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Cannabis taxes fund the police. Here’s how to change that

July 13, 2020
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At a time of growing civil unrest over abusive policing, there’s now a growing debate over how much—if any—of the revenue generated by legal cannabis should go to the police.

Calls from the cannabis industry—and from consumers— to end the flow of cannabis revenue to police are intensifying.

In every state with legal adult-use sales, law enforcement agencies currently get a significant cut of the action. Just how much of the money you spend at the dispensary ends up funding police varies widely by state and municipality, but in Los Angeles alone the amount easily tops $22 million per year.

Activists in cities around the nation are now calling on public officials to significantly defund law enforcement at every level. And that includes breaking the connection between cannabis tax revenue and police budgets.

That pressure is having an effect. In California, some advocates are calling on lawmakers to stop giving cops a financial windfall from cannabis legalization. In Portland, Oregon, Mayor Ted Wheeler recently vowed to cut off his city’s weed-to-police pipeline entirely.

But at the same time, state-licensed cannabis companies are looking to law enforcement to protect their investment in legality. In California, an influential cannabis industry backed trade group continues to push for increased law enforcement, and harsher penalties, to tamp down competition from the still booming illicit and unregulated underground market. But other industry leaders are questioning the move to increase policing at a time when millions across the country are demanding their public officials defund the police.

Meanwhile, police in every state continue to play it both ways. They’re perfectly happy to get paid to bust people for weed or to regulate its cultivation and sale, even if it means doing both at the same time.

The nonprofit Public Health Institute offered these recommendations in its recent report on California cannabis taxes and police budgets. (Click to enlarge image.)

‘We’re funding the disruption of our own communities’

In 2019, a report by the Portland City Auditor showed that 79% of revenue from a cannabis tax that voters approved to fund “drug and alcohol treatment, public safety investments, and support for neighborhood small businesses” actually went to the city’s Police Bureau.

That’s around $3.6 million per year at a time when the Chief of Police just resigned amid controversy over the  force’s treatment of protesters and history of racially biased policing, including disturbing ties to white supremacist groups.

Dr. Rachel Knox says that figure should be reduced to zero. Knox, a Portland-based physician who specializes in medical cannabis, is the chair of the Oregon Cannabis Commission, a member of Portland’s Cannabis Policy Oversight Team, and a board member of the Minority Cannabis Business Association.

“It is outrageous that we are funding the disruption of our own communities with money meant to uplift us,” Knox said in a statement. “We must end this insult to our communities and focus 100% of those dollars to a health equity framework immediately.”

Cutting police out of cannabis taxes in Portland

In June, the MCBA, the OCC, and other local stakeholders renewed their call for all cannabis revenue to be diverted away from policing.

On June 9, Portland Mayor Ted Wheeler pledged to do just that. A little more than a week later the Portland City Council approved a new budget stripping $2 million in cannabis revenue out of the police budget.

California considers a ramp-up of cannabis policing

With police budgets coming under scrutiny nationwide, this same debate is now taking place in every city and state with legal cannabis. It’s also happening in states that are about to legalize, where the same cops out busting people right now are also lobbying to get a piece of the action once the laws change.

In California, a state where voters passed adult use legalization in 2016, legislators in Sacramento are considering a significant escalation of cannabis enforcement.

The California Bureau of Cannabis Control’s latest budget proposal includes a request to create a new 87-member police force tasked with combating illicit marijuana growers and distributors. While a slate of bills moving through the legislature seek to sharply increase penalties for those caught operating in the state’s still-booming underground cannabis market.

All of the money to fund these new enforcement initiatives would come directly from taxes generated by California’s legal cannabis industry, and some of the industry’s biggest operators rank among among the most vocal backers of the bills.

The United Cannabis Business Association (UCBA), a Los Angeles-based trade group, actually sponsored AB 2122, a bill that would impose stiff fines (up to $30,000 per violation per day) on “persons engaging in commercial cannabis activity without a license,” with that money going right back to the police who make the busts.

Defending the legal market from illicit players

“AB 2122 will put another tool in our enforcement toolbelt that we can use to limit access to the untested, untraceable, untaxed and often dangerous products flowing through illicit stores every single day,” according to UCBA President Jerred Kiloh. “The size and scope of the illicit market… poses not only an existential threat to the industry, but also puts the health and well being of Californians at risk.”

