Assemblyman Tom Lackey has asked the California Department of Tax and Fee Administration to justify its decision to increase the state’s cannabis tax.
The department announced last week that it was raising the markup it uses to calculate the duty it imposes upon marijuana sales. The upshot is that the tax on an ounce of dried cannabis flower will increase from $9.25 to $9.65.
Lackey, a Republican representing Palmdale, has written to the department to ask for an explanation of the analysis it used to rationalize the tax hike.
The California Cannabis Industry Association, a trade body representing legal producers in the state, said its members are “stunned and outraged” by the news.
The changes will come into effect on Jan. 1, 2020, unless the department is persuaded to reverse its decision. It would mean the tax on an ounce of dried marijuana leaves would increase from $2.75 to $2.97, while fresh cannabis plants per ounce will increase from $1.29 to $1.35.
The industry is concerned that this will simply push consumers towards the black market at a time when unsafe, illicit products are risking Californians’ health.
The Golden State has the world’s largest legal cannabis industry, but it is constantly forced to fight battles on a number of fronts.
Licensed retailers are currently locked in a legal dispute over whether they can offer home delivery to consumers in parts of California that have banned or restricted legal marijuana stores. A number of cities and counties have joined forces to challenge the state’s home delivery rules in Fresno County Superior Court.
They argue that state law allows them to determine whether or not licensed businesses can sell cannabis to their residents. Yet Bureau of Cannabis Control regulations state that companies can deliver marijuana to homes anywhere in the state, including those cities and counties that have banned cannabis stores.
Salinas-based East of Eden Cannabis Co. has launched a lawsuit against Santa Cruz County, which has banned deliveries by companies it has not licensed. Attorney General Xavier Becerra has filed a motion on behalf of the California Bureau of Cannabis Control to join the lawsuit and back East of Eden, which city spokesman Jason Hoppin branded “beyond disappointing” and “alarming”.
He added that the state promised Californians local control over cannabis operations in their communities. “The state is now lending the power of the attorney’s general office to a business seeking to break that promise,” said Hoppin.