A New Budget Solution That’s Been Around for A While
by Brian Allison, Western Regional Director of Government Relations at Weedmaps
Like almost every state across the country, California and its cities and counties are grappling with catastrophic budget shortfalls as a result of COVID-19. Vital public services are in jeopardy. The livelihood of thousands of public sector workers is on the cutting block. The negative, far-reaching, and irreversible impact on the lives of all Californians is almost impossible to imagine.
Jurisdictions across the Golden State are looking to legal, adult-use cannabis as one way to generate much-needed tax revenue. Mayors, city councilmembers and county supervisors are taking a serious look at opening their communities to legal cannabis retail (dispensaries and delivery services) as well as other related components like growing and manufacturing. The potential tax revenue is certainly enticing.
Wait! What? Didn’t Californians already deal with this . . . almost four years ago when they passed (by wide margins) Proposition 64 — making adult-use cannabis legal in the state?
Indeed, Proposition 64 made adult-use cannabis legal in California. But legal isn’t synonymous with available.
There’s a disconnect between what voters actually wanted to see as a result of Proposition 64, and what their local leaders thought they wanted. The civic repercussions of COVID-19 have brought that disconnect into sharp focus.
In 2016, California voters sent what they thought was a clear message to Sacramento, as well as to their own city halls: we want a thriving legal adult-use cannabis market everywhere in California. Unfortunately, many local leaders didn’t get the memo. They misinterpreted the voice of the people, arguing that their constituents may have voted for adult-use cannabis, but didn’t necessarily want it sold in their backyards. As a result, today only 89 of California’s 482 cities allow cannabis retail sales.
That’s not what Californians expected. A poll conducted by David Binder Research for Weedmaps found that nearly 80 percent of Californians who voted for adult-use cannabis in 2016 said that dispensaries should be allowed to open in jurisdictions that supported the legislation. So local leaders are now beginning to do what their communities wanted them to do. At a time when they really need to do it.
A report by Applied Development Economics funded by our company estimates that taxable sales of cannabis in California could increase from $2.1 billion (under the state’s current number of licenses) to a high of $9.8 billion.
Break it down to the local level and the numbers are equally impressive: the city of Stockton, for example, could generate nearly $1 million to almost $4 million in annual tax revenue. San Bruno could add from $235,300 to more than $1 million to their coffers. The unincorporated area of Sacramento County could see additional annual tax revenue ranging from $1.2 million to $5.8 million. And increasing the number of licenses where cannabis businesses are already allowed but limited by caps would also have a significant positive impact on their bottom lines.
These data points are especially relevant now, as California and the nation address a bleak employment situation as a result of COVID-19; and as viable solutions to social and economic injustices are immediately and rightfully demanded. This report can be deployed to provide scientific understanding to these issues.
From “budtenders” in local dispensaries to investigators at the state’s Bureau of Cannabis Control, legal cannabis is creating good jobs — many with union-negotiated salary and benefits. And while that’s welcome news to job seekers, it is also an opportunity to ensure that cannabis-related worker protections, like labor peace agreements, are broadly and effectively enforced so that the industry and the jobs within it can get better and better.
And along with legalization comes other community benefits — including social equity programs supporting entrepreneurs negatively affected by the failed “war on drugs.” Through grants, loans, business education, and training efforts, as well as special licensing opportunities, individuals from communities impacted by the disparate enforcement of cannabis prohibition have a real chance to become an owner or operator of a cannabis business.
Expanding cannabis retail is money on the table for many local leaders throughout California. And it’s money that their constituents (as well as state officials, civil rights and labor leaders, health advocates and others) want them to take. It’s not the answer for everything, but done smartly, with a balanced approach that considers social equity, public safety, consumer demand, and patient needs, cannabis retail can have an impact.
More local leaders should step up to the table.