SFGATE: Newsom joins last-minute 'Hail Mary' to avert California cannabis industry crisis

EXCERPT:

“If the Governor receives a proposal to halt the cannabis excise tax increase, he will sign it. His record speaks for itself — from supporting the legal cannabis industry to taking down illicit operations, he remains committed to further strengthening California’s growing legal cannabis market,” said Diana Crofts-Pelayo, a Newsom spokesperson, in an emailed statement shared exclusively with SFGATE.

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The industry had hoped this year’s budget bill would include a suspension of the upcoming tax increase, but the details of this year’s agreement were released Wednesday without including any such provision. O’Gorman Jenkins said there’s still time for the tax hike suspension to be included in a companion budget bill, sometimes referred to as a “budget trailer bill,” that would also need to be passed before July 1, when the state’s new fiscal year begins.

“I don’t know if that’s achievable, but there are certainly some last-minute Hail Mary attempts to make it happen,” O’Gorman Jenkins said. She later added, “We are leaving no stone unturned and in ongoing communications with the Senate.”

The tax hike comes as the legal industry fights to survive, with thousands of legal operators shutting down and retail stores struggling to pay the existing tax rate even before it increases. Meanwhile, illegal cannabis farms and illegal stores are thriving in California, with the state estimating that more than 60% of all sales are still in the illegal market.

Industry advocates, as well as the state’s own budget analysts, say that increasing the tax rate on legal cannabis would shrink the size of the overall legal market, as businesses are likely to try to recoup some of their funds by passing the increased tax burden on to customers. That could send more people to illegal cannabis sources, which do not pay any taxes at all and thus tend to be able to sell products at a lower price.

READ FULL ARTICLE: Newsom announces support for pot industry lifeline (SF GATE)