California governor vetoes state tax deduction bill for cannabis businesses

California Gov. Jerry Brown vetoed a bill that would have given a tax break to all licensed marijuana businesses, dealing a setback to MJ companies hoping to reduce their state tax bills.

The measure – Assembly Bill 1863, approved by the Legislature earlier this summer – would have allowed licensed cannabis companies to take tax deductions under the state Personal Income Tax Law. If Brown had signed the measure into law, it would have gone into effect for the 2018 tax year.

The bill came with an estimated price tag to the state of $13 million per $1 billion in retail cannabis sales, according to an analysis by the state Senate Appropriations Committee.

“Given the cost to the General Fund, this proposal is best evaluated as part of the budget process,” the governor wrote in his veto message Wednesday.

The veto is likely to be met with dismay by California marijuana businesses, which already are struggling to make ends meet given the cost of complying with new state regulations and high local taxes. They also face a federal tax burden under 280E that typically results in MJ companies paying a federal tax rate of 70%-90%.

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4 comments on “California governor vetoes state tax deduction bill for cannabis businesses
  1. Mark on

    Taxing the industry too much shows the real reason for this mock legalization….. Money for the democrat coffers … I can only hope that California falls into the ocean or is given back to Mexico …

  2. gregory theodorides on

    Just another Bump set before Us. Taxes are paid , well…when you pay them. This is NOT BAD NEWS…for many reasons. Just think about the whole Thing not just today.
    Good businesses thrive inspite of and outlast Politicians and thier corruption. Make a little less now, look at the longer picture.
    Greg Theo

  3. George Bianchini on

    Just one more reason to go old school (black market). Another onerous regulation. Clearly in violation of prop 64’s prime directive. This violates regulation #26013 which states:

    “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.”

    Then we have regulation #26014, which has been dealt with in a Trumpium way: the complete opposite of what the public voted for.

    Per Business and Professions Code Section 26014:

    (a) The bureau shall convene an advisory committee to advise the licensing authorities on the development of standards and regulations pursuant to this division, including best practices and guidelines that protect public health and safety while ensuring a regulated environment for commercial cannabis activity that does not impose such barriers so as to perpetuate, rather than reduce and eliminate, the illicit market for cannabis.

    The rules and regulation the BCC is TRYING to shove down our necks has created the “perfect storm” for the black market. The illicit market now gets an unlimited supply of cheap product and very happy customers. Their volume will increase and if caught most will receive a penalty far less than before prop 64.

    Gavin oh Gavin, you’ve got some serious house work to do after the election. Provide what the voters approved. You were the only California politician to promote and back prop 64, don’t let these sore losers destroy your hard work. This will follow you all the way to the White House, only you can fix this.
    Call me, you have my number, or stop by when your home.

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