California Update: (Self-Inflicted?) Pain at the Pump; Governor’s Race in Flux; A Cannabis Black Market

- It is Wednesday, April 22nd, 2026, and you're listening to Matters of Policy and Politics, a podcast devoted to the discussion of policy research from the Hoover Institution and issues of geopolitical, national and local concern. I'm Jonathan Movroydis, and every month I have the privilege of moderating discussion on politics and the economic situation of the Golden State with two Hoover fellows and experts on these issues. Bill Whalen and Lee Ohanian. Bill Whalen is the Virginia Hobbs Carpenter distinguished policy fellow in journalism and the regular host of the show. And Lee Ohanian is a senior Hoover Senior Fellow and professor of Economics at the University of California Los Angeles, both right for Hoover's web channel, California on your mind. Good day, gentlemen. How are you both doing today?

- Good, good.

- Doing good. Good to see you fellow.

- Let's start off by looking at how the war in Iran is impacting the Golden State. California imports 75% of its oil, one third of that 75% comes from the Middle East. Meanwhile, California is limited in its refining capacity with one fifth of it reduced in the past year with the closure of Phillips 60 six's LA Refinery and the soon to be closure of Valeros in the Bay Area. Question for our economists, Leo Hanian, since California gets another one fifth of its crude from the Horus dependent to Iraq and refined products such as gas and jet fuel from fuel straps, South Korea and other Asian countries, is the golden state headed for an economic crisis?

- Well, I think we probably do have a crisis in terms of affordability of gasoline. California gas is, is always more expensive than the rest of the country. What is, what's unfortunate is that there's a lot of, you know, and there's a lot of discussion in the media about the Middle East conflict driving up prices, which is absolutely true, but that's not the only thing driving up prices for California drivers. So we have a very special fuel blend. It's a low carbon blend, it's required in California, it's mandated by the state's, California Air Resources Board, which is also called carb. And two thirds of our oil, I believe, comes from foreign sources. We import gasoline from countries such as South Korea, I believe. We may have also imported gasoline from Jamaica of all places, but our regulatory apparatus set up California be extremely vulnerable to international political issues. We, we do not have the capacity to refine the gasoline that's being demanded within California. And because of imports and because of our reg, because of our regulations, our gas is typically the most expensive in the country right now. Our mid-grade gasoline averaging, hold on one second. I'm just gonna go and take a look at my aaa. AA keeps track of gasoline prices across the country, about $6 and 7 cents a gallon. But to, just to give this some context, the price of 89 Octane in the rest of the country right now, you know, which is being impacted by the Middle East conflict, the price in the rest of the country for 89 octane remains lower than what, than what 89 Octane was in California a year ago before any of the Middle East conflict broke out. So yeah, so we've got a, we've got a, we've got a a problem here. We've lost refining capacity, we have less refining capacity today than we had in the 1980s, and the state's added 15 million people during that time. Chevron has, is talking about, or threatening to perhaps, well, more capacity out of California because of potential new re additional regulations that were going to affect in 2030 regarding California's cap and trade program, which Chevron says might raise the cost of gasoline by another $1 per gallon. So, you know, so we created this issue and there's really no resolution, there's no easy resolution insight for this.

- Okay, professor Hanney, and I want you to break down this matter in three categories, and let's start with number one, and that's the resource itself. Oil, you mentioned that California has to import oil. This is the antithesis of the message of America being energy independent. We're bringing in oil from The Bahamas. We're bringing in refined product from India, which gets its oil from Russia. And so, so much for the Russian oil sections, if you will. So problem number one, Lee, what's California do about oil? Do you ever see California going back to the old days when California actually explored for oil?

- Interesting, Mel, go way back in the day. Go back about a hundred years. California, I believe in the 1920s was the number one oil producing state in the country. More than Texas, more than Oklahoma. There's just a different ethos now. There still is enormous oil reserves within California. Much of it in Kern County, which I believe is home to Bakersfield. But just for environmental or regulatory issues, I just don't think those are going to be tapped, given the, given the regulatory and political time we have now in California. So we're gonna continue to depend on imported oil, imported gasoline, those are obviously expensive and I just don't see a change happening here.

- Okay, problem number two, Lee. And that's, you reference this refineries. Jonathan, in the introduction mentioned Phillips 66 and Valero. I think Valero shuts down this month, doesn't it, Lee? Or pretty soon?

- Yeah, I believe it's, I believe it's scheduled for this month.

- So that's one 50 refining capacity right there. And then we have Chevron, which last week or just recently said that if this situation continues, it's outta California within the next decade or so. And I don't think they're bluffing because we've seen other companies do this. When it comes to refining, Lee, is the problem here, is it, is it too difficult to build a refinery in California or is it nimbyism just nobody wants a refinery in their backyard? Or is it, or is it both of those?

- Well, it's going to be both of those. You can find areas in California where I don't think Theia aspect would be very problematic, but just the regulatory aspect of getting a new refinery permit that, I mean, you know, good luck. Good luck getting a new refinery permitted within the state of California. I just don't, I just don't see that on the horizon for us.

