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Legal weed clashes with child care. Why a cannabis tax cut could spell trouble for children

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Legal weed clashes with child care. Why a cannabis tax cut could spell trouble for children

A fight over taxes consumers pay for cannabis products has prompted a standoff between unusual adversaries: child-care advocates and the legal weed industry.

On July 1, California’s cannabis excise tax increased from 15% to 19% as part of a political deal struck in 2022 to help stabilize the fledgling legal market. But the industry now says the increase is untenable as it faces a sharp decline in revenue and unfair competition from the growing illicit market.

An industry-sponsored bill moving through the Legislature — and already passed by the Assembly — would eliminate the tax increase and lower the rate back to 15% for the next six years. This would reduce by $180 million annually the tax revenue that the state contributes toward law enforcement, child care, services for at-risk youth and environmental cleanup.

The losses include about $81 million annually that would have specifically funded additional subsidized child-care slots for about 8,000 children from low-income families.

“They are choosing the cannabis industry over children and youth,” said Mary Ignatius, executive director of Parent Voices California, which represents parents receiving state subsidies to help pay for child care.

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Child care faces setbacks

The tension over taxes for legal weed versus child care — both industries in crisis — highlights the inherent pitfalls of funding important social services with “sin taxes,” whether it’s alcohol, weed or tobacco — funding that experts say is often unstable and unsustainable.

Engage with our community-funded journalism as we delve into child care, transitional kindergarten, health and other issues affecting children from birth through age 5.

The measure’s next stop is the Senate. All bills in the Legislature must be passed by Sept. 12, and the governor must sign them by Oct. 12.

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“We can both support the legal cannabis industry and protect child care. If the measure reaches the governor’s desk and is signed into law, we will work with the Legislature to ensure there are no cuts to child care due to this policy change,” said Diana Crofts-Pelayo, a spokesperson for Gov. Gavin Newsom.

But it’s unclear where money to backfill the losses would come from, as the state grapples with declining finances and federal funding cuts.

The money from cannabis taxes represents a fraction of California’s $7-billion annual child care budget. But as federal cuts to social services for low-income families, including Head Start, continue, any potential loss creates a sense of panic among child care advocates who say California ought to be shoring up revenue options right now — not reducing them.

“Every single dollar needs to remain in the programs that are serving our children and families. What may seem like a small amount to some is everything for advocates who are fighting for it,” said Ignatius.

The past decade has been a time of progress for child care advocates, as the state rebuilt a child care industry decimated by cuts during the Great Recession. California has more than doubled spending on child care since the recession low, added about 150,000 new subsidized child care slots, eliminated the fees paid by families, increased pay for child care workers and added a new public school grade level for 4-year-olds.

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But despite these efforts to bolster the market, California’s child care industry still suffers from low pay for workers, unaffordable costs for families, and a shortage of spaces for infants and toddlers.

The waiting list for subsidized child care slots is still so long that some parents have taken to calling it the “no hope list,” said Ignatius. Those who join the list know they could wait years before a spot opens up, and by that time their child may already be in kindergarten or beyond.

Jim Keddy, who serves on an advisory committee to help determine what programs the tax will finance, opposes the proposed reduction.

“If you don’t work to promote and hold on to a funding stream for children, someone eventually takes it from you,” said Keddy, who is also executive director of Youth Forward, a youth advocacy organization.

The cannabis industry, however, argues that while the causes the tax supports may be worthwhile, market conditions are so abysmal that it cannot weather an increase.

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“It is sad that the cannabis industry is being pit against social programs, childhood programs and educational programs,” said Jerred Kiloh, president of United Cannabis Business Assn. and owner of the Higher Path dispensary in Sherman Oaks. “The reality is, if our legal industry keeps declining, then so does their tax revenue.”

In 2022, when the cannabis industry agreed to increase the excise tax, quarterly cannabis sales were at their peak. The agreement offered the new industry temporary relief by eliminating the cultivation tax passed by voters under Proposition 64, the 2016 initiative that legalized cannabis. In exchange, state regulators would be able to increase the excise tax after three years to make the change revenue neutral.

But since then, sales have plunged to their lowest levels in five years, due in part to the growing illicit market that is siphoning off sales from legal dispensaries.

In L.A., Kiloh said that between state and local taxes, his legal dispensary customers end up paying 47% in taxes on their purchase. But if they shopped instead at any of the thousands of stores in L.A. selling cannabis products without a license, they could avoid state and local cannabis taxes entirely.

