July 10, 2025 • 52 mins
Amy O'Gorman Jenkins, one of California's most influential cannabis lobbyists and director of the California Cannabis Operators Association (CaCOA), breaks down the critical fight to reform cannabis taxes and save the state's struggling legal market. The industry faces a dire situation with legal cannabis sales dropping 30% since 2021 and a recent automatic tax increase from 15% to 19% that represents a 25% hike for consumers.
• Legal cannabis sales in California have dropped 30% since Q2 of 2021
• The cannabis excise tax just increased from 15% to 19% on July 1st, creating a combined tax burden of approximately 38%
• AB 564 would revert the tax back to 15% for five years but faces opposition in the Senate after passing the Assembly 76-0
• Budget negotiations to freeze the tax increase failed despite Governor Newsom's public support
• Tax revenue beneficiaries oppose reform, incorrectly arguing higher taxes will generate more revenue
• California's legislature includes 120 members (80 Assembly, 40 Senate) with 70% of Assembly members having less than four years' experience
• Industry associations are fragmented and under-resourced, limiting political influence
• AB 8 aims to regulate intoxicating hemp products under the cannabis framework
• Future cannabis reform may require a constitutional amendment returning to voters
Call your state senator today to express support for AB 564 and join industry associations to strengthen advocacy efforts in Sacramento.
https://www.cacoa.org/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ben Larson (00:00):
Do they object to it because they just dislike the
industry, or do they just notunderstand economics?
Amy O'Gorman Jenkins (00:06):
They do not understand economics.
They do not understandeconomics.
It's, it's and frankly, it'sinfuriating to me.
Ben Larson (00:20):
Hey everybody, welcome to Episode 96 of High
Spirits.
I'm Ben Larson and with me, asalways, 96 of High Spirits.
I'm Ben Larson and with me, asalways, is NRA Grabstein.
We're recording Tuesday, july8th 2025, and we have a great
show today for you, not for me.
I'm gonna keep my cool.
We're gonna talk aboutCalifornia cannabis reform,
(00:42):
including taxes and hemp and allthe fun things, and I'm going
to keep this demeanor the wholetime.
I promise, Before we get there.
Anna Rae, long time, no see,how are you doing?
AnnaRae Grabstein (00:55):
I'm doing great.
It's Tuesday, which is so weirdAfter all of the last two years
of recording on Thursday.
This is our second weekrecording on a Tuesday and it's
just thrown me for a loop.
It feels like it should be theend of the week.
Ben Larson (01:09):
The energy is a little different, but I think
I'm enjoying it.
It was great seeing you thisweekend.
Thank you so much for having usup to the old abode.
AnnaRae Grabstein (01:18):
Yeah, I had Ben's whole family over.
We made lunch.
The kids hung out.
Our boys really got along well.
I thought they were thick asthieves immediately.
Yeah, the boys immediately wentinto my son's room and started
listening to records, which Ithought was pretty cool, and
there was lots of fun outside.
Yeah, it was great and yourwife is awesome.
(01:40):
She is beautiful and smart andall the things you guys.
Ben's wife is really cool.
Ben Larson (01:47):
Don't let her go to her head.
Yeah, there's a lot going on,but it is nice that every state
is starting to wrap up theirlegislative sessions, with the
exception of our lovely state ofCalifornia, which we'll talk
about later.
So it feels like news isslowing down, which is
(02:08):
appropriate, as we journeythrough summer and get to go on
our vacations and do all that.
So I'm actually kind ofgrateful for that, getting to
spend some more time in theoffice, like I am today, and
reconnect with the team a littlebit.
AnnaRae Grabstein (02:22):
Yeah, I think the bigger news that's not
cannabis news that's importantto acknowledge is just this
terrible flood that's happenedin Texas.
Ben Larson (02:30):
Oh, my God, yeah.
AnnaRae Grabstein (02:32):
I want to just extend some compassion and
empathy and just strength toeveryone that's dealing with the
tragedy there.
It's really, really terrible.
Ben Larson (02:42):
It's really hard to listen and to read.
Like many folks, I tend to whipout the phone.
It's really really terrible.
It's really hard to listen andto read and, like many folks, I
tend to whip out the phone rightbefore bed and kind of just
peruse some of the news that Imiss throughout the day, and
I've had to stop myselfmid-reading at times just to
make sure that I could at leastsleep at night.
AnnaRae Grabstein (03:31):
You know, there's a lot that weighs on the
mind when you start kind oftechnology.
Ben Larson (03:36):
So, yeah, we'll cede our time and energy and send it
down to Texas for everyoneimpacted by this flooding.
Down to Texas for everyoneimpacted by this flooding.
AnnaRae Grabstein (03:44):
But let's jump into the episode.
This week has and really forthe past month it's been really
top of mind California taxreform for cannabis businesses
here in the state, where we bothare and we've talked about it a
little bit here and there onthe episodes and we thought that
it was time to bring in reallythe person that is leading the
(04:08):
largest coalition of folkslobbying for cannabis tax reform
in California and someone thatBen and I both know from our
work in the state for a longtime, and so I'm really excited
to introduce Amy Jenkins, who'sone of the most influential
cannabis lobbyists in California.
She's currently serving as thedirector of the California
(04:32):
Cannabis Operators Association,which represents over 300
licensees across 125jurisdictions, and it's quickly
become the state's largestcannabis industry association,
which is amazing.
Amy is amazing.
She's on the front lines ofCalifornia cannabis policy and
she joins us to share what'shappening behind the scenes.
Amy, we are stoked to have you.
Thanks for being here.
Amy O'Gorman Jenkins (04:52):
Well, I am stoked to be here.
Thank you so much and it's sogood to see you both.
So thank you for having me,yeah.
Ben Larson (04:59):
Amazing.
Yeah, I've been spending a lotmore time in Sacramento these
days, and sometimes on theopposite side of the
conversation that you are, butwe'll keep it kosher on this
recording.
That's right.
As I spend more time at thestate capitol and even in DC, I
realize what a neophyte I amwhen it comes to politics and
(05:19):
understanding how it all works.
It all works, and I think thatgoes for a lot of the people in
our community, especially online, the LinkedIn warriors that are
constantly quote unquote,advocating, you know, for their
side of the plant, and so Ithink it would be helpful for us
if we kind of just started froma high level and talk about
(05:41):
state lobbying, especially whenit comes to cannabis and hemp,
and just kind of give us a goodlike lay groundwork for us about
how this all kind of comes tobe, these different
organizations, the push and pullof it all.
But, more importantly, as, like, the cannabis industry starts
to evolve and kind of intermixwith the hemp category and
(06:01):
there's a lot of outsideinterest, right, there's a lot
of people that look atCalifornia and have a lot of,
yeah, interest in seeingCalifornia grow and succeed
beyond the California operators,and I would just love a little
bit of guidance from you on howwe can be most effective in
those conversations.
You know what's worth spendingour time on, you know, and so on
(06:22):
and so forth.
Amy O'Gorman Jenkins (06:23):
Well, thank you.
There's a lot I can share withthose questions and comments,
ben, what I will start with isI've been lobbying for the
California cannabis industrysince 2014.
I'm kind of an OG in the spaceand there have been many
lobbyists that have come andgone, that lobbied and are no
(06:46):
longer lobbying, and then wehave, you know, kind of a new
host of lobbyists.
More specifically, to yourquestion about how the industry
can lobby and be more engaged inadvocacy, what I would start
with is you know, this industryis very, is very, divided in
most instances right.
(07:07):
So you've got, you know,numerous license types and we
don't always agree.
There's not that kind of unitythat you see in in maybe more um
seasoned is not a good word,but but you know different
entities and organizations andbusiness types where you've kind
of evolved over time andthere's a little bit more unity.
(07:29):
I think we're a little bit morefractured right now.
We're working to change thatand I think you know we're going
to talk a little bit about taxreform and that's really been.
That's really created a lot ofunity amongst industry
associations and the lobbyistswho represent them.
So it's been very encouragingand inspiring to be united as it
(07:54):
relates to taxation and taxreform.
But a lot of work still needsto be done.
Most of the associations arepretty anemic.
They're small.
They have a hard timeattracting and retaining members
.
This industry doesn't have astrong history of joining
associations and engaging and Icertainly appreciate some of the
(08:17):
reasons why.
One, as you noted, it's veryintimidating, it's really
unfamiliar to most people, butit's also engagement.
Those things are really reallyimportant because what we have,
(08:47):
not what we are trying toachieve now and we're having
some success, but what has beenchallenging is legislators don't
look at us and see the industryin their communities, right.
So I'll give you and then I'llbe quiet, but I'll give you an
example of that.
I used to be the.
But I'll give you an example ofthat.
I used to be the director ofpublic affairs for the league of
(09:07):
California cities.
It was a hundred years ago, atleast it feels like that to me.
But what the league was sosuccessful at doing is they'll
go in and lobby and thelegislators don't see the
lobbyists, they don't even seethe league.
They see their individual mayor, their council members, their
people in their community.
And so the more we can getengagement from the legal
(09:29):
industry both cannabis and hempand familiarize policymakers
with who we are in theircommunities, I think the more
successful we'll be.
Sorry, that was probably a longanswer to your question.
Ben Larson (09:44):
No, but that last piece really resonates because
yesterday I was meeting withsomeone and I was there with my
lobbyist and we were like thisis what they care about.
These are the topics.
Now we need to go findoperators that represent those
topics in those areas and bringthem into the office with us so
that they really hear it Right.
And this comes up for a lot forme and I know boo hiss, but
(10:07):
like on the hemp side of thebusiness, you know, as we get
you know into conversationsaround texas and even california
, you know there are many largebrands that are national that
are looking at these states andlike they want to help open them
up or help educate on on thehemp opportunity and there's a
(10:30):
lot of noise that's being caused, whether it's certain
associations that are going inwithout any local representation
, or even law firms that arebased in other states, going
into other states and andthinking that they're going to
rally the troops.
And we have seemingly foundmore success going in and
finding the local organizationswith the local constituents and
(10:51):
being an assist to them insteadof leading the charge.
Amy O'Gorman Jenkins (10:55):
Yeah, I think that's right.
I think that's right.
I think putting kind of a localface on anything you do is
going to move the needle.
At least, that's certainly beenmy experience.
It's not always the case, butthat's that's where I have found
the most success, so I thinkthat is a good strategy, whether
(11:15):
you're cannabis or hemp.
Another way to answer youroriginal question there's I mean
this this is California.
This is the fourth largesteconomy in the world.
