California Collected $345 Million in Cannabis Taxes During 2018

[dropcap class=”kp-dropcap”]A[/dropcap]ccording to figures that the state released on Feb. 19, California collected $345.2 million in cannabis tax revenue during the 2018 fiscal year. The numbers fall short of the $1 billion target given analysts before legal sales began, reaching about one-third of the goal.

California collected $103.3 million in cannabis tax revenue during the last three months of 2018, including $50.8 million from the state’s 15 percent excise tax, $16.4 million from the cultivation tax and $36.1 million in sales tax on all recreational products.

The numbers are much lower than the tax revenue collected in Colorado’s mature recreational cannabis market. Even with the lackluster numbers, it puts the state on track to hit the high mark of revenue totals of Gov. Gavin Newsom’s forecast in his 2019 current fiscal year budget. The slow growth of the industry is most likely due to the unsustainable tax rates. Assemblyman Rob Bonta introduced a bill to lower California’s high cannabis taxes.

“We heard many, many stories of the sticker shock from the taxes sending people back to the black market,” Ellen Komp, deputy director of the California chapter of NORML, told the Chico Enterprise-Record. “Opening up the national and international market is ultimately what’s going to help California the most and will also be the only thing that finally eradicates the illicit grows when everything is fully legal.”

It’s safe to assume that the high tax rates are encouraging Californians to return to the black market. “Lack of enforcement is creating a thriving environment for the unregulated ‘underground market,’” according to the first annual report released from the California Cannabis Advisory Committee.

It will take some time for California’s cannabis industry to stabilize as seen in other states that allow recreational cannabis sales. California’s economy is the fifth-largest economy in the world, surpassing Britain’s, France’s and Brazil’s entire economies.