Democratic Governor Gavin Newsom last week proposed a temporary tax cut for California’s struggling cannabis industry, but businesses have said it isn’t enough.
Since legalisation in 2018, the legal sector has been hampered by high taxes, expensive regulation and competition from the illicit market, while over-supply has forced down prices.
In December last year, Newsom was warned the industry would collapse without immediate tax cuts and the rapid expansion of retail outlets.
In a budget proposal for the year starting in July, his administration has recommended eliminating the cultivation tax, which is set at $161 on a pound of buds.
However, after three years, the state would raise the excise tax imposed on retail cannabis purchases to 19%, up from 15%, to make up for the lost funds.
And the increase could come sooner if sufficient tax revenue is not raised to fund a range of education, law enforcement and other programs costing $670 million each year.
Under the proposals, the state will help fund those activities via a one-time $150 million cash injection and also kick in around $20 million in grants to communities to accelerate the licensing of retail shops.
However, cannabis businesses have previously urged the governor to cut the excise tax to 5% as well as axing the cultivation tax.
Jerred Kiloh from the United Cannabis Business Association said the plan would not allow companies to cut prices and compete with the illegal, untaxed market.
“All they are really doing is shifting some taxes around, and it’s not ever going to get to the customer,” he said.
Lindsay Robinson of the California Cannabis Industry Association said it was a first step which failed to do enough to crack down on illegal sales.
“It’s kicking the can down the road,” she added.
The proposal is subject to review, and potentially modification, by the Legislature.
Meanwhile, actor and cannabis campaigner Woody Harrelson was undeterred, celebrating the opening of The Woods WeHo retail cannabis dispensary in West Hollywood on Friday.
Helping him cut the ribbon was West Hollywood Mayor Lauren Meister, while friend and fellow actor Steve Guttenberg was also in attendance.
“Hopefully, we’ve added more beauty and more good times here,” Harrelson told a crowd which had gathered outside the shop.
“Hopefully we can help make the West Hollywood citizens a little bit higher.”
Delaware has given final approval to a bill legalising the possession of up to one ounce of cannabis by adults aged 21-plus for recreational use.
The Senate voted 13-7 in favour of the measure last Thursday, which passed the House the previous week by 26 votes to 14.
Both chambers are controlled by the Democrats, as is the governership, where the bill is headed next.
However, Governor John Carney has previously indicated his opposition to legalisation.
“We’ll review the bill, but the governor’s position hasn’t changed,” his spokeswoman said after the Senate vote.
Under current law, possession of one ounce or less by those aged 21-plus carries a civil penalty of US$100. That would be removed under the new law, though possession by under 21s, possession of more than one ounce and public consumption would all still be classed as misdemeanours.
A separate bill to create a state-run cannabis industry has cleared two House committees and is awaiting debate by the full chamber.