California to Tax Marijuana as Much as 45 Percent

California to Tax Marijuana as Much as 45 Percent

Buying legal cannabis in the state could be pricey enough to keep the black market healthy.

November 1, 2017

Between customers, retailers and growers, taxes on cannabis may reach as high as 45% in parts of the state, according to a Fitch Ratings report. Those high taxes may keep consumers away from legal marijuana stores once the recreational retail market goes live on January 1.

"High effective tax rates on California cannabis may complicate the state's efforts to establish legal markets," said analysts Stephen Walsh and Karen Ribble in a Fitch Ratings report on California's marijuana taxes.

California marijuana consumers are going to have to pay a combination of state and local taxes that vary by municipality. Growers and sellers have their own taxes, too.

STATE BY STATE: California Cannabis News

Consumers will pay a sales tax ranging from 22.25% to 24.25%, which includes the state excise tax of 15%, and additional state and local sales taxes ranging from 7.25% to 9.25%.

Local businesses will have to pay a tax ranging from 1% to 20% of gross receipts, or $1 to $50 per square foot of marijuana plants, according to the Fitch report.

In addition, farmers will be taxed $9.25 per ounce for flower, and $2.75 per ounce for leaves.

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