Marijuana industry’s plea for help + California leads in unemployment + $$ for water projects

Good morning and welcome to the A.M. Alert!

CANNABIS INDUSTRY TO ELECTED LEADERS: ‘LESS TAXES AND MORE RETAIL’

Several top players in the California cannabis industry came together on Friday morning to call on Gov. Gavin Newsom, Assembly Speaker Anthony Rendon and Senate President Pro Tem Toni Atkins to take action to save the industry which they say is desperately flailing due to high taxes and over-regulation.

Dozens of cannabis industry CEOs, activists, growers and advocates held a press conference Friday morning to promote a letter sent to the governor and legislative leaders, and which has been published as part of a Change.org petition urging immediate action.

Their demand can be summed up in three parts: They are calling for the permanent elimination of the state’s cultivation tax on cannabis, a three-year tax holiday for the cannabis excise tax, and for the Legislature to pass a law requiring local jurisdictions to allow retail commercial cannabis activity.

“Unable to thrive in California’s broken system, many of us are now facing the imminent loss of our businesses and ability to provide for our families. We need urgent action from our elected leaders on these three issues,” the letter reads in part.

The press conference was intended as a clarion call for Gov. Newsom to include the reforms as part of his 2022 budget, which the governor is currently preparing and which will be announced in January.

“All we’re asking is the courage of Gavin Newsom to add this to the budget process,” said Michael Steinmetz, co-founder of Flow Cannabis Co.

Earlier this year, Steinmetz called for cannabis industry CEOs to participate in a tax revolt if such actions are not taken by the end of the fiscal year in June 2022.

While participants in Friday’s press conference stopped short of pledging their participation in such a revolt, Tiffany Devitt of CannaCraft said that such a measure would be a last resort for many in the industry, while Jerred Kiloh, president of the United Cannabis Business Association, said that every business is going to have to decide for themselves what to do as they are faced with the prospect of either going out of business or returning to the illicit market.

“Every business is going to have to independently decide when they cannot afford to be in the legal market anymore,” Kiloh said.

Though California cannabis has been $5 billion-dollar industry in the Golden State, industry members rejected the argument that it has been profitable.

“Lucrative is a far cry from where we are right now,” said Darren Story, founder of Strong Agronomy, a Watsonville-based cannabis cultivation company.

CALIFORNIA LEADS NATION IN UNEMPLOYMENT

California has the highest unemployment rate in the nation, beating out Nevada for the bottom spot, according to the Bureau of Labor Statistics and Loyola Marymount University economist Sung Won Sohn.

The unemployment rate for November was 6.9%, down from 7.3% in October.

“Since the low point in April 2020, the state has regained 69.6 percent of the jobs lost during the pandemic compared to 82.5 percent for the whole country. California has a disproportionate share of its employment in Leisure and Hospitality which has recovered slower than the rest of the economy from the pre-pandemic peak,” Sohn said in a statement.

Sohn said that the omicron variant of COVID-19 likely played a role in the state’s unemployment rate.

“People-contact sectors such as leisure and hospitality added less than 7,000 jobs, down from 26,400 in October. Food services, drinking places and accommodations are having tough time attracting workers despite much higher wages. It could take years before the L&H sector returns to its previous employment level,” Sohn said.

Gov. Newsom released a statement about the unemployment numbers on Friday, touting the number of jobs which California has created.

“Since February, California has created nearly 1 million jobs, an unprecedented achievement for the state’s economic recovery. While the state continues to see a robust recovery, creating nearly 22% of the nation’s jobs in November and the largest unemployment rate decrease since February, there’s still more work to be done getting folks back to work and supporting those hardest-hit by the pandemic,” Newsom said in a statement.

Assembly Republican Leader Marie Waldron, R-Escondido, was less optimistic about the report.

“Despite Democratic claims to the contrary, California’s economic recovery has been slow and uneven. While Democrats’ supporters in the Silicon Valley and Hollywood elite have never done better, ordinary people who make up the backbone of our economy are struggling,” Waldron said in a statement.

SENATE REPUBLICANS CALL FOR FULL FUNDING FOR WATER PROJECTS

California state coffers are looking mighty flush these days, and so the Senate Republican Caucus has called on Gov. Newsom to use some of that money to fully fund the state’s water projects.

In a letter to Newsom, the caucus reminds the governor that state voters approved Proposition 1 in 2014, which was intended to allocate funding for water infrastructure in the state.

“Over the course of four decades, state leaders have failed to build any new water storage, missing every opportunity to capture and store additional water while also failing to provide funding for the repair and restoration of various canals throughout the state, severely limiting the state’s conveyance capacity,” the letter to Newsom reads in part.

The Republican lawmakers are asking Newsom to include $3.2 billion in his budget for water infrastructure projects, including $2.6 billion for the Sites Reservoir and $685 million for the repair of the Friant-Kern/Delta-Mendota Canals as well as the San Luis Field/San Joaquin Divisions of the California Aqueduct.

QUOTE OF THE DAY

“Honestly, not a huge shock, but I will caveat that with, it’s not over yet.”

- Sen. Alex Padilla, D-Calif., on Democratic Sen. Joe Manchin’s refusal to vote for President Joe Biden’s $2 trillion Build Back Better bill.

Best of the Bee:

• California’s population fell by 173,000 residents between July 2020 and July 2021, continuing a trend that began early in the coronavirus pandemic, via Andrew Sheeler.

• Facing pressure from retailers, law enforcement, and lawmakers, Gov. Gavin Newsom on Friday announced plans for more than $300 million in spending to combat retail theft, gun violence and drugs in California, via Lara Korte.

• The California High-Speed Rail Authority began trying to buy the land for its railroad right-of-way through the central San Joaquin Valley more than eight years ago. The job is still not done, via Tim Sheehan.