California Assemblyman Rob Bonta [D] introduced a bipartisan bill on Monday to temporarily lower the state’s cannabis excise taxes from 15 percent to 11 percent as well as completely suspend cultivation taxes until 2022.
The bill is co-sponsored by Ken Cooley [D], Reginald Jones-Sawyer [D], Tom Lackey [R], and Mark Stone [D].
AB286, also known as the Temporary Cannabis Tax Reduction Bill, is a response to the legal cannabis industry’s slower-than-expected start.
Growth in the legal marijuana market in California has been stunted by high taxes and fees as well as the unwillingness of many cities to issue licenses. AB286 is intended to help the new legal cannabis industry compete with the well-established black market.
Assemblyman Tom Lackey [R] introduced a similar bill in 2018, but it did not make it out of committee.
“The black market continues to undercut businesses that are complying with state regulations and doing things the right way,” said Bonta in a news release. “AB286 will temporarily reduce the tax burden on these licensed operators to keep customers at licensed businesses and help ensure the regulated market survives and thrives.”
California’s cannabis tax income was lower than expected in 2018 as revenues fell $101 million short of earlier predictions.
“We are helping legal Cannabis businesses with their transition into the marketplace,” said California State Treasurer Fiona Ma. “Just like we would for any startup industry.
A study released in April of 2018 by The ArcView Group showed that California’s legal cannabis industry is handicapped by costs which are 77 percent higher compared to the illicit market. Bonta says that once the legal marketplace has successfully established itself, taxes will return to their former rates.
