California May Lower Its Marijuana Taxes

Worried by a resilient black market that threatens to undermine California’s experiment with legal weed, state lawmakers are now considering a bill that would cut taxes on cannabis for a period of three years.

The proposed legislation, AB 3157, would reduce the state excise tax on marijuana from 15% to 11%. It would also suspend a $148-per-pound cultivation tax currently placed on growers.

Legal business owners argue the growing and excise taxes are too onerous, especially when combined with local taxes which can be as high as 9.2% in some parts of the state. By lightening the load, some lawmakers hope to give the newly-established legal market some much needed breathing room.

"Criminals do not pay business taxes, ensure consumers are 21 and over, obtain licenses or follow product safety regulations," said Assemblyman Tom Lackey (R-Palmdale),  who introduced the bill. "We need to give legal businesses some temporary tax relief so they do not continue to be undercut by the black market."

The City of Berkeley had the same thought in mind when it opted to lower its marijuana tax last month. The marijuana business license tax in Berkeley has been reduced from 10% to 5% in effort to help the legal industry compete and discourage the black market.

Voters established the 15% excise tax through Proposition 64, but the Legislature does not have to seek voter approval before amending the figure. As long as the move furthers the aim of the measure, Proposition 64 allows the Legislature to amend the tax with a two-thirds vote.