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California Cannabis Taxes Will Increase New Year’s Day

After having avoided an increase in state taxes on legal marijuana, California officials changed course Thursday and announced MJ excise and cultivation taxes will go up effective Jan. 1.

High state and local tax rates have been an industry problem that have made legal businesses less competitive with the illicit market: Unlicensed retailers can lure customers with lower prices, since rogue shops don’t pay any taxes.

In announcing the move, the California Department of Tax and Fee Administration (CDTFA) – which must recalculate the wholesale cannabis markup rate every six months – revealed that the markup rate for the marijuana excise tax will increase from 60% to 80% on New Year’s Day.

The markup rate is used to provide the basis for California’s 15% excise tax.

$9.65 from $9.25 for an ounce of flower, or an increase of 4.3%.The increase will also raise the state cultivation tax to adjust for inflation, raising those taxes as well:

  • $2.87 from $2.75 for an ounce of leaves, or an increase of 4.3%.
  • $1.35 from $1.29 for an ounce of fresh marijuana plant material, or an increase of 4.6%.

The CDTFA’s markup rate is based on the wholesale average market price of cannabis, and the agency had previously declined to increase the state marijuana tax rate.

The agency statement said the markup rate change was based on “an analysis of statewide market data,” and a CDTFA spokesman wrote in an email to Marijuana Business Daily that the tax adjustments are a result of existing state law.

To Read The Rest Of This Article By John Schroyer on Marijuana Business Daily

Published: November 21, 2019

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