“A 30% increase in an excise tax that is already egregious is just kind of the breaking point for a lot of consumers,” said Kiloh.

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Even before the excise tax hike went into effect, just 40% of the cannabis consumed in California was obtained from the legal market, according to the California Department of Cannabis Control.

The measure to drop the excise tax, AB564, received widespread support from Assembly members, including stalwart supporters of early childhood education like Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters), chair of the Legislative Women’s Caucus.

“Revenues from legal sales of cannabis are already dropping and if we keep raising the tax they’ll drop even more. That penalizes cannabis businesses who are doing the right thing and working within the legal market. And, it makes illegal sales from cartels and criminals more competitive,” she said in a statement. “We need to fund our kids’ education through the State General Fund, but if we want to supplement education and youth programs, cannabis tax dollars will only exist if we steady the legal market and go after those illegal operators.”

How reliable are sin taxes?

Lucy Dadayan, a researcher who studies sin taxes at the Tax Policy Center, a nonpartisan think tank based in Washington, D.C., said the California predicament reflects a larger problem with sin taxes.

If a sin tax is successful and consumption drops — as it has with tobacco — “the tax base shrinks. And in the case of cannabis, there’s the added wrinkle that a high tax rate can push consumers back into the illicit market, which also reduces revenue,” she said.

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This is not the first time services for the state’s youngest children have been affected by reductions in a sin tax.

In 1998, California voters slapped cigarettes with a hefty surcharge to pressure smokers to give up their habit. The state used the money to fund “First 5” organizations in every county, which are dedicated to improving the health and well-being of young children and their families. But the less people smoked over time, the less money was available for early childhood programs, and the First 5 system now finds itself confronting an existential crisis as it faces a rapidly declining revenue source.

Meanwhile, the critical social services like child care that come to depend on sin taxes tend to get more and more expensive, creating a “mismatch” in the tax structure versus the need, said Dadayan.

“In the short term, these taxes can raise a lot of money and help build public support for legalization or regulation. But in the long term, they can leave important programs vulnerable because of shifting consumption patterns,” she said.

This article is part of The Times’ early childhood education initiative, focusing on the learning and development of California children from birth to age 5. For more information about the initiative and its philanthropic funders, go to latimes.com/earlyed.

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Video: President Fires Noem as Homeland Security Secretary

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Video: President Fires Noem as Homeland Security Secretary

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President Fires Noem as Homeland Security Secretary

President Trump fired Kristi Noem, his embattled homeland security secretary, on Thursday and announced his plans to replace her with Senator Markwayne Mullin of Oklahoma.

“The fact that you can’t admit to a mistake which looks like under investigation is going to prove that Ms. Good and Mr. Pretti probably should not have been shot in the face and in the back. Law enforcement needs to learn from that. You don’t protect them by not looking after the facts.” “Our greatness calls people to us for a chance to prosper, to live how they choose, to become part of something special. Anyone who searches for freedom can always find a home here. But that freedom is a precious thing, and we defend it vigorously. You crossed the border illegally — we’ll find you. Break our laws — we’ll punish you.” “Did you bid out those service contracts?” “Yes they did. They went out to a competitive bid.” “I’m asking you — sorry to interrupt — but the president approved ahead of time you spending $220 million running TV ads across the country in which you are featured prominently?” “Yes, sir. We went through the legal processes. Did it correctly —” Did the president know you were going to do this?” “Yes.” “I’m more excited about just ready to get started. There’s a lot of work we can do to get the Department of Homeland Security working for the American people.”

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President Trump fired Kristi Noem, his embattled homeland security secretary, on Thursday and announced his plans to replace her with Senator Markwayne Mullin of Oklahoma.

By Jackeline Luna

March 5, 2026

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DOJ continues Biden autopen probe despite former president unlikely to face charges

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DOJ continues Biden autopen probe despite former president unlikely to face charges

NEWYou can now listen to Fox News articles!

The Department of Justice (DOJ) is continuing its investigation into former President Joe Biden’s use of an autopen in the final months of his administration — focusing on pardons and commutations — though a senior official said Biden is unlikely to face criminal exposure.

A senior DOJ official told Fox News the autopen investigation is ongoing and not closed, adding investigators are reviewing clemency actions taken in the final months of the Biden administration.

The official also pointed out, however, that the use of an autopen by a sitting president is “established law.”

The issue under review is whether the autopen was used in violation of the law, specifically, whether Biden personally approved each name included on pardon and commutation lists.

