FRESNO, Calif. (FOX26) — The cannabis market across the state of California is doing everything it can to keep the doors open not just for legal businesses, but also for the industry as a whole.
But a new tax increase could make that a little more tough.
Starting on July 1st, the state cannabis tax rate will increase from 15% to 19% which is only being applied to this sole industry.
This comes at a time when revenue in the state as a whole took a dip to end 2024.
This is pushing lawmakers to find ways to ease the tax burden for those trying to make ends meet.
One idea is the creation of Assembly Bill 564 authored by Matt Haney.
This would block the rate hike to help the legal cannabis business compete with the more dominant illegal market.
“The legal cannabis industry, which is subject to state and local taxes and fees, is constantly at a threat of being overtaken by the illegal untaxed industry,” Haney said. “Fully licensed legal businesses in California capture just 40% of the state’s entire market, while the underground illegal market accounts for 60% of the overall market.”
And this isn’t the only statistic giving state leaders cause for concern.
Consumer participation in the legal markets plateaued at 40%, with more data showing that number declining.
This has allowed states like Michigan to pass California in sales. But that’s not all.
Amy Jenkins with the California Cannabis Operators Association explained some more concerning numbers.
“Then the economic report, which has been referenced in your analysis and elsewhere, commissioned by the Department of Cannabis Control, affirms what operators have been saying,” Jenkins said. “California’s excise taxes and licensing fees are 124% and 162% higher respectively than Michigan’s. And altogether, our taxes and fees account for about 77.5% of total wholesale value. That is not a sustainable framework.”
After hearing from a mixed audience who both supported and opposed the bill, The Assembly Committee on Revenue and Taxation voted unanimously to pass the bill with only one no vote.
With AB 564 now approved by two assembly committee’s, the bill is now currently being revised to be read a second time and be amended.
The cannabis market across the state of California is doing everything it can to keep the doors open not just for legal businesses, but also for the industry as Read More
