California’s hefty cannabis taxes may be eating into the legal weed business, according to several officials in the state. Various regulations are stacking taxes on taxes, and the price increase may be steering consumers into the black market. Since legalization at the beginning of the year, some are calling for the state to reduce their burden on consumers and keep legal cannabis providers competitive with their criminal counterparts.
Right now, the state as a whole imposes a 15% excise tax on cannabis, a cultivation tax amounting to $9.25 for every ounce of flower buds, and $2.75 for an ounce of leaves. In addition, several cities and municipalities have their own cannabis taxes. Los Angeles, for example, has its own 10% tax on recreational purchases, as well as 9.75% general sales tax.
All these taxations together add roughly $12 to a $35 eighth of quality cannabis flower in Los Angeles, according to the Associated Press.
There’s no hard data on how much weed is being bought in the black and white markets, but it wouldn’t be surprising to find that consumers would rather not be taxed more than 30% everytime they want to buy a bag.
That’s why Republican Assemblyman Tom Lackey and Democratic Assemblyman Rob Bonta proposed a plan Thursday to shrink down the state excise tax to 11% from 15%, and to suspend the cultivation tax for three years. That would cut the taxes consumers pay down by roughly 9%.
“Without tax relief to make taxes more affordable, we will continue to empower California’s mature black market,” said Lackey, adding that such high taxes could be a bad idea for a market as young as California’s legal cannabis.
California would not be the first state to walk back initially high marijuana taxes. Washington dropped its separate 25% taxes for cultivation and wholesaling in favor of a 37% cannabis sales tax.
Photo via Flickr user 401(K) 2012