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California's Cannabis Market at a Crossroads

California's Cannabis Market at a Crossroads

June 10, 2022

"Cannabis operators across the state say lawmakers and regulators must address several key issues for the market to prosper. Government officials are proposing changes, but will they be enough?

Tiffany Devitt, the company’s chief of regulatory affairs, states that one of the main issues is the cultivation tax. It’s harmful to California’s entire cannabis industry because it occurs at the beginning of the supply chain, she says, adding that this is uncommon for agricultural commodities.

What’s more, because it’s a flat tax, it becomes more of an obstacle when prices are depressed, she says.

“It goes up proportionately [as a portion of your costs] as your prices go down,” Devitt says. “Then, what happens is, as that mature biomass moves through the supply chain, it gets hit again and again by other taxes, and those end up compounding.”

One of those taxes, the 15% excise tax, is paid by end consumers to retailers, but the state requires that it’s collected and remitted to the state by distributors, Devitt says, adding: “So, another part of this tax question is sort of the lunacy of distributors essentially having to act as tax collectors and tax enforcement agents."

Read the full article at Cannabis Business Times

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