Los Angeles mayoral candidate proposes fix to ‘broken’ cannabis market, largest in the U.S.
- Cannabis businesses in Los Angeles are facing financial struggles due to hundreds of millions in unpaid taxes and increased fees, highlighting issues in the city's roughly billion-dollar cannabis market.
- City Councilmember Nithya Raman, the leading mayoral candidate, labeled the market as “broken” and introduced a cannabis-specific policy platform addressing these challenges, including the high tax burden making legal competition difficult against illegal markets.
- The high combined state and local taxes (around 35%) have contributed to a thriving illegal cannabis market, which starves the city of tax revenue needed to support marijuana social-equity programs.
- Raman’s cannabis policy proposal has received positive feedback from industry leaders, with supporters praising her progressive stance and commitment to fixing the broken market ahead of the November mayoral election.
Cannabis businesses in Los Angeles, by itself a roughly billion-dollar market, are struggling under the weight of hundreds of millions of unpaid taxes and new fees imposed last year.
Those are signs that the largest municipal cannabis market in the U.S. is “broken” and in need of repair, according to City Councilmember Nithya Raman, the leading candidate for mayor in November’s election, who unveiled a cannabis-specific policy platform on Monday.
Across the state, California operators have long blamed an ongoing accounts-payable crisis – with money owed up and down the supply chain – on taxes they say are encouraging customers to purchase cannabis on the illicit market.
In Los Angeles specifically, a vast network of unlicensed cannabis stores has long plagued both the legal market and city officials, who last year raised fees imposed on cannabis operators in response to declining marijuana tax revenue.
That means promises made to both marijuana social equity applicants as well as law-abiding operators “have been broken,” Raman said in an Instagram post on Monday.
“We can fix it,” she added.
According to Raman, state and local taxes mean Los Angeles cannabis is taxed “at roughly 35%, making competition with the vast illegal market virtually impossible.”
And that massive illegal market means that city coffers are starved of the tax revenue that would otherwise go towards funding marijuana social-equity ventures, Raman added.
To solve the problem, Raman is proposing to:
The cannabis-specific policy platform is a rare example of a leading municipal candidate embracing the issue.
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According to recent University of California, Los Angeles polling, the left-leaning Raman currently leads incumbent Mayor Karen Bass by 11 points.
Partially in response to a short-lived tax increase, California cannabis sales last year declined to less than $4 billion for the first time since early legalization before recovering slightly earlier this year.
Cannabis operators reacted warmly to Raman’s proposal.
“A progressive actually being a progressive? Let me give a full-throated shoutout and endorsement to Nithya Raman in the L.A. mayor’s race,” Elliot Lewis, the outspoken CEO of Catalyst Cannabis, said in his own Instagram post on Monday.