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Lawmakers look to slash cannabis taxes
marijuana pic

The robust black market is to blame for California’s first year of cannabis sales falling woefully short of expectations in 2018, industry leaders say, and now a group of bipartisan lawmakers is hoping to jumpstart the state’s legal marijuana marketplace and level the playing field by slashing taxes.

Introduced on Monday by Democratic Assemblyman Rob Bonta of Oakland, AB 286 aims to encourage the public to buy from dispensaries rather than illicit dealers by temporarily reducing the 15 percent tax consumers pay at the retail counter to 11 percent and eliminating the $148 per pound of pot farmers pay for three years.

“The black market continues to undercut businesses that are complying with state regulations and doing things the right way,” Bonta said. “This very strategy has been shown to actually increase overall tax revenue in other states.”

On Jan. 1, 2018, California broadly legalized marijuana use for adults after overwhelming support for Proposition 64, which promised to fill state and local coffers while helping to eliminate the state’s illegal operators. But far fewer licenses and tax revenues have been collected than expected and legal businesses point to the state and local taxes and red tape as the reasons.

Opponents of Proposition 64 cautioned that it could lead to a thriving black market for unregulated tax-free marijuana.

According to cannabis retail analyst GreenEdge, legal California sales fell to $2.5 billion in 2018 from $3 billion in 2017 when only medical marijuana was legally available. The latest available data from the California Department of Tax and Fee Administration and Gov. Gavin Newsom’s revised budget reflect the state’s sluggish sales; the state collected $234 million in taxes between January and October, and the new budget for the fiscal year that ends June 30 estimates $355 million in annual tax revenues — a $275 million reduction from previous estimates.

In a joint statement released Thursday, Assembly Republicans said Capitol Democrats must have been “smoking something to enhance their creativity” in order to come up with AB 286, though it’s worth noting the bill is supported by legislators from both sides of the aisle.

“Republicans think that if you’re a business selling the less-exciting kind of brownie (or anything else for that matter), it’s high-time the Legislature rolls up a tax cut for you,” the statement said. “We hope the legal weed industry doesn’t bogart these low taxes and all struggling businesses in California get to see an ounce of tax reform light up their bottom lines.”

District 12 Assemblyman Heath Flora wasn’t surprised that California’s cannabis industry hasn’t lived up to the hype.

“Yeah, we also learned that the sky is blue,” he responded when asked to comment on reports that high taxes might be a reason for the state’s flourishing black market.

Flora went on to say that he is open to supporting the bill if it leads to wider discussions about the negative impact that high taxes have on consumers and the economy.

Newly-elected State Treasurer Fiona Ma supports the bill, stating that cannabis businesses deserve the same treatment as any other new industry.

“We are helping legal cannabis businesses with their transition into the marketplace, just like we would for ay startup industry,” Ma said.

The State Treasurer’s Office estimates that without current tax barriers, cannabis taxes could generate $8 to $20 billion in annual revenue for California.

During recreational marijuana’s first year of legality in California, 9,445 temporary licenses were issues to dispensaries from more than 19,000 applications received. 

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Costa, Gray propose congressional bill to address critical physician shortage in rural areas
Costa and Gray
San Joaquin Valley congressional members Rep. Jim Costa, D-Fresno, left, and Rep. Adam Gray, D-Merced, are shown discussing their bill H.R. 2106 in a virtual press conference on Tuesday.

BY TIM SHEEHAN

CV Journalism Collaborative

Two San Joaquin Valley congressional representatives have introduced a bill that could help address the vast shortage of doctors in the region, particularly in underserved areas. 

Rep. Jim Costa, D-Fresno, and Rep. Adam Gray, D-Merced, say the Medical Education Act would, if passed, establish a program of grants to support expanded medical education programs in underserved areas of the nation.

The Valley could be one of the key areas that would benefit from the legislation. California has about 90 primary care doctors per 100,000 residents statewide, the federal Health Resources & Services Administration reported in November 2024. 

That’s more than the ratio in some states, and less than some others. The nationwide ratio is about 84 doctors per 100,000 residents.

But in the San Joaquin Valley, home to about 4.3 million people, doctors are much more scarce – about 47 primary care physicians per 100,000 residents, according to Dr. Tom Utecht, chief medical officer at the Fresno-based Community Health System.

That number is “a little over half of what is necessary to take care of a population,” Utecht said Tuesday in a video press conference. “We have the lowest physicians-per-capita rate in all of California, in the San Joaquin Valley.”

Introduced last month, the Medical Education Act is something of a placeholder for the time being until the Congressional Research Service can weigh in with financial estimates of what is needed in different parts of the country, Costa said. 

