Michael R. Blood, The Associated Press | Published 2:42 p.m. PT Nov. 23, 2019
California is increasing business tax rates on legal marijuana, a move that stunned struggling companies that have been pleading with the state to do just the opposite.
Hefty marijuana taxes that can approach 50 percent in some communities have been blamed for pushing shoppers into California’s tax-free illegal market, which is thriving. Industry analysts estimate that $3 are spent in the illegal market for every $1 in the legal one.
The California Cannabis Industry Association said in a statement that its members are “stunned and outraged.”
The group said the higher taxes that will take effect Jan. 1 will make it even worse for a legal industry struggling under the weight of heavy regulation and fees, local bans on pot sales and growing and a booming underground marketplace.
“Widening the price … gap between illicit and regulated products will further drive consumers to the illicit market at a time when illicit products are demonstrably putting people’s lives at risk,” the group said, referring to the national vaping health crisis.
Los Angeles dispensary owner Jerred Kiloh, who heads the United Cannabis Business Association, said the increased levies added to the heavily taxed market “seems like a slap in the face.”