That quarter revenue total includes state cultivation, excise, and sales taxes collected since January 1, 2018.
California made $60.9 million in tax revenue from marijuana sales in the first three months of 2018, according to new data provided by the California Department of Tax and Fee Administration.
That collected tax revenue total only includes state cultivation, excise, and sales taxes. It does not include the local tax revenue collected at the city and county level.
Legal adult use marijuana sales started January 1, 2018 after California voters approved Proposition 64 – the Control, Regulate and Tax Adult Use Marijuana Act – in November 2016.
Also on January 1, two new cannabis taxes went into effect, including a 15 percent excise tax on the purchase of cannabis and cannabis products and a $9.25 per ounce cultivation tax on all harvested cannabis that enters the commercial market. The first payments of these taxes were due on April 30.
All adult use cannabis sales are also subject to a 9.5 percent state sales tax, and local government can also add taxes, which vary around the state. Medical marijuana patients in California are able to purchase cannabis products while being exempt from sales tax.
A breakdown of the tax revenue report from the CDTFA revealed that $32 million of the state-level revenue came from California’s excise tax, while sales tax generated $27.3 million and the cultivation tax generated $1.6 million in revenue.
The first three months of legal adult use marijuana sales weren’t quite what analysts had forecasted. Earlier this year, state budget analysts projected that marijuana sales would produce $175 million in annual excise tax revenue alone. The state is currently on track to collect $128 million in excise tax for the year.
Experts have suggested that the less-than-expected tax revenue numbers could be related to the limited supply of fully licensed stores in place on January 1. After the first of the year, many dispensaries continued to operate as medical-only while they waited to have their adult-use licenses approved. Additionally, several California counties and cities have opted to impose outright bans on cannabis businesses.
Some California lawmakers and cannabis industry experts believe California’s high taxes on marijuana could be hindering legal sales and allowing the illegal market to continue to flourish. Assemblymen Tom Lackey, R-Palmdale, and Rob Bonta, D-Oakland, have authored a bill that proposes temporarily reducing taxes for three years to allow the legal market to take hold.
With most dispensaries now up and running, second quarter revenue is expected to present a more realistic picture of California’s marijuana market.
California’s Marijuana Industry
California possesses the largest cannabis market in the entire United States, and early projections estimate the state will soon have $5 billion in annual sales.
Under California’s recreational marijuana law, adults 21 years and older can legally use, possess, transport, and grow marijuana. With a government-issued identification card, adults can buy and possess up to 1 ounce of marijuana, or 100 milligrams of edibles, and grow up to six plants at a time for personal use.
California was the first U.S. state to legalize medical marijuana. Patients with a doctor’s recommendation for any condition can legally buy and possess up to 8 ounces of cannabis.
Legal Cannabis in the U.S.
California is one of nine U.S. states to legalize recreational marijuana, and one of 29 to legalize medical marijuana.
You can learn more about where cannabis is legal in the U.S. through our education page, or keep up with the latest developments in the legal cannabis industry by visiting our news page.