Policymakers have a lot ofthings they have to focus on,
whether it's housing,homelessness, mental health,
transportation, ai, and soputting that local spin or that
(11:36):
local face on an issue reallyresonates with them in a very
meaningful way in most instances, really resonates with them in
a very meaningful way in mostinstances.
And, again, that's somethingthat I think any trade
association or any industryshould be striving to do,
because I think, again, that'swhere I have found the most
success.
AnnaRae Grabstein (11:54):
I think what you're highlighting, which is
interesting, is this push andpull that happens especially
when people are going andlobbying on behalf of cannabis.
It's often because they are acannabis business operator and
they have some type oftremendous pain and suffering
that they're feeling because ofan existing law or regulation
and that is causing them to tryto change it.
(12:16):
But the push and pull is thatthat is their whole world, but
these policymakers have way moregoing on and don't understand
it at all.
And it's just like how do wedeal with this to be able to
create mutual alignment amongstthese parties that are just not
aligned?
Inherently, policymaking incannabis is like a layer cake.
(12:38):
It starts at the local level.
There's all of these laws thatmight be happening in your city,
and then you've got your statelaws, and then you've got the
federal stuff that complicatesthings all on top of it, and
there's lobbying going on at allof those levels.
I think, specifically, we wantto talk with you because you are
(12:59):
a policy guru for Sacramento,which is where it all happens.
In California, you've beenleading the charge for a long
time.
Really, you're behind one ofthe largest coalitions that I've
seen in the past five yearsaround tax reform and we're
going to talk about tax reformin a second.
But I want you to give us alittle bit of insight about
(13:21):
Sacramento specifically.
Bit of insight about Sacramentospecifically.
How does Sacramento work from apolicy perspective in terms of
the seasons of lawmaking, thebudget, all of that?
Can you just give us a downloadas we go into this tax?
Amy O'Gorman Jenki (13:35):
conversation , absolutely.
So there's 120 legislators thatI'm responsible for getting to
know.
I wish I could tell you I knewthem all personally.
But 120 legislators, so youhave 80 assembly members and 40
senators.
It is a full-time legislaturewhich means you know the session
(13:56):
really commences in January, itconcludes in or around August,
september generally, and thenthey go, they recess and then
you've spent that fall kind ofplanning for the following year.
It's much more, it's veryaccelerated pace, despite it
being, you know, almost the fullyear, unlike part-time
legislators or states where youhave a real condensed timeline.
(14:20):
There's a lot of work to bedone within you know again that
year's timeline and there's kindof two different to be done
within within.
You know again that that year'stimeline and there's kind of
two different tracks youmentioned kind of policy and
budget.
So both are critically,critically important.
The the policy track again,really starts in January and
concludes in the fall, whereasthe budget track is a little bit
(14:44):
more condensed.
It also commences in Januarybut it concludes in June and
that's actually kind of acritical piece as we talk a
little bit about what's beenhappening.
That literally just happened.
So we just concluded the budgetprocess which again is much
more accelerated.
There is a budget releasedevery year.
(15:05):
It is not a two-year budget, itis a single-year budget and our
fiscal year starts July 1.
But then again, as you'readvocating via the budget
process, you're also advocatingvia the legislative process and
to give you a flavor of kind ofhow it works, in California it
is not uncommon to see about2,000 bills introduced in a
(15:28):
single year.
So there's a lot of policy workthat you've got to track and
monitor.
Interestingly enough, up untilthis year, the number of
cannabis bills was overwhelmingand I certainly think that kind
of speaks to a lot of thechallenges we have.
If you've got a lot oflegislation, you're clearly
(15:50):
trying to address a lot ofdifferent issues.
Up until this year, I wastracking anywhere between about
35 to 60 bills that directlytouched cannabis, and I'm not
even talking about indirectissues around.
You know worker protections oryou know different business
(16:11):
related issues.
These were actual billsaffecting cannabis.
So it's a very, again, robustprocess.
It's a very complex process andthere's just a lot of players
and I should also note there'swell over 2,000 lobbyists as
well.
So it's just a lot of-.
AnnaRae Grabstein (16:31):
But not all working on cannabis.
Amy O'Gorman Jenkins (16:32):
No, no, no , not all working on cannabis, I
just mean, in general, you canhave in excess of 2,000
lobbyists registered at anygiven time and so, again, you
have to compete for attention,attention with legislators,
attention with policy staff,attention with budget staff.
(16:53):
So it's a very complex process,it can be very intimidating,
but yeah, that's kind of ahighlight or an overview.
And yeah, that's kind of ahighlight or an overview.
AnnaRae Grabstein (17:04):
Yeah, it's really helpful.
I think so many people don'tlearn how the sausage is made
until all of a sudden it reallyaffects them At least, that was
my own process is that I didn'tunderstand how policy was made
in Sacramento until I wasrunning a business that was
trying to affect that policy,and then I was forced to.
(17:25):
I think we should now talkabout taxes, because this is the
hot topic.
It's, I'm sure, what all of ourlisteners want to hear from you
.
Ab 564 is legislation that ismoving through the Senate this
week.
It's already passed through theassembly.
Why don't you give us anoverview of what's been
happening with Californiacannabis tax, where we are,
(17:48):
where we're going and whatyou're fighting for?
Amy O'Gorman Jenkins (17:49):
Yeah and thank you.
And just to give people kind ofan overview and I'm sure most
of your listeners are quitefamiliar with the state of the
industry but legal cannabissales have dropped 30% since Q2
of 2021.
We've got, you know, 22%decline in excise tax collection
.
We've got revenue forecaststhat are continually on the
(18:12):
decline in the state and theseare forecasts that are projected
by the State Department ofFinance and others.
And we just saw the largestdecline in excise tax collection
in a single quarter.
We dropped 11% just Januarythrough March.
So the state of the industry ispretty dire right now and I
(18:32):
don't think I have to tell youthat and I probably don't have
to tell your listeners that.
So, as we went into this year,taxation and the cannabis tax
rate was really the top priorityand that was primarily due to
two factors One, just thegeneral state of the industry
the industry is in decline buttwo, the fact that we were
(18:55):
facing an automatic tax hikethat actually just went into
effect last Tuesday, july 1.
We went from 15% to 19%.
That's just the state cannabisexcise tax.
While that may seem small, thatrepresented a 25% increase that
would be paid directly byconsumers and patients.
(19:18):
So, going into January.
That was what we were facingand so we, as I previously
mentioned, we strategized anddecided to pursue two tracks.
So first the policy track andwe introduced AB564.
But, as I mentioned, that isnot a track that would conclude
(19:42):
on July 1, meaning that we wouldnot avert the tax increase.
But it's so.
That was a policy bill that wasintroduced and then
simultaneously we fought to, youknow, advocate for a budget
track which would have avertedthe tax hike entirely.
So that was kind of the initialstrategy.
(20:03):
So we were kind of marchingalong.
Ab 564 was, and has continuedto be, on a very positive
trajectory.
As you indicated, anna Rae, itpassed the assembly 76 to zero,
which is just unheard of.
We're talking about a very,very new legislature.
By the way, 70% of the assemblyhas been there less than four
(20:28):
years, so a lot of new faces.
We were still able to pass thatdespite tremendous opposition.
But again, all the while wewere trying to negotiate what
was in the Haney bill into abudget bill and thought we were
going to be successful.
And in fact I will say and Iknow I said this to you guys
(20:50):
privately I was literally beingcongratulated by budget
committee staff prior to themwalking into negotiations, I
knew what the budget bill numberwas going to be.
I knew what the budget billnumber was going to be.
I knew what the language lookedlike.
We thought we were all in theclear and then, for whatever
(21:12):
reason, behind those closeddoors, negotiations blew up and
within several hours time I wasinformed, just a week before the
new fiscal year, that we wereunsuccessful, ultimately, in
getting the tax freeze in thebudget.
So, fortunately, we do have ourplan B, and that is the Haney
(21:36):
bill, and that is what we'refocused on now that we were
unsuccessful with the budgettrack, which, again, I can
elaborate on.
So, yeah, ab 564 would revertthe tax back to 15 for at least
five years.
We wanted it to be longer, butI can get into all those details
too if you're interested.
Ben Larson (21:56):
I want to double click on the budget negotiations
a little bit, to the extentthat you're comfortable, Because
something that we hear in DCespecially right is that hemp is
kind of like this lower levelcannabis same, you know, but it
never rises, and so when we talkabout negotiations in DC, it's
usually just a chip that's, youknow, often easily given up on
(22:20):
in Sacramento.
Or was it actually the tax thatwas being negotiated?
Is that the negotiation thatitself blew up?
Because it sounds like, if itpassed with such resounding
support that that would havebeen reflected and it would have
been protected in saidnegotiations.
Amy O'Gorman Jenkins (22:39):
That is what we thought as well, and I
should say, without trying tocreate any confusion, oftentimes
you run a policy bill just totake the temperature of the
legislature.
So when it passed the Assembly76 to 0, we thought, wow, we've
got all the support.
What we didn't anticipate wasthe Senate's reaction.
(23:00):
So the Senate who, you know.
We didn't work as hard becausethe policy bill was moving
through the assembly.
The Senate, you know, waslargely responsible, in all
candor, for the deal blowing up,and the word I got was that we
didn't work, the Senate, hardenough, we didn't have enough
Senate champions.
(23:21):
And so at the tail end of whatare called third party
negotiations, when you'renegotiating budget language
between the assembly, thegovernor and the Senate, it was
basically the Senate that saidyeah, no, we don't, we're not,
we're not willing to support theinclusion of the tax freeze in
the trailer bill.
And so, absent all threeparties agreeing, it blew up.
(23:45):
And so now we are in the Senatewith AB 564, hoping that in the
last two weeks or so sincethose negotiations blew up, we
have made enough of an impact tomove our policy bill through
the Senate process, and thatfirst hearing in the Senate
(24:06):
occurs tomorrow morning.
AnnaRae Grabstein (24:07):
Wow.
So, if you take his words atface value, governor Newsom is
supportive of tax reform for thecannabis industry and largely
in support of bolstering thelegal cannabis industry.
However, this budget option tosave the cannabis tax issue
(24:28):
failed.
I look at what's happening inDC and how Trump seems to be
really effective at pushingaround the Senate and Congress
and his whole entire coalition.
Is the Senate not listening toGovernor Newsom?
Does he not have the power?
Are the power dynamicsdifferent, like what is going on
?
If Newsom supports this effort,why isn't it happening faster
(24:51):
or at some accelerated kind ofemergency pace to get these
businesses the help that theyneed right now?
