State Bill Would Lift Penalty on Recreational Cannabis Sales

California cannabis clubs rang in the New Year with record profits thanks to the newly expanded legal market, which as of Jan. 1 allows anyone aged 21 and up to buy pot from a licensed seller. Advocates celebrated the milestone, but voiced concerns about the high taxes and cost of doing business in a heavily regulated industry.

A Bay Area lawmaker on Thursday introduced a bill to remove at least some of those costs. Democratic Assemblyman Rob Bonta’s AB 1741 would lift the 10 percent tax penalty on cash payments for adult-use weed.

A 2016 law waived the same penalty for medical pot sales. Bonta’s bill would simply expand that law to the newly sanctioned recreational market.

“AB 1741 will create equity for taxpayers within the cannabis industry by removing an unfair penalty on cash payments made to the state,” the Oakland lawmaker said in a press statement on Thursday.

Under existing law, the California Department of Tax and Fee Administration imposes a 10 percent fee on all non-electronic payments. But because federal law classifies cannabis as a Schedule I drug, most banks won’t do business with collectives.

“Therefore, most cannabis businesses have no choice but to operate and pay taxes in cash,” Bonta said.

State Board of Equalization member Fiona Ma applauded Bonta’s bill, calling it a step toward greater parity in the tax code.

“I have consistently been a champion for fair and transparent regulations within the cannabis industry and creating equity in the tax code is a key part of my mission on the Board of Equalization,” she said.

Ma added: “By expanding the same penalty fee waiver to adult-use cannabis that is currently offered to medical cannabis business owners, we are removing unnecessary and unfair barriers for those that simply want to be a part of California’s booming economy.”

San Jose is home to 16 licensed pot clubs. Of those, 10 are permitted to sell recreational cannabis. The city imposes a 10 percent tax on all sales, while the state demands a 15 percent excise tax in addition to permitting fees and other costs. According to Inc. magazine, many collectives pay effective tax rates of up to 60 percent.

9 Comments

  1. > Advocates celebrated the milestone, but voiced concerns about the high taxes and cost of doing business in a heavily regulated industry.

    The taxes on cannabis are NOT high enough, and the regulations are NOT heavy enough.

    Government can do MORE!

  2. What happened to making money on the taxes. That was quick. Oh well The DOJ will close them all down.
    I’ve already seen people smoking it there cars outside of schools the cops won’t do anything about it. Basically you can be 6 and smoke it CA really doesn’t care. So sad.

  3. Should be taxed at the same rate cigarettes are, about 900% to pay for all the lung cancer and mental health issues this crap will cause in the long run. It should be regulated for quality just like the drug companies are,. and prosecuted just like moonshiners are.
    By the way this is all in violation of Federal law and that bill is coming due soon!

  4. Sales tax on a single cigarette is about $.15 , the cost of making that cigarette is about $.03 so a fair tax on one roach should be 5 times the cost of the ingredients. What’s that come out too?

  5. Some more research on the sale price of cannabis in Colorado was $120 per 20 pack of 1 gram cigarettes, the equivalent tax for tobacco cigarettes is 5 times the production cost of that cigarette $.03 = $.15 or about $3.00 per pack.

    At $120.00 per pack California sales tax should be $600.00 for 20 roaches!

    There Governor Moonbeam is a way to pay for your HIGH SPEED RAIL.

    • > There Governor Moonbeam is a way to pay for your HIGH SPEED RAIL.

      We need a tax on Stupid High Speed Rail Tickets to pay for dedicated lanes for self driving vehicles.

      San Francisco to LA in three hours in a self-driving Lamborghini in a controlled access lane.

      • A self-driving Lamborghini kind of defeats the purpose of a Lamborghini.

        What was I thinking?

        The dedicated lanes will be used for self-driving black Cadillac Escalades for Senator Di Fi and President For Life Hillary.

    • why are we even putting a tax on this illegal drug. The Feds have the right idea. We are teaching our kids that it is ok to disobey…………..now we are telling them they can do drugs

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