- Okay. And then the third issue here, Lee, which is one of I, I'd call regulation and behavior, the state of California has been trying to modify people's behaviors in California by doing what? Trying to discourage people from driving, trying to turn people to other modes of transportation, but also putting of rather healthy tax on the price of gasoline in California to feed other issues in California. I would note by the way, that Tony Strickland, a Republican state lawmaker, does have a measure SB 10 35, the Gas Tax Relief Act, which would suspend the gas tax in California. But this is the other question, Lee, if we're not gonna change how we get oil outta the ground, if we're not gonna change our ability to refine it, to help with the availability of it, do you see any relief on the way in terms of easing on taxation or is California just locked into both high taxes on gasoline plus also the cap and trade program?

- Well, CARB has been under a lot of criticism recently because of the rules that they've been implementing drive on gasoline prices. And this includes democratic members in California's legislature who have been pleading with them to ease up on regulations because of the cost of gasoline and their constituents. You know, whether Democrat or Republicans, cost of gas is the same for everyone. So this brings up, you know, this bill, this brings up a broader and deeper question about just how much influence should politically appointed boards have over a state's economy. And CARB has enormous influence on California's economy right now, and they are political appointees, some appointed by the governor, some appointed by the legislature, the, you know, and, and the issue really becomes, regulations are supposed to be about benefiting consumers. They're supposed to be about, the market isn't working right, consumers are getting hammered. So we're gonna put in some regulations to make life easier for consumers. These are regulations, they're might making life more difficult for consumers. And a lot of the regulations that are being implemented in the rules are regarding CO2 emissions and more broadly, greenhouse gas emissions. California's responsible for less than 1% of the global total of those emissions. So we can't do anything, Literally, we can't do anything in California to, to deal with climate change, whether no matter where a person sits on the spectrum of thinking about climate change, but just as a factual matter, we simply cannot move the needle on, on CO2 emissions. So we shouldn't be really doing anything more to reduce CO2 emissions in California. Just there's no benefit to California consumers from doing that. There would be benefit from regulating emissions that are local in nature such as particulate emissions, but CO2 emissions, we can't do anything about it. We shouldn't, in my opinion, we should not be implementing these kind of regulations because they drive our prices. They're not helping California consumers either today's California consumers or tomorrow's California consumers.

- You know, it's funny, Lee, I don't see too many lawmakers trying to engage the public in a, in a history list of California. In other words, trying to say that our gasoline is more expensive, but we have a special blended gas and we have a special blended gas. Why? Because we want clean air. And look how pristi pristine Los Angeles is today compared to 60 years ago. You don't see lawmakers doing that. But one other angle here, which I think we should discuss, Lee, is how this ultimately is going to impact California's housing market and how would that impact it? Not so much the cost of building a house, Lee, but the fact that if gasoline continues to go up and cost that it's money outta your pocket, less money to spend means that you have less money to put into a house. It means you might be averse to taking out a 30 year mortgage. And here we have in California, we already have a housing problem again with, in terms of available housing, affordable housing. Now, if you have fewer people going out wanting to buy housing, again, another hit to the economy.

- Yeah, that's right. Housing is, was a, was a huge problem for Californians before the ran conflict, before prices for gasoline went up additionally. And we're looking at a state in which about 17% of California households can now afford the median single family home in California. That's according to California State California Association realtors median home price now is around $870,000. And Bill, the affordability problem is even worse than 17% because the calculation that the California Association of Realtors makes assumes that the household has the cash available for a down payment now on a 80 20 loan, 20% down 80% mortgage, that's the industry standard, having a 20% down payment on an $860,000 home, well, that gets you close to $200,000 when you tie in the other aspects of closing costs and build. Not a whole lot of people in California have 180 to $200,000 in cash sitting around that they could go ahead and pop into a home. So yeah, it's, it's California's just the, the affordability problem, which is something that you see now all the time in the media. We're gonna talk about the governor's race here in a few minutes, but you know, recently Antonio Vosa, who's running in governor's race, he's not getting much traction as, as as far as I can tell. No, he said, you know, my party, the Democratic Party, We have caused this affordability problem. And yes, again, not being partisan, but just the aspects of regulations that have been in place have driven up the cost of living in California. It was a state that at one time was very affordable despite all of the immense natural beauty of California and all of the economic opportunities. But that was a long time ago. And when you think about 17% of California households being able to afford the median price home, you just gotta scratch your head and say like, what happened? And how are we gonna deal with this? This simply is just not sustainable.