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A framed portrait shows former President Joe Biden’s signature and an autopen along “The Presidential Walk of Fame” outside the Oval Office of the White House.  (Andrew Harnick/Getty Images)

“These types of cases are tough. Executive privilege issues come into play,” the official said.

What is also clear, the official indicated, is that the target of any potential prosecution would not likely be Biden.

“It’s hard to imagine how [Biden] could be criminally liable for pardon power,” the senior DOJ official said.

BIDEN’S AUTOPEN PARDONS DISTURBED DOJ BRASS, DOCS SHOW, RAISING QUESTIONS WHETHER THEY ARE LEGALLY BINDING

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The use of the autopen by former President Joe Biden remains under investigation. (AP Photo)

The official noted that one reason the former president would be unlikely to face charges stems from a 2024 Supreme Court ruling that originally involved current President Donald Trump but would also apply to Biden.

“We conclude that under our constitutional structure of separated powers, the nature of Presidential power requires that a former President have some immunity from criminal prosecution for official acts during his tenure in office,” the Supreme Court ruled in Trump v. United States in 2024. 

“At least with respect to the President’s exercise of his core constitutional powers, this immunity must be absolute.”

Sources familiar with the matter told Fox News Digital that U.S. Attorney Jeanine Pirro’s team continues to review the Biden White House’s reliance on an autopen, contradicting a recent New York Times report that indicated the investigation had been paused.

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DOJ SIGNALS IT’S STILL DIGGING INTO BIDEN AUTOPEN USE DESPITE REPORTS PROBE FIZZLED

President Donald Trump has pushed for consequences for former President Joe Biden’s alleged use of the autopen. (Julia Demaree Nikhinson/AP Photo)

Trump has pushed for consequences over the autopen controversy, alleging on social media that aides acted unlawfully in its use and raising the prospect of perjury charges against Biden.

Biden has rejected those claims, saying in a statement last year he personally directed the decisions in question.

“Let me be clear: I made the decisions during my presidency,” Biden said. “I made the decisions about the pardons, executive orders, legislation and proclamations. Any suggestion that I didn’t is ridiculous and false.”

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The House Oversight Committee has homed in on Biden’s clemency actions, including five controversial pardons for family members in the final days of his presidency, citing what it described as a lack of “contemporaneous documentation” confirming that Biden directly ordered the pardons.

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The committee asked the DOJ to investigate “all of former President Biden’s executive actions, particularly clemency actions, to assess whether legal action must be taken to void any action that the former president did not, in fact, take himself.”

Fox News Digital’s Ashley Oliver contributed to this report.

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Top Biden officials questioned and criticized how his team issued pardons, used autopen: report
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Anxiety grows among California Democrats as gubernatorial candidates rebuff calls to drop out

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Anxiety grows among California Democrats as gubernatorial candidates rebuff calls to drop out

Despite a plea from the head of the California Democratic Party for underperforming candidates to drop out of the governor’s race, all but one of the party’s top hopefuls spurned the request.

Party leaders fear the growing possibility that the crowded field will split the Democratic electorate in the state’s June top-two primary election and result in two Republicans advancing to the November ballot, ensuring a Republican governor being elected for the first time since 2006.

His advice largely unheeded, state party Chairman Rusty Hicks on Thursday said the fate of a Democratic victory now rests squarely on the gubernatorial candidates who flouted him.

“The candidates for Governor now have a chance to showcase a viable path to win,” Hicks said in a statement Thursday.

Eight top Democratic candidates filed the official paperwork to appear on the June ballot after Hicks released a letter on Tuesday urging those “who cannot show meaningful progress towards winning” to drop out. Friday is the deadline to file to appear on the primary election ballot. On March 21, the secretary of state’s office will formally announce who will appear on the June ballot.

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“It sounded like someone who has his head in the sand,” former Los Angeles Mayor Antonio Villaraigosa said of Hicks’ open letter. “[Most] of us filed within 24 hours of getting that letter. It created some press but not much else. It didn’t impact [most] of the candidates and it certainly didn’t impact my candidacy.”

Democratic strategist Elizabeth Ashford said it was appropriate for Hicks and other Democratic leaders to make a public plea as opposed to keeping such discussions solely behind closed doors.

But the response showed the limited power of the modern-day party bosses.

“It’s definitely not Tammany Hall,” said Ashford, referring to the storied Democratic political machine that had a grip on New York City politics for nearly a century. “The party and Rusty are influential and they are helpful and that is their role. I don’t think anyone would be comfortable with outright public strong-arming of specific candidates.”

