Eliminating Cultivation Tax Could Double California's Monthly Cannabis Tax Revenue By 2024, According To New Study

A new study released this month highlights the impact an immediate elimination of the cultivation tax would have on critical issues facing the state's legal cannabis market from seed to sale.

California’s high cannabis taxes, as much as $90 per ounce, have been detrimental to farmers and businesses, while the illicit market captures two-thirds of cannabis sales. The state could increase legal cannabis sales and bring in 123% more in total monthly cannabis-related tax revenue by 2024 by eliminating its cultivation tax, according to the study.

“We cannot allow the largest cannabis market in the world to fail,” says Amy O'Gorman Jenkins, president of Precision Advocacy and legislative advocate of the California Cannabis Industry Association. “High taxes and fees, inconsistent local taxes and the illicit market are contributing to a serious price compression in the supply chain and California’s legal operators are being pushed to the brink. There are tax policy solutions for the governor and state legislative leaders to consider immediately. This study provides that roadmap.”

Reducing retail excise taxes and encouraging policies that incentivize California's local governments to stop banning the sale of legal cannabis products are also recommended solutions in the study. California has just one legal cannabis retailer for every 29,292 residents, compared to ratios like Oregon and Colorado, which have one legal cannabis retailer for every 6,145 residents and 13,838 residents, respectively. 

The 42-page report was authored by Reason Foundation, a non-profit think tank: Good Farmers Great Neighbors, an alliance of central coast cannabis farmers and businesses; and lobbying firm Precision Advocacy. It can be viewed in full at: https://reason.org/policy-study/the-impact-of-california-cannabis-taxes-on-participation-within-the-legal-market/

Photo by Julian Myles on Unsplash