Amy O'Gorman Jenkins (24:59):
Yeah, very well said.
I appreciate the question.
So, as I previously stated wayback, there's so many competing
interests.
So one of the big policyobjectives going into budget
deliberations was CEQA reform tobuild more affordable housing
in the state.
So there's a whole host ofother issues film tax, credit
(25:22):
extension.
So all of these differentpolicy objectives that you know
were prioritized and so I don'twant to suggest or speak or
suggest in any way that thegovernor did not prioritize
cannabis.
The fact that he went on record,you know, kind of the final
hour of negotiations where westill had a little bit of a
(25:45):
chance to get this slipped intoa trailer bill the fact that he
went on record.
You don't typically see that.
So I have to say that wasgreatly appreciated.
But to your question aboutbeing able to kind of strong arm
or nudge the Senate, I thinkthat the calculation when he put
(26:07):
out that news release so it wasreported in SF gate and
elsewhere I think that wasreally the nudge that he thought
would would get us over thefinish line and it was certainly
something we celebrated amongstthe lobby core.
It's like you don't again, youdon't see the governor way in,
but he very clearly said you.
You get something to.
You get a cannabis tax freezeor a reduction to my desk.
(26:30):
I will sign it Kind of.
Another way to answer yourquestion, anna Rae, is the way
the budget process works.
Yes, the governor can weigh inand try to push, generally
speaking, but our budget processdoes require all three parties
to agree and, from what Iunderstand, there was a fair
amount of nudging and trying topush the Senate to accept this
(26:55):
deal and they were justultimately unsuccessful.
AnnaRae Grabstein (26:59):
And this is not a party line type of a thing
.
I mean, these are Democratsversus other Democrats versus
other Democrats, mostly right.
Amy O'Gorman Jenkins (27:07):
Yeah.
So third party negotiationsinclude, yeah, the leadership
and the assembly, the leadershipin the Senate and then the
governor's office, and inCalifornia it's Democrats, it's
Democrat, democrat, democrat,yeah.
Ben Larson (27:21):
Okay, so well, we we seeded some ground on on the
budget, but we have this billthat that seems to have broad
support and and we will knowcome August, maybe September,
whether that bill passes.
What does the aftermath looklike if that does pass?
You know when?
When, when could we see thetaxes reduced back to the goals?
To get it reduced back to?
(27:41):
The goal is to get it reducedback to 15.
Amy O'Gorman Jenkins (27:43):
15, yes, and I would say on that piece
that's actually a conversationthat is happening in real time.
So the way the bill iscurrently written, it's a tax
levy.
It would take effectimmediately upon signature and I
think that is certainly from anindustry perspective.
We want the tax to revert backto 15% as soon as possible.
(28:06):
Frankly, we want it lower than15%.
We can talk about that.
The challenge with that is howyou avoid operator error, if you
will, and that applies to boththe state and the industry
itself.
So if the tax reverts back to15, kind of mid-quarter, there
(28:30):
are chances that you will remitan incorrect amount.
The California Department ofTax and Fee Administration also
has to adjust their systemsaccordingly.
So back to your question.
There is a lot of discussionabout whether we have to wait
and not have this take effectthe day of signature but have to
(28:52):
include a date certain, andthere is some speculation that
that will be raised during thecommittee deliberations tomorrow
and the timeframe that's beenfloating out there and again
this is all happening in realtime is October 1.
That would be the beginning ofQ4, the fourth quarter, and that
(29:14):
would be kind of a clean way toreduce the tax back.
The concern obviously I have iscan the industry wait that long
?
Because every day, you know,consumers are seeing that 20%
tax hike and you know my biggestconcern is are we losing
consumers and will we get thoseconsumers back if we have to
(29:36):
wait, you know, again tillOctober 1?
And so those are theconversations that we're
deliberating right now in realtime and will be, in all
likelihood, during tomorrow'spolicy hearing.
AnnaRae Grabstein (29:48):
Yeah, this tax bill doesn't seem like it's
good enough to me.
I'm just going to be honesthere 15% you went over the data
that we're seeing reduction inthe revenue that's coming in the
industry is hurting.
Why didn't the industry take amore aggressive approach to this
bill and try to lower the taxesbeyond just keeping them where
(30:13):
they have been for the past fewyears and averting the tax hike?
Amy O'Gorman Jenkins (30:17):
So a couple reasons for that.
So, first off, I agree with you100% and I was recently asked
by a publication as to whatwould be a preferred model, and
I always reference Michigan,which has a quarter of the
population of Californians andCalifornia's and sells more
cannabis than we do legalcannabis in the state, and they
(30:39):
have a 10% excise tax, a 6%sales tax, no local taxes.
So, yes, I would much prefer tobe exploring a very significant
tax reduction.
Going into this year, there wasa lot of uncertainty.
You had the fires in LA, youhad a projected budget shortfall
of around $14 billion.
(31:02):
You had uncertainty at thefederal level.
We continue to have a verysignificant amount of
uncertainty, by the way thatfederal money makes up about a
third of California's totalstate budget and we are
expecting to lose a considerableamount of that.
There were a lot of factors thatwe had to weigh going into this
(31:22):
year and then also looking at avery new legislature.
As I indicated, 70% of theassembly has been here less than
four years.
So in kind of exploring allthose factors, talking to key
policymakers that are ourfriends and champions, the
(31:43):
bottom line was there was noappetite to pursue anything but
this tax freeze and avert that19% hike.
So it was a bitter pill for theindustry to swallow.
There were a lot of internaldebates and discussion.
People were not happy, but itwas what we thought was
politically achievable at thetime and I think, as we're now
(32:06):
going through these policydebates in the Senate, it was
probably the right calculation.
We do have a significant amountof opposition to this bill to
564.
We're not, despite the positiveoutcome in the assembly.
We are competing with a lot ofdifferent interests who strongly
(32:28):
object to even reverting usback to 15.
Ben Larson (32:32):
Do they object to it because they just dislike the
industry, or do they just notunderstand economics?
Amy O'Gorman Jenkins (32:39):
They do not understand economics.
They do not understandeconomics and, frankly, it's
infuriating to me.
I had to sit with with some ofthese folks and and and I don't,
you know, certainly havenothing disparaging to say about
the organizations, but it'sit's largely the beneficiaries
of of the cannabis tax revenueand they, they truly believe
(33:03):
that if you raise taxes, you'regoing to realize more revenue.
And the numbers and the data, asyou just noted, ben, is not
there we're looking at about a38% tax on cannabis right now,
when you factor in the 19% pluslocal taxes, plus the sales and
(33:23):
use tax, the 19% plus localtaxes plus the sales and use tax
.
Consumers are not interested inpaying that high amount in taxes
, particularly in this economy,but nonetheless, these
beneficiaries are convinced that, essentially, by not allowing
this 19% tax hike, theirnarrative right now is that you
(33:46):
are shortchanging us to the tuneof $180 million annually and
you are supporting corporateprofits, corporate cannabis, to
the detriment of children andthe environment.
That is their frame and that iswhat I am dealing with.
And they are in the building,that Capitol building, every day
(34:08):
, every single day, they arelobbying and, to put that in
perspective, there's really onlya handful of cannabis lobbyists
left.
We are under-resourced as anindustry, and for good reason.
We just talked about the data,and for good reason.
We just talked about the data,but I am in there.
It is probably one lobbyist forevery 610 beneficiaries of the
(34:30):
revenue that are running around,and these are you.
Very difficult to make thiscase when you've got those
different interest groups thatyou're competing with.
AnnaRae Grabstein (34:51):
I saw a quote from you.
I thought it was really wellsaid and I don't have it in
front of me, but you basicallysaid that we're not debating the
use of the cannabis tax revenueand we support the good causes
that the money is going to.
It's just that we need to getthis in order.
We need to fix it so that thebusinesses can keep paying into
these tax funds.
So we're at this criticaljuncture.
(35:11):
You're one of only a fewlobbyists.
What is the call to action foreverybody of what's next to do?
Most of our listeners areprobably on your side here, so
you're talking to a group offolks that want California
cannabis to succeed in some way.
What's next?
What's the coalition look like?
What do you want people to do?
Amy O'Gorman Jenkins (35:31):
Well, we have been asking members of
industry, patients, consumers,ancillary businesses that
support the cannabis industrycontact your senator, contact
your state senator.
That is the most important andimmediate call to action.
I don't, frankly, believeeverything I'm hearing from the
(35:52):
Senate, that we weren't loudenough, that we didn't speak
loud enough.
But okay, if that's the case,then we all need to be calling
our senator and communicatingthe importance of this bill for
the state of the industry, atleast preserving the state of
the industry.
We are being taxed out ofexistence currently,
communicating that message and,as I said before, really
(36:14):
personalizing it.
So when you call your senatorand you say you represent me and
I am ex-business and I employthis many people, that resonates
, that's meaningful for them.
They remember that.
They remember that far morethan what I'm saying.
So that would be the first thingI would say in terms of call to
action.
The second would be, again, tosupport one of the handful of
(36:36):
associations that are lefttrying to advocate for this
industry.
I know, again, budgets aretight, but the associations are.
Again, we're the largest, butwe're all still struggling.
We all still have shoestringbudgets.
We don't have the resourcesthat are necessary, we don't
have the lobby support.
So that would be a secondaryask, call to action that I would
(36:59):
urge listeners to consider.
All right, folks urge listenersto consider.
Ben Larson (37:02):
All right, folks, call your senators, join your
associations.
We'll drop a link to Kakoa, amy, I think we've really covered a
lot of what's happening rightnow.
I do want to kind of suspendthat for a bit and start
thinking about the future.
Say we get this optimisticallyput into place, taxes go back
down to 15%.
(37:23):
To Anna Rae's point we have alot more to do to kind of make
this state viable and let itlive up to the opportunity that
it once was like the largesteconomy, the largest cannabis
economy.
How do we get there?
Like, what is the next step?
Like?
I've heard new voterinitiatives that could cost $40
(37:43):
million or something like that.
Is that the way?
Is there a way we iterate ourway through this?
At what?
At a what seems like a snail'space?
Give us some hope.
Amy O'Gorman Jenkins (37:53):
It has been a snail's pace.
I, I, I don't disagree with youand I'm sure there's probably
some listeners out there whothink, well, what the hell has
she been doing for the last 10years If she's been lobbying for
the industry?
I mean, look at the state ofthe industry.
And I and I and I, I reallyappreciate that.
And what I will say to you isthat Prop 64 imposed a lot of
(38:15):
limitations from the standpointthat it's a voter approved
initiative and the legislaturehas very little say in terms of
how it can shape the initiative.
