Will Californians Be Paying More for Their Cannabis?

California has always been at the epicenter of this nation’s Cannabis industry, both legal and underground. It’s no surprise, then, that 60% – 70% of America’s second favorite drug is grown right in her own backyard.

Not everyone’s thrilled, however, as the costs associated with producing all this ganja from both legal and illegal grows has left more than a few people in the state concerned.

It’s no mystery that the state was (and some might argue continues to be) caught within the grips of a devastating drought. This water shortage is only exacerbated by legal and illegal grows which, no surprise again, use thousands upon thousands of gallons of water–daily.  These illegal outdoor grows have diverted water and caused considerable damage and pollution in State and National parks, endangering local wildlife in the process.

There’s also the costs associated with running these huge grow operations.

According to some estimates, legal indoor grows account for about 3% of all electricity use or 9% of household electricity use. While this may seem like a conservative number to some, it must be kept in mind that CA is one of the lowest state consumers of electricity in the nation.

WHAT DOES THIS MEAN FOR YOUR AVERAGE CALIFORNIA CANNABIS CONSUMER?

Ever heard of the Marijuana Value Tax? Don’t be worried if you haven’t, many Californians, including those who use cannabis, have never heard of this proposition, which was introduced late last year and passed this February. The bill essential regulates or rather enforces more stringent licensing for medical marijuana businesses, both on the state and local level. It also hopes to tackle to growing environmental burden of grow operations by limiting their numbers.

One understated goal of this new bill are efforts to bring in more than $100 million in new revenue under the new Bureau of Medical Marijuana Regulation, essentially taxing the hell out of marijuana the same way Colorado has.

But with any new regulation comes unforeseen, oftentimes disheartening side effects. One that many Californians will ultimately feel are rising costs associated with their favorite plant. These new regulations on cannabis businesses (as well as other subsequent programs to regulate the drug) will be paid for with a 15% tax on medical marijuana sales. If the bill becomes law, the tax could go higher than 15%, as cities and counties would be able to tack on their own local taxes and fees on top of the state tax with little impunity.

Marijuana Value Tax, How You’ll Be Affected

For a breakdown of how taxes for marijuana will be allocated, refer to the chart above as well as these handy numbers below (via Herb):

• 30% will go to the Bureau of Medical Marijuana Regulation. Through the Bureau, monies will be allocated to local agencies that regulate the marijuana cultivation, processing, manufacturing, distribution, and sales.
• 30% of tax revenue will go to the State’s General Fund
• 20% of tax revenue will go to State parks to help with a $1 Billion backlog of deferred maintenance
• 10% of tax revenue will go to the State Natural Resource Agency to restore public and private lands and waterways that have been damaged by marijuana grows
• 10% of tax revenue will go to counties for drug and alcohol treatment programs. 

One way to view the tax is a prelude to the taxes anticipated to be put on a ballot initiative that could go into effect this November. Many groups, including the Drug Policy Alliance have worked ardently to gather enough signatures to make this happen.

If you really want a good idea of where the price of pot is going, ask your neighbors in Colorado. There, medical sales have a 2.9% state tax plus the potential of city, county, and district sales taxes. Recreational sales in Colorado have an additional 10% state marijuana tax and a 15% excise tax. That’s 27.9% as of the beginning of 2015.

Percentages not your forte’? Well, let’s put it this way. While your average eight of cannabis in California can cost anywhere between $35-65 dollars, in Colorado your average eight begins at around $65. Unfortunately, this sticker shock may soon become a reality to Californians by as early as next year.