California is expected to raise the cannabis cultivation tax. Although there are forecasts of a $31 billion surplus, one cannabis entrepreneur is calling on others to band together and strive for change with some kind of “revolution.”
Co-founder of cannabis brand Flow Kana, Michael Steinmetz, says he will withhold from paying taxes if Gov. Gavin Newsom and the Legislature do not change California’s tax regulations by July 1, 2022. His recent revolt comes from an op-ed published on Monday co-written with his wife, Flavia Cassani.
Steinmetz frowned upon the California Department of Tax and Fee Administration’s proposal to increase cannabis cultivation tax in the op-ed. He noted that “We simply reply: We’re not going to pay.” California currently taxes retail cannabis four times: a state excise tax, a local excise tax (both paid by buyers), a sales tax paid by customers, and a cultivation tax paid by growers.
The current cannabis cultivation tax is $9.65 per dry-weight ounce for cannabis flower, $2.87 per dry-weight ounce for leaves, and $1.35 per dry-weight ounce for cannabis plants. As of January 1, this will increase to $10.08 for flower, $3 for leaves, and $1.41 for plants. Not only was the tax increase enough for Steinmetz to write his op-ed, but he also touches on how growers want to change the cultivation tax since they pay it before sales are made.
Steinmetz isn’t the only one on board for change; the new tax increase also saw rebuttal from cannabis advocates like NORML. Its director Dale Gieringer said in a statement that the legal industry is already troubled with “excessive taxes and regulation that it cannot compete with unlicensed marketers.” He concluded that California must reduce, not increase, cannabis tax to “make the legal market more competitive.”
Steinmetz noted in his op-ed that he wants the government to drop the cultivation tax and for the state to issue a three-year tax holiday for the cannabis excise tax. According to the California Department of Tax and Fee Administration, in the second quarter of 2021, California generated $333 million in cannabis taxes, up from the second quarter of 2020, which collected $264 million.
In Steinmetz’s op-ed, he added that that change can be achieved, but the solution to save the industry “lies in Governor Newsom’s hands.” Steinmetz is calling on Newsom to protect California’s cannabis industry so we can restore California “to its global cannabis leadership position.”