OPINION
Top 10 Things Wrong With California's Weed
Edibles Magazine™ Issue 62
B. Le Grand
18
These are the top 10 reasons the little guy There's also a 60% Tax Penalty for Being 1 will not survive the California Cannabis Day Late. Part of the biggest problem Prop 64 Business Purge: created was the complete unilateral control and autonomy of the CDTFA (California Department 1) Taxing Tax & Increasing Taxes: of Tax and Fee Administration). They get to • In case you didn't know, the reason choose however the cannabis industry gets California's legal cannabis products are taxes with or without cause. So when they costing so much more than illegal stores feel like they're not getting enough taxes they or black market products is because of just raise the tax rates like they just did with the quadruple taxation on the states part. cultivation and distribution. A 60% penalty is There's the cultivation tax, distribution tax, enough to put a company out of business. the retail tax and sales tax. And that sales tax isn't just the state sales tax there is 2) Too Many Agencies to Answer To: also city, county and district sales tax AND Overall cannabis companies licensed in cannabis tax. A $6 wholesale product ends California have to answer to a minimum of up exiting the stores at $25, and 80% of 11 agencies: every dollar is going to taxes. Furthermore, • BCC (State Oversight) the cultivators can’t pay the cultivation tax • City Departments of Cannabis so it gets passed onto the manufacturers • CDFA and distributors, even though the CDTFA • CDTFA says the cultivator is the one who has to • County pay that tax. Ultimately the rising costs all • District get passed onto the consumer. And what’s • Franchise Tax Board worse is that dispensaries are marking up • Department of Sanitation the wholesale tax, so that the product ends • Department of Fish and Wildlife up at a 127% markup instead of the normal • Department of Weights and Measures 100% keystone so that the retailer doesn’t • IRS end up feeling the weight of the distribution tax…. But the end consumer also pays the 3) Chain of Supply Taxation: retail excise tax. To top it all off, the cities • In no other type of business does a chain are raising their local tax rates putting of supply wholesale tax get applied. For people out of business in places like Santa cannabis, not only is there a wholesale Cruz and Oakland. tax, that tax is due to the city and state, regardless if you collected that money. AND the cities want their 1-15% tax rate on With the rising cost demand to operate, TOP of the CDTFA markup tax. It’s illegal to retail stores are requesting net terms, tax tax, but that’s what’s happening. Don’t promising to pay in 30 days. If that store forget that at the end of the day, the IRS doesn’t pay the supplier within 30 days, doesn’t allow cannabis companies to write the supplier is still responsible for the off anything, so whatever profit would be distribution tax, which just got raised. The left is taxed Federally with no deductions CDTFA chose to write it as: 15% on an 80% because of Section 280E. So you could be markup, which is effectively 27%. Why bringing in millions of dollars, but still go didn’t they just say it’s 27%? Sound too high? bankrupt… but cannabis companies can’t Yes, it does. Because it is too high. This tax even declare official bankruptcy because - which gets taxed as well by the cities, is that is a Federal protection. Let’s not what’s killing California’s cannabis chain of forget the state just raised the taxes for supply. The problem is the people writing cultivators and distributors. the law are not the operators. When you EdiblesList.com I EdiblesMagazine.com
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