California Cannabis Sales Continue to Rise Even Amidst the Pandemic, According to State Report
According to the California Department of Tax and Fee Administration (CDTFA), California brought beyond $208 million in cannabis tax revenue this past quarter, beating the figures from the first quarter of 2020.
As many industries were hit hard by the COVID-19 pandemic, Cali’s cannabis sector has continued thriving.
“Total tax revenue reported by the cannabis industry is $208.4 million for 2nd Quarter returns due by July 31, 2020. This does not include tax revenue collected by each jurisdiction,” the CDTFA said during a press release. “Previously reported revenue for 1st Quarter 2020 returns was revised to $205.9 million, which included $107.4 million in cannabis excise tax, $26.9 million in cultivation tax, and $71.6 million in sales tax.”
Could the revenue generated by cannabis in Cali grow even further if the local cannabis business bans were lifted? Of course, but as cities like San Diego refuse to allow legal dispensaries to operate within their borders, potential tax revenue is lost.
At this point, 75 percent of the cities and counties in Cali have bans on the cannabis industry, even with the 2016 statewide vote to legalize for adult use.
The CDTFA is now trying to hold illegal cannabis operators in Cali accountable, announcing last month that it’s issued tax warrants for a dozen illegal cannabis operations in Los Angeles and San Bernardino counties.
Even with the department’s analysis highlighting that there has been an increase in revenue, the state Legislative Analyst’s Office (LAO) claims there was a seven percent decline. But this is only because they did not factor sales tax into the mix and solely examined the excise and cultivation tax revenue.
Seth Kerstein, the LAO analyst who wrote the report, explained to Marijuana Moment that he omitted the sales tax data for a number of reasons, such as problems with the precision of the method used to get that information and possible complications regarding the timing of reporting sales tax.
Kerstein claimed that the excise and cultivation tax revenue might have declined for two reasons: “The administrative rate adjustments and consumer stockpiling in the early days of the COVID-19 crisis.”
He further explained, “We can’t say for sure whether the strong growth was due to one of these things, both of them, or something else we haven’t thought of. That said, there are some indications of an ‘all of the above’ store–these two factors, plus potentially others.”