LAO Recommends Taxing Pot by Potency

It seems like a logical move—taxing marijuana by its share of high-inducing THC. Now it’s being recommended by the Legislative Analyst’s Office.

The recommendation came Tuesday in an LAO report entitled, “How High? Adjusting California’s Cannabis Taxes.”

The LAO examined a variety of cannabis structures to determine which ones could help undercut the illicit market, reduce harmful use, and yield more stable revenues. To that end, the LAO suggested ditching the 15% excise tax in favor of a potency-based or tiered ad valorem tax system.

The LAO said policymakers should first consult with scientific experts. Then, a "potency‑based rate between $0.006 and $0.009 per milligram of THC could be appropriate."

Reacting to the report, the Cannabis Industry Association said the recommendations were in line with its own priorities (KTLA). Assemblyman Rob Bonta (D-Oakland), said the report “delivers a clear message that the status quo is not working.” 

Read the report here


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