a decade after Californians overwhelmingly approved cannabis legalization, the industry is struggling under the crushing weight of a 15% excise tax. Any increase, particularly a 25% increase, would not only be bad public policy, but devastating to operators already on the brink," said Caren Woodson, who is president of the California Cannabis Industry Association. AB564 now goes to the State Senate for consideration.
Forbes
14-05-2025
- Business
- Forbes
California Cannabis: Setting The Record Straight On The One-Acre Cap
Steve DeAngelo is no small figure in the evolution of the commercial cannabis sector – many have called him the 'Father of the Legal Cannabis Industry.' I have watched Steve from afar and have known him for many years. I have worked alongside him on various projects over the years from Mexico City, MX to Roanoke, VA, and many places in between. Recently, I sat down with him to talk about the state of the California cannabis industry. In doing so, one particular issue came up and really seemed to perturb Steve – the One-Acre Cannabis Cap. So I dove beneath the surface to explore this issue more deeply. For years, a persistent myth has circulated in cannabis industry circles: that Steve DeAngelo—founder of Harborside and one of the most visible figures in cannabis reform—was responsible for license stacking and the elimination of California's one-acre cultivation cap. This myth first emerged in the wake of a 2017 article that did not take the full legislative history of license stacking into account, and was later repeated in other publications. A more fully informed understanding of the relevant law and regulations paints a very different picture. As a cannabis attorney who has worked on policy across the U.S. and internationally, I've had a front-row seat to California's legal evolution. The real story is not one of backroom lobbying or last-minute regulatory sabotage—it's a story of legislative sequencing, local government action, and a state struggling to reconcile medical and adult-use cannabis systems. Steve DeAngelo The groundwork for license stacking in California began in October 2015, when lawmakers passed the Medical Cannabis Regulation and Safety Act (MCRSA). This framework allowed licensed dispensaries to cultivate up to four acres and permitted multiple licenses on a single property. It also gave local governments a deadline: establish your own cultivation rules or default to the state's. In the months that followed, Humboldt, Monterey, and several municipalities passed ordinances authorizing cultivation in excess of one acre. Humboldt allowed up to four acres per operator and up to twelve acres on some parcels. Cities like Desert Hot Springs, Coalinga, and San Jose approved unlimited license stacking or large-scale operations. In one instance, Coalinga sold a former prison to a cannabis company for more than $4 million. Then came Proposition 64, passed by voters in 2016, legalizing adult-use cannabis. State agencies then set about reconciling the pre-existing medical cannabis regulations with the new adult-use law. In April 2017, the California Department of Food and Agriculture (CDFA) issued draft regulations that stated: 'The Department shall not restrict the total number of cultivation licenses a person is authorized to hold, provided the person's total licensed canopy does not exceed four acres.' The term 'person' included both individuals and businesses. Then, in June 2017, CDFA issued a Programmatic Environmental Impact Report reaffirming that policy, and in the same month the Legislature passed SB 94. It merged the state's medical and adult-use systems under one law: the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). MAUCRSA formally eliminated the four-acre limit and reaffirmed that multiple licenses could be held on a single parcel—legalizing unlimited license stacking statewide. A key element in the one acre myth was the idea that Steve supposedly influenced CDFA to remove the one-acre cap in November 2017, but by the time CDFA issued emergency regulations in November 2017, the legal foundation for license stacking was well established. Industrial-scale operations were already underway. Jurisdictions had issued entitlements, and state agencies would have faced legal liability had they attempted to reverse course. Not long thereafter, Santa Barbara County unveiled a licensing program with a cap of 186 acres. Steve DeAngelo never asked anyone to remove a one-acre cap. He never authorized a cultivation plan beyond Harborside's four-acre entitlement. In fact, Harborside only began cultivation after the City of San Jose mandated full vertical integration for dispensaries, back in 2014. Their farm was built not to dominate the market, but to comply with local law. In order to build out that farm, they brought in investors, and Harborside's legal name was changed to FLRish. Yes, FLRish lobbied in 2017—but not on canopy limits. Their efforts focused on keeping doors open for people with cannabis convictions, including DeAngelo himself, who had a prior felony from the pre-legalization era. They also opposed a regulatory scheme that would have forced all transactions through third-party distributors, hurting the small growers FLRish had supported for years. Steve explained, 'the new regulations posed two existential threats, two knives at our throats. One was the felony exclusion—it would have made it impossible to convert FLRish's medical cannabis licenses into adult-use licenses. And the mandatory distribution scheme would have forced us to sever our relationships with the 500 small growers who supplied FLRish, and instead purchase all our cannabis from distributors who knew nothing about the plant.' At CDFA, FLRish weighed in on real compliance issues: provisional licensing, CEQA timelines, canopy definitions, pesticide and testing standards, track-and-trace rollouts, labor safety, and environmental protocols. There was no ask to expand cultivation limits. Now, with federal cannabis reform looming, it's time to set the record straight. The future of this industry depends on fact-based policymaking and mutual respect—not finger-pointing rooted in old myths. License stacking in California was the product of years of legislative development, local ordinances, and public regulatory processes—not the actions of one man. To suggest otherwise isn't just incorrect—it does a disservice to the movement that made legalization possible.
