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By Edward Henderson | California Black Media
Alphonso “Tucky” Blunt, owner of a marijuana product store in Oakland called Blunts and Moors, says his business is in the same zip code where he was arrested in 2004 for selling illegal cannabis.
Now that he’s legitimate in the business – he opened his shop a little over three years ago – Blunt says it’s nearly impossible for Black and other minority-owned cannabis startups to make a profit in California achieve.
“Where is the compromise? I’ve been in the business for a few years and I’m still in the red. California has one of the highest tax rates for cannabis companies anywhere. Oakland is in the top four across the country, ”said Blunt. “We also pay the most for armed guards. It costs between $ 25 and $ 30 an hour. The city requires us to have them – unlike Berkeley where they aren’t required. But the police react faster there. “
According to Blunt, there are many challenges for cannabis companies in the state, including having to pay federal taxes but not being able to write off expenses because cannabis is not legal at the federal level. Businesses like his also have banking issues due to federal restrictions. Plus, criminals often target cannabis companies, and when they do, insurance companies are usually unwilling to pay for damage or lost products, says Blunt.
To address some of the challenges minority entrepreneurs face in the industry – especially those who are victims of the Drug war – California lawmakers have taken a number of steps to lower the barriers to entry into the industry.
“There is no doubt that the war on drugs has disproportionately harmed people of color and their communities,” said Senator Steve Bradford (D-Gardena), who is also chairman of the California legislature Black Caucus.
In 2019, Bradford authored SB 595, which instituted a cannabis stock fee exemption program. The legislature passed this law and the governor signed it that same year. The program was tied to funding Bradford successfully received for its implementation in the 2021 Budget Act.
Right now California is in the process of approving a $ 30 million fund that will eliminate business fees for some entrepreneurs entering the state’s cannabis business.
Last week that Cannabis Control Department (DCC) published the regulations that are followed to implement Senate Act (SB) 166, the Budget Trailer Act. Governor Gavin Newsom signed a bill introducing the fee exemption program in September.
The program creates avenues for individuals affected by the war on drugs to get into the cannabis industry. Potential business owners living at or below 60% of the median income of the region; previously convicted or arrested for a cannabis-related crime; or who live in a community that has been negatively affected by previous cannabis guidelines are eligible for the program.
The exemptions relate to royalties for their potential companies, which can range from $ 1,205 to $ 77,905. The DCC will start accepting requests for fee exemption from January 1, 2022.
The California Office of Administrative Law will post the proposed regulations as “under consideration” on its website: https://oal.ca.gov/. DCC will provide instructions for making a public comment and participating in the regulatory process. The agency will also announce when the five-day comment period will be open to the public.
“SB 166 is part of my ongoing mission for the government to atone for the injustice that has been done to the people by providing them with opportunities to enter and thrive in the cannabis market. I encourage anyone interested in the cannabis industry, especially applicants and owners of cannabis stocks, to provide comments for feedback during the short window of opportunity. “
DCC director Nicole Elliott says the state will continue to invest in ways to make licensing deals fairer, especially for people affected by the war on drugs.
“We know that access to capital remains an ongoing challenge for California’s equity applicants and licensees,” she said. “These exemptions are designed to address this challenge for those in need of the most financial support.”
Bradford said that in order for the government to really understand the challenges entrepreneurs face, they need to be heard and speak about the barriers to entry they face.
“These rules are extremely important in determining who can and should not get exemption from application, license and renewal fees and how much assistance they can get,” said Bradford. “It is vital that the administration fully understands people’s experiences in order to create a framework that respects them.”
Blunt says he welcomes the state’s $ 30 million investment to help with licenses and other costs, but entrepreneurs like him need more.
“We need a two-year tax break. We have to pay some sales taxes, but the extra cannabis taxes we are paying we need a break to recover. We can save some of that money and reinvest it in our businesses and have some money for security, ”says Blunt. “My company makes about $ 5 million a year, but the money I spend on security and taxes is easily between $ 2 million and $ 3 million – and I don’t count other expenses like payroll and other business expenses. How will we ever make a profit? “