California Bill Introduced to End Cannabis Cultivation Tax on July 1, 2022
The state senator from Humboldt County, Senate Majority Leader Mike McGuire (D), has introduced a bill that would eliminate California’s cannabis cultivation tax.[1] The current tax rate is $10.08 per dry-weight ounce for flower and $3 per dry-weight ounce for leaves.[2]
Senate Bill 1074 would discontinue, beginning on July 1, 2022, the imposition of the cultivation tax. The bill would increase, from July 1, 2025, until July 1, 2026, the excise tax by an additional percentage that … will generate half the amount of revenue that would have been collected pursuant to the cultivation tax, and would then, beginning July 1, 2026, increase the excise tax by an additional percentage … to generate the full amount of revenue that would have been collected by the cultivation tax.[3]
“The bottom line is this,” McGuire said. “Cultivation taxes are crushing small farmers throughout the North Coast. Basing it off the weight doesn’t account for when the market collapses. It’s simply not sustainable.”[4]
Other stakeholders have concerns that shifting the cultivation taxes to excise taxes will not help an industry whose legal players ($3.1 billion) are dwarfed by the illegal ones who pay no taxes ($8.7 billion).[5]
Tiffany Devitt, chief of government affairs for CannaCraft, a large cannabis producer in Santa Rosa, contends “the bigger issue is the totality of the cannabis tax burden, which results in tested and regulated cannabis being two to three times more expensive than illicit weed.” She added, “It won’t work. It’s the equivalent of rearranging deck chairs on the Titanic.”[6]
SB 1074 will be heard in the Senate Governance and Finance Committee on May 4, 2022[7], after which there may be changes and a vote by the state Senate. From there it will be on to a similar process in the state Assembly. Eventually, the bill will require a 2/3 vote of both houses in order for it to be passed into law without submission to the voters.[8]
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[1] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB1074
[2] https://www.cdtfa.ca.gov/industry/cannabis.htm
[3] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB1074
[4] https://www.pressdemocrat.com/article/business/north-coast-lawmaker-joins-call-to-ease-tax-burden-for-california-cannabis/
[5] Ibid
[6] Ibid
[7] https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202120220SB1074
[8] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB1074