- Yeah. You know, final, final note on this before we move on, Lee and Jonathan, really interesting to watch Governor Newsom play the situation. On the one hand, Newsom has in the past gone after big oil shamelessly, but that's Gavin Newsom. He just loves to de gue against big oil, big guns, big pharma, you name it. And recently he's been active going after the Trump administration over an issue having to do with the pipeline reopening in Santa Barbara oil coming in off the coast. A Santa Barbara judge, I believe blocked it. And so Newsom took a victory lap on that being blocked. But you haven't seen him out screaming about gasoline prices lately. And I wonder Lee and Jonathan at this time in the presidential politics in that he has to leave California, by the way, I saw study out the other day. Somebody actually looked at his schedule, figured out he spent about a fifth of his time outside of California last year. So, you know, that's a lot for governor, but you don't see him demagoguing heavy on this issue. And I suspect that's because he has to have, you know, one foot in each camp here, he has to have one foot in California where you do wanna criticize oil. You do not wanna be seen as being an anywhere close to Donald Trump, but the other foot is out in the rest of America, which is not California, which is not as hostile to fossil fuel, if you will. And so he has to kind of play these two governors at the same time, one who hates oil, but the other one who doesn't wanna necessarily highlight this issue. Why? Because again, trust me, when people come to visit me, the first thing they see when they get off the plane, gasoline prices, he just doesn't wanna remind voters beyond California about one of the big problems of living in California, which is our gasoline prices.

- Yeah, that's a very good point. Purple states are going to be very worried about California, the California energy environment, and he is not gonna do well in those states if he is painted as the guy who is going to be hostile to fossil fuel companies. And he doesn't want to be seen as the person responsible for driving up prices. And you know, California gasoline prices were high before Newsom took office, so he shouldn't be blamed for that. But on the other hand, if you ask, what has he done in the last, well he's now in his what, in his eighth year now? Yep. As governor. And it's not as if this situation has, has improved. So yeah, California, the California energy, and not just gasoline, but also electricity and natural gas, those are gonna be, in my opinion, low hanging fruit for opponents, whether yeah, including opponents, his opponents who are Democrat and they're gonna talk about affordability and they're gonna talk about low and middle income households and how much those energy prices are stressing those households. And then they'll get to housing affordability and, you know, gee, what's going on in California is the most, perhaps the most un unaffordable state in the, in the union governor, what have you done in those eight years to ease that burden? It seems like you really haven't moved the needle. And again, that's kind of low hanging fruit for his opponent. So yeah, bill is, is absolutely correct. I don't think he wants to advertise anything like that right now. Right,

- Gentlemen, let's look at the impact of another crisis. And this is somewhat of a legacy one. We're six pa we're six years past the beginning of the COVID-19 pandemic and the mass shutdowns it caused in March of 2020, especially here in California. Many of California's residents left the Golden State since then, but it appears not to have recovered since the return to relative normalcy in 2022. A new report finds that San Francisco's population is down 2.6% since April, 2020. And from 2024 to 20 25, 50 4,000 people moved out of Los Angeles County, the largest such exodus in the entire country. I think that's about 0.5% of its population. A-U-C-L-A survey finds that the quality of life in Los Angeles is the lowest in a decade. Lee, it's been six years. Why hasn't LA bounced back? Or California for that matter?

- Well, LA and San Francisco are both cities that have been struggling at that. Obviously the pa the pandemic hit both of those cities substantially, but we're not seeing the recovery that we had hoped to see. San Francisco has lost around 50,000 people since COVID. And Jonathan, you, you mentioned, I'm sorry, how many people left LA County?

- 54,000 people.

- 54,000. So you look at both of the cities, again, affordability is a huge problem. If we think about San Francisco, it's tech heavy where workers are more likely to work remotely than maybe in some other industries. With San Francisco is struggling with its tax base now because commercial buildings simply, there's simply no, there's really not much demand for commercial buildings right now in San Francisco. There's been a number of major office buildings and other commercial buildings in downtown that sold before that when you compare their, when you compare their values before and after COVID, they're losing anywhere from 60% to perhaps 90% of their values pre and post COVID. I simply have never seen anything like that. I think you probably have to go back to the Great Depression to see declines in values that are anything close to that. And the Great Depression, of course, was a period of substantial deflation. So you even, you know, there's even a case, I think there's at least one case of an office building that one on that was in, that was in essentially foreclosure. It went on the auction block and there was simply no bids for it. And, you know, no bid, you know, literally no bids. So that gives you an idea of just what's going on in the commercial aspect of San Francisco. It's incredibly expensive to live there with median home price, I believe over a million dollars in la the median home price is over $800,000. And Jonathan, the, the median household income in California, in Los Angeles, I believe this around 85,000 median household income. And so there's no way any, there's no way someone with $85,000 household income can get close to purchasing a home. In fact, they're struggling to even find rental housing that's within their, within their budget set. You know, if you look at, if you look, go online and look at apartment, apartment searches in Los Angeles and rent on a two bedroom apartment is, you know, routinely over $3,000 a month even that is stretching the affordability for the median median household income. So there's no, you know, there's no surprise people are leaving these areas because they simply cannot afford to live there.

