In a gift to California’s black market weed dealers, the California Department of Tax and Fee Administration (CDTFA) has announced that it will once more raise taxes on legal cannabis.
Every six months, the CDFTA is responsible for determining the cannabis tax based on the good’s mark up rate, meaning how much it things that cannabis distributors are “marking up” their wholesale goods when they sell their grams and joints to customers.
Based on their findings, as of January 1, it has decreed that taxes will go up on an ounce of dry cannabis flower from $9.25 to $9.65. Tax on dry weed leaves will also rise from $2.75 to $2.97 per ounce while tax on fresh cannabis increase from $1.29 to $1.35 an ounce.
The taxes will most directly affect cultivators, applying to cannabis they sell or transfer to a distributor or manufacturer, but the cost will likely spread throughout the industry, kneecapping an already struggling industry.
“It makes you wonder if the state wants the legal cannabis industry to fail,” an anonymous industry executive told Forbes. The news site also reported on cannabis businesses avoiding steep taxes by either setting up shop elsewhere or else staying hidden in the black market where they don’t have to pay the tax man.
“The reason the black market continues to exist is that taxes are too high,” said Los Angeles dispensary owner Jay Handal.
“People are looking for the best value, and the government, both state and city, are woefully poor at shutting down black market stores. Raising taxes will only exacerbate the situation by continuing to keep black market store prices ridiculously lower than legal dispensaries that carry tested products.”
Photo via Flickr/Maja Dumat