Ashford, who worked for former Govs. Jerry Brown and Arnold Schwarzenegger, along with former Vice President Kamala Harris when she served as state attorney general, added that the minimal power of the state GOP is likely a factor in the dynamics of Democrats’ decision to stay in the race. Democratic registered voters outnumber Republicans by almost a 2-to-1 margin in the state, and Democrats control every statewide elected office and hold supermajorities in both chambers of the California Legislature.

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“If there were a strong viable opposition that existed, if the Republican Party was actually relevant in California, I think that would sort of force greater unity amongst Democrats,” she said.

Just one of the nine major Democrats did heed the party chair’s message. Ian Calderon, a former Los Angeles-area Assemblyman who consistently polled near the bottom of the field, withdrew from the race and endorsed Rep. Eric Swalwell (D-Dublin) on Thursday.

Candidates cannot withdraw their name from the ballot once they officially file to run for office, leading to some fears that even if other candidates drop out of the race, a crowded primary ballot could still split California’s liberal votes.

“I’m disappointed most of them will be on the ballot,” said Lorena Gonzalez, the head of the California Federation of Labor Unions, which will announce whether it endorses in the governor’s race on March 16. But “I do still think you can have people drop out of the race or become viable. I think that there are candidates who know viability is a real thing they have to show in coming weeks” before ballots start being mailed to voters.

Jodi Hicks, chief executive and president of Planned Parenthood Affiliates of California, said she is “still worried” about the prospect of two Republicans winning the top two spots in the June primary, shutting Democrats out of any chance of winning the governor’s office in November.

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“I didn’t have any specifics of who I wanted to do what,” she said. “I’m just very, very concerned and the stakes are really high right now and seem to be getting worse by the day.”

Republican candidate Steve Hilton, a former Fox News host, said he is “confident that I’ll be in the top two” along with a Democratic candidate. “I find it very difficult to believe that the Democratic Party will just surrender California and allow two Republicans to be in the top two.”

Hilton made the comments Thursday after a gubernatorial forum in Sacramento hosted by the California Assn. of Realtors focused on housing and homeownership. Villaraigosa, former Health and Human Services Secretary Xavier Becerra, San Jose Mayor Matt Mahan and former Rep. Katie Porter also attended. Swalwell, who is currently in Washington, joined the panel virtually.

During the panel, candidates were in broad agreement about the need to reduce barriers and costs in order to build more housing in California, where the median single-family home costs more than $820,000. Many also endorsed proposals to disincentivize private investment firms from buying up homes as well as a $25-billion bond proposed by former Sen. Bob Hertzberg to help first-time homebuyers afford a down payment.

“This really isn’t a debate because we’re agreeing so much with each other,” Hilton said at one point during the event.

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That political alignment on one of the most pressing issues facing California may explain why voters are having such a difficult time deciding who to support.

A recent poll of the Public Policy Institute of California found that the five candidates topping the crowded field were within 4 percentage points of one another: Porter, Swalwell, Hilton, Democratic hedge fund founder Tom Steyer and Republican Riverside County Sheriff Chad Bianco. Earlier polls had Hilton and Bianco leading the field, though many voters remained undecided.

Some candidates took issue with Hicks’ push to cull the field, noting that most of the lower-polling candidates he asked to drop out are people of color.

“Our political system is rigged, corrupted by the political elites, the wealthy and well connected,” state Supt. of Public Instruction Tony Thurmond, who is Black and Latino, said in a video posted on social media in response to the open letter. “The California Democratic Party is essentially telling every person of color in the race for Governor to drop out.”

Villaraigosa argued that enough voters remain undecided that it was too early for quality candidates to call it quits.

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“Most people don’t even know who’s in the race,” said Villaraigosa. “It’s premature to be thinking about getting out of the race. I certainly am not considering it and I feel no pressure.”

Aside from the opinion polls, other indicators on who may emerge from the pack a candidates are slowly emerging.

Though it wasn’t enough to win the party’s endorsement, Swalwell won support from 24% of delegates at the state Democratic convention last month, the most of any party candidate.

While spending is no guarantee of success, Steyer has donated $47.4 million of his own wealth to his campaign. Mahan, who recently entered the race and is supported by Silicon Valley leaders, has quickly raised millions of dollars, as have two independent expenditures committees backing his bid.

Ashford said part of candidates’ decisions to remain in the race could have been driven by their lengthy political careers, as well as Democrats’ crushing November redistricting victory.

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“In several cases, these are people who have won statewide office,” she said. “It’s tough to feel like there may not be a sequel to that.”

Nixon reported from Sacramento and Mehta from Los Angeles.

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