High taxes on cannabis products in Berkeley are believed to have been pushing consumers into the black market. So on Feb. 13, the city responded by halving its marijuana business license tax to 5%.
The move came less than two months after commercial pot sales became legal. And it’s a lead experts expect many other cities to follow. If not, California could be in a world of trouble.
“We’ve been screaming at these guys for three or four years to really watch out for the tax rate, because it’ll make the difference between the success of this regulatory environment or its failure,” said San Francisco-based cannabis business attorney Matt Kumin. “If [Berkeley’s move] is not a trend, the black market is going to win. And the regulations will fail.”
Berkeley’s initial 10% rate, which was established by Measure S in 2010, was one of the highest in the state. The latest reduction will make the city “more competitive in the regional market,” Mayor Jesse Arreguin said. Still, some critics said it was too soon.
The new tax will take effect 30 days after the second reading Tuesday.
Read more at Leafly and Berkeleyside.