UCBA’s Board of Directors includes some of the biggest players in Southern California cannabis. It’s easy to understand why heavily taxed business owners would resent competition from illicit operators who sell unregulated and untaxed products at a cut rate. And their appeal to public health is not hyperbole; illicit-market vape cartridges tainted with vitamin E oil directly caused last year’s EVALI / VAPI health crisis.

Not everyone’s on board

But not everyone in the industry shares UCBA’s enthusiasm for more policing and harsher sentences as the way to protect both public health and fair competition

“The entity that was responsible for the racist implementation of the criminalization laws… [should not be] also getting the windfall of the money that is being generated from legalization,” said Flojaune Cofer, a representative for Public Health Advocates, which just released a report called California Cannabis Tax Revenues: A Windfall for Law Enforcement or an Opportunity for Healing Communities?

600,000 still arrested every year

Despite the legalization of cannabis in 11 states (and counting), the authorities still arrest over 600,000 people every year in the United States for marijuana. To put that number into perspective, somebody got arrested in the time it took you to read this paragraph.

Perhaps the police seized their victim’s money, or car, or home as part of the billions they take in every year via civil asset forfeiture. Perhaps the bust was an elaborate sting operation—funded, planned, and executed as part of a “drug task force” grant from the federal government. Or perhaps a couple of beat cops assigned to patrol a predominantly Black neighborhood simply decided to find someone to put in cuffs 20 minutes before their shift ended, so they could get paid overtime for filling out the paperwork.

Police keep on cashing in

Police, as the frontline soldiers in the War on Drugs, have found countless ways to cash in as part of the prison-industrial-complex. Which explains why they so vociferously oppose legalization every time it comes up for a vote.

But now the cops want to have it both ways.

After a century of waging a racist, cruel, and unconscionable war against a beneficial plant and marginalized people—and losing—they shamelessly position themselves to get paid on the back end too.

And it’s working.

To understand how we can disrupt this weed-to-police pipeline, we must first understand how and why it got built in the first place.

How the weed-to-police pipeline got started

In 2010, a poll by the Public Policy Institute of California showed a statewide cannabis legalization ballot initiative—Proposition 19— ahead by 11 points just a month before election day. But the measure ultimately fell well short, with only 46.5% voting in favor.

When the smoke cleared on that stinging defeat, proponents pointed to a well-funded opposition campaign led by local and state law enforcement groups as the primary reason public support cratered in the final weeks of the campaign.

Giving cops a cut of the cannabis tax was a tactic to pass legalization measures. But it's time to cut the weed-to-police connection.

In 2016, those same law enforcement groups once again opposed legalization in California, but this time their counterattack was largely symbolic, and the initiative (Proposition 64) passed easily and became the law of the land.

So what changed?

Lynne Lyman co-authored Prop 64 and headed the campaign to get it approved by voters. She recalled that the decision to direct a percentage of the money raised by taxing cannabis to law enforcement was “absolutely” part of a successful strategy to diminish opposition from police organizations, as well as a major concession to then-Gov. Jerry Brown.

“We were never going to get the governor’s support,” Lyman told Leafly. “The best we could hope for was that he would keep his mouth shut and stay neutral, which is what he ultimately did.”

“During the campaign, we sometimes talked about money going to law enforcement because that polled well among swing voters at the time,” Lyman added. “Though my personal feeling has always been that the police don’t need another penny.”

‘It’s a very different world now’

California’s Prop. 64 mandated specific earmarks for the allocation of tax revenue from the legal cultivation, distribution and sale of cannabis. This includes funds for regulation of the industry itself, research into the plant’s medicinal properties, community reinvestment, drug abuse treatment and prevention, and environmental remediation, plus money sent directly to the California Highway Patrol (to study impaired driving) and local law enforcement.

That last provision proved controversial at the time, particularly among those who’d been targeted by the police for cannabis. But Lyman said such a compromise was necessary to serve the greater good of ending cannabis arrests for adults and removing cannabis enforcement as a common pretext for abusive policing.

“It’s a very different world right now than it was when we were drafting Prop 64,” she said. “In 2015, not giving law enforcement a slice of the pie was simply not an option. But now it’s unequivocally time to draw a line in the sand. We don’t need the police involved in enforcing legal cannabis. We want unarmed municipal inspectors like every other industry. And police don’t need any more funding, they get more than enough public money as it is.”

