Orange County Register: Editorial: Newsom signs a tax cut in California

EXCERPT:

“For many years, cannabis industry representatives have argued that combined state and local taxes on cannabis has placed it at a competitive disadvantage to the unregulated illicit market,” explained an analysis from the Senate Rules Committee. “The representatives added that the cultivation tax specifically pushes cannabis farmers into the unregulated market.”

So it wasn’t going to help when the state excise tax rose from 15% to 19%.

“At the end of the day, you end up with a total tax burden of around 40%” when all cannabis taxes are added up, explained Tiffany Devitt, director of regulatory affairs for CannaCraft, to KQED.

And so, Assembly Bill 564 was put forward to suspend the 4% tax hike to help the legal market stay afloat.

“We’re rolling back this cannabis tax hike so the legal market can continue to grow, consumers can access safe products, and our local communities see the benefits,” said Gov. Newsom upon signing the legislation.

...there’s now a whole nonprofit industry now reliant on marijuana tax revenue. But if the high taxes suffocate the market, how viable could that be in the long run?

This is why it’s hard, once government gets in the business of taxing and spending, to scale any of it back. Special interests with clear economic interests fight to claim “their share” of public funds and make it a struggle to claw back anything, regardless of the long-term consequences.

In this case, even the Democrats were able to see that high taxes were shooting the legal market in the foot.