California Kills Cannabis Tax Reduction Bill

Lawmakers in California have rejected legislation to reduce the state’s cannabis tax but also advanced a bill that would require municipalities to allow industry operations.

California lawmakers rejected a plan to reduce cannabis-related taxes but moved forward with a measure to require more municipalities to allow industry operations, the Los Angeles Times reports. Currently, two-thirds of the state’s cities outlaw the industry which has led to the licensing of 631 retailers – just 10 percent of state estimates.

The tax bill would have reduced the California state excise tax on cannabis from 15 percent to 11 percent and suspended the cultivation tax of $148 per-pound for three years. That bill was tabled by the Appropriations Committee who estimated it would cost the state $227 million in revenue for the next fiscal year and likely would have triggered a lawsuit against the Legislature for altering a voter-approved initiative.

The bill requiring municipalities to allow cannabis operations was advanced to the Assembly floor by the Appropriations Committee. It would require cities to allow canna-businesses if the majority of its residents supported Proposition 64 in 2016. The bill would require one retail dispensary for every six liquor licenses or every 15,000 residents.

“We must ensure legal cannabis businesses can compete against the black market. AB 1356 will bolster public health and safety, and help the regulated market succeed.” – Assemblyman Phil Ting, to the L.A. Times

Opponents argue that the measure violates the terms of the initiative, which allowed municipalities to opt-out.

California State Association of Counties spokeswoman Sara Floor told the Times that “the bill infringes on local control and the ability to decide when and where commercial business are permitted in cities and counties.”