Cannabis tax Archives - The Real Dirt with Chip Baker

California Cannabis Tax to be Lifted to Aid Cultivators

by Travis C | Jul 7, 2022 | Blog, Business, Cannabis Business, Cannabis Law, Cannabis Law and Compliance, Cannabis News, Growing, Industry News, Legalization, Marijuana

California cannabis cultivation tax to be lifted

In an effort to aid cannabis cultivators that have been hanging on by a thread the past several years, California is completely overhauling its cannabis tax codes to try and help.

The changes, which were adopted last week as part of a broader state budget agreement, will also create tax credits for some cannabis businesses, expand labor rights within the industry and switch collection of a state excise tax from distributors to retailers. That tax will pause at 15% for three years, after which regulators could raise the rate to recoup lost revenue from discontinuing the cultivation tax.

Advocates believe the new tax plan will aid the struggling small businesses operating in the legal cannabis industry in California. With exorbitant application fees, license costs and strict regulatory oversight set by local jurisdictions, it has become untenable to run a small-scale cannabis operation in the state.

While this may just be a band aid over the larger issues plaguing California’s legal cannabis industry, it should at least help cultivators stand a better chance of staying afloat in the competitive industry.

Prior to the removal of the tax, cannabis cultivators had to pay a tax of over $10 per ounce of flower. With 16 ounces in a pound, and the price of a pound of cannabis flower tanking as low as $500 in the last year, growers were potentially paying nearly half of their profit just into taxes for cultivation.

Additionally wholesale prices have dropped by as much as 50% over the past year, particularly squeezing farmers whose outdoor crops sell for less and forcing many smaller operations to close down.

Even the trimmings of cannabis plants were taxed at $3 per ounce, making a byproduct of the cultivation process that can be used to create ointments, creams or extracts just as untenable.

And of course, all of the increased costs levied on growers is then transferred to distributors, then retailers, and finally passed on to the consumer. Officials and advocates are hoping the move will lower cannabis prices overall for consumers while making it more profitable for cultivators.

However the state has yet to take any action on retail sales taxes. Business owners and advocates claim that California will never be able to compete with illicit market cannabis which is just as large in the state due to current taxes.

For comparison, alcohol in the state is only taxed at the state sales tax of 6%, with an additional charge of $3.30 per gallon. Cannabis on the other hand, in addition to state and local sales tax, is levied a 15% additional sales tax.

In other words, a customer who thinks they may be getting a deal on a $100 ounce, could actually be paying over $120 for the same product after taxes. Exorbitant sales tax on cannabis is extremely common in legal cannabis industries across the country. Medical cannabis sales in most states have no additional tax at all.

Lastly, the latest removal of the taxes is set to last only 3 years. While this gives advocates time to fight for more ground and lower additional taxes, reform licensing and equity access to the industry, the fight is not nearly over for cultivators and business owners in California’s cannabis industry.

Cannabis tax revenue surpasses $10 billion in legal states

by The Real Dirt | Jan 10, 2022 | Blog, Business, Cannabis Business, Cannabis News, Culture, Industry News, Legalization

cannabis tax revenue surpassed $10 billion

Sales taxes collected by states with legal cannabis programs totaled $10.4 billion as of December since the adult use market launched in 2014 in Colorado and Washington State, according to a study by The Marijuana Policy Project.

A report released Thursday by the pro-industry group said the $10.4 billion figure includes more than $3 billion in sales tax reported in 2021, thus far.

“States that have legalized cannabis for adults are reaping significant economic benefits,” said Karen O’Keefe, director of state policies at the Marijuana Policy Project.

The tax revenue helps fund education, school construction, early literacy, public libraries, behavioral health, alcohol and drug treatment, veterans’ services, conservation, job training, conviction expungement expenses, and community reinvestment.

“In many instances that revenue is being distributed to much needed public services and programs, including reinvesting in communities that were devastated by the war on drugs,” O’Keefe said. “This is in stark contrast to [cannabis] prohibition, which costs taxpayers billions of dollars each year to enforce.”

Some examples include $471.9 million toward improving the public education system in Colorado and more than $100 million in California for community and non profit groups that help people impacted by drug laws.

In Illinois, cannabis tax revenue has outpaced revenue from liquor taxes. According to data from the state, adult use cannabis generated about $193 million in tax revenue from July through the end of November, compared to about $141.3 million over the same period for liquor sales taxes, which include levies on beer, wine and spirits.

