XPost: alt.california, talk.politics.guns, alt.politics.marijuana
XPost: sac.politics, alt.fan.rush-limbaugh
California’s beleaguered pot industry was given another piece of bad
news Thursday afternoon: The state cannabis tax rate will increase from
15% to 19% on July 1, the highest allowed by state law.
The 26% change, devised by Gov. Gavin Newsom, is ironically being made precisely because the state’s legal industry is floundering while the
illicit market thrives.
Representatives with the California Department of Tax and Fee
Administration announced the gross receipts tax hike during a cannabis
advisory meeting Thursday. State law requires the department to increase
the pot tax rate this year if cannabis excise revenue falls.
Jerred Kiloh, the president of the United Cannabis Business Association,
said the tax increase will only make it harder for legal stores to offer cannabis at a price point that competes with illegal stores.
“More businesses will close sooner as the legal price is just too far
away from illegally obtained products. Less investment in starting or continuing cannabis operations will occur, and demand for cannabis
licenses will decline exponentially,” Kiloh said.
Cannabis tax revenue has plummeted as the legal marijuana market goes
through a financial contraction, with thousands of companies going out
of business. Industry leaders have blamed the legal market’s struggles
on expensive regulations, high taxes and competition from the thriving
illicit market, which pays no cannabis taxes. A recent study funded by
the state found that the majority of cannabis users still purchase their cannabis from the illegal market.
The tax increase is thanks to a law Gov. Gavin Newsom signed in 2022
that removed a cultivation tax but also required the state to increase
cannabis tax rates if revenues fall in the future. San Francisco
Assemblymember Matt Haney introduced a bill this year that would block
the tax hike. The bill is working its way through the Legislature and unanimously passed its latest committee vote on April 24.
Amy O’Gorman Jenkins, the executive director of the California Cannabis Operators Association, said in an email to SFGATE that cannabis
businesses already can’t afford to pay the 15% tax rate, let alone
operate under the impending tax increase.
“We’re urging the Legislature and Administration to act quickly and
freeze the tax at 15%. If we want a regulated market to survive in
California, the time to intervene is now,” O’Gorman Jenkins said.
https://www.sfgate.com/cannabis/article/california-cannabis-tax-increase-20305768.php
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