How Will Cal3 Impact You?

This past weekend, a family member tried to pull me into an argument about Cal3.  Those of you that know me know I’m not much for arguing anything, let alone anything political.  But it got me to thinking.  How WILL the financial landscape change for my clients if Cal3 passes?

For those unfamiliar with the ballot initiative, Cal3 will do exactly what it sounds like:  divide California into three separate states.  California (currently the California central coast,Ventura, and Los Angeles counties), Northern California and Southern California (dividing right about the Mariposa/Fresno county area).  California state government as we know it would cease, and all assets and liabilities would be divided between the three.  Each state would have its own government and own taxing entities (and tax rates).

I focus on the future planning with my clients, and keeping a finger on the pulse of the local, domestic and international economy is important.  However, I don’t think that Cal3 will impact any of my clients that are currently focusing on the next 3-5 years.  Why?  It’s been tried before.   There’s too little noise surrounding this to make me think it will seriously pass.  This article reminds us that there are still additional steps even if the ballot measure does pass, and some of those may involve litigation, so that pushes the reality of this happening down the road at least.  Not to mention, even if the lawsuits don’t materialize, the HOW of all this will need to be hashed out, and fulfilled, so that’s even further into the future.

Until we know with more certainty what those three states would look like, what cross-border commerce will be, how things will be taxed, what state will be Red or Blue, and many other factors, it’s hard to even forecast what the business impact will be for small businesses.  I think that for Cannabis, the current counties will continue to be cannabis-friendly, regardless of their state.  I think that construction within all three will have a small bump as people move to a state that more closely matches their business, politics, and culture.  Nonprofit will likely not be impacted, although some donation rates may change – but I couldn’t possibly say if that would be up or down.

Is this worth watching?  Absolutely.  If nothing else for the entertainment factor.  But realistically, I don’t see it happening this time around, and I don’t see it impacting my clients businesses for at least the next few years.