Fix California’s cannabis framework; eliminate the cultivation tax

It stinks to beryllium successful the cannabis manufacture successful California close now.

We aren’t conscionable speaking metaphorically either. Four years aft cannabis advocates and workers celebrated the opening of the largest ineligible recreational marijuana marketplace successful the world, misguided licensing and taxation policies person created an emporium of dysfunction.

Today, hundreds of California cannabis farmers are choosing to fto crops rot successful the fields alternatively than hazard a money-losing harvest oregon returning to the illicit market.

Astonishingly, amid this crisis, California’s Department of Tax and Fee Administration precocious announced yet different taxation increase. On Jan. 1, 2022, the state’s cannabis cultivation taxation volition summation by astir 5%, raising it to a whopping $161 per pound.

Let’s comparison however overmuch higher the cultivation taxation is for cannabis than, say, vino grapes, almonds oregon raisins. Actually, nary specified examination is imaginable due to the fact that nary different cultivation merchandise has a cultivation tax. On the contrary, different cultivation industries are supported by national harvest subsidies to support household farms from marketplace fluctuations that could enactment their homes and livelihoods astatine risk.

The authorities cultivation taxation is but 1 of galore cannabis taxes imposed by authorities and section governments. The manufacture is besides taxable to section cultivation, manufacturing, processing, organisation and retail taxes, arsenic good arsenic section “road” taxes that are imposed simply for driving done a jurisdiction. Next a authorities excise taxation is applied that’s astir 27% of the wholesale price, and, lastly, a authorities income and usage tax.

While the aggregation of these taxes contributes to the wide dysfunction, the cultivation taxation is, by far, the astir problematic. For starters, it is levied astatine the precise opening of the proviso chain. So, each 1 of those aboriginal taxes besides applies to the cultivation tax. In different words, our taxes are taxed again and again and again, compounding each time.

To marque matters adjacent worse, the cultivation taxation is simply a level tax, meaning it’s not proportional to the income price. Given the caller precipitous driblet successful the terms per lb for cannabis, this matters. Last year, the cultivation taxation was 10% to 20% of bulk worldly costs. Today it’s arsenic precocious arsenic 80%. Furthermore, it is applied fundamentally astatine the clip of harvest careless of whether materials are sold.

This is devastating for farmers, but they’re not the lone ones who are hurting. Cannabis workers crossed the manufacture are impacted. Hundreds of jobs person been mislaid owed to excessively precocious taxes and adjacent much volition vanish successful the coming twelvemonth arsenic companies are forced to further chopped costs, trim operations oregon spell retired of concern altogether.

Labor unions person fought for amended wages, tenable hours and safer moving conditions for cannabis workers. Despite beardown organizational success, determination volition beryllium small unions tin bash to amended protections successful this comparatively young manufacture truthful agelong arsenic it faces state-imposed fiscal hardships.

And gradually ceding the manufacture to lavishly capitalized, out-of-state companies volition mean that workers whitethorn ne'er payment from California’s beardown labour policies, portion cannabis workers, who are pushed backmost into the unregulated marketplace volition beryllium adjacent worse off. Working conditions successful these amerciable endeavors often lucifer indentured servitude with unsafe conditions, debased wage and nary wellness benefits.

By perpetuating tragically wrong-headed taxation policies, the state’s inaction is costing jobs, strengthening an already ascendant illicit marketplace and each but ensuring that 1 of California’s large practice industries volition beryllium non-competitive erstwhile national legalization occurs.

Fixing the occupation is simple: Reform oregon repeal the authorities cannabis framework, opening with the elimination of the cultivation tax. With the authorities projecting a whopping $31 cardinal surplus successful 2022, it tin good spend to forgo the cultivation taxation to facilitate what should beryllium a vibrant, global-leader industry. Until then, Sacramento’s misguided taxation argumentation volition proceed to compound, hurting cannabis cultivators, consumers and workers alike.

Tiffany Devitt is main of authorities affairs astatine CannaCraft, a California cannabis company. Jim Araby is manager of strategical campaigns for UFCW Local 5, a 30,000-member national successful the Bay Area.