Legal Weed Could Spike Up 70% After New California Taxes Take Effect

Legal Weed Could Spike Up 70% After New California Taxes Take Effect

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Let’s hope you California stoners been saving a little bit extra lately. If not, we might suggest a swear jar, a bake sale, or maybe a car wash, because you’re going to need to come up with something to keep up with the cost of legal weed in your fair state once new taxes kick into the recreational market January 1.

According to a report from the Associated Press, weed prices could rise as much as 70 percent, turning a standard $35 eighth into more like a $50 or $60 bag.

Exact taxation will depend on your city and county, so let’s take as an example the cost of cannabis in Los Angeles. Right now, medical marijuana is not taxed by the state and the city of LA only takes a meager 6 percent kick.

But recreational weed will be a different story. You’ve got your 15 percent state tax, a standard sales tax of roughly 10 percent, and a city business tax of 10 percent which is usually passed onto customers. For those who left their calculators at home, that’s a 35 percent tax on legal weed, which is enough to make a wook want to hit up a black market channel.

And some counties and municipalities are raring to set even higher taxes, which gives us our attention-getting headline.

In fact, the AP posits that some cannabis products are likely to be taxed right out of the market. For instance, trim or shake (the stuff that gets trimmed off of the cannabis plant). It’s sometimes sold by the bagfull, usually used for the purpose of making your own edibles or extracts, at around $50 a pop. Starting next year, those bags will be taxed at $44 a pound, meaning the tax on a seven pound bag would be about six times its market price. That’s so expensive that it would make trim basically worthless in the legal market.

Which brings us back to the unregulated cannabis market. A report from financial analytics firm Fitch Ratings warns that “The existing black market for cannabis may prove formidable competitor to legal markets if new taxes lead to higher prices than available from illicit sources.”

The other competition will of course be the medical cannabis market. Patients probably aren’t going to throw their recommendation cards away the moment the new year rings in. Medical marijuana won’t be as expensive as its recreational counterpart, but it is going to get pricier. That 15 percent state tax applies to all cannabis, medical or otherwise, though MMJ will be spared a sales tax.

Photo via Flickr user Dank Depot

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