Advocates Claim California Cannabis Tax Cuts Will Impact Low-Income Youths
NBC News reported that a child service provider said, “We’ve heard a lot about the impact to the cannabis industry but have heard little to no impact to those who benefit from these taxes.”
But what’s really happening?
Cali’s cannabis space has been overtaxed to the point that it’s suffering. But despite this fact, children’s and youth advocates believe that by cutting marijuana taxation, the necessary social service programs they support would suffer.
However, small cannabis cultivators and business operators throughout the state have requested changes to the industry’s tax system. They claim they’re having trouble staying profitable as operating and regulatory costs continue to rise.
With this being the case, as of January 1, cannabis flower is taxed at $161 per pound, a flat rate. This is on top of the 15 percent excise tax, along with the local cultivation, processing, distribution, manufacturing, and retail taxes. California took in almost $1 billion in cannabis tax revenue amidst the first three quarters of last year.
In January 2022, Governor Gavin Newsom claimed he supports cannabis tax reform. He explained his plans to work with the Legislature to change policies. We’ve also observed some lawmakers supporting the space, and they’ve proposed one or more bills in an effort to restructure it.
However, service providers for at-risk and low-income youths are opposed to these tax cuts. They say that their programs are heavily reliant on the cash collected from Prop 64.
“We’ve heard a lot about the impact to the cannabis industry but have heard little to no impact to those who benefit from these taxes,” Mary Ignatius, the statewide organizer for Parent Voices California, an organization advocating for affordable child care, explained.
A Community Coalition prevention manager, Marianna Hernandez, claims that by cutting these services, it would “insult” the people who have felt the largest impact during the War on Drugs.
“South L.A. was once overcriminalized for cannabis use, sale and possession,” she explained. “To now strip the community of the resources coming from the tax revenues is, quite frankly, an insult to South L.A. Black and brown residents, many of which still have family members incarcerated to this day due to marijuana-related charges.”
Looking at California’s budget for 2021-22, almost $400 million worth of Cali’s cannabis tax revenue is to be allocated to child care and prevention services for thousands of children living below the poverty line. This includes beyond $279 million that will go to the Department of Social Services for child care and almost $81 million towards Department of Health Care Services-supported youth prevention programs.
At this point, California has over 21,000 low-income children benefiting from child care service programs. However, there could be as many as 2.3 million who are eligible to receive these benefits.
“That’s why these Prop 64 dollars are so critical,” Ignatius said. “Any cuts to cannabis tax rates will result in cuts to child care for mostly children of color living in poverty who need that access now more than ever.”
However, efforts are currently underway to reform California cannabis taxes. The recent San Diego City Council vote was in favor of lowering a city tax focused on new production facilities. This will lessen the tax from 8 percent to 2 percent with the idea that this could encourage more indoor cultivation operations and factories in the region.
That day, state Senator Mike McGuire introduced a bill to cut California’s 15 percent excise tax starting on July 1. This would also increase the state’s excise tax in a way that would only generate around half as much revenue as the cultivation tax would have made.
Jim Keddy, the executive director of Youth Forward, an advocacy organization, had this to say:
“Not only does cannabis tax revenue play a crucial role in funding child care, but it is also a primary funding source for services for the formerly incarcerated, youth prevention services, job training and other critical support systems in communities of color that have been impacted by the war on drugs. In downturn years, kids living in poverty, kids of color, those programs get cut,” he added. “That’s why this revenue stream is so critical now.”