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Oakland Cannabis Businesses Call for Tax Amnesty

Oakland Cannabis Businesses Call for Tax Amnesty

Top brass from Kiva Confections, Embarc tell Bloom & Oil why high tax rates and local crime sprees are spelling big trouble for their industry.

Drastic times call for drastic measures and that’s just what Oakland, California’s legal cannabis community says is needed in the wake of yet another recent crime wave targeting area pot businesses. In total, it is believed that more than 25 licensed marijuana businesses were burglarized or robbed during the week of November 15, with owners now facing up to $5 million in losses.

In response, the Oakland nonprofit Supernova Women convened a press conference to demand tax amnesty for small and equity-owned cannabis businesses as a means of providing financial relief during an incredible difficult moment for retailers and their peers along the supply chain. Specifically, speakers called on the state to repeal its cannabis cultivation tax and to approve a notably reduced excise tax for cannabis products as well.

One of the featured guests at the press conference was Kristi Palmer, best known as the co-founder of Kiva Confections: the top-selling cannabis edibles brand in California. Kiva has been based in the Bay Area for over a decade, which has ensured Palmer’s had plenty of time to keep close track of how Oakland taxes its cannabis businesses compared with other counties.

“The taxes in Oakland are higher than any other city in the area,” Palmer told Bloom & Oil, “and the industry is taxed higher than any other business type by both the state and the city. Keep in mind that legal cannabis businesses are trying to survive amongst a thriving illegal market that is untaxed, unregulated and selling cheaper products. Illegal businesses are more economically viable, unfortunately. That’s why legal cannabis businesses need tax relief, so that they can survive.”

As Palmer explained, this dire portrait is unfortunately but the backdrop in what amounts to only the latest in a seemingly never-ending series of coordinated crime sprees targeting licensed Bay Area cannabis companies.

“Recently, cannabis businesses in Oakland have been targeted by seemingly organized criminals,” Palmer said. “These groups are hitting businesses of all sizes and throughout the supply chain — cultivation, manufacturing, distribution centers, brick and mortar retailers and delivery warehouses. Many of the same businesses have been hit multiple times, draining companies of their inventory and cash, damaging their equipment and buildings; they are inflicting serious harm on these businesses, and in some cases forces companies out of business altogether.”

Title: Oakland Cannabis Businesses Call for Tax Amnesty (Bay Bridge)

Though either issue alone would be enough to raise red flags, the compounding financial hardship of facing both challenges at once is, as Palmer sees it, veering towards dangerously insurmountable territory for many of Oakland’s smaller, licensed cannabis businesses.

That’s why she’s lending her voice to raise the alarm and call for tax amnesty, which in turn will allow for companies to invest in both security and simply stay afloat at a crucial juncture in the timeline of the industry.

“The tax dollars that would normally go to the city could instead be used by businesses to protect themselves,” Palmer explained. “For example, businesses now need full time, round the clock, on site, armed security. That can cost in excess of $30k per month. And that doesn’t include any facility upgrades to protect the entryways or windows.”

But it isn’t just about security, either.

“Security is an issue and businesses need immediate help with local and state resources,” Palmer agreed, “but there are even bigger, more widespread issues such as taxes and consumer access that threaten not only individual businesses, but legal cannabis as a whole in our state. This might come as a surprise for many, but the vast majority of cannabis companies are on the brink of extinction.”

These fears are echoed by Lauren Carpenter, co-founder and CEO of Embarc. Billed as a “modern cannabis retailer dedicated to community, culture, and education,” Embarc currently has California retail locations in Alameda, Martinez, and Tahoe, with another store in Fairfield on the way.

While Carpenter doesn’t believe the security issues currently plaguing her local industry community issues can be solved solely by means of a short-term pause on certain taxes, she nonetheless agrees taking such action is essential if legal companies hope to compete with what remains a stout and successful unregulated market.

“Tax reform is critical to our industry’s ability to compete with the illicit market and to ensure the viability of many operators,” Carpenter told Bloom & Oil. “Tax amnesty for businesses facing massive economic hurdles in the wake of a crime — during a time when the bottom has fallen out of the cultivation market and created downward pressure — is an interesting approach to short-term relief but my hope is that this conversation becomes part of a bigger push.”

Indeed, there are notable efforts being made by many of the parties asking for amnesty to make it clear that they do not wish to see this recent rash of crimes overshadow what amounts to a fundamental inequity over tax rates. Such a blurring of the narrative would assuredly only lead to a greater law enforcement presence, which Supernova Women co-founder Amber Senter made clear was not what her group was seeking during last month’s press conference.

“We’re not going to hire people with AK-47s and put them on the roof,” Senter said. “That’s not our job. That’s not why we started to sell weed. We didn’t decide to get into cannabis to kill people. We’re here to provide medicine and improve people’s lives.”

These words apparently failed to resonate with Oakland Mayor Libby Schaaf, who, on Dec. 14, made a public appeal to Gov. Gavin Newsom for more law enforcement resources to combat the issue.

That said, do safety, crime, and the cooperation of local law enforcement remain major issues? Absolutely. Only last month, the San Francisco Chronicle reported that two SFPD officers appeared to “just watch” as a burglary unfolded before letting the suspects drive away, according to surveillance video. Perhaps not coincidentally, it took less than two weeks following news of this minor scandal before the San Francisco Board of Supervisors voted to delay the city’s forthcoming cannabis business tax in hopes of giving legal operators a boost.

While no reciprocal move by the Oakland City Council has yet been made, the stakes and urgency seem crystal clear.

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