Forbes
21-04-2025
- Business
- Forbes
California Cannabis: Setting the Record Straight on the One-Acre Cap
Steve Deangelo is no small figure in the evolution of the commercial cannabis sector – many have called him the 'Father of the Legal Cannabis Industry'. I have watched Steve from afar and have known him for many years. I have worked alongside him on various projects over the years from Mexico City, MX to Roanoke, VA, and many places in between. And so, recently, I had to sit down with him to talk about the state of the California cannabis industry. In doing so, one particular issue came up and really seemed to perturb Steve – the One-Acre Cannabis Cap. And so, I dove beneath the surface to explore this issue more deeply. Steve DeAngelo For years, a persistent myth has circulated in cannabis industry circles: that Steve DeAngelo—founder of Harborside and one of the most visible figures in cannabis reform—was responsible for eliminating California's one-acre cultivation cap. This claim, which first appeared in a 2017 Leafly article and was later repeated in Rolling Stone and WeedWeek, is not only misleading but ignores the public legislative and regulatory record. As a cannabis attorney who has worked on policy across the U.S. and internationally, I've had a front-row seat to California's legal evolution. The real story is not one of backroom lobbying or last-minute regulatory sabotage—it's a story of legislative sequencing, local government action, and a state struggling to reconcile medical and adult-use cannabis systems. The groundwork for license stacking in California began in October 2015, when lawmakers passed the Medical Cannabis Regulation and Safety Act (MCRSA). This framework allowed licensed dispensaries to cultivate up to four acres and permitted multiple licenses on a single property. It also gave local governments a deadline: establish your own cultivation rules or default to the state's. In the months that followed, Humboldt, Monterey, Santa Barbara and other counties passed ordinances authorizing cultivation in excess of one acre. Humboldt allowed up to four acres per operator and up to twelve acres on some parcels. Cities like Desert Hot Springs, Coalinga, and San Jose approved unlimited license stacking or large-scale operations. In one instance, Coalinga sold a former prison to a cannabis company for more than $4 million. Then came Proposition 64, passed by voters in 2016, legalizing adult-use cannabis. State agencies then set about reconciling the pre-existing medical cannabis regulations with the new adult use law. In April 2017, the California Department of Food and Agriculture (CDFA) issued draft regulations that stated: 'The Department shall not restrict the total number of cultivation licenses a person is authorized to hold, provided the person's total licensed canopy does not exceed four acres.' The term 'person' included both individuals and businesses. Then, in June 2017, CDFA issued a Programmatic Environmental Impact Report reaffirming that policy, and in the same month the Legislature passed SB 94. It merged the state's medical and adult-use systems under one law: the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). MAUCRSA formally eliminated the four-acre limit and reaffirmed that multiple licenses could be held on a single parcel—legalizing unlimited license stacking statewide. By the time CDFA issued emergency regulations in November 2017 the legal foundation for license stacking was well established. Industrial-scale operations were already underway. Jurisdictions had issued entitlements, and state agencies would have faced legal liability had they attempted to reverse course. In explaining the final regulations, CDFA spokesperson Steve Lyle said: 'The one-acre limit was in a draft version of the rules. It was left out following evaluation of the emergency regulations, including input from stakeholders.' The Leafly article that ignited this controversy cited unnamed sources and made no mention of the legislative history or the CDFA's own public documents. The result was a narrative shaped more by speculation than fact. Steve DeAngelo never asked anyone to remove a one-acre cap. He never authorized a cultivation plan beyond Harborside's four-acre entitlement. In fact, Harborside only began cultivation after the City of San Jose mandated full vertical integration for dispensaries. Their farm was built not to dominate the market, but to comply with local law. Yes, Harborside lobbied in 2017—but not on canopy limits. Their efforts focused on keeping doors open for people with cannabis convictions, including DeAngelo himself, who had a prior felony from the pre-legalization era. They also opposed a regulatory scheme that would have forced all transactions through third-party distributors, hurting the small growers Harborside had supported for years. Steve explained, 'The new regulations posed two existential threats, two knives at our throats. One was the felony exclusion— it would have made it impossible to convert Harborside's medical cannabis licenses into adult use licenses. And the mandatory distribution scheme would have forced us to sever our relationships with the 500 small growers who supplied Harborside, and instead purchase all our cannabis from distributors who knew nothing about the plant.' At CDFA, Harborside weighed in on real compliance issues: provisional licensing, CEQA timelines, canopy definitions, pesticide and testing standards, track-and-trace rollouts, labor safety, and environmental protocols. There was no ask to expand cultivation limits. Steve didn't respond to the original accusation because he believed the truth would speak for itself. He was also planning to launch the Last Prisoner Project (LPP), a nonprofit focused on freeing those incarcerated for cannabis—a mission that required diplomacy and unity across sectors. 'I didn't respond to the first article because I didn't think it would be viewed as credible. Later on, I was moving other urgent projects forward, like the launch of LPP, and didn't want to attract new attention to the story.' But now, as federal cannabis reform looms and that false narrative continues to circulate, it's time to set the record straight. The future of this industry depends on fact-based policymaking and mutual respect—not finger-pointing rooted in misinformation. License stacking in California was the product of years of legislative development, local ordinances, and public regulatory processes—not the actions of one man. To suggest otherwise isn't just incorrect—it does a disservice to the movement that made legalization possible.
