Its seems that plans to cut California’s cannabis taxes is suffering a major setback and may not be implemented very soon.
The proposed cannabis tax cut
It can be recalled that in March — just three months after California officially rolled out legal recreational cannabis sales — Assembly members Tom Lackey (R-Palmdale) and Rob Bonta (D-Oakland) presented a new bill lowering the state’s cannabis excise tax. The main objective of the proposal is to reduce black market demand and attract more users to the legal cannabis market.
Legal marijuana growers and sellers in the state have been complaining about the very high taxes they need to pay, which results to high retail prices. According to them, many consumers are buying from underground sellers instead because weed from these illegal businesses are way more affordable.
To address the problem, the proposed legislation will specifically reduce the cannabis sales tax rate from 15% to 11%. It is expected to lessen the disparity between the prices of marijuana from regulated retail businesses and those from illegal and unregistered sources. The argument is that closing this price gap will level the playing field and allow the legal market to take hold.
Under the proposal, California’s current cannabis sales taxes will be lowered for three years, which is the expected transition period. Moreover, within the same period, cultivation taxes will be suspended.
Proposal fails in committee stage
Last week, the proposal failed to advance out of the key legislative committee stage.
This could be due to the fact that state cultivation and excise taxes fell below the projections for the first quarter of 2018.
California had expected $175 million by the end of the first half of this year. However, from the January to March period, only $34 million came in. It would be difficult for the second quarter to make up for the difference.
While supporters of the bill tried to convince lawmakers that cutting cannabis taxes would encourage customers to support licensed stores and more growers to enter the cannabis market and would actually result to more state revenue, opposition had been very strong. The bill was opposed by Democrats, one major union, and even the pro-cannabis group Drug Policy Alliance.
Two-thirds majorities was needed for the bill to pass in both houses because it would change Proposition 64.
The bill’s failure to make it means that going forward, legal cannabis will continue to cost high — sometimes double than the black market’s prices.
Two other cannabis-related bills are dead
Aside from the proposed tax relief being killed, two other bills that pertain to California’s cannabis industry have failed after facing opposition. One bill would have prohibited the local (city and county) bans on cannabis delivery services, and the other bill would have give medical marijuana users the same rights and reasonable accommodation in the workplace as opioid users.
Now some good news…
There are a few smaller cannabis-related bills, however, that passed out of committee and are still alive.
One is a measure to allow personal cannabis growers to subject their crops to a lab test. Another bill would allow cannabis events to be held at venues in any city as long as that venue wants them — and not just at county fairgrounds.
There’s also the bill to allow craft cannabis farmers to directly sell to consumers four times per year. There is no other state in the country has craft producers’ markets that let cannabis farmers to sell their crops directly to the public. Those who support this bill believe that it is a constructive and stabilizing element in the marketplace.
Other “viable” cannabis-related bills include:
- a proposal to formulate a state cannabis equity program
- a bill to automatically expunge outdated marijuana sentences on offenders’ criminal records
- a bill to create a state cannabis bank
- a measure to allow pediatric marijuana patients to take their cannabis medication at school
- a bill to allow veterinarians to discuss about medical cannabis with pet owners