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Tax Cuts on California Cannabis

The economy of hemp industry. Tax on weed. Money and pot. Cannabis finance. Revenues in the marijuana industry and the medical industry. American dollar bill on cannabis leaves. Taxation and marijuana.

Taxes are inevitable, regardless of the industry. We talked before about how cannabis producers and sellers face additional hurdles when dealing with taxes as a result of conflicting state and federal laws. Cannabis producers also face exorbitantly high taxes compared to other industries. Thankfully, some California legislators are trying to ease the burden on cannabis producers by way of tax cuts. Read on to learn about the proposed tax changes for cannabis companies, and reach out to a qualified California cannabis business lawyer for help with your marijuana business.

Assembly Bill 1948: Excise and Cultivation Tax
Cannabis producers and other allies who see the potential for growth in the market, including Governor Gavin Newsom himself, have advocated for changes to California’s marijuana tax laws. Several tax reduction attempts have been raised over the past couple of years and have been rejected or delayed pending analyst reports and in response to pushback. AB 1948 represents another go, with the benefit of a report from the California Legislative Analyst’s Office supporting cannabis tax reform.

The goal of AB 1948 is to undercut the illicit marijuana sales market, which continues to thrive by offering lower prices than legal retailers. Legal cannabis businesses offer elevated prices to account for their heavy tax burdens. The bill would reduce the excise tax from 15 percent to 11 percent, and it would eliminate the cultivation tax entirely. The tax relief would be temporary, reverting back in July 2023 unless further legislative action is taken. The bill is currently under review by the Assembly Business and Professions Committee and the Revenue and Taxation Committee.

Assembly Bill 3124: Medical Marijuana Taxes
AB 3124 is targeted at reducing the tax burden for sales of medical marijuana. The proposed law would expand the state’s current medical marijuana program by exempting medicinal marijuana from sales tax as well as other various taxes, so long as the product is purchased by patients or caregivers. AB 3124 is currently under review by the Assembly Revenue and Taxation Committee.

Both bills are still under committee review, meaning it could be some time before they are put to a full vote by the Assembly and the Senate and then reviewed by the governor for his signature.

Call a California Cannabis Business Lawyer
If you are interested in setting up a marijuana business or are dealing with taxation, licensing, copyright or other legal issues with your cannabis business in Los Angeles or Southern California, call McReynolds Vardanyan, LLP, in Glendale at 818-855-2115. Our California cannabis business lawyers will work with you to get your budding business off the ground efficiently, effectively, and legally.

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