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California Cannabis Tax Revenue Surpasses $1B

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According to a report released by state officials, California has collected $1.03 billion in cannabis tax revenue. Figures released by the California Department of Tax and Fee Administration on March 6 indicate a $2.6 million increase, or 1.5 percent, which was also the smallest quarter-to-quarter increase in tax revenue since recreational cannabis sales began. Increases averaged 15.5 percent in previous quarters.

After regulatory costs are subtracted, the majority of the money will be allocated to child care for low-income families, cannabis research, public safety grants and efforts to eradicate illegal cannabis growing operations.

Zachary Pitts is chief executive of a delivery service called Ganja Goddess and president of the California Cannabis Delivery Alliance. “It’s an industry that was supposed to be huge, going gangbusters with the green rush,” Pitts told OC Register. “It has been growing, but it’s not nearly where I think people were expecting it to be.”

Part of the slowdown of tax revenue is due to the fact that hundreds of cities and counties across California are implementing their own bans on recreational cannabis.

California imposes a 15 percent excise tax, cultivation tax by weight and the general sales tax that applies to all sales. Some cities and counties have imposed their own local taxes, which can push the final tax cost upwards to 50 percent in some cases.

A number of efforts have been launched to slash California’s unreasonably high taxes, which are notably higher than several other states with recreational cannabis. Local measures to reduce cannabis tax have also been introduced, such as in Humboldt County.

Cannabis tax revenues rose from $72.6 million in the first three months of recreational cannabis sales in 2018 to $172.7 million in the last three months of 2019. California’s cannabis industry will reach $1 billion in annual tax revenue in 2020 if that growth rate remains intact during the third and current year.