Proposed California Bill aims to give tax relief to cannabis retailers in hopes of strengthening legal pot industry

SANTA BARBARA COUNTY, Calif. — California’s cannabis industry has hit a few potholes.

Public Health Institute Senior Advisor, Dr. Lynn Silver, says the market is just too saturated. 
 
Production has far surpassed demand, leading to a dramatic price drop. 
 
“Even though sales have continued to go up in California, the unit price went down. And so they're making less money than they expected to,” said Dr. Silver.
 
Santa Barbara County received $1.3 million dollars in local cannabis tax revenue in the first quarter of this year. 
 
The County CEO’s Office reported that it was the worst first quarter since the program began in 2018. 
 
But Embarc Cofounder Dustin Moore, who owns several dispensaries including one in Ventura, says there’s another culprit to blame — the unregulated market. 
 
“Those folks who are concerned about, you know, kids walking by our store in Ventura, that should not will be what they're afraid of. It's that Instagram ad. They're served when these products are getting dropped off at their house and their parents have no idea how they got them. And now folks think, well, that's because of the licensed dispensary,” said Moore.
 
Democratic Assembly Member, Matt Haney, says Assembly Bill 564 will boost California’s legal cannabis industry.
 
He says the bill will combat the threat of the growing illicit market by preventing an increase in retail excise taxes, essentially freezing them at the current 15% rate and easing the burden on retailers.
 
Without the bill, they could go up to 19 percent.
 
But environmental and public health advocates are urging lawmakers to reject the proposal.

“That would mean, $150 to $180 million less for child care, which is the biggest single destination of funding for youth programs, including in Santa Barbara County, as well as for environmental remediation and public safety programs,” said Dr. Silver.
 
Moore says he believes that cracking down on “the multibillion dollar black market” will lead to a net benefit for both legal cannabis retailers and the funding of those aforementioned youth programs. 
 
“Those billions of dollars in transactions that are presently illegal through an unlicensed industry would convert into the license industry and the overall pie would grow more than $180 million that the Tier three recipients are suggesting they're going to lose,” said Moore.
 
Assembly Bill 564 is scheduled for consideration by the assembly business and professions committee on April 22nd.