You’ll have read it before but it is worth noting for the record
In the legal cannabis industry, our tax code is inverted. Retailers and brands, and in turn consumers, are getting taxed at rates that would make Sweden blush. Californians are paying up to 45% tax rates on cannabis purchases — nearly 40% higher than the standard 6% state sales tax.
How do we know high taxes impede entry into the market? Well, for one, California’s legal cannabis market is stagnant. The New York Times reported that California’s legal cannabis sales totaled $2.5 billion in 2018, about $500 million less than in 2017. Despite the state’s desire to expand the legal market, entrepreneurs and consumers aren’t adopting as fast as expected.
Not only is the market stagnant, it’s more profitable to buy and sell illegally. California’s illicit cannabis market is estimated to be twice the size of the legal one, nearly doubling California’s legal market in sales a year ago. Current tax rates and fees hamper legal businesses’ ability to compete.