Is California’s pot tax revenue a bust?

August 16, 2018

The state of California failed to collect even half of the marijuana tax revenue it was expecting in the first six months of 2018, signaling that much of the state’s cannabis business remains in the black market. [CBS Sacramento]

Between April and June, cultivation and excise tax revenue reached a combined level of $48 million, up from $34 million over the first three months of the year. But, state finance officials estimated California would receive $185 million in excise and cultivation tax revenue over the first six months of the year. The state only collected $82 million.

Industry workers and state officials are pointing to a variety of reasons for the low-level of pot tax revenue, including numerous local jurisdictions banning commercial pot activity or placing high taxes on it. Pot tax rates can approach 50 percent in some areas, which people in the industry say is driving business into the black market.

Assemblyman Evan Low (D-Campbell) said there is a staggering gap between the current tax revenue numbers and what voters were promised.

“Regulators must adapt before California’s lawful cannabis businesses are obliterated by the black market,” Low said.

On Tuesday, state regulators met in Los Angeles and listened to a long list of complaints and concerns about the California pot industry, including a shaky supply chain, shortage of licenses, testing problems and contested efforts to allow marijuana deliveries in jurisdictions that have banned pot sales. Lori Ajax, California’s top pot regulator, said following the hearing that the state is in a challenging transition period in which it is attempting to transform a largely illegal market into a multibillion-dollar regulated economy and there is a lot of confusion currently.


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1965buick

There’s a black market for weed?


AmericaTheFree

Everybody! Overboard! Now! To The Life Boats! We’re Goin’ Down!!!

Damn!! Get a grip folks, paaaalease! Barely 8 months into this “recreational” experiment and you’re ready to throw the oars in and call the race?!!! It took “awhile” to get his far with it’s legalization and it’ll take a while longer to get the bugs out of it, especially with so much at stake (Corona Beer just invested $4 BILLION in America’s legal pot industry, think they know somethin’ you don’t?).

This is why I smoke; I get can get a grip! Y’all should try it sometime…


horse_soldier

The economic forecasters in CA would do better to throw a dart at a dartboard. 

Missed the bullet train expenses by billions, now they’ve overstated the income from pot by an alarming amount as well. Once again, over promised and under preformed. 


Snoid

And let me add that Brown spent billions of hopeful dollars that were not in the hand yet. Sound familiar? Ferrara and other C Coast so called “leaders” did it anticipating much increased tax revenues that never came to be. Bad management, plain and simple.


Snoid

Well Gee….California’s government failed. Who would have guessed this might happen.


DocT

Why are the tax revenues down? Easy! Simple answer!


Cronies don’t pay taxes and the cannabis industry is now run by cronies and connected money. Local businesses who would have been happy to pay taxes are now shut out of the industry due to “legalization” which was nothing more than a scheme to get cronies in business. May the black (free) market continue to thrive!


rukidding

“Unintended Consequences?” Anybody with any sense at all could have predicted that this was going to happen. The government just taxed and fee’d some of these people to the extent that made them go underground. It’s similar to why there is a shortage of “affordable housing”. That industry is taxed, fee’d and put on hold that projects just die or are never presented. Although like pot, there is no black market in housing.


Myself

My take on what happened is that the govt wanted to stick its hand in a new markets pocket, so it made an illegal product legal,see how simple this is, then it taxed the product to no end,created useless rules and changes them all the time so that no one can deal with it, and the illegal market still operates. What should have happened is that the growers that have been producing for years should have been granted permits,a few simple rules to follow and one “Zare” to oversee this,instead what happened is the govt gave its buddys the ok to turn this into a money grab for people that have never been in the business,what the hell is Corona beer doing in it,wheres the little guy.


AmericaTheFree

I often said while growing up an “illegal smoker” that when the government found a way to tax pot it would be legalized, it has come to pass… What is Corona Beer doing in the pot industry? That’s an easy one… Peso’s, a lot of Peso’s! There will eventually be very few, if any, “little guys” in this industry, just like corporate farming is wiping out the family farm corporate growers will do the same with pot; it’s inevitable in our corporate run country…


kayaknut

The problem is the state of California failed to collect even half of the marijuana tax revenue it was expecting but it has already spent 100%+ of the projected revenue. Expect the threats of reduced services to offset the gap. A proposition we need is that any law/regualtions/policy… becomes void when it fails to meet what we are told it will do. Here in the Five Cities that would mean dissolving the FCFA.


Jorge Estrada

Good judgment set aside, the discussion over revenue from pot doesn’t include the outlay of revenue to mitigate the consequences. Forty years ago it was the Amway scam, have another sucker.


pi-on

Who is down-voting this? It is a true statement-check out the gained tax revenue vs the cost of drug & alcohol rehabilitation programs + the cost of DUIs related societal costs.


pi-on

Please understand that I’m not looking down on anyone who chooses to partake. It is just that there is a very real cost to the use of these substances.


sweethome

Like what Pi-on? Alcohol is the biggest drug problem that American has. Why not bring back Prohibition?


Templetukian

Shocking!