California Implementing High Taxes on Marijuana

Retail price for marijuana in California costs about $35 for a small bag but prices will double by next year when additional taxes kick in, increasing to around $50-$60. Growers typically sell a trash bag to manufacturers for about $50, but this coming January will change prices for marijuana leaves to be at $44 a pound. The tax payment on a bag holding 7 or 8 pounds would exceed current market price by five or six times which would force a huge price hike or making it not very valuable.

Governments have been struggling to keep up with costs ranging from worker pensions to street paving and are looking for the new tax money from commercial pot sales that could eventually top $1 billion statewide. However, higher taxes for businesses and consumers give California’s illicit market an advantage and operators in the legal market have been requesting that regulators be more aggressive about shutting down operators.

These increased tax rates are part of California’s plan to transform their medical and illegal markets into a multibillion dollar regulated economy, the nation’s largest legal marijuana shop. However, these changes will take a long time to implement. Many cities are unlikely to be ready by January 1st to issue business licenses which are needed to operate in the new market. Moving cannabis from the fields to distribution centers as well as testing labs eventually leading to retail shops is going to take some time. State taxes will also include a 15% levy on purchases of all cannabis and cannabis products including medicinal marijuana.

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