Legal Marijuana: A Bummer

In California, America’s biggest legal pot market, officials said legal pot would ultimately generate $1 billion a year in taxes for the financially troubled state. California now has about a half-trillion dollars in state and local debt. But the actual results of legalized marijuana in year three of the experiment are proving to be a major bummer.

California revised its forecasted revenue from the pot excise tax downward by $222 million over two years — to match the reality on the ground.

What’s the problem? It turns out taxes on legal pot are so high, it’s driving a great deal of business to the illegal underground market.

Legal pot dealer Jerred Kiloh in California tells me, “If you’re a cultivator, you pay a tax. When you’re a manufacturer, you pay a tax. And then once it gets to a distributor, you pay a tax. Then once it gets to the retailer, the retailer pays the tax. Then the state takes its excise tax, which is based on gross receipts. Then you have like individual gross receipts tax at the city level.”

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