LOS ANGELES (AP) — California analysts Tuesday recommended scrapping the state’s often-criticized system for taxing legal marijuana and replacing it with one hitched to the potency of products.
In other words, the stronger the smoke, the more you pay.
The proposal comes as legal businesses have been pleading with the Legislature for a tax cut, blaming hefty tax rates imposed by state and local governments for driving consumers into the thriving illegal market. In some areas, the combined tax rates on legal pot can approach nearly 50%.
The plan recommended by the Legislative Analyst’s Office would nix existing taxes, including an across-the-board, 15% levy paid by consumers at the retail counter. They say it could be replaced with one based on potency or a tiered system, with different rates linked to potency or product types.
The office concluded that anchoring taxes to potency could reduce harmful use more effectively.
The plan was welcomed by the California Cannabis Industry Association, which said the recommendations mirror priorities the group’s members have been advocating for over three years, including removing weight-based taxes on cultivation.
“As California’s regulated market struggles against a thriving illicit industry, we believe that comprehensive tax reform will incentivize consumers to purchase regulated cannabis products, ease administration and compliance, and increase and stabilize revenues for the state,” the group said.
Just last month, the state announced it was increasing business tax rates on legal marijuana, a move that stunned struggling companies that have been asking Sacramento to do just the opposite.
Published: December 18, 2019
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