Yesterday, Governor Gavin Newsom culminated months of legislative negotiation by officially signing AB 195, which permanently ends the cannabis cultivation tax in California as of today, July 1, and provides three years of net tax relief to the cannabis industry as a whole.
The end of the cannabis cultivation tax is the result of years of work by cannabis farmers, advocates, trade associations, and allies to put an end to one of the most fundamental mistakes included in Proposition 64.
While farmers have worked together to push back on the “harvest tax” since Prop 64’s passage, it’s worth taking a step back to the end of last year to remember how we got here.
On November 17, 2021, months into a catastrophic collapse in wholesale prices for cannabis, the California Department of Tax and Fee Administration announced an increase of the state cultivation tax from $154 to $161 a pound.
Four days later, on November 21, over fifty of us responded to Chris Anderson of Redwood Roots’ call to action and gathered in the Southern Humboldt Community Park to come together and plan next steps.
From there, we did what Humboldt does: we organized, we planned, we strategized, and we acted.
On January 13, dozens of us made the drive to Sacramento to rally with Supernova Women and Origins Council to demand change for small businesses and equity operators on the capitol steps. A week later, over 250 of us rallied at the Humboldt County courthouse to demand the suspension of Measure S. An online petition started by Rose Moberly of Huckleberry Hill Farms to support the elimination of the state cultivation tax gathered over 7,500 signatures and attracted national press attention.
On February 7, the Board of Supervisors heard us, and voted to cut Measure S taxes by 85% for 2022. The Lost Coast Outpost reported that over sixty people spoke up in unified public comment, writing that “while the tone and specifics of each caller varied somewhat, their requests were remarkably uniform.”
Initially, the county pushed back on requests to suspend Measure S, claiming that the burden of the state cultivation tax was even greater. Our response was clear: Measure S and the state cultivation tax are both unsustainable, and both have to go.
A week after Humboldt’s Supervisors voted to cut Measure S, on February 15, Senator Mike McGuire, representing the North Coast, introduced SB 1074 in the state legislature to permanently end the state cultivation tax.
Over the next several months, HCGA, in collaboration with our partners in Origins Council and our contract lobbyist in Sacramento, fought to keep the permanent elimination of the cultivation tax at the center of the conversation at the state capitol, testifying in legislative committee hearings and advocating with the Governor’s administration for equitable tax reform. On May 13, Governor Newsom responded, with a trailer bill proposal to permanently end the state cultivation tax.
In collaboration with Origins Council, HCGA supported the proposed elimination of the cultivation tax, and also pushed for more, including a more favorable excise tax policy and specific relief for social equity operators.
And yesterday, June 30, Governor Newsom signed an updated proposal that included each of these requests: the permanent elimination of the cultivation tax, a three year net tax cut for the industry, and specific tax relief and support for equity operators.
We know and you know that none of this is enough. The framework for cannabis regulation in California remains fundamentally broken. We need direct-to-consumer sales, the normalization of cannabis as agriculture, greater retail access, and a conversation that centers the legacy, equity, and small operators who built this industry as we move forward into interstate commerce and federal legalization.
But we will only get there by working together, one step at a time. HCGA is your trade association, and this is your victory.
