Federal Legalization Could Raise Taxes on THC in Cali

Federal Legalization Could Raise Taxes on THC in Cali

Despite it being a popular opinion, cannabis legalization is still in the works. There are many factors that play into this including not having enough votes to pass legislation in both houses of Congress and Republicans who have been against legalizing cannabis for years. This has made it so much harder than expected but if we keep pushing forward hopefully one day soon there will be federal legalization!

It seems likely that marijuana will be legalized in the next few years. This is despite some people having doubts about legalization, which includes concerns regarding cancer risks and addiction rates for users of the drug. There are also fears concerning how this trend might affect our society, though most experts think it won’t have a negative effect on these issues in particular or human civilization at large.

The future of cannabis legalization is in the hands of legislators. Many are on board but there’s not yet widespread agreement among them, which could leave us all at an impasse for some time to come. However, if they manage to pass legislation that aligns with what has been proposed so far (which it seems like both houses will), then we can expect more expensive marijuana than ever before and only limited benefits for consumers who use weed medicinally or recreationally.

The proposed federal taxes on pot would deter people from buying legal weed, which could have a negative impact for local economies that depend heavily on cannabis sales.

New Frontier Data, an analytics firm focused on the weed business, last week issued a report saying that proposed federal taxes would “result in a comparatively less competitive market than the illicit one.” However, this bill provides a great opportunity for businesses to operate and thrive legally.

Unfortunately, the current situation in California is not a good one for weed. High prices and lack of availability have resulted in only 20% of legal pot being sold statewide. The majority (80%) still comes from illegal sources due to high taxes & overregulation as well as localities preventing businesses from operating within their borders.

The number of local governments issuing cannabis licenses is rising slowly. In the past two years, they’ve gone from one-third to 40% of all cities and counties in California. However, there are still only 745 dispensaries open for business statewide—not including delivery services. To really serve demand, Hirsch Jain, a cannabis consultant who recently spoke with Marijuana Business Daily, says that “there should be between 4,000 and 5″ thousand more locations across state lines.”

California’s high tax rates create a gray market for weed. While buying legal is easy across the state, people in remote areas are more likely to get their drugs from an illegal dealer who can be found on social media or even passed out on someone’s front lawn with cheap prices and no taxes.

Additionally, since every sale of legal marijuana has 15% excise tax added onto it plus normal sales taxes that vary by locality (as well as some local fees), customers will often find cheaper options outside of dispensaries where they don’t have to pay all these extra costs which add up quick leading many consumers back into grey markets while cutting down dispensary profits at the same time making less money available for city services like schools among other things so everyone loses here really.

The Cannabis Administration & Opportunity Act, sponsored by Senate Majority Leader Chuck Schumer, Senate Finance Committee Chairman Ron Wyden, and Sen. Cory Booker, all Democrats, would impose a further tax that would increase after a few years.

They’re proposing a 25% tax on cannabis to take effect in the coming years that would significantly increase costs for consumers. California may lower their taxes, but not by enough make up for these increased prices as well.

The report found that the bill would be onerous and dissuade entrepreneurs from entering the cannabis industry. It also mentioned that only large businesses with a lot of resources will thrive in this environment due to its stringency.

“Once the costs of regulatory compliance and operational expenses are factored in, the environment for cannabis businesses under the proposed legislation would be encumbered, especially for small or under-capitalized businesses,” said Giadha A. DeCarcer, New Frontier’s founder and executive chairperson.

Author:
Louis Levey is the Content Success Manager and Founder at No Strings Content. He's passionate about helping cannabis businesses use content to attract, educate, and convert audiences. His hometown is Boca Raton, Florida, but he currently lives and works remotely in Chiang Mai, Thailand.

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