California Lawmakers To Fight For Lower Tax On Cannabis
California lawmakers are pushing for a lower tax on legal cannabis in an attempt to fight the black market. Two members of the state assembly announced a bipartisan plan that would reduce taxes on legal weed.
Rob Bonta, a Democrat from Oakland, and Republican Tom Lackey from Palmdale think that taxes on cannabis are too high. They believe that the impact of taxes on the retail prices allows the black market growers and sellers to continue to operate. According to Lackey, who is a retired 28-year veteran of the California Highway Patrol, the illicit sellers distribute weed to minors and don’t follow strict safety rules.
Tax, tax, tax
Cannabis taxes begin with cultivators. Growers pay $9.25 per ounce of flower and $2.75 for each ounce of leaves. Then the product is sold at retail, and here more taxes are added. A state excise tax adds another 15 percent to the total. Local governments can add their fees, and sales tax affects recreational pot buyers.
When combined, taxes on cannabis approach 50 percent. Add the costs of required testing and tracking, and you will get a hefty sum.
If the bipartisan plan succeeds, it would reduce the tax to 11 percent and eliminate the cultivation tax for three years. According to the lawmakers, total prices at retail would shrink about 9 percent.
Other states struggle as well
Other states with legal cannabis have been struggling with the same problem for a while. Activists claimed that potential tax revenues could be a massive benefit of legalization.
However, when taxes are skyrocketing, many buyers still prefer to buy from the black market. It means that established illegal operators continue to have customers.
For example, in the state of Washington, imposed taxes affected many stages of production. A tax of 25 percent was assessed up to three separate times on particular products. As a result, consumers got their wallets much, much lighter.
The Bottom Line
Bonta noted that it is essential to support the newly legal weed business so they can compete with illegal growers and sellers. According to the lawmaker, “if we do not get it right in the beginning, it will be hard to make up for it later and correct in the future.”
(Sweedsy in no way encourages illegal activity and would like to remind its readers that marijuana usage continues to be an offense under Federal Law, regardless of state marijuana laws. To learn more, click here.)