Residents of California often complain about high taxes, but no one pays higher taxes than the cannabis industry. In addition to the Federal 280E penalties, the cannabis industry in California is subject to a 15% state-wide excise tax, sales and use taxes that can reach up to 10.75%, and local business license taxes which are as high as 15% in some jurisdictions. On top of these excise taxes, which combined can approach 40%, there is a state cultivation tax currently imposed on cannabis flowers at a rate of $161.28/dry-weight pound (and some local jurisdictions impose additional cultivation taxes). During good times, the industry could withstand this tremendous tax burden with the price per pound of wholesale flower at between $1,500/lb (outdoor) and $3,000/lb (premium indoor). However, when wholesale prices collapsed to as low as $400/lb for outdoor flowers in the fall of 2021, growers could no longer make a profit. Following protests by desperate growers, in January 2021, Governor Newsom signaled that relief was on its way. Finally, on May 13, 2022, the governor made it official when he released his budget which proposed slashing the cultivation tax to $0 as of July 1, 2022.

Cannabis Law Report, 05/18/2022 03:22:00

Open article: