California's beleaguered pot industry was given another piece of bad news Thursday afternoon: The state cannabis tax rate will increase from 15% to 19% on July 1, the highest allowed by state law. The 26% change, devised by Gov. Gavin Newsom, is ironically being made precisely because the state's legal industry is floundering while the illicit market thrives.
Representatives with the California Department of Tax and Fee Administration announced the gross receipts tax hike during a cannabis advisory meeting Thursday. State law requires the department to increase the pot tax rate this year if cannabis excise revenue falls.
Jerred Kiloh, the president of the United Cannabis Business Association, said the tax increase will only make it harder for legal stores to offer cannabis at a price point that competes with illegal stores.
"More businesses will close sooner as the legal price is just too far away from illegally obtained products. Less investment in starting or continuing cannabis operations will occur, and demand for cannabis licenses will decline exponentially," Kiloh said.
Read more at SF Gate