Sacramento, California — California’s cannabis excise tax is set to increase from 15% to 19% starting July 1, a move that many cannabis business owners and consumers are concerned about. The increase comes as the state looks to fund public services and further regulate the growing industry.
However, some worry that it could significantly affect the already struggling cannabis sector and push consumers back to the illegal market.
Concerns from Local Dispensaries
At Off the Charts, a marijuana dispensary in Manteca, customers were seen packing the store and stocking up on cannabis products ahead of the tax hike.
Miguel Gutierrez, a customer, expressed frustration with the ongoing increases, noting that it’s becoming harder to justify the higher prices, especially when the illegal market continues to offer lower prices.
“It adds up, especially with everything else going up,” Gutierrez said, referring to the rising cost of living in California.
Challenges for Cannabis Dispensary Owners
Lauren Nair, the store manager at Off the Charts, shared her concerns about the impact the new tax would have on both her business and the customers they serve. Nair explained that the industry has already been struggling under heavy taxes and the fierce competition from the underground market.
“We’re trying to sympathize with them because 4% is not a little bit. It’ll be on every product they purchase, so it’ll be a hefty amount,” Nair said. She also pointed out that the dispensary frequently offers specials to attract customers and counteract the effects of the high taxes.
Legislative Efforts and Consumer Impact
The California Department of Tax and Fee Administration is legally obligated to adjust the excise tax every two years, in line with the state’s inflationary measures.
However, some legislators are pushing for reform. Assembly Bill 564, for instance, aims to cap the cannabis excise tax at 15%, but the bill is still under review and needs more deliberation.
While Nair understands the need for funding, she also expressed concern over how the tax hikes are affecting customers: “Tax is at 15% right now. I can understand how it going up could help a lot with California, but it also is coming out of our customers’ pockets,” she said.
On average, customers spend between $120 to $140 per visit at Off the Charts. The increase in the excise tax would mean an additional $5 in charges for each customer, which may seem small but could have a big impact over time.
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Looking Ahead
As California grapples with how to regulate and profit from its legal cannabis market, the state’s cannabis businesses continue to navigate the financial burden of increasing taxes while trying to stay competitive. For many, the question remains: will these increases push more consumers back to the illegal market?
Do you think the cannabis tax hike will affect your purchasing decisions? Share your thoughts or experiences in the comments below!
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