In some areas of the state, the combined taxes on the drug climb as high as 50 percent
Would you be willing to pony up for pot potency?
Analysts in California’s beleaguered cannabis industry have proposed making consumers do just that by getting rid of the state’s bizarre patchwork tax system and replacing it with one tied to the strength of the strain.
Made by California’s Legislative Analyst’s Office, the proposal would wipe out the current taxation system, including a 15 percent levy that all consumers pay at the counter, and replace it with a tiered system.
The size, scope and creativity of California has always made it seem like a dream destination for the cannabis industry, but with legal stores already struggling to stay afloat and new taxes on the way, it is hard to tell who, outside of the black market, is benefiting financially from cannabis.
In some areas of the state, the combined taxes on the drug climb as high as 50 percent, according to the Associated Press, forcing the state to get creative in its efforts to beat back its illicit competition.
“We view reducing harmful use as the most compelling reason to levy an excise tax,” the proposal noted. “Currently available information suggests that a potency-based tax in the range of $0.006 to $0.009 per milligram of THC could be appropriate.”
Purveyors of high-potency pot would probably disagree with that assessment, but targeting California’s heavy-hitters would enable the state to raise the US$350 million annually needed to fund mandatory marijuana-related programs, the agency added.
“I continue to believe we must lower and simplify the taxes on cannabis if the regulated cannabis industry in California is to survive, let alone thrive,” State Assemblyman Rob Bonta said, adding that the report clearly shows “the status quo is not working.”
The California Cannabis Industry Association is already on board — the group has been calling for an end to weight-based cultivation taxes for years. “As California’s regulated market struggles against a thriving illicit industry, we believe that comprehensive tax reform will incentivize consumers to purchase regulated cannabis products, ease administration and compliance, and increase and stabilize revenues for the state,” the group noted.
The report calls on California to confer with experts and examine the results of computer software that tracks sales across the state before making any moves.
It might also want to check with consumers — particularly those using the drug for medical purposes — to determine if a potency tax will unfairly penalize those who require higher-strength strains to treat medical conditions or simply force more people, not less, over to the black market.
Written by David Yasvinski