Take the strain out of your search...tm

California pot taxes lag as illegal market flourishes

www.sfgate.com
Date:
Friday, Jan 11, 2019

LOS ANGELES (AP) — Deep in Gov. Gavin Newsom's new budget is a figure that says a lot about California's shaky legal marijuana market: The state is expecting a lot less cash coming in from cannabis taxes.

The Democrat's proposed spending plan, released Thursday, projects the state will bank $355 million in marijuana excise taxes by the end of June. That's roughly half of what was once expected after broad legal sales kicked off last year.

Industry experts say the diminished tax income reflects a somber reality: Most consumers are continuing to purchase pot in the illegal marketplace, where they avoid taxes that can near 50 percent in some communities.

Tax collections are expected to gradually increase over time, but predicting what that amount will be remains something of a guess.

Tax collections for "a newly created market are subject to significant uncertainty," the budget said.

Josh Drayton of the California Cannabis Industry Association credited Newsom with taking "a realistic look at the challenges" after a bumpy first year of broad legal sales.