CoMPOUNDING Cannabis Taxes

Did you know? ⁠

When LBCA efforts lowered taxes on the supply chain in 2019/2020, from 6% to 1% for testing labs, distribution, and manufacturing, it broadened the tax base and allowed testing labs, distribution, and manufacturing to operate and establish business and jobs. Plus, generating more tax revenue for the city. ⁠

License-types unaffected by the tax decrease supported their fellow operators. This type of unity is important to make policy change comprehensive. ⁠

Since the tax modernization, data has proven its success. By lowering taxes in testing labs, distribution, and manufacturing, we saw an increase in the city’s tax revenue, increase in jobs and careers, increase in operating licenses. ⁠

Was it enough? ⁠

No. The stacked taxes from state and local still compound to an unrealistic and unsustainable legal market. The decrease from 6% to 1% was the only reason that some licenses could even open in the city. They are now drowning from the other state and local taxes. ⁠

Shown here are comparable excise taxes and stacked taxes. 

The onus on taxes goes directly to patients and consumers; who are pushed back to the unlicensed market to access affordability, a market that is not regulated by the rigorous testing that the legal market cannabis products go through to decrease contaminants such as pesticides, molds, and pests. ⁠

Why the stacked taxes? ⁠

Taxes are stacked because originally when developing policy at state and local levels, it was a new industry and that means new income streams for governments. ⁠

Cannabis was and is seen as a cash cow. But it’s a product like any other agriculture industry, it has yields and margins that were not factored into unlicensed markets. ⁠

There were no yield data unless you have secret diaries, we are just developing yield information in the legal market (like almond farms do!). There was no HR, no marketing, no compliant packaging, no testing, no application fees, no license fees, and no build-out fees resulting in inflated operating costs that create barriers to entry and unsustainable operations. ⁠

Lowering cannabis taxes is a public health issue. 

What can we do? 

Register to vote; be ready for advocacy actions to contact your local and state electeds to voice your concerns about high taxes on the legal market. 

Lowering cannabis taxes is a public health issue. 

Skip to content