There’s no bigger issue within the marijuana market than too high taxes. That’s especially the case in California, where rates can go up to 35% and push many consumers to the illicit market.
Last week, California lawmakers made an effort to bring those customers back by reducing the excise tax from 19% to 15% starting October 1st. The law also promises to keep it at this rate until June 30, 2028.
It’s a nice tax cut, but also one that’s pretty familiar, considering the excise tax was at 15% up until July of this year when it raised to 19%. This was written into a 2022 law, but the attempt to avert it failed by Newsom. It’s now coming 3 months late, but better late than never.
Not everyone is happy about the tax cut, surprisingly. Some nonprofit groups who rely on the tax revenue have said they will lose about $135 million in tax revenue from the reduction. The revenue raked in by California from marijuana is no joke, with $250 million in the 2nd quarter of this year alone. No doubt there would be some ripple effects by bringing the excise tax down to its original 15%.
However, lawmakers are a group that have no disagreement about the cut. According to SFGate, the support was pretty much unanimous.
Hirsh Jain, a cannabis consultant, told SFGate, “For the first time, the Legislature is facing the truth that the high cannabis tax rates are leading to a rampaging illicit market and California is behind other states in facing the illicit market.”
Read the original article at SFGate.
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