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Taxing the Green: Money Does Grow on Trees

Taxing the Green: Money Does Grow on Trees



One issue for California has been the continuing push for Legalization of Marijuana, and how the Initiative process is putting that very issue back on the ballot in 2016. This time the people of California, even the leading officials of the State are seeing green. The State of California was the first to approve sale and usage of Cannabis for Medicinal purposes in 1996 under Proposition 215. Clarified again under Prop 420, California should have been the first state to legalize it altogether, but that attempt failed in 2010 with only 46.5 percent of the vote. The Golden State sat back and let Colorado, Washington, Oregon, and even Alaska beat them to the punch.

California Senate Bill 420 firmly established the Medical Marijuana Program Act, which helped to clarify Prop 215 by protecting Physicians from losing licenses to practice medicine, also to establish guidelines for possession and cultivation of Cannabis. Since then the Marijuana industry has slowly established itself amongst the urban population, and dispensaries are opening up across the state. Many of these small organizations remain in research and development and are seeking investors who are willing to harvest the high risk for the high reward. We all know it takes money to make money, and it requires substantial evidence to convince the fiscally conservative to invest in such a progressive effort. In November 2016, legalization will be back on the ballot, and I would argue the benefits for potential growth in California’s economy, citing Colorado as an example, but also pointing out the differences in each State’s Taxation Laws.

Overall the State of Colorado made $76 million in taxes of, extracted from the $700 million in Cannabis sales. The extremely high taxation Colorado citizens are incurring for participating in the Cannabis movement will not pass in California because of Proposition 13. Prop 13 was passed in 1978 via the initiative process by the voters because it calculated property tax values, at their 1976 rate, and capped the rate of increase in the future to a 2% limit. Now if the belief is that California will model its industry after Colorado’s, I would argue their will be differences due to the limits already in place on taxation in the Golden State.

Although Colorado Governor John Hickenlooper denies Marijuana has not “spiked” as far as popularity amongst citizens in Colorado, he does in fact predict an increase in State Tax Revenue for 2015. Governor Hickenlooper predicts the Colorado cannabis industry to bring in $100 million in taxes and one billion dollars in sales, a spike from $76 million collected in taxes and $700 million in sales (2014). Also, Colorado Attorney General Cynthia Coffman, dealing with lawsuits from Nebraska, Oklahoma, and even private citizens of Colorado, stated “It’s not worth it,” when referring to legalization, despite being responsible for defending the states legalization laws. Despite all the contradiction coming out of Colorado, their state sales tax rate of 2.9 percent translated into $76 million dollars in sales tax revenue. Money talks, and that amount made off such a low sales tax rate trumps any issues coming out of the state’s attorney general office.

Utah, a conservative red state that has its own regulations on alcohol that may serve as the perfect example of how to govern and regulate cannabis. Utah credits local micro-breweries, the production and sales of alcohol, for reviving the local economy in Salt Lake. Sales of locally brewed IPA’s and the taxes collected contributed to the rise in Utah’s state economy. California is no stranger when it comes to regulating alcohol, as the world famous wine industry has thrived out of Napa Valley. If regulated like wine, cannabis which can be grown from the ground in fields like grape vineyards, will produce such benefits to California’s economy that will have the Golden State ready to go green once again.

The State of California requires state sales tax rate of 7.5% but is also subject to local economies which enforces a district rate. For example purchasing one-eighth of an ounce of cannabis for $40.00 in San Francisco will get taxed at 8.75%, because the County of San Francisco adds a 1.25% sales tax rate on top of what the State requires. Salinas is an example of how City tax rates in California can jack up the price total, but again this is subject to local economies. Salinas consumers get taxed by the State (7.5%), Monterey County (.125%), and the City of Salinas itself at a rate of 1.5%, making the sales tax of anything purchased in Salinas a whopping 9.125%, not an attractive figure but with a struggling local economy, it is necessary.   Now the extra tax topping varies by each county within California, Alameda County adds 2.0% on top of the State requirements, and cities such as Union City, Hayward, San Leandro, and Albany have added a city tax rate on top of State and County tax rates as recent as April 1, 2015. The increases from these cities have ballooned sales tax rates to 10 percent in those given areas.

Currently Medical Cannabis is not covered by Medical Insurance and many Cannabis patients believe their “medicine” should not be taxed because it can pose hardship on many sick or disabled patients whom rely on State benefits to survive. Legalization could be key to easing this burden on such patients, but this again could be a long drawn out process because most states apply the sales tax because it cannot be “prescribed” by Doctors due to Federal Law. Doctors can “recommend” Cannabis for certain muscle pains, anxieties, and/or cerebral disorders, therefore medical recommendations or certifications are signed by Doctors; all subject to State, County, and City sales tax laws.

With the vast amount of research conducted on the medicinal benefits of Marijuana, we now know that Cannabis when is consumed in moderate fashion does in fact help people with certain sicknesses or disabilities. Stanford University and the University of California San Francisco are conducting research on the benefits of Cannabidiol enriched cannabis for children with epilepsy. The research is proving that Cannabidiol (CBD) does in fact aid in reducing the amount of seizures for patients. The focus for Stanford and UCSF has been on the Cannabinoid receptors system in the brain, which act in the human body via CB1 and CB2 receptors located throughout the body. Cannabinoid receptors impact the immune system, the nervous system, and can directly affect the physiological processes including appetite, memory, mood, and it is used to help with muscle pains. Cannabidiol is one of many active cannabinoids found in cannabis, and is considered to be more beneficial to Cannabis patients than Tetrahydrocannabinol (THC).

