California’s High Taxes for Recreational Marijuana May Help the Black Market
New taxes are coming when recreational cannabis becomes fully operational in California next year. These taxes will not just apply for the grower but also for the recreational user. These taxes include those imposed by the state and by the county and in some cases taxes imposed by cities.
On a retail level, it costs about $35 to buy a small bag of good quality medical marijuana in Los Angeles, enough to roll five or six joints.
But in 2018, when recreational sales take hold and additional taxes kick in, the cost of that same purchase in the new market is expected to increase at the retail counter to $50 or $60. At the high end, that’s about a 70% jump.
The article warns that taxing legitimate cannabis at such a high rate could allow the black market to flourish.
According to Fitch Ratings, a credit reporting agency, “High taxes increase prices in legal markets, and have the effect of reinforcing price advantages to long established black market cannabis…Taken together, state and local tax burdens put California at the high end of the tax range for states that have legalized nonmedical cannabis.”