California reports 94% of marijuana excise taxes paid as sales, revenue dip

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Nearly 94% of cannabis excise taxes that marijuana businesses owed to the state of California have been paid, according to state officials, who also noted that both total sales as well as tax revenue declined in 2022.

Cannabis sales in California are subject to two main taxes: the state’s basic sales tax, which starts at 7.25% but can reach as high as 8.25% in certain jurisdictions, and a 15% excise tax unique to cannabis, which retailers must collect from customers and remit to the state.

According to California Department of Tax and Fee Administration (CDTFA) data shared with MJBizDaily, 94% of excise taxes due had been paid as of May 16.

CDTFA reported $5.38 billion in taxable cannabis sales in 2022, and total taxes due on that amount is $1.11 billion.

The state reported $278 million in outstanding unpaid state taxes, according to CDTFA spokesperson Tully Lehman. The amount includes outstanding excise and sales taxes across multiple years as well as unpaid cultivation taxes accrued prior to that levy’s elimination last year.

The figure does not include revenue due to the state that businesses haven’t yet reported, Lehman said.

Both cannabis sales and taxes declined in between 2021 and 2022. The state reported $1.3 billion in tax revenue based on 2021 sales of $5.781 billion.

To date, nine cannabis businesses in arrears on their state taxes have requested payment plans, Lehman told MJBizDaily.

Marijuana retailers have long bemoaned taxes as a chief reason why California businesses are struggling to compete with the untaxed illicit market.

Other states appear to have taken the lesson to heart. Minnesota, where Gov. Tim Walz signed adult-use marijuana legalization into law this week, will tax cannabis sales at 10%.