After the commercial legalization of Cannabis, California has made $300 Million in the first year, and it’s just getting started. This money was generated from legal tax revenues of the regulated cannabis sales in California. California started its commercial sales of cannabis in January 2018. Although financial analysts projected the sales for the first year to be close to $1 Billion, California made about a third of it. The revenue from the cannabis sale puts the state of California close to the revenue budget proposed by Gov. Gavin Newsom for the current fiscal year.
Various types of taxes are levied on legal cannabis in California. 15% State Excise Tax, Cultivation Tax of 9.75% per ounce, State Sales Tax base rate of 8.75%, and local sales and excise taxes are a few of them. The state made $103.3 Million in cannabis tax revenue in the final 3 months of 2018. In 2018, California made this tax revenue even though 75% of the cities and counties in the state had banned the sales of cannabis. Although, this type of ban is expected in the early stages of the sales. Along with this, a lot of illegal sales of cannabis was also observed in the state during this year.
As the year ended, the analysts have determined that the tax revenue from cannabis can be increased by reducing the ban in various cities and counties and by controlling the illegal sales of cannabis in the state. The State Governor Gavin Newsom has called for increased enforcement this year to prevent the illegal growth and sales of cannabis in the state. He has also requested the help of the National Guard Troops to prevent the illegal growths of cannabis along the Mexican border. Along with this, the number of cities and counties in California that ban the sales of legalized cannabis is expected to be reduced drastically during this year.
A recent bill has been introduced by Assemblyman Rob Bonta to temporarily reduce the cannabis excise tax from 15% to 11% and to suspend the cultivation tax. This was done to attract price-conscious customers.
The steps that the State Governor has planned to take, and the reduction of the ban of cannabis in various cities and counties, is expected to have a huge positive impact on the tax revenue from the sales of cannabis in the state of California. With the expected changes, California should soon hit the projected mark of $1 Billion from sales of legalized cannabis in the state.