California Lawmakers Consider Reducing Pot Tax to Compete with Illicit Markets

California’s legal cannabis industry still can’t compete with the state’s entrenched illicit market. The reason: fairly simple economics. It just costs too much to go legit. So for the second year in a row, California Assembly Member Rob Bonta (D-Oakland) is backing a bill to give the legal industry a tax reprieve. By temporarily lowering costs for businesses, Bonta hopes the bill will draw more companies, cultivators and consumers (back) into the legal market.

California Lawmakers Take Up Bill to Give Legal Industry a Temporary Tax Break

On Monday, Assemblyman Rob Bonta introduced Assembly Bill 286, the Temporary Cannabis Tax Reduction bill. The proposal, if it passes, would drop California’s excise tax for cannabis retailers down to 11 percent from 15. It would also completely eliminate all cultivation taxes through 2022. In many ways, Bonta’s new bill resembles the bill he introduced in March 2018, which did not pass. The ultimate goal is to reduce the price at the point of sale for consumers. Bonta’s proposal could cut consumer prices 10 percent or more.

From the start of legal retail sales in the state, Bonta and other lawmakers recognized that high taxes would prevent the industry from displacing the illicit

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