- Let's talk about what area that's Sacramento. There is a collision coming on July the first between Governor Newsom and state workers. And the collision is this, back in 2024, the governor ordered state workers to come back to work. It spent at least two days a week in the office. Incredibly, it took four years to get, to get to that point, just to get it back for two days. Newsom now wants state workers to come back four days a week. His argument is it's better for morale, but he is also looking at the economy of Sacramento. You get more state workers in the office, they're gonna buy lunch, blah, blah, blah. It'd be good for downtown Sacramento. Now at the same time, you have a bill making its way through the legislature, which wants to ramp up so-called telework for state workers. It wants to give workers the option to stay at home and work. And what the state employees union will say is this ultimately is good for local economies outside of cities. And secondly, it's good for state workers because Lee, we're back to the conundrum of affordable housing. But here's the problem, which I think California has discovered, which gets into this population. Exodus from Los Angeles and San Francisco. You give people the leash to move outside of their metropolitan areas to find more affordable housing. They're gonna take that leash as far as they can since they can telecommute, if they can stay in the same time zone or an hour difference and do a zoom call like we're doing with this podcast, if you will. So the question, will the governor force people to come back for four days or will we do, or will we go to telework with state workers? But again, here's the problem. You let the state workers tele telework great, but they're gonna just keep going further and further away to found housing. And before you know it, Lee and Jonathan, they're gonna be over the border into Nevada and they're gonna be in Utah and Arizona things which are chronicled in these, in these reports about population loss. So, you know, while so much of the focus is on the wealth exodus in California, I think I saw a study the other day, Lee, which said that something like one fifth of the exodus in California during COVID was the wealthy population, if you will. It's also average in citizens. But again, it gets down to what we just talked about in the first segment. The search for affordable housing.

- No, that's right. Search for affordable housing and you put yourself in the shoes, has an Angelina household, even a relatively high income household in, in, in, in Los Angeles, San Francisco, 150,000 household income that will put you way up near the top of, you know, that would put you, I believe in the 90th percentile of national, national household incomes. You're still not gonna be able to afford that median, that medium price home. And bill, you know, what's, you hit, you, you touch on an interesting point, which is that California, I believe is the home of the most, what demographers call super commuters, right? I was about to say supercomputer, but super commuters, which is someone who drives a minimum of 90 minutes to work. And then these are

- Typ, these are here in northern California. These are typically the people who live in the Central Valley and they drive through the Mont Pass to get to the Bay area and they Yeah, that's exactly drive back and forth every day during that.

- Yeah. And the tra the traffic on those routes just, just backs up. No, they live in Stockton, which is much more affordable. And then they drive to San Francisco or or San Jose where high paying jobs are. So from the standpoint of those people, telecommuting is a godsend. And for those who worry about carbon emissions from their cars, telecommuting is a godsend. Then, you know, the issue becomes is, you know, is the worker as productive from home as they're in the office and businesses, you know, make an assessment of that and then they either permit the worker to be at home or have them come in depending upon which is in the best interest of the, of that business. I suspect that the governor is going to require that because you just don't want any more San Francisco downtowns popping up. You don't want that to pop up in, in other areas. So I wouldn't be surprised if he, if he goes ahead and, you know, issues that I'm

- Old enough. You know, Lee, I'm old enough to remember having worked for a Republican governor when we had a big debate in the 1990s over work in California. And what he did was he suspended the daily overtime rule in California, which said that instead of work the way it worked, when he came in office, you worked eight hours a week, you had 40 hour work week, you worked five days a week, eight, eight hours a day for 40 hours, and if you work more than eight hours a day, you got overtime. What he did, what Governor Wilson did was we suspended things, huge fight with labor over this by the way, and said that no, instead of doing eight hours, five days a week, you can do 10 hours a day, four days a week and get that one day off and get a three day weekend. But here's the catch, you're not gonna get overtime for those hours nine and 10 every day. But we were talking then about, about kind of the nature of work and people's lifestyles and then just, just much better mental health driving and all that kind of stuff. If you have that extra day off. This strikes me as a simpler issue in terms of, in terms of remote work, in terms of letting people stay home, if you will. And you could say, yeah, it's easier on your health, your car, your psyche, if you're not, you know, good driving every day. But Lee, maybe the compromise here is safe, fine, you can spend more days out of out of the office if you want to, but you can't leave California. In other words, know there's eagles head, all right. You can check out anytime, but you can never leave.

- You can never leave. Yeah. Yeah.

- Gentlemen, let's talk about politics and the politics of the Golden State. And the most notable story in the past couple weeks is the rise and very, very swift fall of US Representative Eric Swalwell from Dublin, who was the putative front runner for California's next governor. This was after sexual assault and harassment. Allegations were hoisted against him by several women, including congressional staffers, the unions and big name Democrats dumped him the same day, the allegations went public and he was out of the race 48 hours later and then he was out of Congress the day after that. Bill, why did this happen so quickly? And who stands to benefit from Swalwell departure from the race and Congress?

