An omission in the language of California’s recently approved adult-use marijuana ballot initiative has resulted in a sales tax holiday for medical cannabis businesses through the end of 2017.
The snafu means medical marijuana users don’t have to pay the existing 7.5% sales tax, which could give MMJ businesses more pricing flexibility and a bump in sales.
The initial thinking behind Proposition 64 was to give medical marijuana users a tax break versus recreational consumers once the initiative kicked in come 2018, according to the Washington Post.
But the Jan. 1, 2018 start date was left out of a particular section of the ballot measure, so the elimination of the existing 7.5% sales tax on medical cannabis began when California voters approved the initiative last week.
The new law adds a 15% excise tax on all marijuana – both recreational and medical – that is set to take effect at the start of 2018. The 7.5% sales tax will be added on top of that for recreational sales.
The architects of the initiative say they didn’t extend the MMJ sales tax holiday intentionally, according to the San Francisco Chronicle, but analysts predict the blunder could cost California’s government tens of millions of dollars in lost revenue.