California pot makers Gavin Newsom is warning that their legal weed taxes are putting them out of business because the cannabis they produce is now twice as expensive as it costs on the street
- Major California cannabis companies warned Governor Gavin Newsom Friday that the state’s legal industry is on the cusp of collapse
- Industry leaders want the immediate lifting of the agricultural tax on farmers, a three-year leave from the production tax and the expansion of retail stores
- “We want you to understand that we have been pushed to the breaking point,” they told the governor.
- Pot prices sold by illegal traders are half what they cost on legal shelves
California’s leading cannabis companies have warned Governor Gavin Newsom that the state’s legal industry is on the verge of collapse and needs immediate tax cuts and a rapid expansion of retail outlets to stabilize a shaky market.
The letter, signed by more than two dozen CEOs, industry officials and advocates for legalization, came after years of complaints that the heavily regulated and taxed industry had not been able to compete with the widespread illegal economy, where consumer prices are much lower and sales are weak. Or triple the legal. Business.
“Our industry is collapsing,” reads the letter, which was also sent to legislative leaders in Sacramento on Friday, four years after the start of extensive legal sales.
Industry leaders have called for an immediate lift on the farm tax on farmers, a three-year leave from the excise tax and the expansion of retail stores in much of the state. It is estimated that about two-thirds of California’s cities remain without dispensaries, because it is up to local governments to allow sales and production.
The current system, they wrote, is “set for everyone to fail.”
“The opportunity to create a strong legal market has been squandered as a result of excessive taxation,” the letter said. “75% of cannabis in California is consumed on the illicit market and is untested and unsafe.”
Workers prepare marijuana for dispensing at Med Men in West Hollywood, California. California’s leading cannabis companies warned Governor Gavin Newsom that the state’s legal industry was on the verge of collapse and needed immediate tax cuts and rapid expansion of retail outlets to stabilize the market.
“We want you to understand that we have been pushed to the breaking point,” they told the governor.
Newsom spokeswoman Erin Mellon said in a statement that the governor supports cannabis tax reform and recognizes that the system needs to change, while expanding enforcement against illegal sales and production.
The current tax architecture clearly presents unintended but serious challenges. Mellon said any tax reform effort in this area would require action by two-thirds of the legislature and the governor is open to working with them to find a solution.
Companies, CEOs, and groups that signed the letter included the California Cannabis Industry Association, the California arm of the national organization for the reform of marijuana laws, the Los Angeles-based United Cannabis Business Association, and Flow Kana Inc. , and Harborside Inc. , and CannaCraft.
On a conference call with reporters, Darren Storey of Agronomy Engineering said tough market conditions have forced him to lay off more than half of his staff. He said taxes that will rise next year make it an easy choice for shoppers. With prices less than half what they see on legal shelves, he said, “most consumers will quit.”
The companies have asked Newsom to include their proposals in their upcoming budget proposal, which will be released early next year.
“The solution to these problems and the potential to save this industry lies in your hands,” they wrote.