Cannabis businesses in Los Angeles, by itself a roughly billion-dollar market, are struggling under the weight of hundreds of millions of unpaid taxes and new fees imposed last year.
Those are signs that the largest municipal cannabis market in the U.S. is “broken” and in need of repair, according to City Councilmember Nithya Raman, the leading candidate for mayor in November’s election, who unveiled a cannabis-specific policy platform on Monday.
Is Los Angeles cannabis ‘broken’?
Across the state, California operators have long blamed an ongoing accounts-payable crisis – with money owed up and down the supply chain – on taxes they say are encouraging customers to purchase cannabis on the illicit market.
In Los Angeles specifically, a vast network of unlicensed cannabis stores has long plagued both the legal market and city officials, who last year raised fees imposed on cannabis operators in response to declining marijuana tax revenue.
That means promises made to both marijuana social equity applicants as well as law-abiding operators “have been broken,” Raman said in an Instagram post on Monday.
“We can fix it,” she added.
Does Los Angeles mayor candidate Nithya Raman have a cannabis platform?
According to Raman, state and local taxes mean Los Angeles cannabis is taxed “at roughly 35%, making competition with the vast illegal market virtually impossible.”
And that massive illegal market means that city coffers are starved of the tax revenue that would otherwise go towards funding marijuana social-equity ventures, Raman added.
To solve the problem, Raman is proposing to:
- Remove unlicensed cannabis shops from WeedMaps, Google and other online platforms
- “Proactively identify and crack down” on unlicensed retailers
- Including cannabis operators in small business tax reform and “prioritize relief” for operators making less than $500,000 a year
- Restructure and reform the city Department of Cannabis Regulation by simplifying licensing and compliance
- Make it easier for licensed cannabis operators to host special events and ensure that cannabis cafes, recently legalized statewide, are in place for the 2028 Olympics that L.A. is hosting
The cannabis-specific policy platform is a rare example of a leading municipal candidate embracing the issue.
Subscribe to the MJBiz Factbook
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
What you will get:
- Monthly and quarterly updates, with new data & insights
- Financial forecasts + capital investment trends
- State-by-state guide to regulations, taxes & market opportunities
- Annual survey of cannabis businesses
- Consumer insights
- And more!
According to recent University of California, Los Angeles polling, the left-leaning Raman currently leads incumbent Mayor Karen Bass by 11 points.
Partially in response to a short-lived tax increase, California cannabis sales last year declined to less than $4 billion for the first time since early legalization before recovering slightly earlier this year.
Cannabis operators reacted warmly to Raman’s proposal.
“A progressive actually being a progressive? Let me give a full-throated shoutout and endorsement to Nithya Raman in the L.A. mayor’s race,” Elliot Lewis, the outspoken CEO of Catalyst Cannabis, said in his own Instagram post on Monday.
