Many are waiting patiently for California to make recreational marijuana legal at the start of 2018, but many are not waiting for the high taxes that could come with it.
According to a Fitch Ratings report, between customers, retailers, and growers, marijuana tax in California could reach as high as 45% in some parts.
Stephen Walsh, and Karen Ribble, who are analysts for Fitch Ratings, commented, “”High effective tax rates on California cannabis may complicate the state’s efforts to establish legal markets.”
California consumers will pay a sales tax ranging from 22.25% to 24.25%, which includes the state excise tax of 15%, and additional state and local sales taxes ranging from 7.25% to 9.25%.
For local businesses, the tax will range from 1% to 20% of gross receipts, or $1 to $50 per square foot of marijuana plants, according to Fitch.
“California’s black markets for cannabis were well established long before its voters legalized cannabis in November 2016 and are expected to dominate post-legalization production,” said the report.
While this seems high, it is not the highest. Washington has a higher tax rate at 50%.
