How taxes can pay off for cannabis industry

Twenty-one new medical cannabis bills were introduced by California legislators under the February deadline. The proposed laws range from technical fixes in last year’s cannabis legislation to a bill to stop people from smoking pot outdoors within a mile of a school.

The most interesting trend in marijuana legislation involves the government’s eagerness to squeeze tax dollars from the cannabis industry — and how best to spend the windfall.

Industry insiders realize taxes are a necessary evil, but they hope to help authorities find a reasonable ceiling on cannabis fees.

As the industry sees it, tax collectors at the state and local levels can’t treat marijuana revenue as a cure-all for society’s larger problems, including substance addiction and environmental damage caused by illegal cultivation.

The proposed legislation does seek to make the cannabis industry and its followers pay for damages caused by outliers. Under the legislative trend, cannabis taxes will supplement law enforcement and aid environmental repairs.

The strategy has an added incentive — it minimizes opposition by groups opposed to cannabis.

Assembly Bill 2243 is good example of the trend. The bill, by Jim Wood (D-Healdsburg), would impose sliding tax scales across the grow industry. Cultivators would pay sales taxes of $9.25 per ounce for marijuana flowers, $2.75 per ounce for marijuana leafs, and $1.25 for an immature cannabis plant.

The money would help law enforcement prosecute the trade's bad actors — especially drug cartels that grow on public lands, wreck the environment and harm fish and wildlife. Licensed cannabis distributors would collect the taxes, similar to the three-tiered system that supplies spirits, beer and wine in California. 

State Senator Mike McGuire (D-Healdsburg) introduced another cannabis tax proposal, Senate Bill 987, which would impose a 15 percent retail sales tax on cannabis. McGuire’s legislation has drawn opposition from the industry, which sees the tax as too steep.

Both bills would direct tax revenue to law enforcement efforts against cartels. The cannabis industry has fought many battles over the decades to improve its image, but its biggest fight now is against the criminal element within the marijuana trade.

Many local elected officials opposed to cannabis cite the cartels as the primary reason to keep the product away from their communities. These officials, intentionally or not, fail to distinguish between craft farmers, delivery services and retailers eager to follow the law, and cartel growers and distributors who have no interest in respecting the law.

Taxing the legitimate product is one way to make the difference obvious to everyone.