Money talks. And the cannabis industry is talking about California Lt. Gov. Gavin Newsom. Newsom has been the recipient of thousands of dollars in donations from cannabis industry executives hoping to bolster his chances to be the next California governor.
After a day of community visits and press interviews, Newsom took a seat in a hotel conference room near Los Angeles International Airport (LAX) to discuss the state of cannabis in California.
During his time as lieutenant governor, Newsom played a role in the ultimate passage of Proposition 64 in November 2016, and continues to work with constituents and local governments to continue progress.
In 2014, Newsom started the state's Blue Ribbon Commission on Marijuana Policy and campaigned to get Proposition 64, to legalize adult-use cannabis in California, on the 2016 ballot. And in 2016, The Cannabist, a marijuana news-focused vertical of the Denver Post, awarded Newsom a Pineapple d'Or trophy for his pro-Proposition 64 efforts. The award honors innovators, companies and individuals who advance technology, community, public service and education.
California voters passed Proposition 64 with 57.1 percent support.
In February 2017, after then-White House Press Secretary Sean Spicer told reporters to expect greater federal enforcement against recreational cannabis, Newsom urged President Donald Trump cooperate with states like California rather than work against them.
Over the years, the entrepreneur, whose hospitality businesses have seen much success, has appeared alongside celebrities like Wiz Khalifa and John Legend to advocate for issues of social justice, elevating his profile as a pro-cannabis politician despite the fact that he is not himself a consumer.
“… I got into this for three reasons,” he told Marijuana.com. “This was a social justice issue. This was a racial justice issue and this was an economic justice issue to me. And it is incumbent upon us to address that side of this ledger as well.”
Marijuana.com Interviews Gavin Newsom: Full Interview
As the highest-ranking elected official to support Proposition 64, you've interacted with many cannabis industry leaders, and you've seen the industry evolve over time. What role do you believe cannabis legalization will play in California?
Look, this is something no other state or nation has ever done at this scale and scope that we're about to advance. I took this on about two years prior to the initiative being placed on the ballot because I wanted us to be sober about how we processed it. I wanted us to consider the intended consequences [and]the unintended consequences.
We put together a task force, we went out all across the states. We had people on the task force who were vehemently opposed to the taxation and regulation of the adult use of cannabis, and those that were very enthusiastic and supportive.
And we made this point, and it's a point you can't repeat enough:
Legalization was never going to be and certainly has not been, an act that occurred or occurs [during]an election, or occurred on election day. It's a process that will unfold over the course of many, many years. And we're seeing that. The iteration of the application of our rulemaking, the localism that is ultimately determinative in terms of how this industry is going to be shaped, and the fact that this industry is not a top-down industry, it's a bottom-up industry.
And so it's difficult, it's a long way of saying no one really knows how this industry will look in two years, or four years, in 10 years, but one thing is certain, that we can't be ideological about how we approach the rulemaking, we have to be open argument and interested in evidence and we have to be constantly iterative, meaning we have to constantly adjust to tech, and support the industry in its evolution, support local governments in terms of the distribution of best practices, and make sure we address the needs, particularly of our small growers and small businesses that are a big part of this industry's proud past and making sure they're a part of our future.
Throughout your time with the legalization effort, cannabis farmers and cultivators have had an opportunity to share their thoughts and their hopes and concerns with you. What are your key takeaways from those conversations?
There's just fear; fear of the unknown. I mean, at the end of the day, and we've seen this in any capitalistic society, money plays an outsized role and an outsized influence in outcomes. Money buys you access, buys you influence. And there's a lot of fear, about cultivators, people, small farmers, others that have been at this for a generations that somehow they're going to be left behind, that everything they've built that actually has, you know, allowed an industry to thrive despite the black market, allowed families to thrive — not just survive — despite the black market, that all can be taken away because of restrictive regulation or, frankly, over indulgence by certain factors, or factions within the industry, that could take over the industry and dominate it.
We just have to make sure that we protect small cultivators, small farmers, protect small business, and protect, I think, the culture, not just the economy around cannabis, which I think is also something. I mean, having spent a lot of time in the community, [the culture is]really really important.
When it comes to barriers to progress for cannabis business and consumers, what are some of the biggest hurdles that California has yet to overcome?
I think the application, the implementation … the most difficult thing when we drafted the initiative and organized, we recognized in a state as large as ours, one that has 58 counties [and more than]470 cities, one size will never fit all. And we had to create a framework to support local autonomy and local decision making.
Invariably, the patchwork was going to occur, and that's exactly what's happening. The vast majority of counties are not diving headfirst in this. Cities are a little stubborn and slow. Some that have, have frankly overtaxed or overregulated. Some are participating without any fear or threat to the black market and undermining those that are participating in the right way in a regulated market. And so we're going to have a lot of work to do [to level]the playing field and to make sure we deal with the backlog of applications and to make sure we deal with the bad actors.
The whole point of legalization was to bring this industry to the light of day. And you cannot condone bad actors, people who are just taking advantage of their workers. People who are just not doing the right thing in terms of transparency. Legalization is about a lot of things, but one thing it's not about is playing by your own set of rules. Everybody has to play by a new set of rules. And so this is going to take some time. And I hear the complaints and frustrations expressed on almost a daily basis and I recognize there's going to be a lot of work to do over the next four years to move more swiftly and confidently to get more people into this legal market and to hold the bad actors accountable.
