California BIPOC cannabis operators rally in Sacramento for tax breaks

A group of licensed cannabis entrepreneurs gathered on the steps of California’s capital on Thursday to raise awareness of the impact of high cannabis taxes on independent entrepreneurs. The demonstration, held in response to the budget proposal released by Gov. Gavin Newsom last month, was organized by Supernova Women, an Oakland-based nonprofit working to create opportunities for blacks and browns in the cannabis industry.

The rally was attended by more than fifty cannabis entrepreneurs, patients and policy makers who are Black, Indigenous or Colored (BIPOC) and rallied to demand several changes to state cannabis regulations, including the elimination of the licensed social justice cannabis use tax Company.

“I’ve been in business 3 years and we’ve paid half a million dollars in excise taxes alone, in addition to a state excise tax and a 4% city tax,” said Maisha Bahati, founder and owner of Sacramento-licensed cannabis retailer Crystal nugs “This business has to survive. Failure is not an option for me. I’ve put everything I have into this business and being a social equity company taxed at 40% brings me and my dreams of creating generational wealth for my children to life.”

The budget proposal temporarily reduces pot taxes

On May 13, Newsom released a budget proposal for fiscal 2022-2023 that included temporary tax breaks for licensed cannabis companies. Under the proposal, Proposition 64, the 2016 ballot measure that legalized recreational cannabis in California, would be amended to eliminate the cultivation tax paid by cannabis growers.

But participants at Thursday’s Sacramento rally say the proposed tax break doesn’t go far enough and are urging Newsom and state legislators to take more action before the July 1 budget deadline. The proposal calls on the state to repeal the cannabis tax on social equity companies, reduce the cannabis use tax to 5% for all other companies, and codify a statewide definition of social equity to establish eligibility for the state use tax exemption.

“Governor Newsom promoted Prop. 64 less as an opportunity for tax collection and more as a historic opportunity for racial and social justice and economic empowerment — to repair the damage of a drug war that had disproportionately criminalized blacks and Latinos,” said Amber Senter, rally organizer and Managing Director of Supernova Women, explained in a statement ahead of the event.

“Yet five years later, California’s black and brown cannabis companies, many of whom voted for Newsom not once but twice, are literally on the brink of extinction due to onerous state taxes while the governor is at a $100 billion surplus sits. ‘ Senter continued. “Where is the racial and social justice? Without meaningful tax reform NOW, the few remaining BIPOC cannabis operators and social justice businesses in California will not survive, and the communities and patients they serve will not have access to affordable and safe cannabis. This is a major public health crisis today and a missed economic opportunity tomorrow.”

Two bills would provide tax breaks for cannabis in California

In a video released last week, State Senator Steven Bradford expressed his support for the goals of Thursday’s rally. Bradford is the sponsor of two bills providing tax breaks for cannabis companies and their owners, including Senate Bill 1281 that would eliminate the cultivation tax and reduce the cannabis consumption tax from 15% to 5%. Separate legislation, Senate Bill 1293, would allow a $10,000 tax credit on income and corporate taxes for Social Justice applicants and licensees.

“Without significant changes to California’s cannabis tax policy, the industry is doomed, particularly cannabis equity operators operating on a very tight margin,” Bradford said in the video posted online.

Protesters at Thursday’s rally are also calling for changes to California’s social justice regulations. Under state law, social justice programs currently regulated by local jurisdictions may not consider race or ethnicity as a selection criteria. The organizers of the rally are recommending a new statewide definition that establishes eligibility for businesses that are at least 51% owned by someone who has lived for at least five years in a low-income community disproportionately affected by the war on drugs, or by a person with an immediate family member who has an arrest or conviction for a cannabis-related offense.

“In 2020, according to LAPD records, 75% of cannabis-related arrests in Los Angeles were black and Hispanic,” said Whitney Beatty, CEO of Josephine & Billie’s, a Los Angeles weed talk-bar. “With Los Angeles’ majority-minority population, LA alone could help rewrite our state’s recent history of white operators dominating an industry that has locked down so many BIPOC people physically, emotionally, psychologically and economically… but it hasn’t.” without real state-level tax reform that protects our vulnerable social justice operators and BIPOC patients.”