Thread: High Taxes Killing California Recreational Marijuana Tax Collection

High Taxes Killing California Recreational Marijuana Tax Collection



14 May 2018

California expected state and local tax bonanza from legalizing recreational marijuana sales is drastically under-performing forecast due to a high tax burden.

The California Department of Tax and Fee Administration reported that collection for the state’s first three months of legal sales that began on January 1, only produced $32 million of excise taxes and $2 million in cultivation tax on about $213 million in sales.

The voter-approved Proposition 64 tax collection trend is running at about a third less than the recently revised down forecast of $175 million for the first 6 months of 2018 and at about 50 percent less than the $630 million expected in the first 6 months of 2019.

The State of California Bureau of Cannabis Control originally projected that California’s $2.79 billion of illegal cannabis sales in 2017 would grow when legalized by the same 28 percent compounded rate for the roll-out of Internet broadband access. The BCC initially estimated that the first year legalized recreational pot would generate $6.6 billion in sales, produce $1 billion in taxes and support 100,000 private sector jobs in 2018.

But on top of the state’s 15 percent excise tax and about 1 percent cultivation tax, legal marijuana is subject to an average of 9.5 of a percent in sales tax and a 10 percent local tax for cities like Los Angeles. That works out to a tax burden of 38.6 percent for the privilege of buying legal marijuana.

But on top of legal marijuana’s huge state and local taxes, IRS federally taxes legal marijuana sales on revenue, minus only the cost of cultivation. Unlike every other retail business, the IRS does not allow company deductions for rent, advertising, and payroll.

According to the High Times website, the marijuana tax revenue shortfall is motivating cities like Los Angeles to crack down on “black market” businesses.

After a February Los Angeles raid on a high visibility illegal dispensary, Los Angeles Police Department Deputy Chief John Sherman told HT: “We have several hundred, probably somewhere in the neighborhood of 200 to 300, of what we believe are these unlawful and illegal establishments operating throughout the city.”

With the state, cities and legal pot businesses complaining that exorbitant tax rates are hurting tax collection, the California State Assembly’s Committee on Business and Professions voted unanimously on May 9 to move AB-3157 that would lower the legal excise tax on legal pot sales from 15 to 11 percent.

http://www.breitbart.com/california/...ax-collection/

Greedy, corrupt California DemoRATS!

They screw up everything they put their slimy hands on.

Originally Posted by lorrie

Greedy, corrupt California DemoRATS!

They screw up everything they put their slimy hands on.

You're right. The states legalizing recreational pot are all controlled by Democrats and it really does come down to greed. This situation seems to be one where their greed has backfired on them.

California Company Is First to Export Medical Marijuana and CBD Oil, to Mexico

Like I said...they will tax it to death and it will be sold cheaper on the streets!

Greed is the ONLY reason they want to legalize it. Backfiring already!

Originally Posted by Beezer

Like I said...they will tax it to death and it will be sold cheaper on the streets!

Greed is the ONLY reason they want to legalize it. Backfiring already!

Yep, the taxes and added regulation costs will keep the drug cartels and other illegal manufacturers, smugglers and dealers in business. The black market will always be able to undercut the legal market. Many of the folks already purchasing their marijuana illegally will continue to do so because it's cheaper and they already have an established dealer. The new "legal" market will mostly create new drug users and future abusers. Many of the new users will be the preppy type with a little extra jingle in their pocket. Of course due to lack of motivation, some of those "new users" will eventually lose that extra jingle and resort to the black market for their needs. The mom that is buying drugs instead of milk for her kids and the dad buying drugs instead of paying his child support will continue to buy from their illegal dealers because the price is right.

They'll lower the taxes to solve the problem. The taxes were too high, the taxes should be the same as other products.

California considers lower taxes on pot to help new legal industry ...
www.latimes.com/.../la-pol-ca-pot-tax-reduction-california-legislature-20180315-stor...
Mar 15, 2018 - Alarmed that California's fledgling legal marijuana industry is being undercut ... taxes can raise the price of marijuana sold legally by up to 45%, ...

The states have a new source of taxes now.

Supreme Court rules states can legalize sports betting (AND TAX IT)

CA. made $60.9 Million in tax revenue from cannabis industry in 2018 first quarter

"That amount includes state cultivation, excise and sales taxes and does not include local tax revenue collected by cities or counties, the CDTFA said in a news release."