What’s the deal with sky-high taxes
were going to pay on Californy wacky tobaccy?
BY ED MURRIETA
Taxes top The Regs’ inaugural you-ask-the-questions-we-dig-up-the-answers column about California’s new cannabis regulations.
“What’s the deal with sky-high taxes we’re going to pay on Californy wacky tobaccy?
— Bobbi Zimmerman, San Francisco
With three state agencies now overseeing how cannabis is cultivated, tested, processed, distributed, sold and consumed in the world’s largest market, the price of a legalized, regulated cannabis industry in California is about 40 percent — the new highest effective tax rate, depending on what you buy and where you live.
Starting Jan. 1 (or more likely Jan. 2 given dispensaries’ holiday closures, and even later for most recreational shops given local lawmakers’ plodding pace), levies on California cannabis will be the highest in the legalized world. They’ll include:
- state excise tax (15 percent)
- state cultivation tax ($9.25 per ounce of cannabis flowers, $2.75 per ounce of leaves)
- state sales tax (7.25 percent)
- local sales tax (ranging from 7.25 percent to 10.25 percent depending on city and county rates).
Your mileage may vary driving to dispensaries and pot shops and so will the prices you pay from store to store even within the same county when cities impose their own, higher tax rates.
The highest effective tax rates will be in Long Beach and Santa Monica, where the city tax rates are 1 percent above Los Angeles County’s tax rate, the highest among all of California’s 58 counties, at 9.5 percent.
In my case, the half ounces of budget pot I currently buy for $50 (tax included) in Sacramento will cost $61.25 under California’s new cannabis tax scheme.
County and City Tax Rate Samples
You Ask, We Get Answers
Got questions or concerns about the way cannabis is grown, tested, processed, distributed, taxed, sold and consumed as of Jan. 1 and beyond?
- Submit questions and comments via our online form.
- Send us an email.
- Post on our Twitter feed or on our Facebook page. Please use our hashtag, #CARegs.
We, too, are curious about California’s historic and evolving regulations. We’ll put our reporting skills and industry contacts to work to answer your questions and address your concerns as regulations are implemented statewide and locally throughout California over the next year.