California’s 2018 cannabis tax haul of $345 million falls short of projections

California’s 2018 marijuana tax-revenue tally is in, and once more, it’s far below what the state had projected.

According to a news release from the state Department of Tax and Fee Administration, the fourth quarter of 2018 brought $103.3 million in marijuana tax revenues, not including city or county taxes.

That brings the year’s total to just over $345 million, far short of the $643 million originally projected for the year by former Gov. Jerry Brown’s administration.

Why is the California marijuana industry, which is continuing to grow and stabilize, underperforming expectations?

MJ businesses – as well as some lawmakers and regulators in the state – have pointed to the following challenges faced by the cannabis industry, according to the Orange County Register:

  • Issues surrounding the regulatory framework.
  • High state taxes burdening cannabis companies.
  • Municipalities’ widespread bans on MJ firms.
  • A thriving – and possibly expanding – illicit market that’s severely undercutting legal cannabis businesses.

Although tax revenues climbed throughout 2018 – the first quarter of 2018 brought in just $60.9 million, the second increased to $80.2 million and the third hit $100.8 million – the totals reflected a state government caught off-guard by a resilient underground market, which is still widely comprised of businesses that were shut out of the regulated market in one way or another.

Roughly two-thirds of the cities and counties in the state remain off-limits to marijuana companies, and illegal competitors – especially in Southern California – continue to undercut legal competitors by not paying taxes or passing those costs on to consumers.

4 comments on “California’s 2018 cannabis tax haul of $345 million falls short of projections
  1. Kevin Lee Gardner on

    Maybe if the BCC actually did the job of enforcement like they are supposed to. Instead of whining about not making enough tax revenue. Do your job BCC! Shut down the illegal operations.

    Reply
  2. Old Timer on

    Maybe if the BCC did their job and followed the California Business and Professions Code. BPC § 26013 “… nor shall such regulations make compliance so onerous that the operation under a cannabis license is not worthy of being carried out in practice by a reasonably prudent businessperson.
    If the business was accessible, the State would collect their taxes. In my opinion, there are thousands of black market participants who would go legal.
    The code doesn’t require overpriced application fees, local corruption, or onerous operation requirements. The BCC and local authorities have purposely caused the failure. Politicians and law enforcement did not want legalization. So, what we have now is a failed rollout and an incredibly healthy black market. Healthier than ever! The BCC has already lost. There aren’t enough resources to forcibly shut down the black market. Sounds like they might try anyway. Everyone ready for a new war on drugs?

    Reply
    • Pat on

      The war never ended. Its just morphed into something different. The state adopted the “cartel” model. The state liked what they saw and thought… We’d like to do that too. And use the citizen’s tax dollars to implement it.

      Reply
  3. Pat on

    If the BCC were to do what you ask ( and your request is reasonable..); it would cost the state ALL of their tax revenue profits to do so. And then some. So, they keep it a cat & mouse game as it was prior to 1996. So, did this “law” make things better for the industry?

    Reply

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