- Good questions. Usually when something like this happens, it's like bath water draining and that it's kind of slow and steady and just, you eventually wait for, you know, for the water to go out altogether. You know, the, the politician in question has to talk to his family. He has to talk to his supporters, he has to talk to his donors. And over the course of the week and becoming readily apparent that the gig is up, he, he or she is out of the race. But with swallows, you mentioned this was all over, within 72 hours between the time the allegations came out of his committing sexual assault in various hideous ways to the same day this news broke that his, his campaign staffers left, his donors started leaving. Nancy Pelosi turned on him on the same day, the two days after that he is out of the race and the next day after that he's outta Congress. And you mentioned Dublin, he, that's the city in Northern California. Not to be confused with Ireland, but Ireland is pretty much where he is right now. Political Siberia, the question is who done it? And a long line of people who could have done it to him. But I would say this, as much as anybody thinks this is a Donald Trump hit job because Swalwell claim to fame was being one of the impeachment managers in the second Trump impeachment trial. This smack of democratic hit job in this regard. First of all, you waited until he was out until after the filing deadline for governor, but was also congressional racist so that swalwell could not go back to his congressional seat if he dropped out of the race. But secondly, just think about common sense. If you're a Republican running against Eric Swalwell, would you rather have him out of the race of the primary or would you like him to finish first or second in the primary and become the Democrat's November candidate, and then have the world land on his head? So the answer is, Democrats gain from this who gains from this? Interesting. We could get the polling here in a minute as to who benefits, but Swalwell was becoming kind of the IT candidate in this regard. Newsom's political people were taking a shining to him. He was back generously from unions. He had the Trump credentials of impeachment, he had Nancy Pelosi behind him. He seemed very much in a position to finish first or second in that primary and face most likely the Republican Steve Hilton come November now he's out. And the beneficiary would seem to be a former state attorney general and former federal health secretary, Javier Becerra. He had a big spike in a poll that came out a couple days ago that showed him now in a position maybe to be the leading democratic candidate. And he seems to be kind of Lee and Jonathan, the Sacramento candidate now. And that you've seen the governor's people moving behind him, he's picking up state lawmakers endorsements as well. And this is troubling in this regard. The people behind him now are the status quo in Sacramento. They essentially see him as no threat to the Newsom agenda, the Newsom legacy, taking the state in a different direction on anything. So Besser is the beneficiary and you know, Lee, here we are now, it's the third week of April, and ballots are coming out in a couple of weeks now and voters are still not really paying attention to this race. The poll that I mentioned that showed Besera jumping up about 23% of people in this poll just didn't have an opinion. So this is a B list of candidates running in California. There's only one candidate, Tom, Stu, the billionaire investor who you see much on tv. He's been relentless by the way. He has spent over $125 million in advertising. And that's at last report, I imagine by now he has passed Meg Whitman's record in 2010 where she, she spent something like $144 million of her personal fortune and he'll keep going. He could spend 250 or $300 million to buy this thing if he is the candidate come November. So a basic thing to watch, and you know, the question here, Lee, is to any of these candidates really represent, as I mentioned, a change to the status quo in Sacramento. You hear a lot of talk in this race, Lee, about what about Donald Trump, obviously, and you hear a lot of talk about affordability and you hear a lot of talk about California doing better, blah, blah, blah. But I don't hear a lot of concrete ideas coming outta these guys. I hear a lot of concepts, I hear a lot of buzzwords, but no real evidence of what they wanna do if if elected.

- Interesting point, bill. There's not a lot of concrete there. There is not a lot of concreteness to the ideas that in which they're advocating for. You know, it's interesting be Sarah was around 3% before swallow. Well now is up around what, 10 or 12%?

- Yeah, so I've got the numbers here in front of me. Let me just quickly list them off to you guys trying fund,

- I guess while you're looking for that, it's

- Here. I got 'em, I got 'em. So the poll came out. So Hilton, 20%, er 15% Steyer, 15% Chad Bianco, Republican Sheriff from Riverside County, 14%. He's kind of hanging in there despite not having a very visible campaign. Katie Porter, the former congresswoman, ran for Senate in 2024, 13%. And San Jose Mayor Matt Mahan, 6%.

- Yeah, I think, you know, bill, to me the most surprising aspect of this campaign is that, is that Mahan has not generated more traction. He did enter the race very late. I don't know if that, I don't know how much that affected him.

- He is, he is advertising now, so,

- So yeah,

- Yeah. He has $35 billion in tech money behind him, so he should be advertising.

- Yeah, yeah. So Mayhan is a interesting candidate, very bright, very thoughtful. He is very well spoken. He is is not as far as I can tell, not super aligned with Newsom on at least some issues. He is been somewhat critical of his own party. I don't know how much that is hurting him, but his 6%, he's, he's, he was around 3% now he is his 6%. So that campaign's in trouble. And Billy, you know, I was, I was, I'm curious about via osa, via osa, I'm guessing probably is around 4%

- Less than that. Three

- Less, less than that. So he is, you know, I've watched some of the debate. He comes across to me much more sincerely, much more candidly than some of the other candidates. He has some good wins in Los Angeles as mayor, good non-partisan wins, including improving a number of schools substantially. And he did that by taking on teachers unions. And I thought, I thought very highly of him for that. But in why, why are you thinking that he has generated so attraction? Just, he's been away for too long.

