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California cuts cannabis taxes to heal ailing industry

California cuts cannabis taxes to heal ailing industry


"California is significantly overhauling its cannabis tax structure, including entirely eliminating a tax on growers, in an effort to boost a struggling legal industry begging for relief.

The changes, which were adopted last week as part of a broader state budget agreement, will also create tax credits for some cannabis businesses, expand labor rights within the industry and switch collection of a state excise tax from distributors to retailers. That tax will pause at 15% for three years, after which regulators could raise the rate to recoup lost revenue from discontinuing the cultivation tax.

Amy Jenkins, a lobbyist for the California Cannabis Industry Association who was heavily involved in the negotiations, said zeroing out the cultivation tax was a priority for the legal industry — something it has sought for three years.

Growers complained that the tax, a flat $10.08 per ounce for flowers, was making it difficult to keep operating as prices tumbled from a glut of weed and not enough dispensaries to sell it. Wholesale prices have dropped by as much as 50% over the past year, particularly squeezing farmers whose outdoor crops sell for less and forcing many smaller operations to close down.

“Any delays in that happening was something that we were not able to accept,” Jenkins said."

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