CALIFORNIA, 2018. The cannabis community rejoiced at turn of January 1st. Prop 64 was finally official, and it was about time California joined the ranks of recreational states like Washington and Colorado. It took time for the state to reach recreational status, but we finally got there.
A few weeks into recreational cannabis sales, smaller companies have already been complaining about losing their businesses due to licensing, sales, and other factors. Some have survived until the middle of the year, some have gone underground, and some have just given up. Nevertheless, consumers sure aren’t winning either.
The truth is quality affordable weed comes at a price. Often, even at the midst of our complaining, most dispensaries and delivery services eat the taxes. However, unlike California under Prop 215, consumers have to pay more taxes.
Except for industrial hemp containing no more than .03% in their flowers, ALL COMMERCIAL CANNABIS IS SUBJECT TO TAXATION. Implying, recreational cannabis sales are subject to at least 15% in taxes.
Here’s a summary –
2018 CALIFORNIA CANNABIS TAXES
A Consumer’s Guide
EXCISE TAX – 15%
Cannabis Retailers are subject to collect 15% of the market value of cannabis sold in the market. This tax is paid to the distributor and charged to the retailer.
One way to escape paying 15% for cannabis is to get a state-wide medical cannabis card. Sometimes, dispensaries honor this card. Most of the time, when they’re recreational, the card is deemed useless.
USE & SALES TAX (STATE TAX) – 8.5 % to 10 %
Depending on the county, anyone buying merchandise gets taxed on top of the retail price. The percentages change, but this basically goes to the state. Customers and patients who buy marijuana will be charged this percentage once the orders are rung up.
CANNABIS BUSINESS TAX – 5% to 15%
Cannabis business tax ranges depending on where you are. The state charges for this, like the Sales & Use Tax on top of the sale price when the orders are rung up.
A FUTURE OF CANNABIS TAXES
PROP D – 10%
On top of all these taxes, San Francisco has proposed more taxation on cannabis businesses. This 10% tax on cultivators and sellers aren’t solely on the cannabis businesses. Since the industry is starting to get taxed more, perhaps, the price of recreational cannabis will shoot up once it finally takes into effect.
BREAKDOWN OF TAXES
From the $65.00 market value of Diamond OG (SG) the original price soars up due to all the combined taxes – plus delivery fee.
Note: Some delivery services and dispensaries lower their prices pre-check out while some eat a part of the taxes. Even if it’s like that, marijuana isn’t getting any cheaper for the cultivators, distributors, or for the consumers.
But on a better light, these taxes are put into better use towards California’s general fund.
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