Cultivation Tax

California has long been the cultural leader when it comes to cannabis. California cannabis should be the global industry leader; the Emerald Triangle is a jewel in California’s crown. Standing by and permitting the decimation of this nascent (legal) market is unconscionable. I have heard the “call to arms” by the industry and propose the following:

A complete abolition of the cultivation tax; this tax strategy is extremely confusing and because of that is the least remitted. Without going into too much detail on where this tax “disappears”, some simple math will illuminate that it does; the tax simply vanishes. The Department of Cannabis Control knows or should know this is happening (I briefed this to prior administration) but since it doesn’t fall in their jurisdiction, the DCC absolves themselves of this issue (and perhaps rightly so since they have neither the manpower of professional expertise to handle this matter.) So, it falls to the California Department of Taxes and Fees (CDTFA) who also lacks the manpower and specific cannabis knowledge to enforce this corner of tax remittance. I know the DCC has access to statewide METRC reports that will illuminate these issues.

It is a burden to cultivators who either must remit it (or discount their product) immediately upon sale and in many cases does not arrive in the State coffers anyway. When the price of cannabis is as volatile as it is (and will be for the foreseeable future) this additional burden strangles a budding industry which should be in the providence of California. This industry is going global, it is shortsighted to permit its decimation just as global markets are forming. It will further reduce the disparity in price between legal/illegal cannabis which will increase excise taxes which have a more direct route to the treasury. Additionally, this will require far less enforcement and cannabis expertise at the CDTFA which will reduce manpower needs.

At the end of the day (in my opinion) the illegal market will not be conquered until legal cannabis is available at a price which can compete. I do not believe the DCC can hire enough people to wrangle the illegal operators without managing market forces (as much as possible.) Doing away with the cultivation tax is a step in the right direction for all of California.

Let me know what you think?