Cannabis Isn’t Red or Blue. It’s a Small Business.

Burn After Reading The 30-second intel for operators and investors ⏱ 0:30

At IgniteIt in Los Angeles, Republican gubernatorial candidate Steve Hilton argued California's cannabis taxes are too high and that lowering them could help licensed operators compete with the illicit market, according to this guest opinion column.

• Operators: Hilton backs easing burdens on licensed businesses while doing more against illegal operators. Local bans and stacked local requirements remain a barrier, and he says he would engage cities and counties directly rather than override them.
• Investors: Tax structure and illicit-market enforcement are framed as the keys to licensed-market competitiveness. California's rollback of its recent excise-tax increase shows the tax debate crosses party lines.
• Do now: List the state and local costs that most squeeze your margins, with figures, and share them with candidates and local officials who say they want to hear from operators.

Short on time? You’re done. Want the numbers?Keep reading ↓

By Laurie Parfitt – Founder and CEO, LKP Impact Consulting – Fractional CMO

When I sat down with Steve Hilton at IgniteIt in Los Angeles, the political storyline was obvious. Here I was, someone who has spent years working in cannabis, sitting down with the Republican candidate for governor of California in front of a room full of cannabis operators.

But pretty quickly, the conversation stopped being about Republicans, Democrats, or even cannabis.

It became a conversation about small business.

And that is a conversation we need to have a lot more often in this industry.

Hilton talked about his background as a small business owner and his experience running businesses, including restaurants. He spoke about what it means to deal with permits, taxes, employees, regulations, and everything else that makes running a business difficult before you’ve sold a single product.

Anyone who owns or operates a cannabis business in California knows exactly what that feels like.

Cannabis businesses employ people. They sign leases. They make payroll. They hire accountants, lawyers, technology companies, marketing agencies, and countless other vendors. They pay taxes and licensing fees. And because they’re cannabis businesses, they do all of that while navigating regulations and restrictions most other businesses never have to think about.

At some point, we need to stop treating cannabis as a political issue first and a business issue second.

Doing It Right Shouldn’t Put You at a Disadvantage

One part of our conversation really stuck with me.

Hilton told a story about visiting a small shoe store in Los Angeles owned by a couple who had been there for 14 years. They were paying rent, taxes, and licensing costs and dealing with the permitting process. Meanwhile, they were watching customers buy similar products from street vendors operating right outside their door without many of those same costs.

As I listened to him, I immediately thought: That’s cannabis.

California’s licensed cannabis operators have spent years doing what they were told to do. They got licensed. They built compliant facilities. They tested their products. They followed packaging rules. They paid taxes. They created jobs.

And then we asked them to compete against an illicit market that doesn’t have to do any of those things.

That doesn’t make sense.

Hilton talked about attacking the problem from both sides: making it easier for licensed businesses to operate while doing more to address illegal operators.

Whether you’re a Republican or Democrat, I don’t understand why that should be controversial.

If we’re going to create a legal market, then we have an obligation to give the businesses operating within it a reasonable chance of succeeding.

We Have to Be Willing to Admit When Something Isn’t Working

Taxes were obviously a big part of our conversation.

Hilton argued that California’s cannabis taxes are too high and that lowering them could make legal cannabis more competitive with the illicit market.

You would expect a Republican candidate to advocate for lower taxes.

What was more interesting was the discussion about Democrats in California making a similar economic argument around cannabis: if you tax something so heavily that consumers move outside the regulated marketplace, you haven’t accomplished what you intended.

California’s decision to roll back its recent cannabis excise-tax increase illustrates how this issue can cross party lines. The debate isn’t simply about whether taxes should be higher or lower. It’s about whether the structure of the legal market gives licensed operators a realistic chance to compete.

This is exactly where I think we need to get away from party politics.

I don’t care who came up with the idea.

Does it work?

Does it help legitimate businesses compete?

Does it protect consumers?

Does it create a healthier legal marketplace?

If the answer is yes, let’s talk about it.

You Don’t Have to Agree on Everything to Work Together

We also talked about local control, and this is where the conversation got more complicated.

California has communities that don’t allow cannabis businesses at all, while others pile local requirements on top of state regulation.

Hilton believes strongly in local control, so I pushed him on that. If local governments are creating some of the barriers hurting legal cannabis businesses, how does a governor who believes in local control address them?

He acknowledged the tension rather than pretending it didn’t exist. His answer was that a governor can still engage directly with cities and counties, understand why those barriers exist, and try to solve problems without simply taking authority away from local government.

I liked that part of the conversation because that’s how this should work.

We aren’t all going to agree. I’ve been in cannabis long enough to know that.

But we can get into a room, talk about what isn’t working, and figure out where there is common ground.

Cannabis needs Democrats at that table. It needs Republicans. It needs regulators, law enforcement, local governments, operators, ancillary businesses, and consumers.

We need people who are willing to listen to each other instead of deciding that someone’s party affiliation tells us everything we need to know about what they think.

Cannabis Should Have the Opportunity to Be a Normal Business

At the end of our conversation, I asked Hilton what he would want California’s cannabis industry to look like four years into a Hilton administration.

His answer was simple.

He wants cannabis to become a larger, stronger industry that isn’t pushed into the shadows or treated as something inherently different from the rest of California’s economy. The word he kept coming back to was normal.

That resonated with me.

I’ve worked in traditional consumer packaged goods. I’ve worked with Fortune 500 companies. I’ve worked with startups. And I’ve spent years in cannabis.

Cannabis businesses don’t need politicians to love cannabis.

They need policymakers to understand business.

They need a tax structure that allows them to compete. They need regulations that protect consumers without making it impossible to operate. They need enforcement against businesses that ignore the rules. And they need people in government who are willing to listen when the industry tells them something isn’t working.

I don’t care whether the person bringing that idea to the table has an R, a D, or anything else next to their name.

California has some incredibly talented entrepreneurs who have put everything into building businesses here. Cannabis is part of that community.

We should be doing everything we reasonably can to help good businesses succeed.

That starts with getting the right people around the table, leaving some of the politics at the door, and getting to work.

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Editor’s Note: This guest opinion column reflects the views of Laurie Parfitt following her conversation with California gubernatorial candidate Steve Hilton at IgniteIt’s California event. IgniteIt hosts discussions with policymakers and political candidates to examine issues affecting the cannabis industry. Participation in these discussions does not constitute a political endorsement. The opinions expressed are those of the author and do not necessarily reflect IgniteIt’s editorial positions.

About the Author

Laurie Parfitt is the Founder and CEO of LKP Impact Consulting. With more than 20 years of experience in consumer-packaged goods and cannabis, she is a frequent industry speaker, moderator, and thought leader focused on business strategy, brand development, and the growth of emerging industries.

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The conversation about building a stronger, more competitive cannabis industry doesn’t end in California. On November 18, IgniteIt brings industry leaders, policymakers, investors, and operators together in Washington, D.C., for the Cannabis Capital & Policy Summit. Join us as we continue exploring the policies, business challenges, and opportunities shaping the future of legal cannabis, and how the industry can move forward through meaningful dialogue and collaboration.