California Talks Taxes.

legislation to tax medical cannabis set for committee hearings

In 2015 history was made. A robust collaborative effort resulted in breakthrough bi partisan legislation to regulate commercial medical cannabis activity in the state of California for the first time in 19 years.

With many stakeholders working together the state of California took a seminal step toward a well regulated, healthy, sustainable, and prosperous cannabis industry. This breakthrough has opened the door to discussions of an excise tax to be levied on medical cannabis.

Two bills propose to do just that. Both proposals—SB 987 and AB 2243 come from first-term North Coast lawmakers. AB 2243 will be heard in the Assembly Committee on Revenue and Taxation on Monday, April 4, 2016. SB 987 will be heard the following week on April 6th in the Senate Committee on Governance and Finance.

Many in the cannabis industry urge caution. Hezekiah Allen, Executive Director of the California Growers Association explains, “If the tax rate is set too high, there is a very real danger that business that pay their taxes will be at a significant disadvantage to those that don’t. Our members are generally willing to support an excise tax on medical cannabis. However,” Allen continued “we insist that an excise tax be developed in a thoughtful and considerate manner.”

SB 987 was introduced by Senator McGuire (D- Healdsburg). This legislation proposes a 15 percent value tax that would fund mental health and state parks.  

“Simply put, the tax rate is too high. We do not understand the rationale for the tax. This tax appears to be a simple sin tax, which we strongly oppose for medical cannabis. This type of tax may be appropriate for adult use cannabis, but that is not what we are talking about in 2016,” Allen stated.

AB 2243 was introduced by Assembly member Wood (D- Healdsburg); Senator Runner (R- Lancaster) is a co-author of AB 2243, a good sign since any tax bill will require bi-partisan support for a 2/3 majority to pass. This legislation proposes a corrective tax on the propagation, cultivation, and manufacture of cannabis which would fund competitive grants for local law enforcement, environmental restoration and enforcement of environmental regulations. 

“AB 2243 proposes a focused tax that will clean up the mess and begin to reduce continued bad practices,” Allen says. “The legislation achieves our organization’s co-equal goals supporting industry transition into a regulated marketplace while providing funding to address the societal impacts that a lack of cohesive rules has created.”