In California, buying and growing legal cannabis could soon become a bit cheaper as lawmakers from the golden state have announced a bill, Assembly Bill 286, which focuses on reducing, or eliminating, two separate cannabis taxes. The bill is an effort to pave the way for the new legal cannabis industry which is struggling to compete with black market dealers.
Included in the bill is a reduction of 4 percent on the state’s current 15 percent excise tax on cannabis, lowering the tax rate to 11 percent. Also, the bill also allows for the elimination of the states’ current cannabis cultivation tax that growers are required to pay for three years.
Assemblyman Rob Bonta, a democratic representative for the state, is one of the sponsors of the bill. Bonta believes that legit cannabis businesses operators have no chance of competing with dealers working the black market if they can’t compete cost-wise.
Currently, cannabis users who buy marijuana-related products legally pay taxes of approximately 45 percent of the total cost of their purchase. Furthermore, aside from excise taxes and cultivation taxes, local governments also tack on additional taxes of their own to legal marijuana purchases.
Another assemblyman, Tom Lackey, supports the bill as well and has noted that the state’s revenue from cannabis taxes was roughly $100 million less than the Governor’s office projected for the 2017-2018 year. He also notes that the state expects to collect approximately $355 million this year, and over $514 million next year.
To clarify the current state of the cannabis industry in California, and why this bill is so important, California lawmakers seized around 16,000 pounds of marijuana last year. Roughly double than the amount seized the previous year. The bottom line is that the illegal cannabis producers of California are dominating the market. Without the passing of such legislation as Assembly Bill 286, there is little hope for the fledgling market to spread its wings and mature.
Fiona Ma, an additional sponsor of the bill and the State Treasurer, has commented that her office has heard numerous complaints from members of the marijuana industry that 15 percent excise tax is just too high. Ma goes on to state that “We don’t tax start-up businesses when they start. We need to do better. This is anywhere from a $6 billion to $20 billion industry here in California.”