The California legislature on Wednesday approved a wide-ranging bill to restructure the state’s adult-use marijuana program, including by eliminating a cannabis cultivation tax, in an effort to provide industry relief and further curtail the illicit market.
AB 195, which builds upon an amended budget proposal that Gov. Gavin Newsom (D) unveiled last month, passed both chambers with nearly unanimous support. While stakeholders say there’s still more to be done, many feel the bill represents a significant, positive development in the evolving industry.
The key provisions that lawmakers secured would eliminate the marijuana cultivation tax and shift the point of collection and remittance for the separate 15 percent excise tax on cannabis sales from the distribution to retail level. Additionally, there will be no increase in the excise tax for at least three years under the proposal, which is expected to be signed by the governor and then take effect immediately.
“We are extremely pleased at the hard-fought progress that we were able to make with this bill,” Lindsay Robinson, executive director of the California Cannabis Industry Association (CCIA), told Marijuana Moment in a phone interview on Thursday.
“It is certainly not perfect—and we acknowledge that, and we acknowledge that there is more work to do,” she said. “But eliminating the cultivation tax has been a huge priority for CCIA for the past four years, so we’re certainly proud of that victory.”
California’s top cannabis regulator, Nicole Elliott, praised the development in a tweet.
“Big shout-out to the businesses, labor groups, equity advocates, local governments, staffers and all the other stakeholders who believe in doing the hard work necessary to make big reform possible,” she wrote. “Today’s progress was made possible by you.”
Advocates are also pleased that the three years of excise tax relief that would be provided under the bill is a significant expansion from the 18-month window that the governor proposed in his updated budget.
The legislation would also take steps to bolster enforcement against unlicensed operators. For example, property managers that knowingly rent or lease space to a business that unlawfully manufacturers, stores or sells cannabis would be subject to civil penalties of up to $10,000 for every violation per day. County governments could also take civil actions against unlicensed cultivators over water pollution or diversion.
Social equity marijuana businesses would be eligible for a $10,000 tax credit under the bill, and they will be able to keep 20 percent of the excise tax revenue from their cannabis sales for the purpose of reinvesting in their business.
To Read The Rest Of This Article By Kyle Jaeger on Marijuana Moment
Published: June 30, 2022
Founder & Interim Editor of L.A. Cannabis News
