Excise tax formula will change next year
LA MESA, Calif. (KGTV) — Local cannabis shops are sounding the alarm, saying higher state tax rates set to take effect next year will drive more customers to the black market.
Starting January 1, the state will change the way it calculates the excise tax on all marijuana products, effectively raising the rate by 12.5 percent. The state will also adjust a fee charged to growers by the rate of inflation, raising it to $9.65 per ounce of flower from $9.25 per ounce.
Marijuana is also subject to sales tax and local taxes, which at the Reserve dispensary in La Mesa is an extra 8.5 percent and 4 percent respectively.
“What we have here is a clean, safe product, but those extra taxes push people away because they don’t want to spend the extra money,” said Reserve budtender Owen Horsman. “And when that happens, they go and find their product at an unlicensed or illegal spot.”
Industry analysts estimate the illegal market still overshadows California’s legal industry, capturing $3 dollars for every $1 spent at a licensed shop.