As state prepares to raise marijuana tax, a cannabis entrepreneur calls for tax revolt

Fresh off of news that California is set to raise the cannabis cultivation tax despite projections of a $31 billion surplus, one marijuana entrepreneur is calling for a potential tax revolt this summer.

Michael “Mikey” Steinmetz, co-founder of the company that makes the Flow Kana cannabis brand, is threatening to withhold his taxes unless Gov. Gavin Newsom and the Legislature adjust state marijuana regulations July 1, 2022. He is calling on other CEOS to join him in this effort.

Steinmetz issued the declaration in an op-ed on Medium, published Monday and co-written by his wife, Flavia Cassani. He criticized the California Department of Tax and

Fee Administration’s plans to increase the cultivation tax this January, writing “We simply reply: We’re not going to pay.”

Retail marijuana is taxed four times in California: a state and local excise tax paid by buyers, a sales tax paid by customers and the cultivation tax that growers pay. Growers want changes to the cultivation tax because they pay it before they make a sale.

California’s current cannabis cultivation tax is $9.65 per dry weight ounce for cannabis flower, $2.87 per dry weight ounce for leaves and $1.35 per dry weight ounce for cannabis plants. That will increase to $10.08 for flower, $3 for leaves and $1.41 for plants beginning Jan. 1.

The increased rates “reflect as an adjustment for inflation as required by the Cannabis Tax

Law,” according to the department.

The proposed increase has drawn condemnation from cannabis advocates, including California NORML, whose director Dale Gieringer said in a statement, “The legal industry is already so burdened by excessive taxes and regulation that it cannot compete with unlicensed marketers. California needs to be reducing, not increasing cannabis taxes to make the legal market more competitive.”