The California capitol was occupied by a gathering of licensed cannabis entrepreneurs who protested the high taxes on cannabis. Supernova Women of Oakland, a non-profit that helps Black and Brown individuals in the cannabis sector, organized the protest in reaction to Gov. Gavin Newsom’s state budget proposal.

The rally featured more than fifty cannabis business owners, patients, and policymakers who are Black, Indigenous, or people of color (BIPOC) and gathered to call for several changes to the state’s cannabis regulations, including eliminating the cannabis excise tax for licensed social equity businesses.

“I have been in business 3 years and we have paid half a million dollars in excise taxes alone, and this is 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. I refuse to give up on this business. I’ve put everything I have into this business and being a social equity business taxed at 40% is killing me and my dreams of creating generational wealth for my children.”

Budget proposal Temporarily reduces pot taxes

Newsom’s budget proposal for the fiscal year 2022-2023 was released on May 13. It included temporary tax relief to licensed cannabis business owners. Proposition 64 (the 2016 California ballot measure legalizing recreational cannabis in California) would be modified to repeal the cultivation tax that is paid by growers.

The protestors at the Sacramento rally said the proposed tax relief is not sufficient and called on Newsom to continue his efforts before the July 1st budget deadline. According to the proposal, the state should repeal the cannabis exise taxes for social equity companies and reduce it to 5% for other businesses. They also need to codify a state definition of social equity in order to be eligible for state exemptions from the excise.

“Governor Newsom promoted Prop. 64 less as an opportunity for tax revenue and more as a historical opportunity for racial and social justice and economic empowerment—to remedy the damage of a drug war that had disproportionately criminalized Blacks and Latinos,” Amber Senter, rally organizer and executive director of Supernova Women, explained in a statement before the event.

“And yet five years later, California’s Black and Brown cannabis operators, many of whom voted for Newsom not once but twice, are literally sitting on the brink of extinction, due to onerous state taxes, while the Governor sits on a $100B surplus,” Senter continued. “Where is the racial and social justice in that? Without meaningful tax reform NOW, California’s few remaining BIPOC cannabis operators and social equity businesses will not survive, and the communities and patients they serve will not be able to access affordable and safe cannabis. This is a major health crisis today and a missed economic opportunity for tomorrow.”

Two bills would provide cannabis tax relief California

In a video released last week, state Senator Steven Bradford expressed his support for the goals of Thursday’s rally. Two bills provide tax relief for cannabis business owners and operators. One is Senate Bill 1281. This bill would remove the cultivation tax, and lower the cannabis excise taxes from 15% to 5.5%. Senate Bill 1293 is separate legislation and would give a tax credit for $10,000 towards the Corporation Tax or Personal Income Tax. This credit could be used by social equity licensees as well as applicants.

“Without meaningful changes to California’s cannabis tax policy, the industry is destined for failure, especially equity cannabis operators who are operating on a very thin margin,” Bradford said in the video posted online.

The demonstrators at Thursday’s rally are also seeking changes to the social equity provisions in California. State law prohibits social equity programs from considering ethnicity or race as criteria for eligibility. Rally organizers suggest a new, statewide definition to establish eligibility for businesses that are at least 51% owned by someone who has been living for more than five years in a low income community which has been adversely affected by war on drugs or who is a family member of someone who has been arrested or convicted for marijuana-related offenses.

“In 2020, 75% of cannabis-related arrests in Los Angeles were Blacks and Latinos, according to LAPD records,” said Whitney Beatty, CEO of L.A. weed speakeasy Josephine & Billie’s. “With Los Angeles’ majority-minority population, L.A. alone could help rewrite our state’s recent history of white operators dominating an industry that has physically, emotionally, psychologically, and economically imprisoned so many BIPOC people… but not without true tax reform at the State level that protects our vulnerable social equity operators and BIPOC patients.”