Follow the money

Earlier this year David Downs, Leafly’s California Bureau Chief, crunched the numbers on legal cannabis in California and found that in 2019, the state took in about $635 million in state and local cannabis tax revenue.

Given all the various kinds of cannabis taxes collected at the state, county, and local level—all at different rates, and with different allocations—it’s almost impossible to put a precise figure on how much of that money goes to law enforcement.

But it’s important to note that in addition to police budgets, significant funding from legal cannabis in California supports a wide range of progressive programs, including:

  • $140.8 million annually for child care for 11,000 children from low-income families
  • $37.5 million for programs to assist at-risk youth
  • $30 million for community reinvestment grants to social workers
  • $20 million for a statewide social equity program
  • $15 million for cannabis science research

How your weed money funds the LAPD

At the local level, California’s state agencies do not distribute any cannabis tax money to cities and counties that ban retail dispensaries or outdoor home cultivation. Otherwise each municipality sets its own rules.

For example, if you drop $100 on OG Kush at one of Los Angeles’s licensed cannabis dispensaries, you’ll be handed a bill for $136, which covers an excise tax to the state ($15), a sales tax to Los Angeles County ($9.50) and a city cannabis tax ($11.50)—and that’s on top of taxes and licensing fees already paid by the grower and the distributor.

In 2020, the legal cannabis industry will pour $128 million into the City of Los Angeles’s annual budget: $84 million in business taxes, $30 million in sales tax, and $14 million in permit fees.

All of that money goes directly into the city’s general fund, which is then portioned out in a budget approved by the Los Angeles City Council.

Since the LAPD’s annual budget of $1.8 billion currently constitutes 17.5% of overall municipal spending, that means at least $22.4 million in cannabis revenue goes directly to local law enforcement each year.

How LA took from equity to fund cops

Los Angeles voters created this local weed- to- police pipeline in March 2017, when they voted overwhelmingly in favor of Measure M, which set a licensing structure for cannabis businesses, while simultaneously directing the City Council to create an official Social Equity Program, tasked with “developing and implementing cannabis policies that seek to center equity in cannabis policy reform…. particularly for low income and minority community members.”

But while the city, and by extension the police, quickly started raking in cash from legal cannabis, the Social Equity Program languished due to a lack of funding and political will. Two years after the passage of Measure M, roughly 1,000 licenses had been granted to cannabis businesses in Los Angeles—all before the Social Equity Program got up and running.

Then came a March 2019 meeting between local cannabis activists and city officials to discuss the future of the program. At one point, according to multiple sources in the room, the City Council president’s assistant chief deputy revealed that $10 million originally set aside to fund the Social Equity Program had just been diverted to cover a shortfall in the LAPD’s overtime fund.

Ultimately, amid a public outcry, some of that funding was restored, but the incident made the city’s priorities crystal clear.

A year later, however, things look very different.

The tide is turning

As protests against abusive policing continue across the country, Los Angeles recently announced a temporary halt on overtime pay for the LAPD. Meanwhile, the LA City Council is moving forward with a complete overhaul of the Social Equity Program—one that would grant temporary approval to all social equity license applicants and limit all new storefront retail licenses and delivery licenses to social equity applicants until 2025.

Meanwhile, calls from within the cannabis industry—and from consumers— to end the flow of cannabis revenue to law enforcement are steadily intensifying.

According to Lynne Lyman, the best way to turn this political momentum into tangible results is by getting directly involved.

“Do not support ballot measures that allocate the revenue to the General Fund, or to law enforcement specifically,” she said. “Insist on some percentage of the revenue going to a community reinvestment fund, that would be made available to communities and individuals most impacted by the war on drugs. Build a broad and diverse stakeholder table to discuss and recommend revenue allocation along the priorities you identify in that community. And attend and speak at City and County budget meetings to voice your opposition to any cannabis revenue going to police.”

Correction: An earlier version of this story stated the United Cannabis Business Association had threatened to sue the City of Los Angeles over the city’s lack of cannabis licensing enforcement. That threat was actually issued by the California Minority Alliance, a separate and unrelated organization.

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David Bienenstock's Bio Image

David Bienenstock

Veteran cannabis journalist David Bienenstock is the author of "How to Smoke Pot (Properly): A Highbrow Guide to Getting High" (2016 - Penguin/Random House), and the co-host and co-creator of the podcast "Great Moments in Weed History with Abdullah and Bean." Follow him on Twitter @pot_handbook.

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