“One of California’s many oppressive taxes on the cannabis industry has been laid to rest. Gov. Gavin Newsom has signed into law A.B. 195, which eliminates the state’s cultivation tax.
California’s cultivation tax, unique among the states that have legalized marijuana sales, forced growers to pay the state for each ounce of cannabis grown. This tax was separate from the state’s 15 percent excise tax and state and local sales taxes.
Because the cultivation tax rate was automatically indexed to inflation, it had actually been increasing thanks to the state of the economy. Anybody attempting to legally grow marijuana shouldered a heavy tax burden, which then flowed downstream to consumers, many of whom realized it was cheaper to continue purchasing marijuana on the black market. The end result: two-thirds of marijuana purchases in the Golden State take place through unlicensed vendors. Because it’s so expensive to grow legally, illegal grow operations abound within the state, leading to more police raids, arrests, and prosecutions, not to mention corrupt practices among local governments who have the power to pick and choose which businesses can open up shop legally.”
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“A.B. 195 also bends the knee to the state’s labor unions by reducing the threshold from 20 to 10 employees to require that aspiring licensees enter into a labor peace agreement with a qualifying labor organization. A labor peace agreement is a deal between a business and a labor union that the business will not oppose a unionization effort and the union will not encourage strikes or work stoppages. Making it a mandatory requirement in order to get a license essentially gives labor unions a type of veto power over who can and can’t operate a marijuana business. These agreements also, by their nature, require both sides to waive certain rights under the federal National Labor Relations Act.”