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That joint just cost me how much? High cannabis taxes vex California consumers

Standing at the counter of a Santa Rosa dispensary, I’m trying to quickly do the math on how $187 worth of products just turned into a $233 purchase. Heat rises in my cheeks, on this cold January morning, and I’m in a bit of shock. Wait, is that right? That can’t be right.

Yep, it’s right. As of January 1 California cannabis consumers are paying 22 to 24 percent tax fees on cannabis. Sometimes more, sometimes a bit less depending on the local sales tax. But holy Jack Herrer, that kind of upcharge could harsh anyone’s mellow.

Most medical users are having the same sticker shock as they head to familiar dispensaries and, for the first time, see exactly what a 15 percent state excise tax, 12 percent sales tax, $9.25 per ounce cultivation tax (for growers) as well as various other local taxes and fees look like on their receipts. This is the increasingly pricey future for cannabis in California.

On another dispensary visit, to Sebastopol’s Sparc, a familiar pattern emerges: Surprise, shock, and outrage of former medical patients who knew the taxes were coming, but had no idea just how much their pocketbooks would suffer. Prices were almost doubled on some items, and anger is often directed at budtenders, who are apologetic, trying to explain the complicated process of compliance with new state tax mandates. You can’t help but feel a little sorry for them.

At Sparc (formerly Peace in Medicine), the state excise tax of 15 percent is built into the cost of the price of the product. For example, on my bill, the costs of my concentrates were simply listed as $30 and $12, with only a city tax added to the $41 bill, bringing it to $44.64. It just seemed expensive overall, and I actually bought less, because the prices seemed higher — something Sparc CEO Erich Pearson says was a difficult choice made by the company for auditing purposes and simplicity for the consumer. Pearson also says that adding the excise tax into the price of the product is how the state has mandated how dispensaries do their accounting.

Not adding excise tax into the retail price causes taxes to be under-collected, said Pearson. The California Department of Taxes and Fees explained how to collect the taxes in this document released earlier this month.

The surprising new prices cause several patients at the dispensary to announce that they planned to go “black market”, turning to the unregulated cannabis market rather than pay high taxes, something Pearson says is almost inevitable if taxes aren’t lowered by state regulators.

“I believe that taxes are too high, and there’s a sweet spot that balances taxes the government needs against a consumer willingness to pay tax when they have an alternative source in the black market,” said Pearson. “You can’t get the black market to go away when people are incentivized to use it,” he added.

Building in the taxes into the price may be hurting more than helping local dispensaries, but because there is no standardized codification for receipts, no point-of-sale technology and no real clarity on how to present the taxes to consumers, dispensaries are left to figure it out on their own. The California Department of Tax and Feed Administration, which is responsible for collecting cannabis taxes, itself doesn’t seem totally clear. In the digital CDTFA Tax Guide for Cannabis Businesses, users are told, “We will update this page as we receive information about the taxation requirement for the cannabis industry.” Not exactly confidence-building.

Santa Rosa’s Organicann cannabis dispensary has taken a different approach. The still-medical dispensary’s consumer receipts clearly spell out how much they are paying to the state and county, directing outrage at lawmakers rather than the dispensary.

“It’s so people know what they are being taxed, so that they can see it,” said a representative of the Santa Rosa dispensary, which also operates in Mendocino as MendoCann. The company did not respond to repeated inquiries for more information.

So what’s a consumer to do? You can write your local congressperson, you can huff and puff, you can threaten to go black market — but frankly, the train has already left the station.  This is the cost of legalization, regulation and bringing this longtime hidden industry into the light. Trouble is, many folks may head back to the shadows if the cost of  California cannabis continues to rise.

  • Dgran21

    I hope the black market thrives in Cali. I’m on disability and use mmj. I didn’t have the money to pay for it before the taxes were piled on. I sure as hell don’t have it now. I have had to grow my supply because of costs. California now has a BUDGET SURPLUS and they keep piling the taxes on. Everyone in the game is driven by greed. The growers as well as the politicians. Nobody really gives a rat’s ass about medical, especially now we have rec. It has never been about helping people, just about lining pockets. The dispensary I use is doing rec sales now too. I’m about to go to the black market to get my plants because I am so disgusted with the situation.

    • Charlie Noble

      Personally, I hope ypu idiots will LEARN from this. The Democrats in Sacramento are no friend of anyone in this state.

  • DMR

    Just wait until higher taxes are voted on. It happened with tobacco and will happen with this too.

    • Charlie Noble

      I, for one, will happily vote for higher dope taxes. They all screwed us on gun ownership in this state, turnabout is fair play. Maybe the hippies out there will learn that freedom and rights are sacred.

  • Tim Hope

    This is a surprise? Every time there was a campaign for legalization, the argument in favor was “the government can tax it and regulate it.” Now everyone is in a huff (pun intended) over the high taxation? And the same people are no doubt in favor of “Single Payer” Healthcare. Single Payer Healthcare will make healthcare more affordable and accessible. Yeah right. Leave it to the State to mess everything up.

  • Mason

    The tax suckers and those who eat out of the government tax trough see this as a way to end the money, problems of the cities . counties and states. One solution is have a two tier tax system. One for medical and one for recreation!

    • Charlie Noble

      Right. Then suddenly, every pothead has headaches and JOINT pain. PUN INTENDED!

      • Mason

        They have been doing that all along!!!!

        • Charlie Noble

          Well, no shit, homey. But it will effectively nullify your “brilliant” two-tier tax idea.

          • Mason

            Thanks for a calling my idea “brilliant” at least it is better that just flapping your lips “homes”

  • reader

    Just another example of how the Democrats in California screw their constituents all the while brainwashing them to believe they’re whats best.. Trump forgot to add California to his list of sh!* H%$#…

  • Mr RW Trickler

    Sooo… I thought cannabis businesses were barred from banking and were all cash – yet I see a visa and a debit card receipt that must connect to a bank account. What’s the deal?…

    • Smiling Man

      Some manage to get away with taking CCs and ATMs, some charge for the service, some have cash dispensers.

    • Big Dad

      If they use a Squares card reader, it goes from POS to Square then your bank account.

      • Mr RW Trickler

        Ah, but a cannabis business is not allowed to have a bank account under federal law – both the bank and the business are at risk of significant sanctions….

  • Smiling Man

    There is no reason for there to be a special tax on marijuana.

    I’m buying from the black market from now on.

    • Charlie Noble

      Oh, because dopeheads are a special class?

  • Davis Lawson

    Why would anybody act surprised? Taxation was the deal from the very beginning. Oh I get it, you stoners were so blazed you didn’t read the fine print. Duuuuuuuhhhhh! No wonder….

  • Charlie Noble

    I’m laughing my ass off. What did you all THINK your buddies in Sacramento were going to do? One of these days you morons will realize that liberal policies SUCK and cost y’all way more than they should in FREEDOM and money. But hey, all you hippies support this big government bullshit so now you have to pay for it.

  • With taxes on booze and tobacco why is this a surprise? For government it has always been about the money, certainly not the health and welfare of Californians.

  • skymaster

    If you have that kind of money to buy a weed you are differently a Snowflake grow your own or better yet get from private grow, the true old school grower warned this would happen if legalized.