NEW YORK (Reuters) - California lawmakers on Thursday launched a bipartisan bid to temporarily reduce taxes on the state’s emerging recreational cannabis industry in order to help legally run pot businesses compete financially with black market growers and sellers.
Legislation introduced by assemblymen Tom Lackey, a Republican from Palmdale, and Rob Bonta, an Oakland-based Democrat, comes 2-1/2 months after a law took effect legalizing adult marijuana use in the most populous U.S. state.
“California cannabis businesses are making significant investments as they embrace the regulated marketplace while, at the same time, being undercut by unregulated competitors,” Bonta said in a statement. The bill is aimed at “keeping customers at licensed stores and helping ensure the regulated market survives and thrives,” he said.
The marijuana market in California, which lays claim to the world’s sixth-largest economy, is valued by most experts at several billion dollars annually and is expected to generate at least $1 billion a year in tax revenue.
California pot farmers and other cannabis workers have complained at local government meetings in recent months that new regulations, licensing rules, fees and taxes have stifled their businesses and made it harder to offer products at affordable rates.
Lackey and Bonta’s legislation, which would suspend a $148-per-pound marijuana cultivation tax and cut an excise tax on cannabis sales to 11 percent from 15 percent, is aimed at lowering costs for cannabis operations as they get up to code. Both provisions would expire in June 2021.
“We need to give legal businesses some temporary tax relief so they do not continue to be undercut,” Lackey said.
The bill is awaiting a referral to a California State Assembly policy committee before it can make it to the assembly floor for a vote. It would then be moved to the state’s senate.
Reporting by Laila Kearney; Editing by Daniel Bases and James Dalgleish