California Voters Advance Pro-Cannabis Governor, New Taxes

by: David Downs | on November 7, 2018 | No Comments

California cannabis promises to become more available and normalized thanks to the 2018 midterm elections in the Golden State.

“I think we’re in the midst of a cultural shift. Having more pro-cannabis governors is going to drive the conversation on a national level …

Josh Drayton, California Cannabis Industry Association

Voters on Tuesday handed out victories to longtime cannabis allies such as Gov.-elect Gavin Newsom, as well as new legalization supporter Sen. Diane Feinstein.

Results in races for House seats in California proved mixed. Voters kicked out staunch cannabis critics like Republican Rep. Steven Knight. But congressional cannabis champion Rep. Dana Rohrabacher also appears to have lost his seat in an extremely close race.

California legalized recreational cannabis in 2016 and is the world’s largest market for the botanical drug. Local, state, and national policymakers from California promise to shape cannabis law reform efforts for years and decades to come.

Feinstein Retains Senate Seat

Voters returned US Sen. Dianne Feinstein to Congress. She bested her democratic challenger, Kevin De Leon, 54–46.

Feinstein sits on the powerful Senate Judiciary committee, a key chokepoint for cannabis law reform. Once an ardent drug war hawk, Feinstein flipped to supporting a states’ rights solution. Her policy evolution helped her fend off an attack from her left flank Tuesday night.

Very Close House Races in California

California promised to help Democrats retake the House and contained a number of contested districts. Among them:

In the 22nd district, anti-cannabis Republican Rep. Devin Nunes of Fresno bested his challenger with 56% of the vote and all precincts reporting.
In the battleground 25th district, incumbent Republican Rep. Steven Knight narrowly lost to Democratic challenger Katie Hill. Hill garnered 51.3% of the vote.
In the battleground 45th district, anti-cannabis Rep. Mimi Walters held onto her seat with 51.7% of the vote.
In the closely watched 48th district, Rep. Dana Rohrabacher appears to have lost by less than 2,000 votes out of 180,000 counted. Democratic challenger Harley Rhouda is wining 50.7% to 49.3%, though mail-in ballots are still being counted.
And pro-cannabis Republican Rep. Duncan Hunter prevailed in battleground district 50. Hunter amassed 54.2% of the vote with 71% of precincts reporting.

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Democrats retook the House, but it’s unclear what pathway cannabis law reform will take in the next Congress. Republicans control the Senate, and they typically reject legalization, whereas the White House ostensibly supports a state’s rights solution to winding down cannabis prohibition.

“Hopeful we can solve banking issues and look at descheduling and rescheduling. I think it’s realistic,” said Josh Drayton, at the California Cannabis Industry Association.

Cannabis Reform Leader Becomes Governor of California

Longtime legal cannabis champion, former San Francisco mayor, and Lt. Gov. Gavin Newsom will take the helm of California as its new governor. Watchers called the race for the democratic gubernatorial candidate from San Francisco within minutes of the polls closing in California.

Newsom stumped for Prop 64 in 2016 after leading a blue-ribbon commission to outline the landmark legalization law.

Newsom took 59% of the vote in the race against Republican challenger John Cox.

Newsom will preside over the ongoing implementation of legalization Proposition 64. The governor’s office sets priorities for the legislative calendar and wields a veto over all state bills.

California finalizes its cannabis industry regulations this month and needs his help, said Jacqueline McGowan, director of licensing and business development at K Street Consulting.

“Gavin Newsom has become a thought leader in the cannabis space,” she said. “I truly admired his approach with the creation of the Blue Ribbon Commission in order to study the policy changes when it became apparent that legalization would be on a future ballot in California. I believe Newsom will continue to not only lead but also to listen to the industry’s concerns and implement sound policy to solve many of the urgent problems the regulated market is enduring. From high taxes, to an unchecked and thriving illicit market, and a lack of safe access throughout the state, there’s no shortage of problems that need his assistance.”

California joined Colorado in sending one of its boldest leaders on cannabis law reform to the governor’s mansion, noted Sean Donahoe, a cannabis consultant in California. An axis of reform governors now stretches from California to Colorado—where longtime cannabis booster Rep. Jared Polis won the gubernatorial race Tuesday—to Illinois, where pro-cannabis J.B. Pritzker became governor-elect, to Maine, where Democrat Janet Mills will replace Gov. Paul LePage.

“With the elections of Gov. Newsom and Gov. Polis, the two foundation states of the national cannabis industry have clearly elected industry allies who are extraordinarily well prepared to both further implement reasonable and effective regulations in their respective states while also (hopefully) preparing for real efforts for national legalization under a Democratic House,” Donahoe said.

“I think we’re in the midst of a cultural shift. Having more pro-cannabis governors is going to drive the conversation on a national level, just like it did with same-sex marriage,” said Drayton.

Local Taxes Approved Statewide

Voters approved of dozens of new local taxes on recreational and medical cannabis. Among them:

San Francisco’s Proposition D imposed new costs on cannabis sales through a local tax of up to 5%. Voters approved it 66% to 34% with all precincts reporting.
Oakland Measure V passed with 78% of the vote and all precincts reporting. Oakland cannabis taxes might actually be going down thanks to Measure V.
Fresno’s cannabis Measure A, a business tax of 10%, passed handily, 70–30, with all precincts reporting.
Santa Ana’s Measure Y, a recreational marijuana business tax, passed with 69% of the vote.
Santa Clara’s Measure M business tax passed with 75% approval.

Drayton said cities and counties are still treating the cannabis industry like a golden goose when they should instead be competing to nurture cannabis businesses. “The over-taxation of the industry I still find overwhelming,” Drayton said.

Oakland’s tax decrease is the first of many local tax recalibrations, he said. “I think we’re going to be seeing more of that,” he said.

Cannabis Bank Fails, Dispensary Owner Triumphs

Los Angeles Measure B, which would have paved for the way for a city-run cannabis bank, failed 42–58 with all precincts reporting.

Longtime medical marijuana activist Cody Bass is set to take a leadership role in the town that persecuted him- South Lake Tahoe. The longtime dispensary owner of Tahoe Wellness once battled local officials to stay open and now holds first place in a nine-way race for City Council with all ballots counted. Bass bested a field that included three incumbents.

California Voters Advance Pro-Cannabis Governor, New Taxes