LOS ANGELES — California is increasing business tax rates on legal marijuana, a move that stunned struggling companies that have been pleading with the state to do just the opposite.
The California Cannabis Industry Association said in a statement that its members are “stunned and outraged.”
The group said the higher taxes that will take effect Jan. 1 will make it even worse for a legal industry struggling under the weight of heavy regulation and fees, local bans on pot sales and growing and a booming underground marketplace.
“Widening the price … gap between illicit and regulated products will further drive consumers to the illicit market at a time when illicit products are demonstrably putting people’s lives at risk,” the group said, referring to the national vaping health crisis.
A Major Change Involves What’s Known as the Mark-up Rate
The changes involve taxes paid by legal businesses, which ultimately get passed along to consumers at the retail counter.
Josh Drayton of the cannabis association predicted that an eighth-ounce purchase of marijuana buds, typically priced around $40 to $45, would be pushed up to $50 or more in the new year.
For consumers, “ultimately, they’ll feel that at the register,” Drayton said.
Separately, cultivation tax rates are being increased by inflation, as required by law. For example, the tax on an ounce of dry buds will climb to $9.65 from $9.25, an increase of just over 4 percent.