Do you feel California's current landscape is sufficient to provide access to both recreational and medical consumers?
Yeah, I mean, no. It's insufficient right now because invariably we were going to be at this point that Washington [state]was at. They had to collapse their system into a unitary system. We always knew there was gonna be this friction, this dialectic from the medical side and the recreational side and obviously the differentiation in terms of taxation and the historical nature of a medical regime that has existed since 1996 — the maturity in that space and the immaturity as it relates to the recreational side. So, there was gonna be, and not surprisingly has been, some collision in that respect.
And we're gonna have to navigate those white waters and deal with those issues in a forthright manner and, look, I feel a great sense of responsibility to making sure we do this right. I want to prove our critics wrong. I want to make sure we address the concerns real-time.
I want to make sure that the medical market thrives at the same time our recreational market thrives in a way that gets people off the streets, get rid of the corner drug dealers that don't card our kids, that don't care about the quality of the product they're selling. I want to go after the cartels. I want to make sure people that are playing by the rules are rewarded.
I want to make sure people that are seeking medical treatment, medical support, get it in a fair manner, and I want to make sure the state of California has the resources and the resourcefulness to support this industry and, to the extent that we can, influence local government and decision making so that they're moving in the right direction and not in the wrong direction.
Earlier this month we saw reports that tax revenue from cannabis sales came in lower than expected, mostly due to lack of licenses issued across the state. How would a Newsom administration work with the state and local officials to ensure more licensing pathways?
Well, first of all, I wouldn't have set the expectation so high, which is rather remarkable because we made it crystal clear that we shouldn't raise the expectations. We said that probably in five to seven years we'd begin seeing some maturation in terms of that tax revenue. We, I think, overstated. … And I think, eventually we'll have understated them.
But it's in that process of maturity that any subsequent administration, I hope — and I hope that I'm leading that effort — that we'll do justice for sort of setting the tone and setting the tone in a more honest and realistic way. Be more transparent in what we think we can achieve in the short run. Be more honest about what challenges will remain in the medium to long-term.
… There's a big backlog, and I think we have good leadership interns of those that are in the state and I think they're trying to do the right thing and I applaud them, but this is new and, again, this isn't Colorado. You go up to Humboldt and Trinity and Mendocino county at wholesale — we're producing ten times what they retail in Colorado. That's just in, you know, three counties in this state.
California truly is a nation-state as it relates to the issue of cannabis and cannabis production. And so, this is a big, big Herculean challenge for state regulators. And we're going to have to make sure they have the resources and support their staffing and support their efforts to make sure we're doing things in an efficient manner and in a timely manner.
Is there anything more you'd like to add, anything we haven't covered?
Hindsight is 20/20 on the initiative. We could've done this better, we could've done that better. … This is playing out as we expected.
I this biggest surprise is, there have been no surprises. And what I mean by that is, no one ever believed that everything would go swimmingly and perfectly. No one believed every local official would do everything right and would do the right thing and open the floodgates to, you know, local cultivation or retail establishments. It's just going to take time and people are going to go slowly, and success leaves clues.
I think this is the good news. The cities that are early adopters, they'll tax, overtax, overregulate, they'll pull back. All of a sudden other communities, counties, cities will take a look at that and say, “All right, we learned some lessons there. Let's not replicate those mistakes, let's move.”
And the reality is today very de minimis number of jurisdictions are providing access to recreational adult use and so as that matures, you're going to see, I think, some big big things happen in the next few years that will address some of the early criticisms and ultimately advance some of the principles we all promoted and I think one of those principles is wisely using the tax revenue and making sure we invest it back in to communities that were disproportionately impacted by the war on drugs.
To make sure we do justice particularly to the African-American community as it relates to small business loans and to make sure that this industry doesn't just look like me. It cannot, we cannot let that happen. If we do, we've failed.
And also because I got into this for three reasons. This was a social justice issue. This was a racial justice issue, and this was an economic justice issue to me. And it is incumbent upon us to address that side of this ledger as well. To continue our effort to get more people out of county jail. Thousands have been either released or are in the process of being released since we passed the initiative.
And to get those one-plus-million people who are eligible to get their records expunged to make sure we do that and to make sure they're following examples like the District Attorney in San Francisco and other more enlightened district attorneys to advance and scale those efforts. That is something, if I'm the next governor, I'm going to be aggressively advancing.
I don't just see this from the side of economic opportunities. I really see this as a way of righting wrongs and moving in a new and enlightened direction because I want California's legalization initiative to do one this more than anything else and that was to be known to have been the tip of the spear in ending the war on drugs in this country. Which has been a war on poor people and people of color and generations of people's lives have been destroyed, families have been broken apart. It is a disgrace.
Peoples' freedoms have been denied, and that is what motivates me in this space. And while there is an economic opportunity for people, I hope they never lose sight of the millions and millions of lives that have been devastated that got us to this point where people ultimately can prevail. And from an entrepreneurial frame, that they have an obligation to give back and to promote those principles of justice that are a big part of why we're sitting here today.