California Cannabis Taxation Turning Up The Heat

Everyone knows California’s taxation is insanely high. And with cannabis becoming a major cash crop in the state, it’s easy to see why consumers and canna-business owners are feeling the heat from Cali’s cannabis taxation.

With California’s Proposition 64 in place, we’re seeing a plethora of taxes raising the costs of cannabis. These taxes include state, local, excise, and sales taxes. But let’s not forget about the taxes the industry must endure.

Driving up the costs of cannabis, taxation impacts the cannabis industry. While it might not directly threaten the success of the industry, the taxation has to be covered somehow. The producers of cannabis must cover cultivation taxes and various other regulatory costs as well. And these costs get passed on to consumers. (What a surprise right?)

Looking at the costs associated with purchasing cannabis flowers as a consumer, we can see how the taxes impact cannabis price. According to Leafly, an eighth of an ounce of marijuana flower costs $100 in San Francisco as of today. When comparing this to the $50 ounces available in Oregon, it’s easy to see how taxation is impacting what consumers must pay.

San Francisco Considering Taxing Cannabis Even More

San Fran Considering Taxing Cannabis Even More

In San Francisco, the voters are set up to choose whether or not they will add a 5% tax on each dollar cannabis businesses collect. They’re calling it a “gross receipts tax,” taking a portion of the gross sales of each canna-business. And an even larger impact comes from this city’s 8.75% sales tax paired with the cannabis tax of the state of California.

Currently, cannabis retailers must pay a 15% sales tax. Even though medical cannabis operations are exempt from this tax, other taxes will still impact the price of cannabis plant derivatives.

The proposal for cannabis business tax rates are sky high. With the tax rate suggested for canna-businesses being even higher than those of major tech companies, it’s easy to see that this industry’s taxation has the potential to further impact the price of cannabis products. Which of course hurts the consumers wallets.


What’s The Problem With These Taxes

While the cities making money on cannabis can be detrimental to some business owners, for other individuals, this taxation sparks opportunity. The main problem with these potential taxes is the likely increase in illegal cannabis sales. With taxation comes the juice that powers the illicit cannabis market, resulting in undesirable criminal activity.

With high prices and limited availability, we’re seeing a flourishing illicit cannabis market. Legal cannabis is expensive, driving consumers to seek their products elsewhere. And when this happens, taxation is fueling the crimes surrounding these illegal sales. Who wins then?

How Cannabis Taxes Could Benefit The Industry

What’s The Benefit To Cannabis Taxes?

With taxation comes a legitimate industry. And this allows decent business owners to take action with the support of the cities. As more taxation legislation passes, local voters tend to lean towards allowing the sale of cannabis within their jurisdictions as well.

While there is a visible distaste for higher taxation on the cannabis industry in California, the potential to change the minds of voters is monumental. So far, 75% of California cities do not allow cannabis businesses. But this can change for the better with taxation.

With increases in taxation swaying the opinions of voters, it’s possible to allow the spreading of this industry throughout the state. The immense taxes the cities receive as a result of high taxation could be enough to entice allowance of cannabis businesses to set up shop throughout areas currently prohibiting them. So you can say there’s at least one potential benefit to a high tax.

What are your thoughts on the California Cannabis tax rate? Is the high expense worth it? Do you believe we will see a decrease?

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