So people have real concernsabout local control.
57% of cities and countiesstill ban cannabis retail.
(38:36):
We can't change that.
That would require going backto the voters.
Even the tax structure.
I mean, we've been kind ofchipping away at the tax
structure, but there arelimitations in terms of what we
can do.
In fact, even with the Haneybill potentially passing and
getting signed, there's threatsof lawsuits.
So that all sounds dismal.
(38:58):
But what I will say is, becausethe legislature has acknowledged
, and in some cases verypublicly acknowledged, its
limitations, there is a coregroup of us that are really
trying to think through what wecan do in terms of addressing
some of these real coreimpediments, like local control,
(39:18):
for instance, and that doesrequire another initiative.
And the thing for people toknow is that you can put an
initiative on the ballot as alegislature and that bypasses
that signature gathering processwhich is one of the more costly
elements to the initiativeprocess.
So what the legislature can dois a Senate constitutional
(39:40):
amendment or an assemblyconstitutional amendment.
An example of that was Prop 1,which was passed a year ago,
march.
So the legislature has thecapacity to do that and and
again, recognizing theimpediments that they have to
really affecting positive changefor this industry.
(40:00):
We are talking about how we canmaybe draft a constitutional
amendment and and move itthrough the legislature and get
it on the ballot.
And we're having those.
We were having thoseconversations at the beginning
of the year.
We were continuing to havethose conversations and frankly,
it's a personal goal andobjective of mine is really
(40:21):
trying to achieve again sometruly meaningful reform for the
industry.
But that's going to take againgoing back to the voters.
So that's the process that I'mreally wanting to focus on and
again is maybe potentially doingit next year.
I think we've unfortunatelybeen caught up in these tax
conversations which have reallydominated debate or discussion,
(40:44):
but again I would like to focuson a constitutional amendment,
working with some key allies inthe legislature and we do have,
despite our setback with thebudget, we do have many that are
really interested in this topicand wanting to work with us.
Ben Larson (40:59):
Yeah, well, the other conversation and the other
bill that's kind of on thedocket is AB8.
And that really kind ofaddresses the influence of hemp
and cannabis and that's a reallyunique conversation in
California as well.
I feel like we're embarking ona whole new episode by
introducing this.
I'll be your contact.
Yeah, I don't know how we keepit lightweight.
(41:21):
As we talk about the future andwe talk about saving the
cannabis industry, we can'tignore what is happening all
around the nation with theconvergence of hemp and cannabis
, and that's a uniqueconversation in here in
California From your vantagepoint.
How do you imagine that kind ofbeing addressed as we get into
2026, as we look at AB8 andmaybe just a very quick primer
(41:46):
on what that's looking to do?
Amy O'Gorman Jenkins (41:48):
AB8 is really kind of a reaction to
what we saw happening inCalifornia.
So what AB8 does is itestablishes a very comprehensive
regulatory and enforcementframework around intoxicating
hemp products, so hemp productscontaining THC and the hemp
(42:11):
industry is not pleased with thebill currently.
But again, I would suggest thatAB8 is kind of a reaction to
really the proliferation ofthese products and without any
real guardrails.
Okay, so whether you supporthemp or you don't support hemp,
hemp products were readilyavailable and sold in total wine
(42:32):
and more up until recently, andso that really infuriated the
cannabis industry, becauseobviously there's very tight
regulatory guardrails aroundwhere we sell cannabis products.
So we started to see thisdirect competition.
So AB8 is really kind of astrong reaction to the you know
the proliferation of theseproducts and the availability of
(42:55):
these products.
So it really has.
It essentially says if you area hemp operator and you want to
sell these products in the stateyou are, you are subject to all
the rules governing cannabis,which means you you have to sell
your products and dispensaries,you have to adhere to all of
our child packaging and labelinglaws.
(43:15):
You've got to participate inthe track and trace system.
The way I would maybe moresimply kind of frame.
It is our governing statutes.
Our laws would governcannabinoids, essentially
intoxicating cannabinoids, andso you wouldn't really
distinguish between hemp andcannabis.
That bill is also moving.
It's also being heard tomorrowin the same committee, so it's
(43:39):
going to be an interestingpolicy discussion.
We'll talk about the tax bill.
We'll talk about AB8.
Longer term and you know thiswell, ben there's a lot of
discussion about meetingconsumers where they're at and
supporting a low dose channeloutside traditional dispensaries
(44:00):
.
Right now that's being met withpretty fierce opposition from
cannabis retail the cannabisretail community as well as
small farmers retail thecannabis retail community as
well as small farmers.
But I think that's going to bean ongoing debate and discussion
, even if we're successful atpassing AB8 this year, that the
hemp industry and the number ofproducts are not going away.
(44:24):
So we can try to regulate itunder our cannabis framework.
But I think that discussion isgoing to be ongoing in the next
couple of years.
Ben Larson (44:31):
Is there a particular format that gets less
pushback?
Amy O'Gorman Jenkins (44:38):
Not currently.
I know where you're going.
I would say probably the mostactively engaged segment of the
hemp industry is the beveragecomponent.
So the low dose beverage groupshave been very actively
lobbying for a low dose channeloutside dispensaries for a whole
host of reasons.
(44:59):
A lot of folks would argue thatyou know our system and our
system of distribution and ourregulatory requirements don't
really fit the beverage productline.
So I think that conversation isgoing to continue again, even
if we ultimately pass AB8.
AnnaRae Grabstein (45:22):
What occurs to me in this discussion around
AB8 and what you're bringing upis some of the frustration that
dispensaries have had with theproliferation of cannabinoid
products outside of theregulated channel is just that
if Prop 64 had created a healthybusiness environment and we
(45:43):
weren't having to spend timetrying to just keep taxes where
they are instead of rising, andthere wasn't an overall decline
in performance of the businessesthat have invested so heavily
in this space, that there wouldbe a more easy path for people
to collaborate, for businessesto find alignment and
(46:03):
opportunities to broaden aconsumer access discussion, as
opposed to what we're doingright now, which is everyone is
just fighting to survive, and itfeels like this fight to
everyone has to protectthemselves and protect their
little fiefdom, because they'rebarely holding on, and so my
hope is that some of theseincremental steps will give
(46:26):
people some runway andconfidence that the industry is
moving in the right direction sothat there can be collaboration
to figure out a way to bestserve consumers, which is
ultimately what is going to stopthe proliferation of the
illicit market.
And that's like what hemp hasdone is created like a third leg
of of competition for for thesecannabis operators.
(46:51):
It's like there was the illicitmarket and now there was the
intoxicating hemp that got addedoutside of it and it just
became too much, I think, fordispensaries to to be able to
handle, and so that nobody wasable to come to a problem
solving place to figure out awin-win and that ended up with a
ban.
Which space to figure out awin-win?
(47:13):
And that ended up with a banwhich, you know, depending on
where you land, you can see itas positive or negative, but I
think that it isn't servingconsumer access for sure.
Amy O'Gorman Jenkins (47:21):
I think that well said, very, very well
said, and I couldn't agree withyou more.
And I will say too that youknow, one thing I didn't share
about AB8 is that it doesprovide a path to integrate hemp
cannabinoids into cannabisproducts.
So CBD, cbn, cbg, you know, andin some cases limited amounts
(47:44):
of THC.
That's kind of step one.
But I also think you know,unfortunately, to your point,
given the condition and thestate of the industry, we were
well on a path at one point toreally having this broader
conversation about how weregulate cannabinoids.
And hemp was kind of seen, evenjust three years ago, as kind of
(48:06):
this way to chip away at ourframework.
So again, hemp is a crop, we'rea cannabis product, and so we
kind of looked to the hempindustry as being like what we
had aspired to be as cannabis.
And then, to your point, hempkind of came in.
There was this influx, massiveinflux of products, and then it
(48:28):
created this immediatecompetition at a time when the
legal cannabis industry wasreally struggling.
So, unfortunately, to yourpoint, now everyone's kind of
back in this protectionist modeand it's it's hemp versus
cannabis, and I think that'sreally unfortunate.
So I think there is a place intime to have those broader
conversations, but as as long asthe house is burning down and
(48:52):
that is legal cannabis I thinkthose conversations are a ways
away.
Ben Larson (48:56):
Yeah, that makes sense.
Well, Amy, I really appreciateyou coming on and sitting on the
hot seat.
It's been really informative.
As we approach the end of theshow, I would love to hear your
last call.
It's our time for our guests totake the mic and give a plug,
give a shout out.
I think I know what it might be, but we're going to give you
(49:18):
the opportunity.
Say whatever you want, cannabisrelated or otherwise.
This is your moment.
Amy O'Gorman Jenkins (49:24):
Oh, gee, and you know it's so funny.
I remember there was somethingI forgot to do was figure out
what my last call was going tobe.
I think what?
What I just maybe just torestate, um, you know, just
really encouraging thiscommunity, this, this wonderful,
unique community that iscannabis, to make your voices
(49:44):
heard.
I, you know, I, that is myappeal.
My last call to all of you isthere is a place for you to
engage and advocate here inSacramento.
Again, you don't have to workwith me, but, but you know, I
think we will be successful,more successful, when, again,
(50:06):
our policymakers can see howcannabis is, you know, woven
into the fabric of their owncommunities, whether it's you
being a consumer, a patient, abusiness owner.
We need to get there, andthere's a lot more work to be
done, and so your voice matters,your voice is important and it
(50:28):
will dramatically contribute tothe work that we're doing up
here.
So, hopefully, this is anentree into much more engagement
on the part of the broadercannabis community that I am
honored to represent.
But, again, I need to hear andsee more of you.
So that is my call and my plea.
Ben Larson (50:47):
Awesome.
Well, thank you so much.
Thank you again.
Thank you for the decade plusof work that you've put into
this industry, no matter whatside of the table you're on in
any given conversation.
Yeah, but the passion, thededication, it's very much
appreciated.
So thank you.
Amy O'Gorman Jenkins (51:02):
Thank you, and thank you for your time and
for having me today.
Ben Larson (51:05):
Absolutely All right .
Anna Rae, do you feel a littlebit more in the know and what's
going on in Sacramento?
AnnaRae Grabstein (51:12):
yeah, I'm hopeful, uh, I'm hopeful good
let's, let's, save this industryin the state.
California's got to win it.
Ben Larson (51:18):
We right, we have to absolutely, uh, we have our
work cut out for us, though.
All right, folks, what did youthink?
Do you feel like you know moreabout what's going on in
Sacramento?
