Government
California BIPOC Cannabis Operators Rally in Sacramento for Tax Relief
A group of BIPOC cannabis business owners gathered on the steps of the California capitol to protest high pot taxes and call for changes to the state’s social equity rules.
A group of licensed cannabis business owners rallied on the steps of the California capitol on Thursday to bring attention to the impact high cannabis taxes have on independent entrepreneurs. The demonstration, which was held in response to the proposed state budget released by Governor Gavin Newsom last month, was organized by Supernova Women, an Oakland nonprofit that works to create opportunities for Black and Brown people in the cannabis industry.
The rally featured more than fifty cannabis business owners, patients, and policymakers who are Black, Indigenous, or people of color (BIPOC) and gathered to call for several changes to the state’s cannabis regulations, including eliminating the cannabis excise tax for licensed social equity businesses.
“I have been in business 3 years and we have paid half a million dollars in excise taxes alone, and this is in addition to a state excise tax and a 4% city tax,” said Maisha Bahati, founder and owner of Sacramento licensed cannabis retailer Crystal Nugs. “This business has to survive. Failure is not an option for me. I’ve put everything I have into this business and being a social equity business taxed at 40% is killing me and my dreams of creating generational wealth for my children.”
Budget Proposal Temporarily Reduces Pot Taxes
On May 13, Newsom released a budget proposal for the 2022-2023 fiscal year that included temporary tax relief for licensed cannabis businesses. Under the proposal, Proposition 64, the 2016 ballot measure that legalized recreational pot in California, would be amended to eliminate the cultivation tax paid by cannabis growers.
But those attending the rally in Sacramento on Thursday say the proposed tax relief does not go far enough and are calling on Newsom and state legislators to take further action before the budget deadline on July 1. The proposal calls for the state to repeal the cannabis excise tax for social equity businesses, reduce the cannabis excise tax to 5% for all other companies, and codify a statewide definition of social equity to establish eligibility for the state excise tax exemption.
“Governor Newsom promoted Prop. 64 less as an opportunity for tax revenue and more as a historical opportunity for racial and social justice and economic empowerment—to remedy the damage of a drug war that had disproportionately criminalized Blacks and Latinos,” Amber Senter, rally organizer and executive director of Supernova Women, explained in a statement before the event.
“And yet five years later, California’s Black and Brown cannabis operators, many of whom voted for Newsom not once but twice, are literally sitting on the brink of extinction, due to onerous state taxes, while the Governor sits on a $100B surplus,” Senter continued. “Where is the racial and social justice in that? Without meaningful tax reform NOW, California’s few remaining BIPOC cannabis operators and social equity businesses will not survive, and the communities and patients they serve will not be able to access affordable and safe cannabis. This is a major health crisis today and a missed economic opportunity for tomorrow.”
Two Bills Would Provide Cannabis Tax Relief in California
In a video released last week, state Senator Steven Bradford expressed his support for the goals of Thursday’s rally. Bradford is the sponsor of two bills to provide tax relief to cannabis businesses and their owners, including Senate Bill 1281, which would eliminate the cultivation tax and reduce the cannabis excise tax from 15% to 5%. Separate legislation, Senate Bill 1293, would allow a $10,000 tax credit against the Personal Income and Corporation Tax for social equity applicants and licensees.
“Without meaningful changes to California’s cannabis tax policy, the industry is destined for failure, especially equity cannabis operators who are operating on a very thin margin,” Bradford said in the video posted online.
The demonstrators at Thursday’s rally are also seeking changes to the social equity provisions in California. Under state law, social equity programs, which are presently governed by local jurisdictions, are not permitted to consider race or ethnicity as eligibility criteria. Rally organizers recommend a new statewide definition establishing eligibility for businesses with at least 51% ownership by someone who has lived for at least five years in a low-income community disproportionately impacted by the War on Drugs or by a person with an immediate family member who has an arrest or conviction for a pot-related offense.
“In 2020, 75% of cannabis-related arrests in Los Angeles were Blacks and Latinos, according to LAPD records,” said Whitney Beatty, CEO of L.A. weed speakeasy Josephine & Billie’s. “With Los Angeles’ majority-minority population, L.A. alone could help rewrite our state’s recent history of white operators dominating an industry that has physically, emotionally, psychologically, and economically imprisoned so many BIPOC people… but not without true tax reform at the State level that protects our vulnerable social equity operators and BIPOC patients.”
Source: https://hightimes.com/news/california-bipoc-cannabis-operators-rally-in-sacramento-for-tax-relief/
Business
New Mexico cannabis operator fined, loses license for alleged BioTrack fraud
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Business
Marijuana companies suing US attorney general in federal prohibition challenge
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Business
Alabama to make another attempt Dec. 1 to award medical cannabis licenses
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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