The California Legislative Analyst’s Office (LAO) recently published their cannabis tax report, Adjusting California’s Cannabis Taxes, recommending adjustments to the state’s cannabis tax rate.
In November 2016, California voters approved Proposition 64, which legalized the non-medicinal use of cannabis (typically called recreational or adult-use) and created a structure for regulating and taxing it. Proposition 64 also directed LAO to submit a report to the Legislature by January 1, 2020, with recommendations for adjustments to the state’s tax rate on cannabis to achieve three goals: undercutting illicit market prices, ensuring sufficient revenues are generated to fund the types of programs designated in the measure, and discouraging use by persons younger than 21 years of age.
This report responds to that requirement. Specifically, we provide (1) background information on cannabis and its legalization in California, (2) a discussion of the effects of adjusting the tax rate, (3) an assessment of other potential changes to California’s cannabis tax structure, and (4) recommendations for the Legislature.
The full report can be found on LAO’s website: https://lao.ca.gov/reports/2019/4125/cannabis-taxes-121719.pdf.