High Taxes Could Drive Up Marijuana Prices
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High Taxes Could Drive Up Marijuana Prices
Posted by CN Staff on October 30, 2017 at 07:14:25 PT
By Katie Zezima
Source: Washington Post
California -- High taxes on legal marijuana in California could have the potential to turn many consumers away from the state’s cannabis shops and toward the black market, according to a report from Fitch Ratings.The credit rating agency estimates state and local taxes on marijuana, which will become legal in California on Jan. 1., could be as high as 45 percent in some cases. It would trail only Washington state, which levies a 50 percent tax on marijuana.
“The existing black market for cannabis may prove a formidable competitor to legal markets if new taxes lead to higher prices than available from illicit sources,” the report says.Recreational marijuana will be taxed on both the state and local level, contributing to the potential for high rates. California will impose a 15 percent excise tax, as well as cultivation taxes. Municipalities will also levy sales tax and a business tax, which could be anywhere from 1 to 20 percent, on gross receipts. Business taxes on recreational marijuana have been approved by voters in 61 California cities and counties, according to the report.These high tax rates have the potential to drive customers toward the black market. The state is the nation’s epicenter of marijuana growing and has long provided black market pot. The report states that Colorado, Oregon and Washington all reduced tax rates after the commencement of legalization to shift customers back toward the legal market.California will implement a statewide framework for marijuana legalization, but each municipality must decide whether it wants to house marijuana businesses and, if so, map out its own regulations and tax structure. This may lead to a playing field that is not level in terms of tax revenue. Some cities like Adelanto, about 85 miles northeast of Los Angeles, are using the cultivation of marijuana as an economic development strategy. In Monterey County in northern California, the local government is encouraging cannabis growers to use its vacant greenhouses.The report says that legalization brings extremely high stakes for parts of the state, including the so-called Emerald Triangle in northern California. Trinity, Humboldt and Mendocino counties encompass the triangle, which has long been the U.S. marijuana-growing mecca. The report said legalization could do what many small farmers fear: create large-scale marijuana farms that undercut the small, often family-run operations that have proliferated in the region for decades.If other new marijuana markets are an indication, California will likely start with high sales that gradually slow over time. The report cites Colorado’s Legislative Council Staff, which estimates 44 percent revenue growth from marijuana in the 2016-17 fiscal years, slowing to 25 and 10 percent increases in the subsequent years.One issue in California, however, is that both the state and many municipalities have not released their regulations, leaving businesses in limbo just weeks before legalization. Some cities, including San Francisco, have admitted they will not have their regulations in place for the start of legalization on Jan. 1. Katie Zezima is a national correspondent covering drugs, guns, gambling and vice in America. She covered the 2016 election and the Obama White House for The Post. Source: Washington Post (DC)Author: Katie ZezimaPublished: October 30, 2017Copyright: 2017 Washington Post CompanyContact: letters Website: URL: -- Cannabis Archives 
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Comment #7 posted by Hope on November 03, 2017 at 04:11:34 PT
The Marijuana Machine Rolls Ahead
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Comment #6 posted by John Tyler on November 01, 2017 at 08:01:46 PT
getting better all the time
Business is business. When business sees an opportunity they are going to go for it. This is a “ground floor” opportunity as they say. I am leery of it, but it is kind of inevitable for reasons Hope mentioned earlier. I think it will work to our advantage because, big business has the power (money) to keep the small minded prohibitionists people out of the picture. We should all still be able to grow our own if we like, or go to our neighborhood shops and other venues, but if we want to see it on store shelves across the country there will have to be a larger distribution network. 
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Comment #5 posted by Hope on October 31, 2017 at 09:00:21 PT
I don't drink much of any alcohol at all... but when I do... I want it to be Corona. I like this. We always worried about big corporations taking over production and destroying the essence of what people liked about enjoying the herb. I was concerned about it being kind of as a little thing taken over and from the people by the big guys. I don't think I could, then or now, comprehend how big this thing would be. Big! Really big. Like coffee or tea. There aren't enough of the little guys to meet that demand. Lot's of people in the world and lots of them will want to enjoy some affordable and easy to find herb. Mom and Pop's just weren't going to cover it. I think they will still exist. I hope so. Home style folk, hippie, small entrepreneurs will still happen. Artisan, the connoisseur, and epicurean will still be here. I'm comparing it to coffee or tea and there's a great, great, huge population out there that need serving, and in retail, people like choices. Just like with coffee and tea... or anything.It's big. Really big. Big shops and big production are needed for a big demand. Keeping stuff on the shelves is important in any retail business. There is simply going to be more demand than a neighborhood mom and pop, head shop situation will be able to satisfy. Illegality hasn't destroyed the herb and neither will legality and availability or big business. It's got to be better for most people than the way it's been. 
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Comment #4 posted by Soupherb on October 31, 2017 at 05:48:23 PT:
It is not even legal!
On the Federal level and we are hearing stories of high taxes? From the Washington Post no less where one is not allowed to sell or buy cannabis yet smoking it is ok?
Common sense is lost to the greed of it all!!!!!!
Corporations are positioning for control of the not yet legalized and soon to be destroyed by corporate manipulations of cannabis?
The smoke and mirrors stupidity is off the charts and has been for a long, long time. SMH
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Comment #3 posted by FoM on October 30, 2017 at 16:00:05 PT
I was just reading about that.
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Comment #2 posted by HempWorld on October 30, 2017 at 08:27:15 PT
Big Brewer Makes a Play for Marijuana BeveragesCorona brewer to invest nearly $200 million in Canadian marijuana grower, with plans to develop cannabis-infused drinks:
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Comment #1 posted by HempWorld on October 30, 2017 at 08:19:29 PT
In Any Case...
The Market Will Decide!No judge and no jury is involved! (thank God)There is a limit to over-taxation, especially with Marijuana/Cannabis, the void WILL be filled quickly!
The Market!
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