California Leading the Way in Cannabis Regulation

When it comes to cannabis regulation, California has always been a trendsetter. From being one of the first places in the world to legalize medical marijuana to having a thriving industry around the plant, California has set an example for others to follow.

But despite its potential to have one of the largest cannabis markets in the US (or even the world!), California has been held back by one major obstacle: taxes. For years, the state’s high taxes and complicated regulations have hindered the growth of cannabis businesses, both big and small. In fact, a recent report suggested that California’s cannabis tax revenue could double if cultivation taxes were eliminated.

The Burden of Taxes

The heavy tax burden has not only stifled the legal market, but it has also fueled the illegal market. With more competitive prices and no cumbersome regulations or punitive taxes, the illegal market has been able to thrive.

A Temporary Reprieve

In June, the situation went from bad to worse when it was announced that taxes would increase by a staggering 25%. However, there was a glimmer of hope when Governor Gavin Newsom signed a law last week to halt the increase until at least October 2028.

The law, proposed by Assemblyman Matt Haney, aims to level the playing field for the legal cannabis industry. Haney believes that the industry can bring enormous benefits to the state, but only if it is given a fair chance to compete against the untaxed and unregulated illegal market.

Immediate Relief for the Industry

The new law requires the California Department of Tax and Fee Administration (CDTFA) to work with the Department of Finance to adjust the cannabis excise tax rate for purchasers or products. This adjustment will be based on the estimated revenue equivalent to the previous fiscal year.

The CDTFA is also required to file an annual report to track the effectiveness of the measure. This move aligns with Governor Newsom’s support for easing the pressure on the cannabis industry.

And true to form, Newsom hasn’t shied away from making headlines, recently mocking Donald Trump in a tongue-in-cheek tweet. With this new law in place, California’s cannabis industry may finally have a chance to thrive as intended by voters.

 

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