How are you going to getinvolved?
Who are you going to back?
It is a race to September herein Sacramento.
Thank you to our teams atVirtosa and Wolfmeyer.
(51:39):
As always, we couldn't do itwithout you guys.
Thank you to our producer, ericRossetti.
I feel like we're falling intoa groove.
Tuesdays is our new recordingday, hopefully putting out the
recordings by Thursday.
If you enjoyed this episode,please drop a review on Apple
Podcasts, on Spotify, whereveryou listen to your podcasts, or
(52:00):
maybe YouTube.
Maybe you can subscribe to uson YouTube.
As always, folks stay curious,stay informed and keep your
spirits high Until next time.
That's the show.
Do they object to it because they just dislike the
industry, or do they just notunderstand economics?
Amy O'Gorman Jenkins (00:06):
They do not understand economics.
They do not understandeconomics.
It's, it's and frankly, it'sinfuriating to me.
Ben Larson (00:20):
Hey everybody, welcome to Episode 96 of High
Spirits.
I'm Ben Larson and with me, asalways, 96 of High Spirits.
I'm Ben Larson and with me, asalways, is NRA Grabstein.
We're recording Tuesday, july8th 2025, and we have a great
show today for you, not for me.
I'm gonna keep my cool.
We're gonna talk aboutCalifornia cannabis reform,
(00:42):
including taxes and hemp and allthe fun things, and I'm going
to keep this demeanor the wholetime.
I promise, Before we get there.
Anna Rae, long time, no see,how are you doing?
AnnaRae Grabstein (00:55):
I'm doing great.
It's Tuesday, which is so weirdAfter all of the last two years
of recording on Thursday.
This is our second weekrecording on a Tuesday and it's
just thrown me for a loop.
It feels like it should be theend of the week.
Ben Larson (01:09):
The energy is a little different, but I think
I'm enjoying it.
It was great seeing you thisweekend.
Thank you so much for having usup to the old abode.
AnnaRae Grabstein (01:18):
Yeah, I had Ben's whole family over.
We made lunch.
The kids hung out.
Our boys really got along well.
I thought they were thick asthieves immediately.
Yeah, the boys immediately wentinto my son's room and started
listening to records, which Ithought was pretty cool, and
there was lots of fun outside.
Yeah, it was great and yourwife is awesome.
(01:40):
She is beautiful and smart andall the things you guys.
Ben's wife is really cool.
Ben Larson (01:47):
Don't let her go to her head.
Yeah, there's a lot going on,but it is nice that every state
is starting to wrap up theirlegislative sessions, with the
exception of our lovely state ofCalifornia, which we'll talk
about later.
So it feels like news isslowing down, which is
(02:08):
appropriate, as we journeythrough summer and get to go on
our vacations and do all that.
So I'm actually kind ofgrateful for that, getting to
spend some more time in theoffice, like I am today, and
reconnect with the team a littlebit.
AnnaRae Grabstein (02:22):
Yeah, I think the bigger news that's not
cannabis news that's importantto acknowledge is just this
terrible flood that's happenedin Texas.
Ben Larson (02:30):
Oh, my God, yeah.
AnnaRae Grabstein (02:32):
I want to just extend some compassion and
empathy and just strength toeveryone that's dealing with the
tragedy there.
It's really, really terrible.
Ben Larson (02:42):
It's really hard to listen and to read.
Like many folks, I tend to whipout the phone.
It's really really terrible.
It's really hard to listen andto read and, like many folks, I
tend to whip out the phone rightbefore bed and kind of just
peruse some of the news that Imiss throughout the day, and
I've had to stop myselfmid-reading at times just to
make sure that I could at leastsleep at night.
AnnaRae Grabstein (03:31):
You know, there's a lot that weighs on the
mind when you start kind oftechnology.
Ben Larson (03:36):
So, yeah, we'll cede our time and energy and send it
down to Texas for everyoneimpacted by this flooding.
Down to Texas for everyoneimpacted by this flooding.
AnnaRae Grabstein (03:44):
But let's jump into the episode.
This week has and really forthe past month it's been really
top of mind California taxreform for cannabis businesses
here in the state, where we bothare and we've talked about it a
little bit here and there onthe episodes and we thought that
it was time to bring in reallythe person that is leading the
(04:08):
largest coalition of folkslobbying for cannabis tax reform
in California and someone thatBen and I both know from our
work in the state for a longtime, and so I'm really excited
to introduce Amy Jenkins, who'sone of the most influential
cannabis lobbyists in California.
She's currently serving as thedirector of the California
(04:32):
Cannabis Operators Association,which represents over 300
licensees across 125jurisdictions, and it's quickly
become the state's largestcannabis industry association,
which is amazing.
Amy is amazing.
She's on the front lines ofCalifornia cannabis policy and
she joins us to share what'shappening behind the scenes.
Amy, we are stoked to have you.
Thanks for being here.
Amy O'Gorman Jenkins (04:52):
Well, I am stoked to be here.
Thank you so much and it's sogood to see you both.
So thank you for having me,yeah.
Ben Larson (04:59):
Amazing.
Yeah, I've been spending a lotmore time in Sacramento these
days, and sometimes on theopposite side of the
conversation that you are, butwe'll keep it kosher on this
recording.
That's right.
As I spend more time at thestate capitol and even in DC, I
realize what a neophyte I amwhen it comes to politics and
(05:19):
understanding how it all works.
It all works, and I think thatgoes for a lot of the people in
our community, especially online, the LinkedIn warriors that are
constantly quote unquote,advocating, you know, for their
side of the plant, and so Ithink it would be helpful for us
if we kind of just started froma high level and talk about
(05:41):
state lobbying, especially whenit comes to cannabis and hemp,
and just kind of give us a goodlike lay groundwork for us about
how this all kind of comes tobe, these different
organizations, the push and pullof it all.
But, more importantly, as, like, the cannabis industry starts
to evolve and kind of intermixwith the hemp category and
(06:01):
there's a lot of outsideinterest, right, there's a lot
of people that look atCalifornia and have a lot of,
yeah, interest in seeingCalifornia grow and succeed
beyond the California operators,and I would just love a little
bit of guidance from you on howwe can be most effective in
those conversations.
You know what's worth spendingour time on, you know, and so on
(06:22):
and so forth.
Amy O'Gorman Jenkins (06:23):
Well, thank you.
There's a lot I can share withthose questions and comments,
ben, what I will start with isI've been lobbying for the
California cannabis industrysince 2014.
I'm kind of an OG in the spaceand there have been many
lobbyists that have come andgone, that lobbied and are no
(06:46):
longer lobbying, and then wehave, you know, kind of a new
host of lobbyists.
More specifically, to yourquestion about how the industry
can lobby and be more engaged inadvocacy, what I would start
with is you know, this industryis very, is very, divided in
most instances right.
(07:07):
So you've got, you know,numerous license types and we
don't always agree.
There's not that kind of unitythat you see in in maybe more um
seasoned is not a good word,but but you know different
entities and organizations andbusiness types where you've kind
of evolved over time andthere's a little bit more unity.
(07:29):
I think we're a little bit morefractured right now.
We're working to change thatand I think you know we're going
to talk a little bit about taxreform and that's really been.
That's really created a lot ofunity amongst industry
associations and the lobbyistswho represent them.
So it's been very encouragingand inspiring to be united as it
(07:54):
relates to taxation and taxreform.
But a lot of work still needsto be done.
Most of the associations arepretty anemic.
They're small.
They have a hard timeattracting and retaining members
.
This industry doesn't have astrong history of joining
associations and engaging and Icertainly appreciate some of the
(08:17):
reasons why.
One, as you noted, it's veryintimidating, it's really
unfamiliar to most people, butit's also engagement.
Those things are really reallyimportant because what we have,
(08:47):
not what we are trying toachieve now and we're having
some success, but what has beenchallenging is legislators don't
look at us and see the industryin their communities, right.
So I'll give you and then I'llbe quiet, but I'll give you an
example of that.
I used to be the.
But I'll give you an example ofthat.
I used to be the director ofpublic affairs for the league of
(09:07):
California cities.
It was a hundred years ago, atleast it feels like that to me.
But what the league was sosuccessful at doing is they'll
go in and lobby and thelegislators don't see the
lobbyists, they don't even seethe league.
They see their individual mayor, their council members, their
people in their community.
And so the more we can getengagement from the legal
(09:29):
industry both cannabis and hempand familiarize policymakers
with who we are in theircommunities, I think the more
successful we'll be.
Sorry, that was probably a longanswer to your question.
Ben Larson (09:44):
No, but that last piece really resonates because
yesterday I was meeting withsomeone and I was there with my
lobbyist and we were like thisis what they care about.
These are the topics.
Now we need to go findoperators that represent those
topics in those areas and bringthem into the office with us so
that they really hear it Right.
And this comes up for a lot forme and I know boo hiss, but
(10:07):
like on the hemp side of thebusiness, you know, as we get
you know into conversationsaround texas and even california
, you know there are many largebrands that are national that
are looking at these states andlike they want to help open them
up or help educate on on thehemp opportunity and there's a
(10:30):
lot of noise that's being caused, whether it's certain
associations that are going inwithout any local representation
, or even law firms that arebased in other states, going
into other states and andthinking that they're going to
rally the troops.
And we have seemingly foundmore success going in and
finding the local organizationswith the local constituents and
(10:51):
being an assist to them insteadof leading the charge.
Amy O'Gorman Jenkins (10:55):
Yeah, I think that's right.
I think that's right.
I think putting kind of a localface on anything you do is
going to move the needle.
At least, that's certainly beenmy experience.
It's not always the case, butthat's that's where I have found
the most success, so I thinkthat is a good strategy, whether
(11:15):
you're cannabis or hemp.
Another way to answer youroriginal question there's I mean
this this is California.
This is the fourth largesteconomy in the world.
Policymakers have a lot ofthings they have to focus on,
whether it's housing,homelessness, mental health,
transportation, ai, and soputting that local spin or that
(11:36):
local face on an issue reallyresonates with them in a very
meaningful way in most instances, really resonates with them in
a very meaningful way in mostinstances.
And, again, that's somethingthat I think any trade
association or any industryshould be striving to do,
because I think, again, that'swhere I have found the most
success.
AnnaRae Grabstein (11:54):
I think what you're highlighting, which is
interesting, is this push andpull that happens especially
when people are going andlobbying on behalf of cannabis.
It's often because they are acannabis business operator and
they have some type oftremendous pain and suffering
that they're feeling because ofan existing law or regulation
and that is causing them to tryto change it.