- His peak was 2012 Lee, when he was the mayor of Los Angeles, he wanted desperately to be Barack Obama's transportation secretary and didn't get it. That was 14 years ago. And

- So

- He's passed his peak. It's kinda like watching Andrew Cuomo run for governor, run for mayor of New York City last year. Just, you know, a guy who wants a very political potent force. And I like, I like Mayor Vera goes, don't get me wrong here, he ran against Gavin Newsom in 2018. He's just long in the tooth here. Just so hard to come back when you just kind of out of people's minds in that regard. Now mayhem is interesting because he, I have seen his ads and he is going after wasteful government spending and we spend $350 billion each year. What do we get for it? But he is not being specific as to what is wasteful and how he would change things in Sacramento if elected. Now, clearly the democratic powers that be don't like him. Once Swalwell dropped out, you saw political people get behind Becerra very fast. And Lee, you saw the California Teachers Association beat a hasty path to Tom Steyer. Nobody got behind Matt Mayhan. And I guess that's because they see him as possibly a guy who could, who could do things different. And Sacramento, by the way, the person who kind of stands out here is missing on all this is Katie Porter. I wrote a column for California on your mind on this for last month. You wanna talk about wretched timing, by the way, that column came out the same day that Swalwell dropped out. But what I was positing was you could see a primary where Swalwell and Steyer were going to just beat each other up every day. And Katie Porter might be the beneficiary by just taking a high road while the other two took the low road. This is how Gray Davis won the Democratic primary in California in 1998 when he ran for governor as well. But there doesn't seem to be that much excitement attraction around Katie Porter. And it's a, it's a very curious thing because one thing California has not had, it's not had a woman governor, and with Betty y dropping out of the race the other day, it just would seem that, you know, there would just be a appetite for a woman running, but nobody wants to get behind Katie, it seems.

- No, I, I wonder how much voters know about any of these candidates. And I would love it if these polls, if these polls for governor would ask some additional questions like, so what do you like about Steyer or, or Hilton or Porter or via s or Mahan, what do you like about that? And I suspect that I doubt that more than one outta 10 would literally have any idea of, of what any of these people stand for. Whenever I see, whenever I see stories about Katie Porter, what I read about is, is that awful gaff she made during that campaign, during that campaign advertisement she was filming and then the story of her allegedly throwing mashed potatoes on the head of her former, of her, of her former husband. So, I dunno, my sense is that the ship is already sailed for her. And you know, when I look at Steyer, who is, it was literally, I think he's now, he might be close to what, 150 million in spending on his campaign.

- The last report was 1 25. But there's reports always run behind real time. His advertiser, he's gotta be, he's gotta be hit one 50 and Kle.

- Yeah. And so, you know, I've seen, I've seen some, some, you know, I'm watching ESPN as some of the ads for Tyer pop on there. And, you know, I don't, it's hard for me to really follow his, his, yeah, his train of logic, he makes, you know, he makes promises or campaign pledges such as, you know, I'm gonna do away with political action committee money. And, and that's a national issue. Citizens United was decided by the Supreme Court, California can't ban pac. So I don't know where that kind of stuff's coming from. He does have one idea about housing that, that I'm a big proponent of, which is expanding the use of manufactured housing and modular housing. You're gonna have to take on unions. You're really gonna have to take on unions if you want to implement those kinds of policies. And he does not strike me as a person who's willing to take on unions. I just, you know, bill, you and I, I joke before, you know, if you were to become governor, does he really even know how to govern?

- Well that's, so this is a great question. So if you believe this poll, so you believe that Steyer sitting there tied with Besser at 15% Porter is nipping their heels at 13% in Mayan. Is it 6% may be declining? Our timing is not ideal here because we're doing a podcast in the same day there as a candidate to debate in San Francisco. I wanna watch this and see strategically how Steyer approaches this debate because why he has choices here. He can either go out on that debate stage and tear into his democratic opponents and try to drive them down. I would argue that when you are at 15% in the polls and you spend $150 million and you're not running away from the rest of the field, you probably need to work on your positives more so than your opponent's negatives. And so here I'll be curious to what he sells. But you know, Lee, you, you raise is a great point about what a Governor Steyer would do. It's kind like the old joke about the dog that chases the car and finally catches it. You know, he doesn't know what to do with it once he's caught it and it's Steyer. Now Steyer has some ideas he wants the billionaires tax to go through, for example. But if he actually ran California, how would he actually run it? And this is where, and endorsement of some CTA and the like, are very problematic. They will just go in there and flood him and just kind of essentially tell him what to do. Governors like Jerry Brown or Pete Wilson who I worked for, even Greg Davis knew Sacramento. They had been executives in the past life. They were familiar with the process. So they'd come in kind of ready to govern and they'd have people around them from their political teams, but Steyer wouldn't bring that. So, and this was gonna be, by the way, a big problem with Eric Swalwell, who had really nothing to show in the way of accomplishments politically other than the Trump impeachment was in his mid forties, had no political bodies around him. So I'm not sure how he would've governed either. So a lot of what ifs in this governor's race, and it's the uncertainty of it, they both fascinates, but scares us at the same time.

