KSBW
Calif. —
California’s legal cannabis industry could be in for a brutal 2025. The state is considering increasing the licensing fees for legal businesses, right as a 25% tax increase looms in July.
The great irony is both cost hikes are in play precisely because the legal market is in such dire financial shape.
The state is legally required to update the cannabis excise tax rate in July of this year to make up for lackluster cannabis tax collections due to lower-than-expected sales. While the new rate hasn’t been determined yet, it’s widely expected to increase from 15% to 19% due to stipulations in state law.
Meanwhile, the state’s Department of Cannabis Control, or DCC, is facing a $23 million budget deficit this year. The looming shortfall has left the agency considering raising licensing fees, a core part of its revenue, thus charging pot companies more to participate in the legal market.
Caren Woodson, the president of the California Cannabis Industry Association, said in an email to SFGATE that increasing the costs of running a legal business would be “catastrophic to the industry” and drive customers back into the illicit market, which continues to thrive in California.
“The current model keeps one foot in regulation and one in prohibition, with dollars going in both directions. We must act swiftly to course correct or California’s legal, regulated market will continue to face the risk of an extinction event,” Woodson wrote.
Amy O’Gorman Jenkins, the executive director of the California Cannabis Operators Association, told SFGATE in an email that a tax increase in particular poses an “existential threat” to the industry.
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https://www.ksbw.com/article/california-pot-industry-extinction-big-tax-hike/63741482
