California Gov. Gavin Newsom (D) proposed a tax cut on Friday for the state’s heavily taxed cannabis industry but business owners say the relief wouldn’t go far enough, the Associated Press reports.
In the Newsom administration’s proposal for the budget year starting in July, the governor called for removing the cannabis cultivation tax of $161 per pound of flower. Under the plan, the missing tax dollars would be made up by increasing the state’s cannabis excise tax from 15% to 19% after three years.
Despite being the largest cannabis marketplace in the U.S., the California cannabis industry has struggled since its 2018 launch with steep tax rates that can reach as high as 50% in some jurisdictions. The taxes, coupled with steep licensing costs and other expectations, has helped to prop up the unregulated marketplace as an attractive alternative for consumers. Additionally, recent harvests by large, corporate cannabis growers have started to push down the price of wholesale flower, which has made business even more difficult for licensed growers, according to the report.
According to Nicole Elliott, director of the California Department of Cannabis Control, removing the cultivation tax would “greatly simplify tax compliance, reduce the overall tax burden for our licensees and help stabilize the legal market,” the AP reported.
But industry business leaders had hoped the tax relief would include a reduction to the state’s high excise taxes, not an increase. According to Jerrod Kiloh of the Los Angeles-based United Cannabis Business Association, “All they are really doing is shifting some taxes around, and it’s not ever going to get to the customer.” Kiloh even warned the plan could result in higher consumer prices, according to the report.
A recent report by the Reason Foundation found that
In a report titled “The Impact of California Cannabis Taxes on Participation within the Legal Market” published earlier this month, the Reason Foundation suggested that California could double its cannabis-derived taxes by eliminating the cultivation tax altogether.
Get daily cannabis business news updates. Subscribe
Thanks for reading our latest news article. Stay up to date on the latest hemp news, sourced and approved by HempRevs. If you have any questions or comments, please feel free to leave us a message in the comments!
Sign up for our weekly newsletter to stay up to date on the latest Industry news and check back soon for our next news story!
Source Disclaimer: This article was was sourced from Ganjapreneur.com (the Original Publisher). In order to maintain the functionality, trust, and safety of HempRevs.com, the content sourced from the Original Publisher may have been altered. Read the original article here:
California Gov. Proposes Cannabis Industry Tax Cut
