SACRAMENTO, Calif. — It has been nearly six years since Californians voted to legalize recreational marijuana by passaging Prop 64.
However, the legalization also created several taxes, which leaders of the industry say is forcing many business owners to shut down their operations.
What You Need To Know
- Retail marijuana is taxed four times in California
- Cannabis advocates are calling on Gov. Newsom to eliminate the cultivation tax and repeal the excise tax for social equity businesses
- The unlicensed market is 30 to 40% cheaper for consumers
- Many business owners say the high taxes are forcing them to shut down
“Something needs to happen. Change has to happen,” said Mindy Galloway, CEO of Khemia Manufacturing.
As a professional in the cannabis industry for the last eight years, Galloway said she feels like every year that passes is an uphill battle to keep her company alive. She is one of several cannabis advocates calling on Gov. Gavin Newsom and legislative leaders to pass a tax reform.
“We need some relief. We need to be able to get some sort of break so we can start being profitable and be able to support our businesses or unfortunately a lot of businesses are not going to make it,” she said.
When Galloway launched Khemia Manufacturing, which is a woman-owned social equity cannabis brand, she made it a goal to provide opportunities to individuals that were harmed by the war on drugs. However, the entrepreneur pointed out the reality of being a leader in the legal marijuana market has been disappointing.
“We have a cultivation tax that we have to pay on the actual flower itself. Then we have an excise tax and we have a city tax and then we have a state tax. So it’s a lot compounded, almost up to 30% of our margins,” adds Galloway.
Assembly members Steven Bradford and Mia Bonta joined cannabis supporters at a rally at the state capitol earlier this month, and said they looked forward to collaborating with the Newsom administration to come up with short- and long-term solutions.
“With a $45.7 billion surplus, California can afford to keep its cannabis taxes while keeping whole the child care slots, environmental cleanup and the community grants funded by legal cannabis,” Assemblywoman Bonta said.
During the governor’s budget presentation, Newsom said he looked forward to working with legislature on cannabis reforms.
Galloway notes a tax break needs to happen soon in order for her to keep her business open.