With Heavy Taxes, Legal Marijuana in California Will Cost More

legal marijuana in california

Beginning Jan 1st, 2018, legal marijuana in California will cost about eight dollars more per eighth-of-an-ounce.

Cutting out the black market is always a priority with recreational marijuana legalization. But heavy taxes may cause initial prices of legal marijuana in California to soar above street value. The exact price of cannabis, whether recreational or medicinal, depends on individual store’s local taxes. Also, shops may raise prices to account for new costs in the supply chain.

Check out this projection for the price of a $50 dollar-eighth from different dispensaries courtesy of the GreenState.

Click here if you want to see a map of all recreational dispensaries in California.

A $50 eighth-ounce of the strain Star Dawg from Torrey Holistics in San Diego:

TODAY

$50 pre-tax base price
$3.88 state and local sales tax @ 7.75 percent
$53.88 total

In 2018

$50 pre-tax base price
$3.88 state and local sales tax @ 7.75 percent
($6.90 state excise tax at 15 percent)
($1.15 state cultivation tax)
$61.93 projected total 

A $50 eighth-ounce of Green Ribbon from Harborside in Oakland:

TODAY

$50 pre-tax base price
$4.63 state and local sales tax @ 9.25 percent
$54.63 total

Versus 2018

$50 pre-tax unit base price
$4.63 state and local sales tax @ 9.25 percent
($2.50 Oakland excise tax @ 5 percent)
($6.90 state excise tax)
($1.15 state cultivation tax)
$65.18 total (projected total)

And a $50 eighth-ounce of Wedding Cake from Northstar Holistic in Sacramento:

TODAY

$45.98 pre-tax base unit price
$3.79 state and local sales tax @ 8.25 percent
23 cents local use tax @ 0.5%
$50 total

Versus 2018

$45.98 base unit price
$3.79 state and local sales tax @ 8.25 percent
23 cents local use tax @ 0.5%
($6.90 state excise tax)
($1.15 state cultivation tax)
$58.05 (projected total)

Layers, and Layers of Taxes

According to the rating agency Fitch, multiple layers of taxes could cause prices to go up 45 percent in some parts of the states. Fiona Ma, member of the state board of equalization says “it’s going to be kind of messy in the beginning.” Ma goes on to say,

“This is a huge undertaking. Trying to rush it all in a two-year process is a daunting task.”

With the imposed taxes, legal marijuana in California could collect around $1-billion per year in cannabis tax revenue. But with things largely speculative at the moment, California may reconsider its tax rates in the near future. David McPherson, compliance director at a cannabis management services consultancy touches on this point. He says,

“I think the issue really is where stabilization begins. It’s like when we first got computers: They were $4,000 and three years later they were $400. We anticipate it’s going to take 18 months to tell us where we really are and how much we’re over-taxed.”

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