California Assembly Unanimously Passes Bill To Delay Marijuana Tax Hike For Five Years
From toxifillers.com with love
The California Assembly has unanimously approved a bill to delay the implementation of an planned hike on marijuana taxes.
About a month after state officials announced that the cannabis excise tax rate would increase from 15 percent to 19 percent on July 1, the Assembly voted 74-0 to pass legislation from Assemblymember Matt Haney (D) to delay the change for five years.
The bill now goes to the Senate for consideration, but advocates are hoping to see its language incorporated into a separate budget trailer measure that would take effect upon enactment—as opposed to at the beginning of next year as would be the case under Haney’s bill.
While the legislation as introduced would have outright repealed the proposed tax hike, it’s since been amended to delay its implementation until the 2030-2031 fiscal year.
The United Food and Commercial Workers (UFCW) officials applauded the Assembly’s vote.
Joe Duffle, president of UFCW Local 1167, said raising the tax rate would “only increase the number of failed legal cannabis businesses” in the state.
“AB 564 freezes the cannabis excise tax at 15 percent and gives legal cannabis businesses a fighting chance to stay afloat in an industry that is contracting every day,” he said. “Without this bill, the illicit cannabis industry will only flourish more and keep putting untested, untaxed and unregulated cannabis products into the hands of consumers.”
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Under the legislation, the California Department of Tax and Fee Administration (CDTFA), working with the Department of Finance, would be required to “adjust the cannabis excise tax rate upon purchasers of cannabis or cannabis products” based on the “additional percentage of the gross receipts of any retail sale by a cannabis retailer that the department estimates will generate an amount of revenue equivalent to the amount that would have been collected in the previous fiscal year,” the bill text says.
The department would need to “estimate the amount of revenue that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax” and “estimate this amount by projecting the revenue from weight-based cultivation taxes that would have been collected in the previous calendar year based on information available to the department.”
“The specific goal of the cannabis excise tax rate reduction is to provide immediate tax relief to the cannabis industry,” the measure states. “The efficacy of this goal may be measured by the Legislature by the amount of gain or loss in cannabis excise tax revenues resulting from the cannabis excise tax rate reduction allowed by this act.”
It also mandates that CDTFA, on or before December 1, 2026 and each subsequent year the California “submit a report to the Legislature…detailing the amount of gain or loss in cannabis excise tax revenues resulting from the cannabis excise tax rate reduction allowed by this act.”
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Meanwhile, California officials last month awarded another round of community reinvestment grants to nonprofits and local health departments, funded by marijuana tax revenue.
California’s Supreme Court separately delivered a victory for the state’s marijuana program last month, rescinding a lower court ruling in a case that suggested federal prohibition could be used locally to undermine the cannabis market.
The state Supreme Court ruling also came just weeks after California officials unveiled a report on the current status and future of the state’s marijuana market—with independent analysts hired by regulators concluding that the federal prohibition on cannabis that prevents interstate commerce is meaningfully bolstering the illicit market.
Gov. Gavin Newsom (D) did sign a bill in 2022 that would have empowered him to enter into interstate cannabis commerce agreements with other legal states, but that power was incumbent upon federal guidance or an assessment from the state attorney general that sanctioned such activity.
Meanwhile, a California Senate committee recently declined to advance a bipartisan bill that would have created a psilocybin pilot program for military veterans and former first responders.
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Photo courtesy of Philip Steffan.
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