Cannabidiol has been shown to be effective in reducing inflammation in muscles, anxiety, arthritis, diabetes, schizophrenia, and symptoms of Post-Traumatic Stress Disorder (PTSD). The Research conducted by Stanford and UCSF not only has shed light on the dark stereotypes Marijuana. Formerly known as the “gateway drug” to generations past, is now a laughing matter to a more informed generation. To blame Marijuana for addictions to chemically based substances that are self-induced is ridiculous and irresponsible. Stanford University and the University of California San Francisco are helping to spread such vital information to an audience that otherwise would not accept research, data, and analysis from a lesser source. The study being conducted will provide vital evidence and will gather even more support from a broader audience in route to legalization of Marijuana in California.

Many States have followed California’s political lead on various progressive issues, as they did for legalizing pot for medicinal purposes, but California dropped the ball when not taking the initiative in 2010 and approving Prop 19 for full legalization. At the time the State was in financial crisis and with partisanship present politically and socially, it was hard to get anything done in Sacramento. Balancing the budget became Governor Brown’s top priority when he came into office, so Marijuana was put on the back burner. California has long battled with social issues in the political spectrum, Conservative ideology just does not seem to resonate with Liberal perspective of inner city residents, but we still co-exist together in our beautiful state.

The unanimous decision by the people to initiate Proposition 13 in 1978 set the standard going forward when dealing with taxation in California. Democrats and Republicans alike stood together on limiting property taxes because they knew a continual increase would cause businesses and home owners to not invest in commercial or private real estate in the Golden State. Limitation on property tax increase set the tone for California’s boom into the next millennium. More money in the hands of homeowners meant more disposable income to eventually consume the products in which big business produced. Various industries contribute to what makes California the 9th largest economy in the world. Establishment of the Silicon Valley, stronghold on the agricultural industry due to fertile land in the valleys, and of course Hollywood and the motion picture industry all invested in California for its vast resources, weather, and limitations on property taxes. When it comes to the diversity allowed within society and business, California sets the bar. If it is lucrative and can help the state’s economy grow, and there is a sufficient demand for the product, there is a way in California.

The economic boom that lures in the cloudy shadows is no mystery to Californians, many can smell the flowers from miles away, and the potential of this industry has investors licking their chops. Could this be the initiative by the people, for the people, that lifts California’s economy to an even higher level than ever imagined? This movement to legalize Cannabis, if supported by liberal sanctions and funded by conservative dollars, will be a step forward socially and economically for California, as Prop 13 was back in 1978. Why? Because bi-partisanship is key, and if the door is an industry produced using the natural resources and fertile land already provided, limiting cost of production, increasing profit margins, it appears inevitable. This is exactly what the private investors’ want, and the taxes collected on such goods is what the State of California needs.

If Marijuana can bridge social and economic gaps would it seem more appealing even to those whom do not partake? Very possible because Cannabis is conceivable, feasible, and is already being consumed by people from all walks of life. This initiative to legalize Marijuana for recreational use will be the first since ballot initiative since Proposition 13 to unite Californians, left and the right, red and blue. Investing green to produce green, to generate green, the boom is building up and those whom invest early with reap the rewards. Proposition 13 initially set the tone socially and eventually contributed to an economic boom that catapulted California to an impactful participant in the Global Market. One issue we must not forget is the reason why Prop 13 was initiated, taxes. Increase in property taxes took money away from both Republican and Democrat property owners. Proposition 13 was a fight to limit taxation and put hard earned money back into the hands the citizens or consumers of California. Now imagine if a Marijuana tax was proposed by the Government officials in Sacramento on top of already hefty sales taxes from the State, County, and Cities of California; it would be Prop 13 all over again. Cannabis collectives are already uniting to prevent big businesses such as the tobacco industry from taking over the Cannabis industry, imagine the social unrest if more taxes are imposed, completely contradictory to the overall purpose of Cannabis.

The State of California will profit enough from the sales taxes it already imposes, no other taxation is needed to surpass the profit margins of any other State selling Marijuana. Taxation trumps any social issues brought up with legalization, and Proposition 13 property tax limitations are a living example of how things are ran in California. Under the control of the California state governance the Cannabis industry will thrive, but regulations similar to alcohol must be rooted and implanted to be socially accepted by the general public. Colorado, Washington State, Alaska, and Oregon are proving legalization is conceivable, it is now up to the people of California to come together and produce the real cash crop that California is known for.















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About Robert Lara

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Robert Lara studies at the University of San Francisco, College of Arts and Sciences, Political Science program. Robert has chosen FootballandFutbol.com and Baysportsreport.com as his outlets to give back to the Sports Communities, Foreign and Domestic. Robert is a proud United States Navy Veteran, and also the Co-Founder and Public Relations Officer for the United Veterans of USF.

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