High taxes on legal pot in California could mean black market will thrive
California could end up being one of the highest taxing states in the country if proposals stand
Monday, October 30, 2017
State and local taxes on marijuana could surpass 45% in some parts of California, jeopardizing efforts to bring all growers and sellers into a state-licensed market in January, according to the credit ratings firm Fitch Ratings. “High tax rates raise prices in legal markets, reinforcing the price advantage of black markets,” the firm said in a report. “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.” Increased enforcement may blunt the illegal market, “but high taxes may complicate such efforts by diverting in-state sales to the black market." (See also: With 9 weeks to go, California’s cities not positioned to start recreational marijuana sales)
