California Treasurer Calls for Fixing Legal Cannabis Market
At IgniteIt’s Market Spotlight: California, Treasurer Fiona Ma delivered a powerful message to a packed room of industry professionals. In a bold and direct manner, she addressed the issues plaguing the state’s legal cannabis market and called for immediate action.
The Importance of the Treasurer in the Cannabis Industry
As the state’s banker, Treasurer Ma plays a crucial role in the success of the legal cannabis market. With an estimated $3 trillion in annual revenue flowing through her office, she is responsible for investing a portfolio of $150 to $250 billion and issuing bonds for infrastructure and educational institutions.
The Impact of Finance Policy on the Industry
Treasurer Ma highlighted the fact that finance policy has a direct impact on the cannabis industry. She pointed out that during the COVID-19 pandemic, the industry was unable to access state grants due to the federal government’s classification of cannabis as a Schedule I substance.
Enforcement and Tracking Issues
Ma also addressed the issue of enforcement, stating that it is currently upside down. She called for better coordination and a focus on illicit actors who refuse to follow the rules. Additionally, she pointed out the redundancy and confusion caused by the current tracking system, where operators must maintain internal systems and also use the state’s METRC system.
The Problem of Leakage and Tax Evasion
One of the biggest challenges facing the legal cannabis market in California is leakage and tax evasion. Ma emphasized that the state still produces a significant amount of cannabis, but newer markets are thriving without matching in-state production. This means that a large portion of the product is coming from illegal sources, resulting in lost tax revenue for the state.
The Failure of Prop 64
Ma did not shy away from addressing the shortcomings of Proposition 64, which legalized recreational cannabis in California. She stated that ten years later, it is still a failure and called for immediate action to fix the issues plaguing the legal market.
The Need for Reliable State Programs
When asked about what the cannabis industry can count on at the state level, Ma’s response was stark: “Nothing…not much.” She noted that only one state loan program is currently accessible to cannabis businesses and welcomed any suggestions for reliable state programs.
The Choke Point of Banking
Ma acknowledged that banking remains a major issue for the cannabis industry. While she supports financial institutions that choose to serve the industry, she also pointed out that many charge high due diligence fees, making it difficult for smaller businesses to access banking services.
The Budget Context
Finally, Ma reminded the audience of the state’s structural deficit of $20 billion a year and emphasized the need to fix the legal market in order to increase tax revenue and reduce the reliance on the illicit market. She also called for the complete descheduling of cannabis at the federal level to allow for a more practical and successful path forward.