(12:16):
But the push and pull is thatthat is their whole world, but
these policymakers have way moregoing on and don't understand
it at all.
And it's just like how do wedeal with this to be able to
create mutual alignment amongstthese parties that are just not
aligned?
Inherently, policymaking incannabis is like a layer cake.
(12:38):
It starts at the local level.
There's all of these laws thatmight be happening in your city,
and then you've got your statelaws, and then you've got the
federal stuff that complicatesthings all on top of it, and
there's lobbying going on at allof those levels.
I think, specifically, we wantto talk with you because you are
(12:59):
a policy guru for Sacramento,which is where it all happens.
In California, you've beenleading the charge for a long
time.
Really, you're behind one ofthe largest coalitions that I've
seen in the past five yearsaround tax reform and we're
going to talk about tax reformin a second.
But I want you to give us alittle bit of insight about
(13:21):
Sacramento specifically.
Bit of insight about Sacramentospecifically.
How does Sacramento work from apolicy perspective in terms of
the seasons of lawmaking, thebudget, all of that?
Can you just give us a downloadas we go into this tax?
Amy O'Gorman Jenki (13:35):
conversation , absolutely.
So there's 120 legislators thatI'm responsible for getting to
know.
I wish I could tell you I knewthem all personally.
But 120 legislators, so youhave 80 assembly members and 40
senators.
It is a full-time legislaturewhich means you know the session
(13:56):
really commences in January, itconcludes in or around August,
september generally, and thenthey go, they recess and then
you've spent that fall kind ofplanning for the following year.
It's much more, it's veryaccelerated pace, despite it
being, you know, almost the fullyear, unlike part-time
legislators or states where youhave a real condensed timeline.
(14:20):
There's a lot of work to bedone within you know again that
year's timeline and there's kindof two different to be done
within within.
You know again that that year'stimeline and there's kind of
two different tracks youmentioned kind of policy and
budget.
So both are critically,critically important.
The the policy track again,really starts in January and
concludes in the fall, whereasthe budget track is a little bit
(14:44):
more condensed.
It also commences in Januarybut it concludes in June and
that's actually kind of acritical piece as we talk a
little bit about what's beenhappening.
That literally just happened.
So we just concluded the budgetprocess which again is much
more accelerated.
There is a budget releasedevery year.
(15:05):
It is not a two-year budget, itis a single-year budget and our
fiscal year starts July 1.
But then again, as you'readvocating via the budget
process, you're also advocatingvia the legislative process and
to give you a flavor of kind ofhow it works, in California it
is not uncommon to see about2,000 bills introduced in a
(15:28):
single year.
So there's a lot of policy workthat you've got to track and
monitor.
Interestingly enough, up untilthis year, the number of
cannabis bills was overwhelmingand I certainly think that kind
of speaks to a lot of thechallenges we have.
If you've got a lot oflegislation, you're clearly
(15:50):
trying to address a lot ofdifferent issues.
Up until this year, I wastracking anywhere between about
35 to 60 bills that directlytouched cannabis, and I'm not
even talking about indirectissues around.
You know worker protections oryou know different business
(16:11):
related issues.
These were actual billsaffecting cannabis.
So it's a very, again, robustprocess.
It's a very complex process andthere's just a lot of players
and I should also note there'swell over 2,000 lobbyists as
well.
So it's just a lot of-.
AnnaRae Grabstein (16:31):
But not all working on cannabis.
Amy O'Gorman Jenkins (16:32):
No, no, no , not all working on cannabis, I
just mean, in general, you canhave in excess of 2,000
lobbyists registered at anygiven time and so, again, you
have to compete for attention,attention with legislators,
attention with policy staff,attention with budget staff.
(16:53):
So it's a very complex process,it can be very intimidating,
but yeah, that's kind of ahighlight or an overview.
And yeah, that's kind of ahighlight or an overview.
AnnaRae Grabstein (17:04):
Yeah, it's really helpful.
I think so many people don'tlearn how the sausage is made
until all of a sudden it reallyaffects them At least, that was
my own process is that I didn'tunderstand how policy was made
in Sacramento until I wasrunning a business that was
trying to affect that policy,and then I was forced to.
(17:25):
I think we should now talkabout taxes, because this is the
hot topic.
It's, I'm sure, what all of ourlisteners want to hear from you
.
Ab 564 is legislation that ismoving through the Senate this
week.
It's already passed through theassembly.
Why don't you give us anoverview of what's been
happening with Californiacannabis tax, where we are,
(17:48):
where we're going and whatyou're fighting for?
Amy O'Gorman Jenkins (17:49):
Yeah and thank you.
And just to give people kind ofan overview and I'm sure most
of your listeners are quitefamiliar with the state of the
industry but legal cannabissales have dropped 30% since Q2
of 2021.
We've got, you know, 22%decline in excise tax collection
.
We've got revenue forecaststhat are continually on the
(18:12):
decline in the state and theseare forecasts that are projected
by the State Department ofFinance and others.
And we just saw the largestdecline in excise tax collection
in a single quarter.
We dropped 11% just Januarythrough March.
So the state of the industry ispretty dire right now and I
(18:32):
don't think I have to tell youthat and I probably don't have
to tell your listeners that.
So, as we went into this year,taxation and the cannabis tax
rate was really the top priorityand that was primarily due to
two factors One, just thegeneral state of the industry
the industry is in decline buttwo, the fact that we were
(18:55):
facing an automatic tax hikethat actually just went into
effect last Tuesday, july 1.
We went from 15% to 19%.
That's just the state cannabisexcise tax.
While that may seem small, thatrepresented a 25% increase that
would be paid directly byconsumers and patients.
(19:18):
So, going into January.
That was what we were facingand so we, as I previously
mentioned, we strategized anddecided to pursue two tracks.
So first the policy track andwe introduced AB564.
But, as I mentioned, that isnot a track that would conclude
(19:42):
on July 1, meaning that we wouldnot avert the tax increase.
But it's so.
That was a policy bill that wasintroduced and then
simultaneously we fought to, youknow, advocate for a budget
track which would have avertedthe tax hike entirely.
So that was kind of the initialstrategy.
(20:03):
So we were kind of marchingalong.
Ab 564 was, and has continuedto be, on a very positive
trajectory.
As you indicated, anna Rae, itpassed the assembly 76 to zero,
which is just unheard of.
We're talking about a very,very new legislature.
By the way, 70% of the assemblyhas been there less than four
(20:28):
years, so a lot of new faces.
We were still able to pass thatdespite tremendous opposition.
But again, all the while wewere trying to negotiate what
was in the Haney bill into abudget bill and thought we were
going to be successful.
And in fact I will say and Iknow I said this to you guys
(20:50):
privately I was literally beingcongratulated by budget
committee staff prior to themwalking into negotiations, I
knew what the budget bill numberwas going to be.
I knew what the budget billnumber was going to be.
I knew what the language lookedlike.
We thought we were all in theclear and then, for whatever
(21:12):
reason, behind those closeddoors, negotiations blew up and
within several hours time I wasinformed, just a week before the
new fiscal year, that we wereunsuccessful, ultimately, in
getting the tax freeze in thebudget.
So, fortunately, we do have ourplan B, and that is the Haney
(21:36):
bill, and that is what we'refocused on now that we were
unsuccessful with the budgettrack, which, again, I can
elaborate on.
So, yeah, ab 564 would revertthe tax back to 15 for at least
five years.
We wanted it to be longer, butI can get into all those details
too if you're interested.
Ben Larson (21:56):
I want to double click on the budget negotiations
a little bit, to the extentthat you're comfortable, Because
something that we hear in DCespecially right is that hemp is
kind of like this lower levelcannabis same, you know, but it
never rises, and so when we talkabout negotiations in DC, it's
usually just a chip that's, youknow, often easily given up on
(22:20):
in Sacramento.
Or was it actually the tax thatwas being negotiated?
Is that the negotiation thatitself blew up?
Because it sounds like, if itpassed with such resounding
support that that would havebeen reflected and it would have
been protected in saidnegotiations.
Amy O'Gorman Jenkins (22:39):
That is what we thought as well, and I
should say, without trying tocreate any confusion, oftentimes
you run a policy bill just totake the temperature of the
legislature.
So when it passed the Assembly76 to 0, we thought, wow, we've
got all the support.
What we didn't anticipate wasthe Senate's reaction.
(23:00):
So the Senate who, you know.
We didn't work as hard becausethe policy bill was moving
through the assembly.
The Senate, you know, waslargely responsible, in all
candor, for the deal blowing up,and the word I got was that we
didn't work, the Senate, hardenough, we didn't have enough
Senate champions.
(23:21):
And so at the tail end of whatare called third party
negotiations, when you'renegotiating budget language
between the assembly, thegovernor and the Senate, it was
basically the Senate that saidyeah, no, we don't, we're not,
we're not willing to support theinclusion of the tax freeze in
the trailer bill.
And so, absent all threeparties agreeing, it blew up.
(23:45):
And so now we are in the Senatewith AB 564, hoping that in the
last two weeks or so sincethose negotiations blew up, we
have made enough of an impact tomove our policy bill through
the Senate process, and thatfirst hearing in the Senate
(24:06):
occurs tomorrow morning.
AnnaRae Grabstein (24:07):
Wow.
So, if you take his words atface value, governor Newsom is
supportive of tax reform for thecannabis industry and largely
in support of bolstering thelegal cannabis industry.
However, this budget option tosave the cannabis tax issue
(24:28):
failed.
I look at what's happening inDC and how Trump seems to be
really effective at pushingaround the Senate and Congress
and his whole entire coalition.
Is the Senate not listening toGovernor Newsom?
Does he not have the power?
Are the power dynamicsdifferent, like what is going on
?
If Newsom supports this effort,why isn't it happening faster
(24:51):
or at some accelerated kind ofemergency pace to get these
businesses the help that theyneed right now?
Amy O'Gorman Jenkins (24:59):
Yeah, very well said.
I appreciate the question.
So, as I previously stated wayback, there's so many competing
interests.
So one of the big policyobjectives going into budget
deliberations was CEQA reform tobuild more affordable housing
in the state.
So there's a whole host ofother issues film tax, credit
(25:22):
extension.
So all of these differentpolicy objectives that you know
were prioritized and so I don'twant to suggest or speak or
suggest in any way that thegovernor did not prioritize
cannabis.
The fact that he went on record,you know, kind of the final
hour of negotiations where westill had a little bit of a
(25:45):
chance to get this slipped intoa trailer bill the fact that he
went on record.
You don't typically see that.
