California’s governor wants to eliminate a tax on marijuana cultivation, but not without raising taxes elsewhere on the state’s struggling cannabis industry.
In a proposal to the state Legislature for a state budget that would start in July, Gov. Gavin Newsom on Friday recommended ending the tax of $161 per pound of flower, the Associated Press reported.
To compensate for the lost revenue, the state would raise the retail excise tax on marijuana purchases after three years, from 15% to 19%.
For years, California marijuana companies have argued that heavy state tax and regulatory burdens are killing small businesses and further empowering the illicit market.
Industry members have called for a reduction in the excise tax along with the elimination of the cultivation tax.
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Not only do California cannabis companies pay a steep tariff at the state level, but they also face taxes from local municipalities.
The governor’s prospective budget also calls for the state tod offer roughly $20 million in grants to encourage municipalities to improve their retail licensing programs.