Read Full Story on MSN

San Francisco Suspends Cannabis Tax to Combat Crime

by The Real Dirt | Dec 6, 2021 | 420 News, Blog, Business, Cannabis Business, Cannabis Law, Cannabis Law and Compliance, Cannabis News, Industry News, Legalization

san francisco cannabis tax removed to fight against crime

San Francisco city officials approved an ordinance suspending the tax it planned to place on cannabis sales, according to multiple reports.

Set to go into effect on Jan. 1, 2020, the 1% to 5% it was going to impose was approved by San Francisco voters in November 2018, the San Francisco Examiner reported.

The decision is due to a rise in illegal sales and increased theft and meant to helping cannabis retailers who have been struggling, trying to compete with illegal cannabis drug dealers.

“Sadly, the illegal market is flourishing by undercutting the prices of legal businesses, which is bad for our economy as illegal businesses pay no taxes while subjecting workers to dangerous conditions and consumers to dangerous products. Now is not the time to impose a new tax on small businesses that are just getting established and trying to compete with illicit operators,” said Supervisor Rafael Mandelman, author of the ordinance, to the San Francisco Examiner.

Last month, a group of armed individuals stole thousands of dollars’ worth of merchandise from a cannabis retailer, BASA, which had already dealt with four thefts, according to the report.

Mandelman said he plans to work with the City Comptroller’s Office, the Treasurer, Tax Collector ‘s Office and the Office of Cannabis for recommendations — including a tax rate and structure — to implement in 2023.

Original Story from silive

Billionaire-backed Denver Ordinance 300 would raise retail cannabis tax by 13%

by The Real Dirt | Oct 13, 2021 | Blog, Business, Cannabis Business, Cannabis Law, Cannabis Law and Compliance, Cannabis News, Industry News, Legalization, Politics

Denver Ordinance 300 would raise taxes on recreational cannabis.

An advocacy organization registered in Delaware and backed by a Bahamas-based billionaire Forbes calls “the world’s richest 29-year-old” is going head-to-head with the Denver cannabis industry — and the mayor — through a proposed city ordinance that would increase Denver’s recreational marijuana tax by 13%.

Initiated Ordinance 300, which will appear on the 2021 ballot, proposes that “Denver retail marijuana sales tax be increased by $7 million” through a 1.5% tariff to fund “pandemic research” at the University of Colorado Denver.

Should a statewide ballot initiative that will also be put before voters in 2021, Proposition 119, pass along with Ordinance 300, Denver cannabis consumers will be paying nearly 25% more for their weed within the next three years. Denver residents currently pay a total of 26.41% in taxes on recreational cannabis: 11.41% to the city and 15% to the state.

The move has Colorado cannabis industry insiders wondering why Colorado, why CU Denver and why their sector.

“Ordinance 300 taxes Denver cannabis consumers to fund, and I’m putting this in big old air quotes, ‘future pandemic research,'” Marijuana Industry Group Executive Director Truman Bradley told Denver Business Journal. “I literally cannot think of a cause that’s going to achieve more attention globally than [pandemic research]. It makes no sense to ask Denver cannabis consumers to foot the bill for that.”

MIG, along with industry advocacy organization Colorado Leads, primarily expressed concern about the impact on cannabis buyers who consume for medical purposes but may not have the means for a medical card — something that requires an often expensive annual physical exam and fees paid to the state — or simply don’t want to be on an official list.

“This measure — funded by a rich, out-of-town carpetbagger — taxes people’s pain relief to pay for a random pandemic preparation program that has no accountability, no oversight, no specific solutions and no connection to the marijuana industry,” Chuck Smith, Colorado Leads board president and CEO of Denver-based cannabis giant BellRock Brands, told DBJ. “If, as the proponents contend, this program is so beneficial, why aren’t all Denver industries asked to pay their fair share?”

Read Full Story on Denver Business Journal

Illinois Cannabis Sales Smash Records, Surpass Alcohol

by The Real Dirt | May 5, 2021 | 420 News, Blog, Business, Culture, Legalization

Legalized cannabis sales in Illinois continue to smash all sorts of records, with the state now exceeding $1 billion in recreational weed sales and setting a new record for sales in the month of April.

According to the latest data available from the state’s Department of Revenue, Illinois recorded nearly $115 million in sales in the month of April alone, the highest-grossing month since cannabis became legal last year.

By comparison, the state saw $37 million in sales during the month of April in 2020.

In all, Illinois has now racked up $1,064,750,968 in recreational cannabis sales since legalization took place. Of those sales, nearly $777 million were made to in-state residents, according to the Department of Revenue.

The state also set another remarkable record in the first quarter of 2021, with tax revenues for cannabis sales ($86 million) exceeding those of liquor ($72 million) for the first time ever, according to Newsweek.

If current trends continue, the state is expected to surpass $1 billion in sales during 2021, according to officials.