California’s legal cannabis industry is in dire territory. Licensed businesses are already struggling with the state’s high taxes, which have made it nearly impossible to compete against a behemoth black market. Those levies are about to increase on Jan. 1. The cultivation tax for flower per dry-weight pound will increase from $154.40 to $161.28. This comes on top of an existing 15% excise tax on retail.
Cannabis industry leaders have warned lawmakers and the governor that the industry is nearing “collapse.” Some have threatened to pull out of California and boycott the state. Some cities and counties that rely heavily on the industry have joined them in calling for immediate relief.
The City of Rio Dell in Humboldt County passed a resolution Tuesday, December 14, calling on the state to reform its cannabis tax system.
“This is a case where what is going up should be going down, and what’s going down needs to be going back up,” said Rio Dell Mayor Debra Garnes. “It’s upside down. The state needs to correct this. The state needs to respond. They are by far taking the lion’s share of cannabis tax receipts and they risk killing the concept of the small legal cannabis farmer. That’s not good for anyone in Humboldt.”
“We’ve been able to pave roads and invest in public safety, in good part because of cannabis legalization and how we’ve approached it,” added Rio Dell city manager Kyle Knopp. “But the state’s taxation system is now putting these local benefits at risk, perpetuating the black market and shutting down legal North Coast cultivators.”
State Sen. Mike McGuire (D-Healdsburg) has also called the current tax structure “unsustainable.” He plans to introduce legislation that would shift the cultivation tax to the excise tax — an idea that one critic characterized as “rearranging deck chairs on the Titanic.”
Read more at the Times-Standard.