California Bill To Cut Adult-Use Taxes Stalls In Committee

By Benjie Cooper

IG: @nuglifenews

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Projected revenue from adult-use marijuana in the state of California has fallen short of the state’s initial projections in the first several months of 2018. Original forecasts predicted that retail sales would generate $175 million in tax revenue by the beginning of July, but by March, the state had only collected $34 million.

High tax rates, which can collectively amount to nearly 50% in some places, are one of the things being blamed for sales not meeting the forecast expectations.

In April, the Oakland-based Arcview Group released a study which estimated that, compared to unlicensed marijuana manufacturers, legal cannabis producers pay 77% higher business costs stemming from a variety of state and local taxes and other fees associated with new regulations.

In March, Tom Lackey [R] introduced AB3157 into committee, a bill aimed at helping the new legal cannabis industry by suspending the cultivation tax for three years, and reducing the excise tax rate to 11% until June 1, 2021, when it would return to 15%.

“The cumulative tax rate imposed by existing law is substantial and undermines the legal regulatory system if high taxes cause prices to far exceed that what it found on the black market,” states AB3157. “It is the intent of the Legislature that this act suspend the cultivation tax rate for the first three years of that market as marijuana businesses come into that market.

But the measure failed to make it through the legislative committee Friday. Opponents of the bill contend that it is too early to reduce taxes without proof that the rates were helping drive black market sales.

“Today was another win for the black market,” said Lackey, “All we wanted to do was level the playing field financially.”

AB3157 is currently being held under submission but Lackey, a former CHP officer, is hopeful that the bill can be revived at some point in 2018.