California is missing out on a golden opportunity to bring production back to the state while building a self-sustaining, potentially billion-dollar industry. Instead of thinking boldly, were stuck in a tired debate over incentive caps. Its time to stop playing small and startbetting big like the global film powerhouse we claim to be.

California needs to invest actual hard cash directly into the film industry not just soft money through tax credits and incentives if it wants to truly revive production and compete with other states. In other countries, equity-based funding models provide direct financial support to filmmakers offering actual cash investments in projects in exchange for a share of future profits creating a more sustainable and competitive film industry.

In the United Kingdom, the British Film Institute (BFI) provides equity investments to films through the National Lottery, allowing the government to share in box office revenues. In France, the CNC (Centre National du Cinma) operates a similar model, using a mix of direct funding and equity stakes to support local productions. Meanwhile, in Canada, Telefilm Canada, sustained by taxes on existing media revenue streams, invests in films directly, taking an equity position to help producers secure additional financing and ensure a return on investment if the film succeeds.

Californias GDP, which exceeds $3.9 trillion, is significantly larger than that of the United Kingdom, France, and Canada individually, making it all the more perplexing why the state fails to match their equity-based investments in the film industry.

Investing directly in the film industry isnt just an economic imperative for California its a cultural and historical necessity, because the movie industry was born here; its ours, and we should be proud to support and preserve this legacy for future generations.

On a personal note, many peers of mine have left California for Austin, Texas, and other more affordable states, not because they wanted to but because they had to. And in an even more sad twist of fate, many of my peers have now lost their homes in the fires of early 2025.

Heres what I am proposing: California becomes a financier or co-financier on films. By providing 50-100 percent of the budget for films across all budget levels from $100,000 to $100 million California could adopt an equity-based funding model, allowing the state to earn a share of future profits, royalties, and residuals from successful films. This would transform the state from a passive supporter through tax credits to an active investor reaping substantial financial returns. In broad brushstrokes, this is how it could look:

Major Studios Indie Films:The state could take a two-pronged approach partnering with major studios to keep big-budget productions in California while also funding independent films to support emerging talent and diverse storytelling. Sustainable Investment Fund:Profits generated from successful projects could be reinvested into new films, creating a self-replenishing fund that supports continuous production without draining state resources. Increased Tax Revenue:With more productions choosing California, the state would benefit from increased payroll taxes, sales taxes on goods and services, and income taxes from industry workers and businesses. Job Creation:Funding films directly would stimulate job creation across multiple sectors from construction and hospitality to technology and logistics multiplying the economic benefits as each dollar spent circulates through the states economy. Cultural Exports Tourism:Successful films shot in California would serve as powerful cultural exports, enhancing the states brand globally and driving tourism to iconic locations showcased on screen, generating additional revenue. Intellectual Property Ownership:By investing directly, California could negotiate ownership stakes in the intellectual property rights of films, creating a valuable portfolio of assets that continue to generate income through streaming, licensing, and merchandise long after initial release. A common concern is the idea of the state picking winners in film investment. To avoid this, California could establish an independent board of industry professionals to oversee investments, ensuring transparency and a balance between artistic value and financial viability. This board could be composed of award-winning, California-based film directors and other seasoned creatives who have a deep understanding of storytelling, filmmaking, and the industry itself. Wouldnt it make more sense to have experienced filmmakers guiding investment decisions rather than leaving them solely in the hands of studio executives with business degrees and corporate priorities? This approach would ensure that California is investing in films with artistic and cultural value as well as commercial viability.

This initiative would expand the California Film Commissions mandate beyond tax credits. The commission could administer a dedicated investment fund drawn from the state budget, operating with reinvestment mechanisms where successful films help fund future projects. This approach would make it a self-sustaining system rather than a one-time subsidy.

Transforming Californias approach to film funding by directly investing 50-100 percent of budgets for projects across all levels isnt just a smart economic move its an urgent necessity. This strategy would create jobs, boost tax revenue, and reclaim the states rightful place as the epicenter of the film industry. This needs to happen not soon but right now, before even more productions leave and the opportunity to secure Californias cultural and economic legacy is lost.

Adam Bhala Lough is an independent filmmaker living in Los Angeles. His latest film, Deepfaking Sam Altman, recently premiered at the 2025 SXSW Film Festival.

This story first appeared in the March 19 issue of The Hollywood Reporter magazine. To receive the magazine,click here to subscribe.