California Has Slow Start To Marijuana Tax Collections

Photo Credit: Chris Roussakis

So far, there’s been no tax windfall from legal marijuana in California.

Broad legal sales kicked off on Jan. 1, and state officials had estimated that California would bank $175 million from cultivation and excise taxes by the end of June.

But estimates released Tuesday by the state Legislative Analyst’s Office show $34 million came in between January and March, appearing well behind those initial projections.

“The excise tax revenue numbers announced today are abysmally below what Californians were promised when they voted to legalize recreational cannabis,” said Assemblyman Evan Low, a Democrat from Campbell who heads the Business and Professions Committee. “The state must take all possible action to defeat the black market and support good actors, or else our newly established regulatory scheme will surely fail.”

State economist Seth Kerstein said tax collections are expected to pick up significantly in coming months, but it appears unlikely the state will hit the $175 million target by midyear.

Gov. Jerry Brown’s administration will release its updated tax figures later this week.

The lackluster figure for the first quarter of the year appears to reflect a bumpy rollout of licenses for the state’s new legal marketplace. Meanwhile, many areas of the state have banned commercial marijuana businesses.

The start of legal sales for adults this year is part of a sprawling plan to transform California’s long-standing medical and illegal markets into a multibillion-dollar regulated economy, the nation’s largest legal pot shop.

Some legislators are pushing for temporary tax cuts, fearing that higher costs are pushing consumers into the black market, which continues to flourish.

State taxes include a 15 percent levy on purchases of all cannabis and cannabis products, including medicinal marijuana. State cultivation taxes include $9.25 per ounce of buds, and $2.75 an ounce for dried cannabis leaves.

But when combined with local and sales taxes, consumers can be hit with tax rates approaching 50 percent in some cities.