Marijuana taxes in California would drop substantially for three years under an Assembly bill introduced Thursday.
The legislation would cut the marijuana sales tax rate from 15 percent to 11 percent, and suspend all cultivation taxes, until June 2021.
Assemblymen Tom Lackey, R-Palmdale, and Rob Bonta, D-Oakland, said they authored the bill as a way to reduce the price gap between licensed cannabis businesses and black market sources while giving the regulated market a chance to take hold.
“We need to give legal businesses some temporary tax relief so they do not continue to be undercut by the black market,” Lackey said in a statement.
Cannabis industry workers and consumers have been clamoring for the cuts, insisting that sticker shock since taxes kicked in Jan. 1 is driving some shoppers back to the cheaper black market.
“Reducing this gap is critical to making the legal market more competitive against the illicit market and more attractive for consumers,” said Beau Whitney, senior economist at New Frontier Data, which tracks cannabis industry finances.
Under rates approved by voters in November 2016 with marijuana legalization measure Proposition 64, all cannabis legally sold in California now comes with a 15 percent excise tax. Recreational cannabis shoppers also pay state sales tax, which typically runs between 8 and 10 percent. And, on top of that, most cities that allow marijuana stores have also tacked on local taxes, which can range from 5 to 15 percent.
That means medical marijuana consumers are generally paying at least 20 percent tax on every purchase, and recreational consumers are paying as much as 40 percent.