US (CA): "To the cannabis tax raise, we simply reply: we’re not going to pay"

As you might have read, California is raising its taxes on cannabis farmers in 2022. This has raised some eyebrows, especially as the state coffers have a $31 billion surplus. These two facts did not sit well with everyone, and calls for action have been made. 

"We applaud recent reforms that resulted in a surplus. To the cannabis tax raise, we simply reply: we’re not going to pay." That is what Michael Steinmetz, co-founder and Chief Servant Officer of Flow Cannabis Co., writes on Medium.

Indeed, it seems that Michael is serious, and he calls upon other cannabis operators to join: "We are 100% committed to working alongside Governor Newsom and the legislature; with that said, we are prepared for the unfortunate possibility of continued inaction. Thus, we are also making the recommendation to our board that we refrain from paying the cultivation tax after July 1st, 2022. Our recommendation will be to place our estimated tax in escrow in good faith, and to withhold payment until we see real, actionable change. We invite our fellow California operators to join us."

Fewer taxes, more retail
Steinmetz is angry to see the promising cannabis market afflicted by the taxes. He explains that the current tax structure makes legal products 50% more expensive than products on the illicit market. Of course, with such a difference in price, it is imaginable that more and more people flock there.

Michael sees the solution to make the industry thrive once again not in increasing taxes, but in the opposite: "By eliminating the cultivation tax, and allowing a three-year grace period for excise tax, we can give oxygen to the supply chain, which ultimately lowers the price point on the shelf and makes legal products more competitive with the illicit ones, which in turn grows the tax base. Lowering the price point on the shelf will also bring over consumers who still shop illegally and create a bigger market for everyone. This growth will spur more brands, more companies, more jobs, and ultimately more tax revenue." 

Read Michael Steinmetz' complete article at medium.com.


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