.png)
KQED: California Cuts Tax for Legal Weed, Youth Groups Cry Foul
- Laura Braden
- Sep 21
- 2 min read
EXCERPT:
But over the years, that financial bargain has come into conflict with another promise in that proposition: one that allows cities and counties across the state to apply whatever local cannabis taxes they wish on top of the state taxes.
For a company like CannaCraft, this means they pay the cost of Sonoma County’s local cannabis cultivation tax — 36 cents per square foot of outdoor crop, and $3 per foot indoors — when they buy cannabis from local farmers.
Then they pay a 1% manufacturing tax to the city of Santa Rosa, a 2% distribution tax to San Diego County, where most of their dispensaries are, and another 10% retail tax to the city of San Diego when they sell them. All of these taxes are compounded, meaning they get baked into the price at each stage before the 19% state excise tax is added on top.
“At the end of the day, you end up with a total tax burden of around 40%,” Devitt said.
This breaks the first and most fundamental promise made to voters, she argued, to establish and protect a legal, regulated market.
“Consumers are price sensitive. You raise the prices, they go to the illicit market, and it’s hard to get them back,” Devitt said. “They find their hook up and they’re like, ‘Ah, this works for me, it’s a lot cheaper. Buy it from Uncle Joe.’”
Only 40% of cannabis consumed in California comes from licensed dealers, according to the state Department of Cannabis Control. Lawmakers, including the governor, argued that lowering the state tax would help stem closures and bankruptcies of legal businesses and help them regain enough of a foothold to compete with the illicit market.
“If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California’s cannabis culture is under serious threat of extinction,” state Assemblymember Matt Haney, D-San Francisco, said in a statement. “Instead, we should be looking at how we can support this industry.”
