[Hash Zeppelin]

https://money.cnn.com/2017/10/31/new...tch/index.html

Another interesting article.

California to tax pot as much as 45%

Buying legal marijuana in California could be pricey enough to keep the black market healthy.

Between customers, retailers and growers, taxes on cannabis may reach as high as 45% in parts of the state, according to a Fitch Ratings report. Those high taxes may keep consumers away from legal marijuana stores once the recreational retail market goes live on January 1.

"High effective tax rates on California cannabis may complicate the state's efforts to establish legal markets" said analysts Stephen Walsh and Karen Ribble in a Fitch Ratings report on California's marijuana taxes.

California marijuana consumers are going to have to pay a combination of state and local taxes that vary by municipality. Growers and sellers have their own taxes, too.

Consumers will pay a sales tax ranging from 22.25% to 24.25%, which includes the state excise tax of 15%, and additional state and local sales taxes ranging from 7.25% to 9.25%.

Local businesses will have to pay a tax ranging from 1% to 20% of gross receipts, or $1 to $50 per square foot of marijuana plants, according to the Fitch report.

In addition, farmers will be taxed $9.25 per ounce for flower, and $2.75 per ounce for leaves.

The Fitch report says this combination of state and local taxes for consumers, retailers and growers could keep portions of California's cannabis industry off the grid, where it has flourished for some time.

"California's black markets for cannabis were well established long before its voters legalized cannabis in November 2016 and are expected to dominate post-legalization production," said the Fitch report.

Among the eight states where recreational marijuana is legal, only Washington has a higher tax rate at about 50%.

Colorado and Nevada both follow with rates of 36%. Oregon has a tax rate of 20% and Alaska has a rate of up to 20%.

Medical marijuana has been legal in California since 1996, but the retail markets for recreational marijuana are just now ramping up and are scheduled to begin on New Year's Day.

Retail: Corona beer company is investing in Canadian cannabis
Black market farmers already face considerable obstacles to becoming compliant with state law, even without the taxes.

Van Bustic, a specialist in the environmental impact of cannabis cultivation for Berkeley's College of Natural Resources, said that registering with the state and becoming compliant will cost about $100,000. He said that many Humboldt farmers are unlikely to shoulder that cost if they can continue to operate in the dark.

The Fitch report says the black market could prove to be a "formidable competitor" to legal weed, if taxes push prices significantly higher than illegal, tax-free pot.

Other analysts agree that high taxes could actually be a boon to the black market.

"If taxes increase the price of cannabis beyond a certain point, the legal market becomes less competitive than the illicit market and then consumers become less likely to make the transition from the illicit market to the legal market," said John Kagia, analyst for New Frontier Data, which tracks the cannabis industry.

The Fitch report says this dynamic has already prompted Colorado, Washington and Oregon to lower their "initially uncompetitive" tax rates.

"It's almost certain that all of the states with recreational marijuana still struggle with the black market for marijuana because of its prevalence before legalization," said Morgan Scarboro, a policy analyst for the Tax Foundation's Center for State Tax Policy.

She said that high tax rates "will prevent the minimization of the black market" and that state governments "need to be open to evaluating their marijuana tax structures."

Oregon started in 2015 with a weight-based sales tax of $35 per ounce but changed that to a percentage sales tax of 20%.

Colorado got rid of a 2.9% sales tax but rose its excise tax from 10% to 15%, effectively raising its tax rate.

Washington started out with a 25% tax rate on producers and another 25% on processors, in addition to a 25% sales tax. Officials changed that to a 37% flat sales tax for cannabis that's in addition to standard state and local sales taxes.

"The only state that we know of that has undertaken a radical tax transformation is Washington," said Kagia, but he added that Washington still has the highest cannabis sales tax in the country.
Of the eight states where recreational marijuana is legal, three, including California, haven't yet started retail markets.

Massachusetts is expected to have a tax rate of 24% when it starts up its retail market in July of 2018, according to the Fitch report.
Maine has not yet established its tax rate.

[yesum]

No surprise sadly. They made it illegal because they thought it made people less productive and easy to control. There were class, religious and racial issues as well, but it got made illegal worldwide so more for productivity reasons.

Now that it is legal, they tax the hell out of it to make up for the lost revenue generated by formerly 'happy enthusiastic workers' who would rather play video games now. Also the lost law enforcement and associated revenue.

The good news is, I was gifted some buds recently from a non grower. Never happened before. There are so many people with plants in the backyard now the supply will swamp demand soon enough. There will be legal sales and black market too but not like now.

California is broke and going deeper into debt. Pot is not going to solve that. 90% of the people that smoke do not require more than say a ounce a year. If they grow or know someone that does, they may not spend any money at all, or very little. None of it taxed.

[St. Phatty]

Always be Flowering.

or at least enough for 2 harvests a year.

[Chevy cHaze]

45% and even 50% those greedy bastards.
How crazy would it be to just do it because it's the right thing, not earning you a cent ?
Oh man....

[bigAl25]

That tax rate is pure bullshit and oppressive. The comments about the black market for California are probably correct, their product will turn out to be cheaper. Hey California, if you tax it that high, I and many others will just continue to grow our own. You fuckers cannot defeat us, we will continue with our organic grown, properly flushed and jar cured homegrown. Damn I thought California would do it better than Colorado, Washington, and Oregon, but I must be incorrect on that thought process.

[Hash Zeppelin]

Interesting points guys. Not even cigarettes and alcohol are taxed at that high of a rate in California. The tax rates will be forced down, or the black market will thrive. More people will start growing their own too. Since it will be legal to grow 6 plants and won’t be needed to make a profit, people will have the luxury to experiment and learn it for a hobby. After a few grows and some reading they probably have a pretty decent flower. Especially considering today’s genetics.

[Easy7]

Lot's of that $ will come from people out of state visiting. Maybe slme folks in college and those in apartments. People that don't have the roots for the flowers.

[Hash Zeppelin]

Originally Posted by Easy7

Lot's of that $ will come from people out of state visiting. Maybe slme folks in college and those in apartments. People that don't have the roots for the flowers.

That’s whats happening in Colorado, but they are surrounded by states with no legal recreational cannabis. California is surrounded by states with legal recreational cannabis.

[Easy7]

Ya but Cali and colorado are awesome places with many attractions. Face it, the west coast kicks ass if it weren't so costly to live there. The mountains, the national forests and parks, and the pacific. If someone had the cash and time, they could do a west coast tour. Lot's of young people do stuff like that. To be able to walk into a store and buy a bag 'o' weed makes it all the more.

[St. Phatty]

Most of those California legislators are very aware of California's informal person-to-person market - since it's existed for most of their lives, and was probably the channel they used themselves.

Oregon's 22% is a sign of Hope - they hope people will go along with it, even though Quality has clearly suffered.

California's 45% ?! That's Desperation. Must need the money.

Don't Feed the Cancer of Corporate Pot, AKA the New Black Market.