Politics
California Treasurer Calls Voter-Approved Marijuana Legalization Law A ‘Complete Failure’ That Should Be Replaced With A New Ballot Initiative
California’s marijuana legalization law that voters approved a decade ago has been a “complete failure” and should be replaced with a new ballot initiative that prioritizes consumers and small businesses, the state’s treasurer says.
At a hearing she convened on cannabis industry banking challenges on Wednesday, Treasurer Fiona Ma (D) heard from multiple officials, financial services representatives and stakeholders who spoke about the complex marijuana policy landscape at both the state and federal levels.
On Prop. 64—the initiative that legalized adult-use cannabis in the state after voters approved it in 2016—Ma said the reform is not “working as intended,” particularly as it concerns excess taxes and regulatory barriers.
That’s because the initiative was written “by big companies that wanted to take over the smaller farms and kind of gobble it up and be the big dogs,” she said.
There’s limited money among interested stakeholders to put up a grassroots initiative campaign to replace the current law, however, so she said it’s likely up to legislators to pass a bill placing the issue on the ballot. And if they do, the treasurer said she’d be interested in championing it.
“That means they have to be educated about it, and they have to see this as a source of ongoing revenues going forward so that we are not having to tax our billionaires every other year,” Ma told State Affairs.
The alternative initiative she envisions would involve lower taxes on marijuana distributors, streamlined tax compliance options for licensees and preventing local governments from imposing hefty fees for cannabis businesses to operate in their jurisdiction.
The treasurer, who is currently running for lieutenant governor, also discussed federal marijuana rescheduling, as the Trump administration has implemented for state-authorized medical cannabis and is currently considering applying to the plant more broadly.
The move represents a step in the right direction, Ma said, but she argued that as long as marijuana remains a Schedule I drug under the Controlled Substances Act (CSA) outside of the current narrow medical exception, California’s marketplace will continue to be stifled.
While broader federal legalization would represent a long-term solution for many of the state’s ongoing cannabis policy issues, Ma and other panelists also voiced support for a bipartisan marijuana banking bill that was recently reintroduced in Congress.
Earlier iterations of the banking legislation have been introduced in past sessions, and while versions have been approved by the House of Representatives on several occasions, the reform has never been enacted into law.
“California has invested tremendous resources into creating a safe, transparent and accountable regulatory framework,” Ma said. “Yet, despite these efforts, the conflict between state and federal law continues to create uncertainty for financial institutions. While there has been a movement at the federal level, including discussions surrounding marijuana rescheduling and continued consideration of the SAFER Banking Act, significant barriers still remain.”
At the forum on Wednesday, representatives of the Department of Cannabis Control (DCC), California Bankers Association and California Tax and Fee Administration also shared their perspectives on cannabis policy issues.
For example, according to DCC Director Clint Kellum, about 60 percent of cannabis sold in California still comes from the illicit market. To that point, the department recently released data showing how 97 percent of state cannabis enforcement actions in unincorporated cities have happened in counties that have locally banned licensed growers from operating.
Meanwhile, California Gov. Gavin Newsom (D) is term-limited, but the state’s two major party general election gubernatorial candidates both support legalization. Republican Steve Hilton, who is endorsed by President Donald Trump, recently told Marijuana Moment that taxes and regulations on cannabis are “too high.”
Not all California Republicans are on board with the reform, however. The vice chair of the state Senate Budget Committee has floated the idea of putting a new initiative on the state ballot to “reverse” Proposition 64, for example, arguing that voters were misled and voicing concerns about the health impacts of marijuana use.
“We have seen significant negative consequences of this legalization, both here as well as in other states,” the senator, who was speaking at a hearing at which lawmakers approved a bill to legalize marijuana dispensary drive-thru windows in California, said.
Democratic gubernatorial contender Xavier Becerra, who previously served in Congress and as California’s attorney general, meanwhile, facilitated a scientific review process during his time as health and human services secretary under the Biden administration that ultimately resulted in a recommendation to move cannabis from Schedule I to Schedule III of the CSA.
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Meanwhile, California regulators recently adopted emergency rules changes for the state’s marijuana licensing process that are intended to make it easier for businesses to qualify for benefits in line with the Trump administration’s recent decision to move ahead with federally rescheduling medical cannabis.
They also launched a new AI tool to help businesses identify marijuana product packaging may appeal to kids in violation of state rules.
Separately, Newsom recently took credit for helping to lead the push for the state to legalize marijuana and discussed his own limited experience with using cannabis.
In October, however, the governor vetoed a bill that would have allowed certain marijuana microbusinesses to ship medical cannabis products directly to patients via common carriers like FedEx and UPS, stating that the proposal “would be burdensome and overly complex to administer.”
Newsom did sign a bill earlier that month aimed at streamlining research on marijuana and psychedelics.
In September, the governor also signed a measure into law to put a pause on a recently enacted tax hike on marijuana products.
Separately, the state attorney general says Indian tribes cannot independently engage in marijuana commerce with licensed cannabis businesses without first obtaining their own commercial license from state officials.
California officials recently awarded nearly $30 million in grants for marijuana-focused academic research projects.
