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

Women, minority execs show few gains in U.S. cannabis industry, according to the latest data from the MJBiz Diversity, Inclusion and Equity Report. Get your copy here.


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.