California cannabis tax collections explained.

I asked California Department of Tax and Fee Administration a couple of questions about why cannabis tax collections are coming in low.   At the end are the questions and the CDTFA’s helpful answers, from Paul Cambra.

My reactions:  I.  The producer or cultivation tax collected only $1.6 million in the first quarter because retailers some how brought untaxed products into inventory before the tax was effective on January 1.  Retailers then sold that untaxed product in early 2018.  The standard excise tax procedure for taxing jurisdictions is to apply a “floor stocks tax” to product that escaped tax as it came into inventory (and sits on the shelf or the floor).  See https://www.ttb.gov/tax_audit/floor-stocks-tax-faqs-answer.shtml.  California did not have a floor stocks tax, so had a short-term loophole.  Its effect will soon disappear.

II.  The 7.25% sales tax collected a lot compared to the 15% marijuana excise tax because the sales tax
1. includes pipes and t-shirts and so on;
2. is based on a real price, while the excise tax is often based on an artificial or phony price (the “average market price”) under California regs;
3. includes the 15% tax in the base (for an extra 1.0875% evert time).

Continue reading California cannabis tax collections explained.

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Confused by California marijuana tax receipts

California released some info about cannabis tax collections May 11, 2018. I can’t figure some of it out. Questions below.

UPDATE: Dale Gieringer of California NORML answers, pointing out that most medical cannabis is not tax exempt. The only tax exemption is for product sold to patients who have bothered to get cards. So the sales tax figure is high because it includes sales of lots of medical cannabis. Few adult use licenses have been issued.

Continue reading Confused by California marijuana tax receipts