Co-Founder of Flow Cannabis Calls For Tax Revolt In California, Says Regulatory System 'Unworkable'

Michael “Mikey” Steinmetz, co-founder of Flow Cannabis Co, which makes the Flow Kana cannabis brand is threatening to withhold his taxes unless California Governor Gavin Newsom and the state Legislature adjust marijuana regulations on July 1, 2022, reported The Sacramento Bee.

Steinmetz issued the declaration in an op-ed on Medium, published Monday and co-written by his wife, Flavia Cassani. Steinmetz calls for the cultivation tax to be eliminated and for the state to issue a three-year tax holiday from cannabis excise taxes.

“We are 100% committed to working alongside Governor Newsom and the legislature; with that said, we are prepared for the unfortunate possibility of continued inaction. Thus, we are also making the recommendation to our board that we refrain from paying the cultivation tax after July 1st, 2022. Our recommendation will be to place our estimated tax in escrow in good faith, and to withhold payment until we see real, actionable change. We invite our fellow California operators to join us,” said Steinmetz in the op-ed.

“We had partnered with more than 200 Emerald Triangle legacy craft farmers and grew to become Mendocino’s second-largest employer (after Costco)” Steinmetz said and then qualified “California’s entire cannabis supply chain” as “quickly becoming an ICU of distressed assets.”

Flow Kana has around 350 unique retail partners in a shrinking market of roughly 800, only 150 of whom it regularly services.

“Every other retailer is in default or on a payment plan (not because these are bad actors, but because it’s almost impossible for any of us to operate profitably under California’s broken regulatory regime). Layoffs have become the norm as we all constantly adapt and right-size to a market that is contracting every month due to a surplus of illicit operators, a dearth of retailers, a surplus of flowers and an unworkable tax structure,” added Steinmetz.

According to the letter, the “state’s licensing process is unworkable, and the regulatory framework has disincentivized operators to remain open. The regulatory system, which borrowed concepts from non-agricultural states, is set up to benefit vertically integrated operators. Our tax structure it’s creating a thriving illicit market, putting people out of business and killing what could be one of the greatest industries of California,” concluded Steinmetz.
Photo By Gina Coleman On Weedmaps