In May 2019, California significantly cut its cannabis tax revenue projections through June 2020. In just four months, state projections decreased by $223 million.
Much of the blame is often placed on the state’s rampant illicit market. Since the legalization of adult use cannabis, California has struggled to convert or shut down noncompliant businesses.
Despite the risk of untested cannabis products, consumers continue to use illicit options to avoid excise taxes that can reach 50%. Some estimations have projected that for every one compliant shop in the state, there are five that are noncompliant.
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Newsom OKs $30K Fines
The state has continued to push consumers toward legal options while attempting to curtail black market actors. The state Bureau of Cannabis Control recently launched the #weedwise campaign, encouraging people to buy from licensed businesses. The campaign also urges noncompliant businesses to obtain licensing and become compliant.
Governor Gavin Newsom approved another measure on July 1, Assembly Bill 97, which aims to cut into the illicit market.
The bill is highlighted by a fine for illicit operations totaling $30,000 per day. The move could steer businesses toward licensing, although smaller fines have been disregarded by businesses for years.
‘The Illicit Market Undercut The Legal One’
Lauren Estevez is a Los Angeles-based attorney who has appeared on CNBC and Bloomberg, in addition to other cannabis endeavors, including the completion of over 100 global cannabis projects.
In an email, Estevez touched on California’s struggles with revenue due to the illicit market and other factors.
Published: July 16, 2019