California’s legal marijuana industry is expected to post $6.4 billion in sales this year, making the state the world’s largest legal pot economy. But despite surging growth over the past five years since weed was legalized, the state just granted growers and retailers a huge tax break after they complained about high costs and competition from the still-vibrant illegal pot market. The new law wiped out about 14 percent of state-level taxes on marijuana cultivation, or about $166 million, in 2021. The aim is to help marijuana businesses as well as the state, which is footing the bill for launching the market and funding costs created by the industry, such as dealing with drugged drivers. The businesses say they need help because of cheap illegal weed that isn’t taxed or screened for possible contamination and claim they face bankruptcy or consolidation without the fiscal stimulus. The tax package also includes $10,000 credits for so-called social equity operators, who were awarded licenses as part of an effort to redress the harm to communities of color that were disproportionately harmed by the war on drugs. Experts say the tax break may also help operators nationwide, who compete not only with illegal weed in their own state but also California pot that’s trafficked across state borders. California earmarks tax revenue for youth and environmental programs but has also discovered that pot profits also go to keep marijuana consumers safe from the ill effects of the drug.
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Rosenthal Center for AddictIon Studies