By accessing this site, you accept the Terms of Use and Privacy Policy. We use cookies to enable essential features of our site and to help personalize your experience. Learn more about our use of cookies in our Cookie Policy and Privacy Policy. You can unsubscribe from Leafly email messages anytime. And it did dd with both hands—and one foot—tied behind its. Today, the California Department of Tax and Fee Administration released its final tally for cannabis sales and excise tax receipts for But the amount is far greater than totals from any other state that also legalized cannabis the year California did, in
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Bill Chappell. California says revenue from marijuana sales has risen — but analysts say the illegal market is still thriving. Here, an employee puts down an eighth of marijuana after letting a customer smell it at the Magnolia cannabis lounge in Oakland. It’s the latest sign that the country’s largest marijuana market has struggled to take off since sales of recreational pot became legal last year. But earlier this year, the results prompted Gov. Gavin Newsom to revise his office’s estimates of how much money the state would net from its cannabis industry. Compared to other states, California’s legal cannabis market has stumbled rather than soared. The result was a departure from the spikes seen in states such as Colorado, Washington and Oregon after those states legalized recreational markets. In those three states, he adds, they «posted 50 to 90 percent compound annual growth for three years straight. As for what’s holding California back, Adams says licensed stores can be hard to find, because many local areas have refused to allow retailers to open. And then there are the tax and regulatory costs: In addition to requiring wholesale distribution, California imposes a number of levies on the cannabis industry. But local city and county governments can impose their own taxes on cannabis products, and those rates vary widely. Of the decision to levy a set tax that’s based on weight rather than on a fluctuating market price, Adams says that if «instead of going with a percentage of revenue tax you go with a per ounce tax, that gets painful really quickly. Confronted with high taxes in the legal market and new requirements for getting an annual medical marijuana card, many cannabis users in California have turned to the illegal market. The number of medicinal customers has shrunk drastically in the past year, Adams notes. And he says the state’s rules about keeping inventories separate for recreational and medicinal sales have either increased costs or prompted some retailers to abandon the medical market altogether. The state’s figures do not include taxes collected at the local level. Accessibility links Skip to main content Keyboard shortcuts for audio player. Don’t Tell Me!
Industry supporters say high taxes, black market to blame.
But it does put the state on track to hit the revenue totals Gov. But revenue narrowly grew in the fourth quarter, according to figures Tuesday from the California Department of Tax and Fee Administration. The state largely took a carrot rather than stick approach to enforcement in , hoping to lure unlicensed businesses out of the illicit market. Newsom is calling for increased enforcement this year, with a request to send National Guard troops from the Mexican border up to Northern California to combat illegal grows on forest land. Assemblyman Rob Bonta, D-Oakland, introduced a bill that would temporarily reduce the cannabis excise tax from 15 percent to 11 percent and suspend the cultivation tax completely for the next three years. An identical bill failed to get support in California has had to reckon with more realistic cannabis revenue forecasts as the first-year totals came through. Former Gov. And no funds have so far been dedicated to programs that prevent young people from using cannabis, environmental cleanup and other programs promised to voters when the legalized marijuana through Proposition Some funds are expected to be allocated to those causes for the coming fiscal year when Newsom revises his budget in May. Meanwhile, Komp said they hope to see the state lower barriers to entry for small cannabis businesses, plus for things to change at the federal level. Report an error Policies and Standards Contact Us. More in News.
Why California isn’t seeing the expected tax revenue from legal cannabis sales
The Agenda. Think. States that have legalized recreational cannabis are finding that it’s not always the cash cow they envisioned. And there are plenty of other complicated issues to confront as they try to create and manage a legal market for a product long considered taboo. Eleven states and the District of Columbia have given the green light to recreational cannabis, starting with Colorado and Washington state inwith sales already underway in califkrnia states. In those states, bringing marijuana into the legitimate economy was often sold to officials and the public as a way to raise new tax revenue from sales and production and funnel it into areas californix education, mental health and law enforcement. So what have those states experienced? Tax revenue that has largely fallen short of expectations and a growing recognition that taxing marijuana is pretty complicated. In a lot of ways, states are also grappling with their central goal of bringing cannabis out of the black market. As it turns out, the state raised not even a third of that in fiscalthe first full year since recreational sales began. There are a few exceptions: Colorado got its original revenue estimate for legal marijuana almost exactly right, and Nevada zoomed past its projections.
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