By Josh Jardine
California activated its recreational adult-use cannabis program on January 1, 2018, and with it being the nation’s most populous and prosperous state, expectations were “high.” (Get it? “High,” like when you use cannabis, is the joke, see? This is gonna be a great column.) The state was positioned to prosper greatly, and everything was going to be amazing.
So let’s check in on how the Golden State has been faring with its recreational rollout. Surely state regulators had closely examined the foibles and follies of other states that had embarked on similar legalization plans, which would allow them to make wise policy choices?
Well... let’s start with that much-heralded tax revenue. Beginning January 1, California implemented two types of taxes on recreational cannabis: One for commercial growers, who pay the state a cultivation tax on harvested, dried cannabis—$9.25 per ounce of flower, and $2.75 per ounce of leaf. The second was a retail excise tax of 15 percent of the sale price to be collected by the state at the time of purchase.
The budget office predicted the state would take in $175 million in new taxes during the first two quarters of 2018. Instead, during the first quarter, it only took in $34 million, with the cultivation tax a mere $1.6 million of that. That’s about a third of what was expected. So why haven’t Californians been flocking to their nearest dispensaries?
It turns out those aren’t the only taxes. There’s another state sales tax of 8 to 10 percent, plus cities and counties are allowed to impose their own additional taxes, which range from 5 to 15 percent. This results in consumers paying up to a 40 percent tax on their weed. (Insert spit take here.) In Oregon, the state tax on cannabis is 17 percent, and cities may collect up to an additional 3 percent, for a total of 20 percent.