SLASHING WEED PRICES: Ask any cannabis business owner why California’s nascent legal weed market has struggled to gain a foothold and you’ll get the same answer: The taxes are too damn high. After years of listening to that complaint, California state lawmakers look like they’re about to do something about it.
Gov. Gavin Newsom’s office and at least a half dozen lawmakers are now consolidating six different legislative proposals to alter the states’ tax rate on pot products. Their goal is to reach a deal by the time the state budget is passed in mid-June, so the tax changes could go into effect this summer.
That level of interest from state leaders represents a remarkable shift from the last few years. Previous proposals to lower cannabis taxes — from a small, bipartisan group of lawmakers — were met with resistance over potential revenue loss and went nowhere.
- Some of that newfound interest comes from the executive branch. Newsom declared in January that confronting the tax problem was one of his top policy priorities, signaling to lawmakers that their ideas for overhauling the system should be met with open arms in the Capitol.
- California has also for years been dogged by critical stories about the state of its licensed cannabis industry, which continues to lag behind a robust underground market in sales and has actually shrunk in size compared to the legal medical market that predated Proposition 64’s passage in 2016.
TAXES UPON TAXES: California imposes a weight-based tax imposed on growers and a 15 percent excise tax on retail sales. Cities and counties can also tack on a local excise tax that can reach as high as 10 percent. That means the total tax rate can reach as high as 40 percent, a number that legal dispensaries say makes their products uncompetitive with those of illicit retailers that sell nearly identical items, but pay no taxes.
Many in the cannabis industry expect tax overhaul legislation to include an elimination of the cultivation tax and some reduction of the excise tax. The plan will almost certainly also include a way to offset lost tax revenue, which supports a range of childcare, substance abuse and law enforcement programs — funding that has been fiercely defended by youth-focused groups and unions like SEIU.
HAPPY WEDNESDAY AFTERNOON! Welcome to California Playbook PM, a POLITICO newsletter that serves as an afternoon temperature check of California politics and a look at what our policy reporters are watching. We’ll go Monday to Thursday through June 9 before returning in August for the legislative homestretch. Got tips or suggestions? Shoot an email to [email protected] and [email protected] or send a shout on Twitter. DMs are open!
MORE ABORTION CASH: Newsom wants to spend an extra $125 million this year so California can help pay for abortions for out-of-state and uninsured patients, with some money earmarked for a website that would list where women can get the procedure and lay out their legal rights. The Democratic governor will also announce an incentive program for companies located in states with abortion bans to relocate to California.
The governor said in a statement today that the state will “fight like hell, making sure that all women — not just those in California — know that this state continues to recognize and protect their fundamental rights.”
STUDENT BORROWERS ANONYMOUS: A state agency wants $10 million for a new program to help Californians navigate their student debt as the federal government slowly moves to restart its loan repayment schedules and President Joe Biden teases at least some relief. But half of that money would go to marketing the program rather than to actually supporting indebted Golden State citizens. That’s raised the eyebrows of the lawmakers who are handling the purse strings. Sen. Sydney Kamlager (D-Los Angeles) made it clear she thinks the numbers are “out of whack” at a Senate budget subcommittee hearing this morning. Besides the $5 million earmarked for outreach, about $750,000 would go to administration costs.
The Legislative Analyst’s Office had its own list of concerns about the plan, saying the proposal from the Department of Financial Protection and Innovation doesn’t specify what gaps in information it’s trying to fill and that the new program may be redundant. DFPI officials said they see huge spikes in inquiries after they launch consumer outreach — and stressed that people tend to distrust federal agencies, particularly on this issue, as policy promises have swung so wildly. — Susannah Luthi
HELP FOR HOMEBUYERS: State Senate leaders released details today for a homebuying assistance plan to help offset soaring housing costs. The program, dubbed California Dream for All, would cost $10 billion over the next decade and cover 17 percent of the total purchase price for first-time homebuyers. Notably, unlike similar programs, the Senate proposal does not include price limits on purchases. Lawmakers argued that would allow renters in high-cost regions like Los Angeles and the Bay Area to stay in their neighborhoods. The state would recoup those funds when the homeowner decides to sell or refinance, and send them to new applicants.
MICRA ON THE MOVE: A bill to raise the limits on pain-and-suffering awards in medical malpractice cases — after nearly 50 years — is en route to the Assembly floor and could get a vote Thursday. AB 35, by Assemblymember Eloise Gómez Reyes (D-San Bernardino), cleared the Senate last week and faces just one more hurdle before it reaches the governor’s desk.
June 30 is the last day for proponents of a statewide initiative updating the Medical Injury Compensation Reform Act, or MICRA, to pull the measure from the November ballot. They promise to do so once the bill gets Newsom’s signature, and the swift movement of AB 35 puts that well on track to happen. — Victoria Colliver
Compiled by Chris Ramirez
— “Santa Cruz Starbucks workers vote to unionize, a first in California,” by the SF Chronicle’s Michael Cabanatuan: “Workers at a Starbucks store in Santa Cruz voted Wednesday morning to unionize — becoming the first Starbucks in California to join the wave of unionizing at the company’s stores nationwide.
In an election overseen by the federal National Labor Relations Board, workers at the Santa Cruz Starbucks outlet on Mission and Dufour streets voted 15-2 to join Starbucks Workers United, a union representing workers at the coffee chain and connected with the Service Employees International Union.”
“California spent millions to boost COVID vaccination rates of Medi-Cal members — but they lag even more,” by CalMatters’ Ana B. Ibarra: “While 84% of all Californians 5 years and older have received at least one dose of the COVID-19 vaccine, only about 57% of those in Medi-Cal, the health insurance program for low-income residents, have done so as of April, according to the latest vaccination update from the California Department of Health Care Services.
That’s a gap of 27 percentage points, and it’s slightly bigger than the gap recorded last summer.”
“Immigration shortfalls, like soaring housing prices, fuel California’s population drop,” by the LA Times’ Sarah Parvini: “The drop in foreign migration is due in part to the implementation of so-called Title 42 authority, a public health order that allows border agents to expel asylum seekers to Mexico. The decades-old policy was invoked during the Trump administration to curb the spread of COVID-19. After initially moving to lift Title 42, the Biden administration expanded its use of the policy earlier this month. Several other federal immigration policies — including the ‘Remain in Mexico’ policy meant to deter asylum seekers by keeping them out of the United States while their claims were processed, as well as then-President Trump’s ban on travel from Muslim-majority nations and cuts to refugee admission caps — also have helped set the stage for diminishing migration. Those admission caps were raised last year by the Biden administration.”
— Sacramento school district and union leaders have yet to determine how many additional school days students will be in classrooms, following strikes that won one-time bonuses and raises for teachers and faculty. (Sac Bee)
— Yelp reviews dating back to 2016 describe a San Francisco boba store, which San Francisco District Attorney Chesa Boudin’s office accused of being involved in an international fencing operation, as “shady” and “sketchy.” (SF Chronicle)
— Newsom and supporters of Attorney General Rob Bonta appear to be urging voters to vote for opponent Eric Early in an effort to create what they believe to be a smooth path to a November election victory for Bonta. (SFGATE)