After enduring years of frustration stemming from myriad business complications, the California marijuana industry might soon have a way to “fix legal cannabis” in the state.
A statewide ballot measure is being floated that could potentially ease the high taxes, regulatory burdens and illicit-market competition the California industry has been dealing with since 2016, when Proposition 64 – the initiative that legalized adult-use cannabis – was passed.
In a bid to undo the complications caused by Prop 64, the military veterans marijuana advocacy group Weed for Warriors has been quietly circulating a draft ballot initiative in recent weeks, soliciting support from cannabis businesses, labor unions, politicians, medical marijuana patients and anyone else they can bring to the table.
According to a summary by Weed for Warriors, the 65-page draft measure would:
- Remove local control of cannabis licensing, thus opening business opportunities in far more jurisdictions.
- Eliminate state marijuana cultivation taxes.
- Lower the state cannabis excise tax rate from 15% to 5%.
- Prohibit local marijuana taxes but devote 20% of state taxes collected to localities.
The larger systemic problem, according to Weed for Warriors Executive Director Sean Kiernan, is that the current system has proved unworkable because it has increased prices for consumers, thus empowering and emboldening illicit actors.
On top of that, he noted, most of the state’s cities and counties remain off-limits to legal MJ businesses because Prop 64 gave local governments the right to opt out of the industry.
That’s resulted in ongoing cannabis prohibition in roughly 70% of California’s cities and counties, Kiernan said.
In a letter accompanying the draft measure, Kiernan noted that an estimated 80% of the California marijuana market remains illegal, citing a warning to Gov. Gavin Newsom from his own Cannabis Advisory Committee.
Prop 64 “balkanized access, created over-taxation, overregulation, and gave elected locals, not local voters, the ability to say, ‘Not in my back yard,'” Kiernan wrote.
“That needs to change so that every consumer, every entrepreneur and every community can access legal, safe cannabis, and the positive jobs and taxes it creates.”
Support, funding are key
It’s not clear whether Weed for Warriors will be able to round up the political support – or the funding – it would need to mount a viable statewide campaign in 2022, Kiernan emphasized.
One encouraging sign, he said, is that a Prop 64 financial backer did fund the drafting process for the Weed for Warriors ballot measure. Kiernan declined to identify that supporter.
“We are not calling this a campaign yet,” Kiernan said. “We’re team-building right now. We’re going to see who we can bring on board.”
Kiernan said it likely will require tens of millions of dollars to gather the signatures needed to get the measure on California’s 2022 ballot – at least 623,212 signatures from registered voters – and fund a successful political campaign.
By contrast, eight separate political committees supported Prop 64 in 2016, and those groups spent a total of $41.7 million that calendar year alone.
Weighing 2022 versus 2024
Kiernan is realistic about the measure’s chances – it’s a “long shot,” he said – in part because 2022 will be a midterm election. It’s typically tougher for ballot measures to succeed in midterms than in a presidential-election year because of generally lower voter turnout.
“We figure we need to raise $8 million for signature gathering,” Kiernan said. “Then you’re talking at least $20 million to $30 million to run a campaign that has a real chance of winning in an off-year election.”
He said the campaign might wait until 2024 to seek a ballot spot to give the initiative a better chance to pass and the organization more time to round up political support and funding.
Kiernan acknowledged, for instance, that the group doesn’t have an angel funder as Prop 64 did when billionaire Sean Parker bankrolled much of that campaign.
Weed for Warriors has been engaging with some state lawmakers, Kiernan said, and there might be a “third option” to fix what’s ailing the California marijuana industry: The state Legislature also could put its own measure to change Prop 64 on the ballot.
Regardless, Kiernan is optimistic about Weed for Warriors’ draft initiative because he knows there’s a lot of industry interest in the types of reforms the ballot measure could enact.
“Just today, I’ve had 15 calls with 15 different CEOs,” he said. “Every single one of them (said), ‘We’re doing this. I’m in.'”
John Schroyer can be reached at [email protected].