The legal cannabis industry has been dogged by a burdensome combination of taxes.
The proposed plan, introduced late Thursday, is to cut the state excise tax from 15% to 11% and suspend a cultivation tax that charges $148 per pound, reported the LA Times.
The thinking is that the illegal market does not pay business taxes nor it is bound by other rules that legal license holders must observe, so why not level the playing field?
“We need to give legal businesses some temporary tax relief so they do not continue to be undercut by the black market,” said Assemblyman Tom Lackey (R-Palmdale), who is one of five legislators pushing the bill.
The legal cannabis industry has been dogged by a burdensome combination of taxes: excise and grower's taxes, local taxes adopted by cities and counties, and sales tax that can be as high as 9.2% in some counties.
And there’s more…the state will soon begin charging a $1,000 license-processing fee.
How can the legal market flourish under such a tax scheme that can, and does, raise the price of legal weed by up to 45%, which they then pass on to their customers?
This begs another question: will consumers continue to pay so dearly for legal weed when it’s much cheaper elsewhere?
Let’s face it, California is the nation’s largest legal weed marketplace so they need to get this right.
Tom Lackey told reporters that the cumulative tax burden is high for an industry being regulated for the first time.
“Without tax relief to make taxes more affordable, we will continue to empower California's mature black market.”
Amen to that.