A companion version was introduced in March in the U.S. Senate by Sen. Tim Kaine, D-West Virginia, and Sen. Alex Padilla, D-Los Angeles.

At this point, the legislation does not specify how much money will ultimately be sought or how grants would be structured.

Costa said the shortage of doctors in the region “is combined with language barriers, cultural barriers and distances … and that would really go for rural parts of our country regardless where folks live.”

“If you live in rural areas, it’s just more difficult to have access to good quality health care,” he added.

Costa said the legislation, if it can survive a Republican-controlled House and Senate and a Republican president, “would be transformative because it would invest expanded resources to minority-serving institutions and colleges located in rural and underserved areas to establish schools of medicine and osteopathic medicine.”

The bill would also create an avenue for more historically Black colleges and universities, as well as Hispanic-serving institutions, to establish medical education programs, Costa said.

Gray noted that when he was in the state Legislature, he and colleagues “worked to get hundreds of millions of dollars in funding to expand the UC Merced campus, to ultimately secure the funding to put the first medical education building up on campus.”

Gray added that the UC San Francisco’s medical education program in Fresno “is an important part of creating the (medical) workforce of the future for the valley, but more importantly, solving this access to care issue that plagues Valley communities.”

At UC Merced, director of medical education Dr. Margo Vener said there has been a surge of interest in the university’s program that funnels students through an undergraduate program for their bachelor of science degree through a medical school degree in collaboration with UC San Francisco.

“All the students that we are enrolling are from the Valley and for the Valley, because they want to really make a difference in promoting health in their communities,” Vener said. That, she added, is likely to eventually translate to those would-be doctors to stay in the Valley to practice medicine.

“The data suggests that two factors really strongly influence where physicians stay to practice,” Vener said. “One of them is where they’re from, which, of course, is why we’re recruiting students from the Valley for the Valley just to stay (and) be doctors for their community. And the other factor is where you went to residency. Those are the two biggest drivers.”

That’s something that was underscored by Dr. Kenny Banh, assistant dean of undergraduate education at UCSF Fresno. “Regional campuses such as UC Merced and UCSF Fresno not only grow doctors, but they take those doctors, physicians and medical students from their communities in the region, and train them in those regions to go back to be physicians in those areas,” he said.

While the costs of the Costa-Gray legislation are yet to be determined, Banh said there are also costs associated with doing nothing to expand medical education.

“There’s health care costs, regardless of how we work it, if we don’t invest in having an adequate supply of physicians,” Banh said. “There’s a cost on the human that can’t access care” and doesn’t get to a doctor until a condition is not treatable “or with significantly worse morbidity and mortality outcomes.”

“And that cost is borne by health systems taxpayers, one way or the other,” Banh added.

But even if the Costa-Gray bill were to pass in this congressional session, the payoff of home-grown medical schools producing a bumper crop of physicians in the Valley or other deprived parts of the country would be years down the road.

“I think it’s really important to understand why we need to invest now for our future, because it takes so darn long” for a student to go from being a college freshman to a practicing doctor, surgeon or specialist, UC Merced’s Vener said. 

After a four-year bachelor’s degree, a student must then complete four years of medical school, which in turn is followed by a residency of three to five years.

“Then often people will do a fellowship to become, for example, a cardiologist or a gastroenterologist or something like that,” she added.

“If you start investing in just one student now, it’s going to take such a long time before they really are there to take care of you at that moment when you need them to be your gastroenterologist, your cardiologist, your emergency physician, or, dare I say, your family doctor,” Vener said.

That, she said, is why it’s also necessary to expand residency programs that can attract would-be physicians into the region in hopes that they will remain once they complete their training. “We need those doctors now, and that’s why this effort is important,” Vener said, “because this is what will both inspire people to stay, but also inspire people to really come and embrace the communities and serve them.”

In a related development, state Assemblymember Esmeralda Soria, D-Fresno, recently introduced a bill for the University of California system to develop a comprehensive funding plan for expanding the current SJV Prime+ BS-to-MD partnership between UC San Francisco and UC Merced, with the goal of transitioning the program to a fully independent medical school operated by UC Merced.

“We have seen firsthand the impacts of medical workforce shortages throughout the Central Valley,” Soria said in a prepared statement. “AB 58 would help ensure the Legislature is equipped with the information needed to secure appropriate funding for the medical education provided for our community at UC Merced.”

— Tim Sheehan is the Health Care Reporting Fellow at the nonprofit Central Valley Journalism Collaborative. The fellowship is supported by a grant from the Fresno State Institute for Media and Public Trust. Contact Sheehan at tim@cvlocaljournalism.org.