California Gov Jerry Brown Shows His True Colors on Cannabis
It’s no secret that many of the small to mid-size legal, licensed businesses operating under the new regulations imposed by Prop 64 in California are struggling to stay afloat financially.
A combination of ridiculously high state and local taxes, the sudden added costs of compliance requirements like licensing and child-proof packaging, uncertainty from a supply chain that so far has been ravaged by overbearing mandated lab testing, and a well-established black market that has only gotten stronger, has many companies on the ropes and being forced to either downsize or take on investors.
Two more financial hurdles that cannabis businesses face in Cali, and across the country, is the total lack of federally insured banking options and the discrimination that these companies face when filing their taxes each year.
California lawmakers easily approved Assembly Bill 1863 earlier this year and sent it to Governor Jerry Brown to be signed into law this week.
The bill would allow legal, licensed cannabis companies in Cali to deduct regular business expenses on their state income taxes each year. If passed, it would take effect immediately, retroactively covering the entire 2018 tax year and providing significant relief to many of these stressed out start-ups.
Inexplicably, Gov. Brown vetoed the bill on Wednesday with a brief explanation that it should be a budgetary matter to be addressed next year.
The fiscal impact of the bill would “cost” the state a mere $13 million on every $1 billion of cannabis-driven revenues. In other words, a .01% “loss” on money that is only there because of these companies that are being extorted.
To make matters worse, because cannabis is still illegal at the federal level, all legal weed businesses face a federal tax burden as well under U.S. Tax Code Section 280E that that often leads to a federal tax rate of 70%-90%.
Section 280E, much like the state-level extortion in California, says that a business engaging in the trafficking of a Schedule I or II controlled substance – like cannabis – must pay taxes on all of that revenue without being able to use relevant business expenses to reduce their taxable income.
These deductions and credits are benefits afforded to every other business and industry in our vast economy but are being denied to companies that are not only following all local laws, but are also generating mountains of retail cannabis sales tax revenues for the state already.
Governor Brown’s veto pen has been active over the past year when it comes to cannabis-related legislation crossing his desk, but he often falls on the right side of history. For example, bills aimed at banning edibles that look like candy or restricting sales of butane wound up in his waste bin instead of our law books.
But make no mistake, with nearly 50 years in public service, the 80 year old Brown has made it pretty clear of what he personally thinks of the reefer, and especially those who enjoy it.
In 2010, he went on the record with this barf, “I think it’s more prudent for California not to embrace a legalization strategy. I don’t think fostering chemicals is a smart move.”
Before the GQ interviewer at the time could follow up on that nonsense, Brown hit him with “You know, the number one drug on the street is marijuana. The cartels are increasingly taking over. This is a serious problem.”
Chemicals? Cartels? What the fuck?
Then, in 2014, two years before California voters would pass Prop 64 and legalize the recreational use and sale of cannabis, Gov. Brown used his limited time on a nationwide Sunday morning broadcast of Meet the Press on NBC to say, “The world’s pretty dangerous, very competitive. I think we need to stay alert, if not 24 hours a day, more than some of the potheads might be able to put together.” He added, “How many people can get stoned and still have a great state or a great nation?”
This from a guy who is allegedly such a liberal tree hugger that he got the nickname “Governor Moonbeam”…
With his term limit and likely exit from political life approaching fast, ol’ Brownie used his platform in a New York Times profile piece on Tuesday of this week to take one more jab at the thousands and thousands of cannabis users in California that have undoubtedly helped to keep the geezer in power.
Asked about climate change, and what we can do about it, Gov. Brown reached deep into his odd hatred for pot and blurted out, “We either do nothing and smoke marijuana because it’s legalized, or we put our shoulder to the plow and do everything we can.”
Ok, listen up Moonbeam. We have actual people with their actual shoulders to actual plows trying to form a lucrative, fair, and eternally sustainable industry out of an actually miraculous plant that grows like a weed.
For decades it was our lawmakers who held this effort down but now, even with them onboard, there is still one crotchety old fart at the top who literally chose to “do nothing” when handed a solution to a very real problem.
Somebody get this guy some sativa and a suitcase for his belongings.