Doltish CA Tax Addicts Rolling Out The Green Carpet For The Black Market

It truly staggers the imagination.  If cannabis companies in the U.S  do not readily have access to banks, nor 280E deductions, then continuing to increase state and local taxes on cannabis and CBD products will only cripple the legal market and further embolden the black market.

However, California, justifies even more tax increases due to the state’s lower than expected tax return collections on cannabis products.  Their expected returns were low because the taxes are now so high that the black market is, unfortunately, the most overwhelmingly dominant player in the state.

To bring you up to speed. Last week, the California Department of Tax and Fee Administration (CDTFA) announced cannabis mark-up and cultivation tax rate changes to be effective as of Jan. 1, 2020.

Their desire for more revenue is like a vampire’s endless thirst for blood.  The mark-up rate will now  go up again, from 60% to 80%, based on an analysis of statewide data that the CDTFA undertakes every six months. Essentially, this mark-up rate is the basis for the State’s justification for a 15% excise tax. The 15% excise tax to recreational sales, is in addition to a cultivation tax on growers.  It is estimated that consumers in some CA counties could be paying as much as 45% in aggregate tax.

California is undermining the potential success of the cannabis industry driving business into bankruptcy and emboldening the black market.  There are just too many regulations and excessive taxes.  It is estimated that almost 70% – 80% of cannabis sales in California currently happen through the black market, which makes a big dent in the state’s tax revenue. In addition to which, close to 80% of the state’s municipalities have banned cannabis retailers. This allows black-market growers to fill the void where consumers have no other purchasing options.

The CA legal cannabis market simply cannot compete with the black market.  It’s time for sensible legislation and responsible taxation, something that has been lacking for decades.

Sources

About Us

Tailored Benefits, Inc. is one of the premier employee benefit and consulting firms in Northern California. We have earned the reputation for delivering consistent, responsive and highly personalized service to our clients. This service ethic is engrained in our company culture and continues to be our mission. Our founder worked for over a decade as a licensed attorney in Northern California prior to launching Tailored Benefits, Inc. His experiences resolving company benefits and employee related issues led him to instill an advocacy approach to Tailored Benefits’ client services. This approach to client management assures continuous delivery of highly professional and personalized service. The result is a client retention rate unrivalled by peer firms.

Top 200 Cannabis Lawyers

Cannabis Law Journal – Editorial Board Members

Editor – Sean Hocking

Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild