Cannabis Law Group's Medical Marijuana Legal Blog
Should California Marijuana Taxes be Based on Potency Levels?
The cannabis industry in California is struggling, despite being larger than ever. Los Angeles marijuana lawyers know that is thanks in large part to the tight regulations and steep taxes imposed on cultivators, producers, labs, retailers and consumers. Now, some legal analysts are proposing a plan that would base tax level on how potent a product is. 
In other words, the higher the concentration of a product’s THC content, the more it would be taxed. The proposal comes as state-legal businesses have been begging lawmakers for some relief from local and state government taxes. The high tax rates (a combined 50 percent for some businesses) are driving up the costs of marijuana products, which in turn are being passed onto consumers, a growing number of whom find it preferable to frequent the plentiful (and much cheaper) black market vendors.
The plan proposed by the state’s Legislative Analyst’s Office would:
- Eliminate existing marijuana business taxes (including the 15 percent across-the-board tax paid by customers when they buy).
- Replace this with a tiered tax system wherein taxes would range on the basis of the potency or the type of product itself.
This would effective address a few different issues, they say. First, it would help reduce the potential for consumers to get their hands on dangerous, high-potency pot products. Secondly, it would ease the tax burdens of retailers primarily selling low-to-moderate THC potency products. Once companies aren’t so squeezed financially, they’ll be better able to compete with the unregulated black market. Continue reading
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