Please ensure Javascript is enabled for purposes of website accessibility
California Pot Taxes Lag as Illegal Market Flourishes
gvw_ap_news
By Associated Press
Published 5 years ago on
January 11, 2019

Share

LOS ANGELES — Deep in Gov. Gavin Newsom’s new budget is a figure that says a lot about California’s shaky legal marijuana market: The state is expecting a lot less cash from cannabis taxes.
The Democrat’s proposed spending plan, released Thursday, projects the state will bank $355 million in marijuana excise taxes by the end of June. That’s roughly half of what was once expected after broad legal sales kicked off last year

“[Initially] the state was too optimistic about how the implementation of legalization was going to work. This governor has paid attention to that.” — Josh Drayton of the California Cannabis Industry Association
Industry experts say the diminished tax income reflects a somber reality: Most consumers are continuing to purchase pot in the illegal marketplace, where they avoid taxes that can near 50 percent in some communities.Tax collections are expected to gradually increase over time, but predicting what that amount will be remains something of a guess.
Tax collections for “a newly created market are subject to significant uncertainty,” the budget said.
Josh Drayton of the California Cannabis Industry Association credited Newsom with taking “a realistic look at the challenges” after a bumpy first year of broad legal sales.
Newsom also recommended a sharp increase in spending for regulatory programs, although it’s an open question whether it will be enough to help steady the state pot economy.
The budget recommends just over $200 million for marijuana-related activities in the fiscal year that starts July 1, which would be over a 50 percent boost from the current year.
Initially “the state was too optimistic about how the implementation of legalization was going to work. This governor has paid attention to that,” Drayton said.
That said, Drayton added that legal businesses need a break from hefty tax rates that are driving consumers to the illicit economy. Various proposals have been made to cut state pot taxes.

Newsom Is an Advocate for Legalized Marijuana

State taxes include a 15 percent levy on purchases of all cannabis and cannabis products, including medical pot. Local governments are free to slap on taxes on sales and growing too, which has created a confusing patchwork of tax rates around the state.
The state’s top marijuana regulator, Lori Ajax, has said the state intends to get more businesses licensed and operating in 2019, while cracking down on rogue operators who continue to proliferate across the state.

Newsom, an advocate for legalized marijuana, said it has long been expected the new market would take five to seven years to settle in, with twists and turns along the way.
At year’s end, California’s effort to transform its longstanding illegal and medicinal marijuana markets into a unified, multibillion-dollar industry remained a work in progress. By some estimates, up to 80 percent of sales in the state remain under the table, snatching profits from legal storefronts.
Drayton said more than half the municipalities in the state do not have laws governing the industry. That means pot businesses cannot locate there, since companies are required to have a local license before seeking one from the state.
The budget also includes an additional $2.9 million for the California Department of Tax and Fee Administration to help chase down tax cheats.
Meanwhile, the courts budget includes nearly $14 million for resentencing of thousands of drug offenders whose offenses are no longer crimes since California legalized recreational pot.
Newsom, an advocate for legalized marijuana, said it has long been expected the new market would take five to seven years to settle in, with twists and turns along the way.
The issues he intends to look at include the distribution pipeline and claims that local governments are gouging the industry.
The state will “move expeditiously at licensing more and more dispensaries, making sure we go after the bad actors,” he said.

DON'T MISS

Smokey Robinson, Anthony Jeselnik, and Brit Floyd Are Top Choices for Father’s Day Weekend

DON'T MISS

This Shy Sweetheart Was Dumped in a Parking Lot with Her Siblings

DON'T MISS

Fresno City Attorney’s Wage Theft Unit Targets Valley Children’s Hospital

DON'T MISS

Fresno Police Chief Balderrama on Paid Leave, City Manager Says

DON'T MISS

Konstadinos T. Moros Discusses Gov. Newsom’s Proposed Firearms Amendment on Unfiltered

DON'T MISS

US Inflation Eases in May, Indicating Potential Relief from Price Pressures

DON'T MISS

Over 200 Rockets Launched from Lebanon Following Israeli Strike on Hezbollah Commander

DON'T MISS

Rep. Costa Blasts GOP House For Holding AG Merrick Garland in Contempt

DON'T MISS

Is California’s $20 Minimum Wage to Blame for Loss of 10,000 Fast-Food Jobs?

DON'T MISS

Balderrama: ‘I Plan on Leading This Police Department to Even Greater Heights’

UP NEXT

New Pro-Palestinian Protests at UCLA Lead to Dozens of Arrests

UP NEXT

Federal Appeals Court Backs California’s Ban on Gun Shows at County Fairs

UP NEXT

California Doctors Rally for Ballot Measure to Increase State Medicaid Funding

UP NEXT

NBA Legend and Logo Jerry West Dies at 86

UP NEXT

Shaver Lake Drowning Victim Identified by Sheriff’s Office

UP NEXT

Cold Stone Creamery Could Shell out Cash for Not Putting Pistachios in Pistachio Ice Cream

UP NEXT

California Sits on Millions That Could Boost Wage Theft Response

UP NEXT

Hunter Biden Convicted on All Three Felony Counts in Federal Gun Trial

UP NEXT

A Lost Credit Card and $7 Cheeseburger Reignites CA’s Debate Over Excessive Bail

UP NEXT

CHP Bust Yields 10 Pounds of Fentanyl Powder, Two Arrests

Fresno Police Chief Balderrama on Paid Leave, City Manager Says

15 hours ago

Konstadinos T. Moros Discusses Gov. Newsom’s Proposed Firearms Amendment on Unfiltered

16 hours ago

US Inflation Eases in May, Indicating Potential Relief from Price Pressures

17 hours ago

Over 200 Rockets Launched from Lebanon Following Israeli Strike on Hezbollah Commander

17 hours ago

Rep. Costa Blasts GOP House For Holding AG Merrick Garland in Contempt

17 hours ago

Is California’s $20 Minimum Wage to Blame for Loss of 10,000 Fast-Food Jobs?

18 hours ago

Balderrama: ‘I Plan on Leading This Police Department to Even Greater Heights’

18 hours ago

Wired Wednesday: Clovis Raises Water Development Fee by 105%. Impact on Homebuyers?

19 hours ago

As Californians’ Stance on Crime Hardens, Republicans Try to Regain Relevance

19 hours ago

Lawsuit Claims Valley Children’s Paid On-Call Employees Less Than Minimum Wage

Smokey Robinson, Anthony Jeselnik, and Brit Floyd Are Top Choices for Father’s Day Weekend

There’ll be an assortment of events you can do with your dad this Father’s Day Weekend. R&B singer Smokey Robinson, comedian...

2 hours ago

2 hours ago

Smokey Robinson, Anthony Jeselnik, and Brit Floyd Are Top Choices for Father’s Day Weekend

2 hours ago

This Shy Sweetheart Was Dumped in a Parking Lot with Her Siblings

Fresno City Attorney’s Wage Theft Unit Targets Valley Children’s Hospital

15 hours ago

Fresno Police Chief Balderrama on Paid Leave, City Manager Says

16 hours ago

Konstadinos T. Moros Discusses Gov. Newsom’s Proposed Firearms Amendment on Unfiltered

17 hours ago

US Inflation Eases in May, Indicating Potential Relief from Price Pressures

17 hours ago

Over 200 Rockets Launched from Lebanon Following Israeli Strike on Hezbollah Commander

17 hours ago

Rep. Costa Blasts GOP House For Holding AG Merrick Garland in Contempt

MENU

CONNECT WITH US

Search

Send this to a friend