Despite being a Grandfather of sorts in US Cannabis, California has some blatant problems in its industry. That’s not to say that other states don’t. The powerhouse of cannabis is always in the news for it, however. High taxes and licensing are their own issues; but, outside of that, are several factors stacked against businesses trying to walk the straight and narrow. This month’s factor: a string of robberies targeting businesses and local law enforcement doing very little to help.
If you decide to Google it for yourself, you’ll see articles scathed across Forbes and The Post asking how this could’ve happened, interchanging the words ‘cannabis’ for ‘weed’ when there is a negative headline to follow. As they investigate, the clear answer is steadily being blasted on social media by advocates. Taxes and the following approach continue to hinder the industry that they so strongly wish to profit from. So much so that local businesses are considering withholding taxes in the coming year. So, how exactly did we get here?
PROP 64
Despite how much green everyone wants to see, there’s a lot of grey in the long-debated Prop 64. That grey starts in legislation and priorities to big-cannabis. If it’s not the hypocrisy the state throws at the industry, it’s the hands-off approach it has towards a cash cow it doesn’t want to abandon.
More recently, cannabis CEOs from Catalyst Cannabis and Flow Kana have decried the increased taxing situation in their respective cities. Catalyst has garnered attention over the past few months as their owner voices his frustrations through Instagram reels. Flow Kanna penned an op-ed on Medium doing the same. While all the complaints are valid, many blast the two for being the same ‘big-cannabis’ that caused some of these very problems. So, how do you call for fairness when you caused the market to be unfair?
To be clear, I’m not blaming one specific company or entity. Prop 64 pits everyone against each other with limited licenses for one of the biggest markets in the country. At the same time, many municipalities refuse to allow legal cannabis businesses but complain about illegal cannabis in the same breath. The infamous Prop 64 is what is causing turmoil in its less-than-stellar language.
According to the proposition, four separate taxes are added to cannabis purchases: the cultivation tax, paid by cultivators, remitted by distributors; state and local excise tax paid by retailers; and a sales tax paid by the consumer. As it stands, California cannabis taxes are among the highest in the country, with Oakland taxes being 417 times higher than gun taxes in the state. As I also mentioned, many cannabis-centric areas in the state do not allow for cannabis businesses to operate which furthers accessibility issues with the high taxes on purchases.
THE GREY AND THE GREEN
As I mentioned, Oakland already deals with higher tax rates than some nearby municipalities. At the same time they, along with Los Angeles and San Francisco, have endured a string of over 20 robberies totaling over $5 million in damages. This further adds to the robberies from last year in the peak of controversy and protests. To make matters worse, law enforcement has been described as:
“encouraging this crime wave by not responding to reports of break-ins—arriving hours later only to ask owners to file a police report, if they respond at all—or, in at least one recorded instance, appearing to stand by and watch as unarmed thieves robbed a legal marijuana store blind.”
The authorities and city officials have yet to comment on the reports and footage of the incident. Their lack of comment, of course, has led to some colorful assumptions.
After all of that, it’s no wonder the two companies feel the way they do. Flow Kana has businesses debating withholding taxes in the coming year. A worthy gesture but, it’s lost on mom-and-pop shops who never got to compete legally in the first place. Many of the biggest players in cannabis -not just California- don’t get involved until trouble comes knocking at their door; leaving smaller farms and craft shops as cannon fodder. This all leads us to these break-ins. They primarily target small businesses who can’t afford sufficient security and thieves assume they have loads of unguarded cash on hand as a result. If you have gotten through the gates of licensing and paid the taxes required, it’s completely unacceptable to not be protected by the state that receives those taxes
LEGALITY AND MORALITY
Considering all that, as well as the overall high cost of operation in California, many of the targets are not able to reopen. Taxes, corruption, gatekeeping, and negligence are everywhere; but, more than anything, legislators taking advantage of legal jargon and misinterpretation seems to be the guilty party. The following blow-back is the cause and effect.
Cannabis legislation has progressively gotten better as more states join the legal side of cannabis. The urge for legal cannabis, however, leads to rushing bills that aren’t helping anyone which -to me- looks like the problem in California. As consumers have echoed through all of this, it’s never easier being at the forefront of an industry. With politicians and legislators constantly using cannabis as a prop, however, it shouldn’t be this hard.
So, what do you think? Did Prop 64 hurt or help?
