The legal cannabis sector is bringing about many different changes. Cannabis consumers are driving a multi-billion-dollar industry. Those who previously showed no support of cannabis have switched sides to partake in the green, and we’re not talking about the plant.
Politicians are using cannabis legalization as a way to promise millions and billions of dollars for state revenues. This is the case in California where Governor Newsom estimated cannabis tax revenues to be around $1 billion. According to the California Department of Tax and Fee Administration figures associated with 2018 fell short of the $1 billion mark ringing in only $345 million.
The Green of the Green
So, where is the estimated $650 million discrepancy? If you ask the governor’s office, they will tell you the tax revenue shortfall was mainly in part due to the existence of the black market for cannabis. Taxes in California are some of the highest anywhere in the US. Even though cannabis is legal for adults to purchase by merely walking into a dispensary, it’s cheaper for them to get it on the black market.
In 2018, California regulators spent an estimated $133 million regulating cannabis. That already cuts that $345 million in collected cannabis taxes in half. This might sound like a lot of money, but California has a state budget of over $200 billion. $212 million is pocket change in comparison.
California shows that high taxes aren’t necessarily the way for lawmakers to rake in the green. Providing easier access with a lower tax would stand to increase sales significantly. More sales would equal more taxes collected.
Not Just for Stoners
As cannabis becomes normalized, there will be a lot of different ways it works into everyday life. The many different phytocannabinoids, terpenes, vitamins, and minerals found in the cannabis plant can be used in a wide variety of applications. High tax isn’t where it’s at and the state of California is proving that. Not to mention cannabis legalization isn’t bringing in money just by tax revenue collected. Tourism and ancillary services, as well as the employment sector, thrive where cannabis is legal. It’s time to free the leaf once and for all and allow economies globally to succeed.