So I have to say that wasgreatly appreciated.
But to your question aboutbeing able to kind of strong arm
or nudge the Senate, I thinkthat the calculation when he put
(26:07):
out that news release so it wasreported in SF gate and
elsewhere I think that wasreally the nudge that he thought
would would get us over thefinish line and it was certainly
something we celebrated amongstthe lobby core.
It's like you don't again, youdon't see the governor way in,
but he very clearly said you.
You get something to.
You get a cannabis tax freezeor a reduction to my desk.
(26:30):
I will sign it Kind of.
Another way to answer yourquestion, anna Rae, is the way
the budget process works.
Yes, the governor can weigh inand try to push, generally
speaking, but our budget processdoes require all three parties
to agree and, from what Iunderstand, there was a fair
amount of nudging and trying topush the Senate to accept this
(26:55):
deal and they were justultimately unsuccessful.
AnnaRae Grabstein (26:59):
And this is not a party line type of a thing
.
I mean, these are Democratsversus other Democrats versus
other Democrats, mostly right.
Amy O'Gorman Jenkins (27:07):
Yeah.
So third party negotiationsinclude, yeah, the leadership
and the assembly, the leadershipin the Senate and then the
governor's office, and inCalifornia it's Democrats, it's
Democrat, democrat, democrat,yeah.
Ben Larson (27:21):
Okay, so well, we we seeded some ground on on the
budget, but we have this billthat that seems to have broad
support and and we will knowcome August, maybe September,
whether that bill passes.
What does the aftermath looklike if that does pass?
You know when?
When, when could we see thetaxes reduced back to the goals?
To get it reduced back to?
(27:41):
The goal is to get it reducedback to 15.
Amy O'Gorman Jenkins (27:43):
15, yes, and I would say on that piece
that's actually a conversationthat is happening in real time.
So the way the bill iscurrently written, it's a tax
levy.
It would take effectimmediately upon signature and I
think that is certainly from anindustry perspective.
We want the tax to revert backto 15% as soon as possible.
(28:06):
Frankly, we want it lower than15%.
We can talk about that.
The challenge with that is howyou avoid operator error, if you
will, and that applies to boththe state and the industry
itself.
So if the tax reverts back to15, kind of mid-quarter, there
(28:30):
are chances that you will remitan incorrect amount.
The California Department ofTax and Fee Administration also
has to adjust their systemsaccordingly.
So back to your question.
There is a lot of discussionabout whether we have to wait
and not have this take effectthe day of signature but have to
(28:52):
include a date certain, andthere is some speculation that
that will be raised during thecommittee deliberations tomorrow
and the timeframe that's beenfloating out there and again
this is all happening in realtime is October 1.
That would be the beginning ofQ4, the fourth quarter, and that
(29:14):
would be kind of a clean way toreduce the tax back.
The concern obviously I have iscan the industry wait that long
?
Because every day, you know,consumers are seeing that 20%
tax hike and you know my biggestconcern is are we losing
consumers and will we get thoseconsumers back if we have to
(29:36):
wait, you know, again tillOctober 1?
And so those are theconversations that we're
deliberating right now in realtime and will be, in all
likelihood, during tomorrow'spolicy hearing.
AnnaRae Grabstein (29:48):
Yeah, this tax bill doesn't seem like it's
good enough to me.
I'm just going to be honesthere 15% you went over the data
that we're seeing reduction inthe revenue that's coming in the
industry is hurting.
Why didn't the industry take amore aggressive approach to this
bill and try to lower the taxesbeyond just keeping them where
(30:13):
they have been for the past fewyears and averting the tax hike?
Amy O'Gorman Jenkins (30:17):
So a couple reasons for that.
So, first off, I agree with you100% and I was recently asked
by a publication as to whatwould be a preferred model, and
I always reference Michigan,which has a quarter of the
population of Californians andCalifornia's and sells more
cannabis than we do legalcannabis in the state, and they
(30:39):
have a 10% excise tax, a 6%sales tax, no local taxes.
So, yes, I would much prefer tobe exploring a very significant
tax reduction.
Going into this year, there wasa lot of uncertainty.
You had the fires in LA, youhad a projected budget shortfall
of around $14 billion.
(31:02):
You had uncertainty at thefederal level.
We continue to have a verysignificant amount of
uncertainty, by the way thatfederal money makes up about a
third of California's totalstate budget and we are
expecting to lose a considerableamount of that.
There were a lot of factors thatwe had to weigh going into this
(31:22):
year and then also looking at avery new legislature.
As I indicated, 70% of theassembly has been here less than
four years.
So in kind of exploring allthose factors, talking to key
policymakers that are ourfriends and champions, the
(31:43):
bottom line was there was noappetite to pursue anything but
this tax freeze and avert that19% hike.
So it was a bitter pill for theindustry to swallow.
There were a lot of internaldebates and discussion.
People were not happy, but itwas what we thought was
politically achievable at thetime and I think, as we're now
(32:06):
going through these policydebates in the Senate, it was
probably the right calculation.
We do have a significant amountof opposition to this bill to
564.
We're not, despite the positiveoutcome in the assembly.
We are competing with a lot ofdifferent interests who strongly
(32:28):
object to even reverting usback to 15.
Ben Larson (32:32):
Do they object to it because they just dislike the
industry, or do they just notunderstand economics?
Amy O'Gorman Jenkins (32:39):
They do not understand economics.
They do not understandeconomics and, frankly, it's
infuriating to me.
I had to sit with with some ofthese folks and and and I don't,
you know, certainly havenothing disparaging to say about
the organizations, but it'sit's largely the beneficiaries
of of the cannabis tax revenueand they, they truly believe
(33:03):
that if you raise taxes, you'regoing to realize more revenue.
And the numbers and the data, asyou just noted, ben, is not
there we're looking at about a38% tax on cannabis right now,
when you factor in the 19% pluslocal taxes, plus the sales and
(33:23):
use tax, the 19% plus localtaxes plus the sales and use tax
.
Consumers are not interested inpaying that high amount in taxes
, particularly in this economy,but nonetheless, these
beneficiaries are convinced that, essentially, by not allowing
this 19% tax hike, theirnarrative right now is that you
(33:46):
are shortchanging us to the tuneof $180 million annually and
you are supporting corporateprofits, corporate cannabis, to
the detriment of children andthe environment.
That is their frame and that iswhat I am dealing with.
And they are in the building,that Capitol building, every day
(34:08):
, every single day, they arelobbying and, to put that in
perspective, there's really onlya handful of cannabis lobbyists
left.
We are under-resourced as anindustry, and for good reason.
We just talked about the data,and for good reason.
We just talked about the data,but I am in there.
It is probably one lobbyist forevery 610 beneficiaries of the
(34:30):
revenue that are running around,and these are you.
Very difficult to make thiscase when you've got those
different interest groups thatyou're competing with.
AnnaRae Grabstein (34:51):
I saw a quote from you.
I thought it was really wellsaid and I don't have it in
front of me, but you basicallysaid that we're not debating the
use of the cannabis tax revenueand we support the good causes
that the money is going to.
It's just that we need to getthis in order.
We need to fix it so that thebusinesses can keep paying into
these tax funds.
So we're at this criticaljuncture.
(35:11):
You're one of only a fewlobbyists.
What is the call to action foreverybody of what's next to do?
Most of our listeners areprobably on your side here, so
you're talking to a group offolks that want California
cannabis to succeed in some way.
What's next?
What's the coalition look like?
What do you want people to do?
Amy O'Gorman Jenkins (35:31):
Well, we have been asking members of
industry, patients, consumers,ancillary businesses that
support the cannabis industrycontact your senator, contact
your state senator.
That is the most important andimmediate call to action.
I don't, frankly, believeeverything I'm hearing from the
(35:52):
Senate, that we weren't loudenough, that we didn't speak
loud enough.
But okay, if that's the case,then we all need to be calling
our senator and communicatingthe importance of this bill for
the state of the industry, atleast preserving the state of
the industry.
We are being taxed out ofexistence currently,
communicating that message and,as I said before, really
(36:14):
personalizing it.
So when you call your senatorand you say you represent me and
I am ex-business and I employthis many people, that resonates
, that's meaningful for them.
They remember that.
They remember that far morethan what I'm saying.
So that would be the first thingI would say in terms of call to
action.
The second would be, again, tosupport one of the handful of
(36:36):
associations that are lefttrying to advocate for this
industry.
I know, again, budgets aretight, but the associations are.
Again, we're the largest, butwe're all still struggling.
We all still have shoestringbudgets.
We don't have the resourcesthat are necessary, we don't
have the lobby support.
So that would be a secondaryask, call to action that I would
(36:59):
urge listeners to consider.
All right, folks urge listenersto consider.
Ben Larson (37:02):
All right, folks, call your senators, join your
associations.
We'll drop a link to Kakoa, amy, I think we've really covered a
lot of what's happening rightnow.
I do want to kind of suspendthat for a bit and start
thinking about the future.
Say we get this optimisticallyput into place, taxes go back
down to 15%.
(37:23):
To Anna Rae's point we have alot more to do to kind of make
this state viable and let itlive up to the opportunity that
it once was like the largesteconomy, the largest cannabis
economy.
How do we get there?
Like, what is the next step?
Like?
I've heard new voterinitiatives that could cost $40
(37:43):
million or something like that.
Is that the way?
Is there a way we iterate ourway through this?
At what?
At a what seems like a snail'space?
Give us some hope.
Amy O'Gorman Jenkins (37:53):
It has been a snail's pace.
I, I, I don't disagree with youand I'm sure there's probably
some listeners out there whothink, well, what the hell has
she been doing for the last 10years If she's been lobbying for
the industry?
I mean, look at the state ofthe industry.
And I and I and I, I reallyappreciate that.
And what I will say to you isthat Prop 64 imposed a lot of
(38:15):
limitations from the standpointthat it's a voter approved
initiative and the legislaturehas very little say in terms of
how it can shape the initiative.
So people have real concernsabout local control.
57% of cities and countiesstill ban cannabis retail.
(38:36):
We can't change that.
That would require going backto the voters.
Even the tax structure.
I mean, we've been kind ofchipping away at the tax
structure, but there arelimitations in terms of what we
can do.
In fact, even with the Haneybill potentially passing and
getting signed, there's threatsof lawsuits.
So that all sounds dismal.
(38:58):
But what I will say is, becausethe legislature has acknowledged
, and in some cases verypublicly acknowledged, its
limitations, there is a coregroup of us that are really
trying to think through what wecan do in terms of addressing
some of these real coreimpediments, like local control,
(39:18):
for instance, and that doesrequire another initiative.
