California regulators about to increase marijuana taxes again

(This story has been updated to correct how often cultivation tax rates are recalculated.)

For the second time since California launched its legal cannabis market in 2018, regulators are going to raise marijuana taxes statewide.

According to a notice from the California Department of Tax and Fee Administration (CDTFA), all three types of marijuana cultivation taxes will increase effective Jan. 1, 2022.

The tax increase stems from a state law requiring the CDTFA to recalculate the cultivation tax rates once a year because of inflation.

The tax rates for:

  • Marijuana flower per dry-weight ounce will increase from $9.65 to $10.08.
  • Cannabis leaves will increase from $2.87 to $3.
  • Fresh marijuana plant material will increase from $1.35 to $1.41.

The taxes in question are all paid by marijuana growers.

The previous rate increase came Jan. 1, 2020, when the wholesale markup rate for marijuana was raised from 60% to 80%.

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The agency also said the markup rate will remain at 80% through at least June 30, 2022, while the state marijuana excise tax of 15% will remain unchanged.

The markup increase in 2020 led to a rush of meetings and negotiations by industry representatives and state lawmaker but ultimately didn’t end with any tax decrease.

Multiple attempts to lower marijuana tax rates since 2018 have all been met with defeat in the state Legislature, despite lower taxes being a top industry priority.