With California’s legal cannabis industry in dire straits due to high taxes and regulatory costs, California NORML called on legislators to pass a tax relief bill by Sen. Bradford (SB 1281) at a hearings before the State Senate Governance and Finance Committee on May 4. The Bradford bill would eliminate the state cultivation tax, which was designed to increase retail prices and reduce consumer demand. SB 1281 would also reduce the state’s excise taxes to make legal retailers more competitive with California’s underground market.
It’s estimated that only one-third of cannabis sold in California currently comes from the legal market. By reducing burdensome taxes, SB 1281 would expand the legal industry, producing enough revenue to boost the state’s total cannabis tax receipts in coming years, according to a new report from the Reason Foundation on the economic impact of California cannabis taxes on the legal market.
“Cannabis is grossly overtaxed in California,” says Cal NORML Director Dale Gieringer. “The state collects twice as much in excise taxes from cannabis as from alcohol, even though alcohol is more widely consumed and causes more societal harm.” See Dale’s introduction to the Reason report: California’s legal marijuana industry has been hard-pressed to compete with untaxed, unregulated providers.
State and local cannabis taxes currently amount to some $735 – $1,000 per pound, more than the wholesale prices that farmers receive, which range around $550 – $300 per pound or lower. As a result, California’s legally licensed industry is hard pressed to compete with the untaxed illicit market.
“Cal NORML hears countless consumer complaints about the high cost of cannabis in our state,” says Gieringer. “Many low-income and medical users tell us they can’t afford buy on the legal market. SB 1281 would provide the kind of meaningful, permanent tax cuts that are needed to foster a viable legal industry in California and assure safe access to regulated and tested cannabis products for our state’s consumers.”
Cal NORML and Americans for Safe Access will be bringing citizen lobbyists from around the state to Sacramento in support of cannabis users’ employment rights, pain patients’ rights, tax relief and more at its Lobby Day on Tuesday, May 10. Senator Bradford will stop in at Lobby Day at 10 AM to talk about his legislative efforts, which also include an bill aimed at tax relief for equity businesses.