Flow Cannabis Co-Founder Calls for Tax Revolt

Flow Cannabis co-founder Michael Steinmetz this week called for a summer tax revolt to force California legislators to reconsider a looming state tax hike on cannabis cultivation. California is raising its cannabis tax again despite state budget projections of a $31 billion surplus, The Sacramento Bee reported.

Michael Steinmetz of Flow Cannabis Co.

Steinmetz threatened in a Medium post to withhold his company’s taxes unless Governor Gavin Newsom and the California legislature adjust marijuana regulations prompting such tax increases by July 1, 2022.

Flow Cannabis sells products under the Flow Kana cannabis brand. Steinmetz called on other cannabis industry leaders to join him in this effort.

“We simply reply: we’re not going to pay,” Steinmetz wrote.

California has both local and state excise taxes on cannabis, which are paid by buyers, while customers pay a sales tax and growers pay a cultivation tax.

Steinmetz called for the elimination of the cultivation tax and for a three-year tax holiday for the cannabis excise tax. He co-authored the Medium post with his wife Flavia Cassani.

The Flow Cannabis founder claimed that the four levels of taxation have turned the “cannabis supply chain … into an ICU of distressed assets … operating in perpetual survival mode as we all collectively wait for an injection of lifesaving regulatory and legislative changes to simply have a system that works.”

But Steinmentz told The Sacramento Bee that a tax revolt was a last resort and that he was willing to work with Newsom and legislators.

“By eliminating the cultivation tax, and allowing a three-year grace period for the excise tax, we can give oxygen to the supply chain, which ultimately lowers the price point on the shelf and makes legal products more competitive with the illicit ones, which in turn grows the tax base,” he said.

“We are 100 percent committed to working alongside Governor Newsom and the legislature. With that said, we are [also] prepared for the unfortunate possibility of continued inaction.”