And the thing for people toknow is that you can put an
initiative on the ballot as alegislature and that bypasses
that signature gathering processwhich is one of the more costly
elements to the initiativeprocess.
So what the legislature can dois a Senate constitutional
(39:40):
amendment or an assemblyconstitutional amendment.
An example of that was Prop 1,which was passed a year ago,
march.
So the legislature has thecapacity to do that and and
again, recognizing theimpediments that they have to
really affecting positive changefor this industry.
(40:00):
We are talking about how we canmaybe draft a constitutional
amendment and and move itthrough the legislature and get
it on the ballot.
And we're having those.
We were having thoseconversations at the beginning
of the year.
We were continuing to havethose conversations and frankly,
it's a personal goal andobjective of mine is really
(40:21):
trying to achieve again sometruly meaningful reform for the
industry.
But that's going to take againgoing back to the voters.
So that's the process that I'mreally wanting to focus on and
again is maybe potentially doingit next year.
I think we've unfortunatelybeen caught up in these tax
conversations which have reallydominated debate or discussion,
(40:44):
but again I would like to focuson a constitutional amendment,
working with some key allies inthe legislature and we do have,
despite our setback with thebudget, we do have many that are
really interested in this topicand wanting to work with us.
Ben Larson (40:59):
Yeah, well, the other conversation and the other
bill that's kind of on thedocket is AB8.
And that really kind ofaddresses the influence of hemp
and cannabis and that's a reallyunique conversation in
California as well.
I feel like we're embarking ona whole new episode by
introducing this.
I'll be your contact.
Yeah, I don't know how we keepit lightweight.
(41:21):
As we talk about the future andwe talk about saving the
cannabis industry, we can'tignore what is happening all
around the nation with theconvergence of hemp and cannabis
, and that's a uniqueconversation in here in
California From your vantagepoint.
How do you imagine that kind ofbeing addressed as we get into
2026, as we look at AB8 andmaybe just a very quick primer
(41:46):
on what that's looking to do?
Amy O'Gorman Jenkins (41:48):
AB8 is really kind of a reaction to
what we saw happening inCalifornia.
So what AB8 does is itestablishes a very comprehensive
regulatory and enforcementframework around intoxicating
hemp products, so hemp productscontaining THC and the hemp
(42:11):
industry is not pleased with thebill currently.
But again, I would suggest thatAB8 is kind of a reaction to
really the proliferation ofthese products and without any
real guardrails.
Okay, so whether you supporthemp or you don't support hemp,
hemp products were readilyavailable and sold in total wine
(42:32):
and more up until recently, andso that really infuriated the
cannabis industry, becauseobviously there's very tight
regulatory guardrails aroundwhere we sell cannabis products.
So we started to see thisdirect competition.
So AB8 is really kind of astrong reaction to the you know
the proliferation of theseproducts and the availability of
(42:55):
these products.
So it really has.
It essentially says if you area hemp operator and you want to
sell these products in the stateyou are, you are subject to all
the rules governing cannabis,which means you you have to sell
your products and dispensaries,you have to adhere to all of
our child packaging and labelinglaws.
(43:15):
You've got to participate inthe track and trace system.
The way I would maybe moresimply kind of frame.
It is our governing statutes.
Our laws would governcannabinoids, essentially
intoxicating cannabinoids, andso you wouldn't really
distinguish between hemp andcannabis.
That bill is also moving.
It's also being heard tomorrowin the same committee, so it's
(43:39):
going to be an interestingpolicy discussion.
We'll talk about the tax bill.
We'll talk about AB8.
Longer term and you know thiswell, ben there's a lot of
discussion about meetingconsumers where they're at and
supporting a low dose channeloutside traditional dispensaries
(44:00):
.
Right now that's being met withpretty fierce opposition from
cannabis retail the cannabisretail community as well as
small farmers retail thecannabis retail community as
well as small farmers.
But I think that's going to bean ongoing debate and discussion
, even if we're successful atpassing AB8 this year, that the
hemp industry and the number ofproducts are not going away.
(44:24):
So we can try to regulate itunder our cannabis framework.
But I think that discussion isgoing to be ongoing in the next
couple of years.
Ben Larson (44:31):
Is there a particular format that gets less
pushback?
Amy O'Gorman Jenkins (44:38):
Not currently.
I know where you're going.
I would say probably the mostactively engaged segment of the
hemp industry is the beveragecomponent.
So the low dose beverage groupshave been very actively
lobbying for a low dose channeloutside dispensaries for a whole
host of reasons.
(44:59):
A lot of folks would argue thatyou know our system and our
system of distribution and ourregulatory requirements don't
really fit the beverage productline.
So I think that conversation isgoing to continue again, even
if we ultimately pass AB8.
AnnaRae Grabstein (45:22):
What occurs to me in this discussion around
AB8 and what you're bringing upis some of the frustration that
dispensaries have had with theproliferation of cannabinoid
products outside of theregulated channel is just that
if Prop 64 had created a healthybusiness environment and we
(45:43):
weren't having to spend timetrying to just keep taxes where
they are instead of rising, andthere wasn't an overall decline
in performance of the businessesthat have invested so heavily
in this space, that there wouldbe a more easy path for people
to collaborate, for businessesto find alignment and
(46:03):
opportunities to broaden aconsumer access discussion, as
opposed to what we're doingright now, which is everyone is
just fighting to survive, and itfeels like this fight to
everyone has to protectthemselves and protect their
little fiefdom, because they'rebarely holding on, and so my
hope is that some of theseincremental steps will give
(46:26):
people some runway andconfidence that the industry is
moving in the right direction sothat there can be collaboration
to figure out a way to bestserve consumers, which is
ultimately what is going to stopthe proliferation of the
illicit market.
And that's like what hemp hasdone is created like a third leg
of of competition for for thesecannabis operators.
(46:51):
It's like there was the illicitmarket and now there was the
intoxicating hemp that got addedoutside of it and it just
became too much, I think, fordispensaries to to be able to
handle, and so that nobody wasable to come to a problem
solving place to figure out awin-win and that ended up with a
ban.
Which space to figure out awin-win?
(47:13):
And that ended up with a banwhich, you know, depending on
where you land, you can see itas positive or negative, but I
think that it isn't servingconsumer access for sure.
Amy O'Gorman Jenkins (47:21):
I think that well said, very, very well
said, and I couldn't agree withyou more.
And I will say too that youknow, one thing I didn't share
about AB8 is that it doesprovide a path to integrate hemp
cannabinoids into cannabisproducts.
So CBD, cbn, cbg, you know, andin some cases limited amounts
(47:44):
of THC.
That's kind of step one.
But I also think you know,unfortunately, to your point,
given the condition and thestate of the industry, we were
well on a path at one point toreally having this broader
conversation about how weregulate cannabinoids.
And hemp was kind of seen, evenjust three years ago, as kind of
(48:06):
this way to chip away at ourframework.
So again, hemp is a crop, we'rea cannabis product, and so we
kind of looked to the hempindustry as being like what we
had aspired to be as cannabis.
And then, to your point, hempkind of came in.
There was this influx, massiveinflux of products, and then it
(48:28):
created this immediatecompetition at a time when the
legal cannabis industry wasreally struggling.
So, unfortunately, to yourpoint, now everyone's kind of
back in this protectionist modeand it's it's hemp versus
cannabis, and I think that'sreally unfortunate.
So I think there is a place intime to have those broader
conversations, but as as long asthe house is burning down and
(48:52):
that is legal cannabis I thinkthose conversations are a ways
away.
Ben Larson (48:56):
Yeah, that makes sense.
Well, Amy, I really appreciateyou coming on and sitting on the
hot seat.
It's been really informative.
As we approach the end of theshow, I would love to hear your
last call.
It's our time for our guests totake the mic and give a plug,
give a shout out.
I think I know what it might be, but we're going to give you
(49:18):
the opportunity.
Say whatever you want, cannabisrelated or otherwise.
This is your moment.
Amy O'Gorman Jenkins (49:24):
Oh, gee, and you know it's so funny.
I remember there was somethingI forgot to do was figure out
what my last call was going tobe.
I think what?
What I just maybe just torestate, um, you know, just
really encouraging thiscommunity, this, this wonderful,
unique community that iscannabis, to make your voices
(49:44):
heard.
I, you know, I, that is myappeal.
My last call to all of you isthere is a place for you to
engage and advocate here inSacramento.
Again, you don't have to workwith me, but, but you know, I
think we will be successful,more successful, when, again,
(50:06):
our policymakers can see howcannabis is, you know, woven
into the fabric of their owncommunities, whether it's you
being a consumer, a patient, abusiness owner.
We need to get there, andthere's a lot more work to be
done, and so your voice matters,your voice is important and it
(50:28):
will dramatically contribute tothe work that we're doing up
here.
So, hopefully, this is anentree into much more engagement
on the part of the broadercannabis community that I am
honored to represent.
But, again, I need to hear andsee more of you.
So that is my call and my plea.
Ben Larson (50:47):
Awesome.
Well, thank you so much.
Thank you again.
Thank you for the decade plusof work that you've put into
this industry, no matter whatside of the table you're on in
any given conversation.
Yeah, but the passion, thededication, it's very much
appreciated.
So thank you.
Amy O'Gorman Jenkins (51:02):
Thank you, and thank you for your time and
for having me today.
Ben Larson (51:05):
Absolutely All right .
Anna Rae, do you feel a littlebit more in the know and what's
going on in Sacramento?
AnnaRae Grabstein (51:12):
yeah, I'm hopeful, uh, I'm hopeful good
let's, let's, save this industryin the state.
California's got to win it.
Ben Larson (51:18):
We right, we have to absolutely, uh, we have our
work cut out for us, though.
All right, folks, what did youthink?
Do you feel like you know moreabout what's going on in
Sacramento?
How are you going to getinvolved?
Who are you going to back?
It is a race to September herein Sacramento.
Thank you to our teams atVirtosa and Wolfmeyer.
(51:39):
As always, we couldn't do itwithout you guys.
Thank you to our producer, ericRossetti.
I feel like we're falling intoa groove.
Tuesdays is our new recordingday, hopefully putting out the
recordings by Thursday.
If you enjoyed this episode,please drop a review on Apple
Podcasts, on Spotify, whereveryou listen to your podcasts, or
(52:00):
maybe YouTube.
Maybe you can subscribe to uson YouTube.
As always, folks stay curious,stay informed and keep your
spirits high Until next time.
That's the show.
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