- Yeah. You know, bill, and in terms of vetting these candidates, you know, I can't help with things that people deep with the democratic circles knew about these issues with swallow because it seems like there's potentially many of these issues with swalwell. And then, you know, there was an advertisement, I think not even, I think maybe six weeks before all of this broke with Adam Schiff just waxing eloquently over what a wonderful person and, and politician and political leader Eric Swalwell is and would become. So are these things really that much of a surprise?

- Back in my journalism days in Washington, we had a phrase this, it was called so and so has a zipper problem. In other words, he just can't keep his fly shut. He chases women, but you didn't know specifically what he or she did, and you didn't have details, but more to the point you didn't have people coming forward and laying accusations. One of the sadder aspects of the swallow story was one of the women who came forward was an aide for him who worked in the Bay Area in field office. And she said she didn't want to come forward originally because why her career in politics would've been over nobody in democratic circles would've hired her. And that's one of the problems here. I think the public needs to understand why didn't the press go after this earlier? Why didn't they investigate? I just, you can't, as a reporter, you know, investigate Jonathan of Reuters or Leo Hadian based on some rumor. You have to have people habeas corpus. You have to produce a body. Somebody has to come forward and make allegations and especially when it's in, in, you know, something political like this. You need really kind of, you know, behavior to be shown here as well. So multiple candidates. But that, having said that, yeah, this was a political hit job given the timing of it and the swiftness done to it as well. But again, just, you know, as far as Swalwell, California dodged a bullet. But again, I look at some of these guys running for office, I'm not sure. And by the way, on Becerra, one final note, Javier Becerra is ultimately a creation of Jerry Brown in this regard. Besser was appointed Attorney General by Jerry Brown and Kamala Harris went to the Senate in 2017. That made him, because then he became the AG of California, got a lot of attention for suing Donald Trump. And that gave him the access to the Biden administration where he became the health secretary. Now, if he became governor of California, would he be more of a Newsom Democrat or would he be more of a sage Jerry Brown Democrat? That's one of the question people of Sacramento were thinking right now.

- And Bill, you know, Betty Yid, I believe Betty Yid dropped out and that's the person, what was she? Was she state, state,

- State controller? She was a state, she was a state controller Lee. And at a time when fraud in California is rampant and stories nationwide about state governments not having control over her fraud to be California's chief accountability officer officer, which is what the state controller is not a good launching pad, if you will. She was on Bay Area TV a lot this week after she dropped out, sadly the most attention she got in the race. And she was very bitter about it, saying that the party squelched her didn't really run. And on top of that, people don't want to hear serious candidates. They want performative art, if you will. And this is her going after of the Democrats will make Donald Trump the focus. She has a point here, but look, there is a performative side to running for governor of California. Arnold Schwarzenegger approved this in 2003. People do wanna be entertained. And I'm sorry, she may have thought she was running a serious campaign, but first of all, I never saw any terrible terribly great credible ideas out of her. Secondly, I never got excited about her because one of my great frustrations in life is at California state controllers, I don't know they do with their day jobs because their job is to hold government accountable. And our state government's a mess when it comes to accountability. So sorry, Betty, the campaign didn't work out, but you know, probably shouldn't have been running in the first place.

- Yeah, she never, yeah, she, I don't think she was ever above two or 3%. And you know, bill, if if, you know, with, with the primary coming up very soon for Republicans, I would think that they would per, it looks like Hilton might finish in the top two. But for Republicans, I would imagine they would be happier to see Steyer as the second person rather than Becerra. What do you think? I'm, I don't knower, I'm thinking Steyer, he, steyer Steyer puts off a lot of people. He's, he's, he doesn't have the aura of a politician. He, he doesn't come across, let's say like Gavin Newsom does.

