- The Washington Times - Tuesday, May 15, 2018

Marijuana generated nearly $61 million in tax revenue for the state of California during the first three months of legal recreational weed sales, falling shy of preliminary projections.

A cultivation tax on harvested cannabis, a 15 percent excise tax applied to pot purchases and California’s state sales tax together generated $60.9 million worth of tax revenue during the first quarter of 2018, California’s Department of Tax and Fee Administration (CDTFA) revealed Friday.

Democratic Gov. Jerry Brown predicted in his January budget proposal that marijuana would earn the state $175 million worth of tax revenue within six months of recreational sales starting, or roughly three times the amount so far for California’s coffers.

Despite disappointing numbers, however, Mr. Brown issued a revised budget proposal Friday predicting the state will earn $185 million worth of cannabis-related tax revenue through June.

“We are expecting that to turn over time and ramp up as more people get licensed and as more people get into the system,” Michael Cohen, the director of the California Department of Finance, said at a press conference Friday, KQED reported.

The revised outlook also said the state expects to earn $630 million marijuana excise tax revenue during the first full year of legalization, or $13 million less than previous predicted.

“While the forecast assumes revenues will be phased in over time, preliminary data indicates revenue receipts are slower than anticipated,” the new budget said. “Cannabis revenue projections are subject to great uncertainty.”

The new marijuana taxes took effect on January 1, when California became the latest addition to a group of currently six states and counting with systems in place for regulating, selling and taxing recreational cannabis.

During the first quarter of 2018, the excise tax on cannabis generated $32 million in tax revenue, the cultivation tax generated $1.6 million and the state sales tax generated $27.3 million, according to CDTFA’s statistics.

The state’s numbers did not take into account any sales taxes applied by individual cities that permit dispensaries to sell recreational pot. Fewer than one-in-three California cities currently allow any kind of cannabis businesses to operate, The East Bay Times reported last month.

Marijuana is illegal under federal law and classified as a Schedule 1 controlled substance, a listing the Drug Enforcement Administration has for drugs deemed to have “no currently accepted medical use and a high potential for abuse.”

Nonetheless, 29 states have passed laws legalizing medical marijuana, and nine states have passed laws legalizing recreational marijuana, including California and five others that currently allow retail sales: Alaska, Colorado, Nevada, Oregon and Washington state.

Legalizing marijuana federally could earn the government up to $132 billion in tax revenue by 2025, cannabis industry analysts predicted earlier this year.


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