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.
Here’s the release, in italics:
Cannabis Tax Revenues Total $60.9 Million in First Quarter
Sacramento – The California Department of Tax and Fee Administration (CDTFA) today released revenue numbers for cannabis sales in the first quarter of 2018. Tax revenue from the cannabis industry totaled $60.9 million since January 1, 2018, which includes state cultivation, excise and sales taxes. It does not include local tax revenue collected by cities or counties.
In November 2016, California voters approved Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act. Beginning on January 1, 2018, two new cannabis taxes went into effect: a cultivation tax on all harvested cannabis that enters the commercial market and a 15 percent excise tax on the purchase of cannabis and cannabis products. In addition, cannabis and cannabis products are subject to state and local sales tax at the time of retail sale.
California’s excise tax on cannabis generated $32 million in revenue for the first quarter of calendar year 2018. The cultivation tax generated $1.6 million, and the sales tax generated $27.3 million in revenue. Medicinal cannabis is exempt from sales tax if the purchaser holds a valid Medical Marijuana Identification card.
The California state-collected sales tax is 7.25 percent, with local taxes on top of that. https://blog.taxjar.com/california-state-sales-tax-2018/
So why doesn’t amount collected from the 15 percent excise tax then more than double the amount collected from the 7.25 percent sales tax (15 divided by 7.25 is 2.07)? The sales tax does not apply to medical cannabis – so the 15 percent excise tax should exceed it by even more than a factor of 2.07. But the 15 percent excise tax brought it $32 million, versus $27.3 million for the sales tax.
One more question: Why did the producer tax bring in so little? I suppose that may come from the ability of taxpayers to defer payment.