California Pot Industry Tax Cuts: Too Less, Too Slow? | National News

MICHAELR.BLOOD-The Associated Press

Los Angeles (AP) —Governor of California proposed a temporary tax cut on the state’s struggling legal marijuana industry on Friday, but companies are far from what it takes to revive the founder’s pot economy. He said it was not enough.

With widespread statutory sales launched in California in 2018, the industry has high taxes, high regulations, and high regulations that can reach 50% in some regions. Competing with thriving illegal marketsIndustry analysts estimate that it is at least twice the size of the legitimate one.

On the other hand, the excess of cannabis from enterprise-scale farms has boosted wholesale prices, making it impossible for some producers to make a profit.

California was once conceived as a national model for legal sales, Industry leaders warned Democratic Governor Gavin Newsom in December The state’s licensed industry was on the verge of collapse and needed immediate tax cuts and rapid expansion of retail stores to survive.

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In a proposal to Congress for a budget year beginning in July, the Newsom administration recommended abolishing the highly despised cultivation tax set at $ 161 for a £ 1 sprout. However, to make up for these lost funds, the state will raise the excise tax on retail cannabis purchases from the current 15% to 19% three years later.

However, under the proposal, the excise tax surge could come sooner.

If the state does not have enough cannabis tax to support various education, law enforcement and other programs ($ 670 million annually), excise tax will be applied in January 2024 to fill the gap. It may be pulled up. Not necessarily at the 19% level. In addition, the state has temporarily invested $ 150 million to cover these costs.

There are other provisions, including about $ 20 million for community grants to accelerate retail store licensing. Cannabis is legal in California, but many communities have either banned cannabis or have not set up a local licensing program for the market to operate. The company says it has less than 1,000 retail stores, down from about 8,000 before widespread legalization began.

Overall, the changes proposed by the Governor “will significantly simplify tax compliance, reduce the overall tax burden on licensees, and help stabilize the legal market,” said Nicole Elliott, director of cannabis administration at the State Department. I am saying.

If approved, this plan will represent the first change in tax policy since the legitimate sale began. However, some taxes, including cultivation, increased in the meantime.

The plan disappointed the big companies seeking to eliminate the cultivation tax and reduced the excise tax on retail sales tax from 15% to 5%.

Jered Kilo of the United Cannabis Business Association, a Los Angeles-based industry group, said the plan is driving buyers into a tax-free, cheaper underground market with sharp consumer prices. He said it could not be lowered.

Kiloh also warned that the plan could even increase the cost to retail consumers.

“The only thing they really do is shift some of the taxes, which never reach their customers,” Kiloh added.

Cannabis is subject to various state taxes and can also be levied at the local level. Currently, state taxes include cultivation taxes on buds, leaves and plants, 15% excise tax on retail sales, and regular sales tax.

In a statement, industry group Save California Cannabis Coalition said Newsom’s proposal “keeps the dying market handcuffed to oppressive taxes.”

Lindsay Robinson of the California Cannabis Industry Association saw the plan as the first step in not doing enough to crack down on illegal sales. “It’s kicking the can,” she said.

There is no quick fix. Talking to Sacramento reporters, Newsom said the proposal was the “beginning of the process” to force the withdrawal of illegal businesses, which could take years.

The proposal may be considered by the Legislature and may be amended.

Cannabis remains illegal at the federal level, but most Americans live in states that have at least some access to legal legal marijuana.

Due to the many different approaches used, it is difficult to make state-by-state comparisons of marijuana tax burdens, and some states limit sales to medicinal marijuana only. In Washington State, a 37% excise tax is levied on a wide range of statutory sales. When New York paved the way for widespread legitimate sales last year (a process that hasn’t been rolled out yet), the surcharge included taxes based on the level of THC, the active ingredient in marijuana.

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California Pot Industry Tax Cuts: Too Less, Too Slow? | National News

Source link California Pot Industry Tax Cuts: Too Less, Too Slow? | National News

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