- Yeah. And there is an argument he made that spending this much amount of money is, gosh, look, he spent I think $300 million running for president in 2020 and got nowhere. He will end up spending $300 million in this. That's $600 million. That's, you know, drop in the bucket for the California state budget. But I think the three of us could agree, you could do a lot of good things for the world with $600 million compared to spending it on water, essentially to vanity projects. One final thought, by the way about Swalwell then we can move on, is if he had advanced to the November election and this ton of dirt would've landed in on top of him right after that, boy would Democrats in California quickly move to a abandon? The two parties set the, the top two primary in California this's, by the way, a very fascinating column by George Skelton, the Los Angeles Times columnist on this the other day. And he pointed out one flaw in our current system right now, you cannot write in candidates in the general election in California for governor, because there was a school of thought. You heard this bus, by the way, a few weeks ago. There should be a writing, a writing campaign for kalo in the primary, if you will. That's not gonna happen. But what Skelton was arguing was, geez, what happens if you in a state that's, you know, two to one Democratic, democratic candidates is fatally flawed? What do voters do? They just not vote for the guy and let the Republican walk in? Or should you have the option of of doing it? It's just a reminder that we get these political systems set up, but then once it doesn't work to one party's advantage, they quickly will change the system. And you saw this with redistricting in California and Proposition 50 last year, and if Swalwell again had gotten advanced in November and then been exposed this way, he would've seen Democrats quickly, I think blow up the, the top two primary

- Gentlemen. Monday, April 20th or four 20 marked the annual worldwide marijuana celebration. I'm not sure if it's an official holiday woo in California. Not sure if it's, I don't know if, is it, is it an official holiday bill?

- The state of California could do a lot of things, gentlemen, it's not gonna have a holiday to celebrate marijuana where people can go out and get stoned. Jerry Brown, by the way, had, I think the greatest line ever when it came to this Jerry Brown in 2016 opposed Proposition 64 of which called for recreational marijuana legalization in California. Gavin, some championed it reporter said, good Governor Brown, you know, you grew up in the sixties and governed in the seventies, why aren't you in favor of marijuana legalization? And Jerry looks at the reporter, he goes, because I'd never heard marijuana and overachiever used in the same sentence. So no, it's not a holiday. In fact, it's very funny. In San Francisco, this used to be the epicenter of the celebration and there's one part of San Francisco called Hippie Hill called, called Big Gathering in the 1960s. But San Francisco started canceling a few years ago, started canceling the Hippie Hill celebration, and I was watching the news on Monday outta San Francisco and it was raining up in the city and they were just put a handful of people on Hippie Hill, a lot of smoke coming out of them, mind you. But not quite the, not quite the wild celebration. It was, I think like maybe during prohibition it probably is more exciting to smoke it when it was illegal than illegal, if you will. But here we are, 10 years into marijuana legalization lead. There's a very open question here about, is this working as intended?

- No, it's not working as intended. It was perceived to be a cash cow for the state that would bring in a lot of, a lot of tax revenue. But you know, bill, what's happened is that there's really two markets now for cannabis. There's the legal market and then there's, you know, the illegal market that's been around forever within the legal market. Taxes are high comp, there are substantial compliance costs. And I'm not saying those bad things, but what they have done is drive up the cost of legal cannabis substantially. So, you know, the idea was, oh, well if, we'll if we'll legalize it, then all the marijuana users will go to these legal cannabis stores and they'll be happy tax revenue flow in Sacramento. It's a win-win. It hasn't turned out that way because the illegal market still really dominates in terms of sales. The estimates are something like 60% of cannabis consumption comes through the illegal market. Yeah. 35 to, you know, maybe 40% comes through the legal market. A lot of, a lot of those within the legal cannabis market are struggling. They're not really covering their costs. So I suspect we'll probably see some exit there. It's still a, you know, it's still a taboo, it's still a taboo topic in a lot of communities, which it will not permit a legal cannabis dispensary. I live in the Santa Barbara area, not far away as Camarillo and, and Caria where, where it's grown and processed and, you know, people just aren't happy about it. You know, you can, you can smell this stuff growing, you know, you know, a a long way is away. People aren't happy about it. So, you know, thi this is a, you know, there's a, there's a world to the story of of, of implementation, of policy, which you kind of have to walk your way between the starting line and the finish line and ask yourself, are we gonna get there? You know, what are, what are the impediments to this? And local communities failing to permit dispensaries and driving up costs to the point where people continue to purchase most of their cannabis on the illegal market. These are things that I don't think were really adequately thought out, thought out. So no Bill, it's not working out as intended.

- You know, there is some good news to report here if, if you're fear in this thing became, if you, if you're afraid when marijuana became legal in California for recreational use, that essentially it was gonna be, you know, dazed and confused, bunch of, bunch of high school kids just getting stoned constantly. Not so according to stats, fewer high schoolers or partaking of marijuana these days than before it became legal. But Lee, there's just a simple market issue here, and I think this just gets back to government being tone deaf or just plain stupid. You overtax a commodity, you're gonna create a black market.

- Yeah, exactly. That's right. That's right. And, and that's what's happening. And I know, I think if people could have walked this back and said, oh, you know what, we're not gonna get nearly tax revenue. We thought the the legal industry is gonna struggle financially, you know, more than half is still gonna be consumed through illegal markets that then, you know, they never saw that coming, but I think the writing was on the wall for them to see. They just chose not to see it. Yep.

- Good day, gentlemen, as always, thank you for your time.

- It was fun, guys.

- Great. Great to see you fellas.

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