How Will Recreational Marijuana Be Taxed?

The new wave of recreational marijuana sales in California is just around the corner and the buzz of excitement from non-medical marijuana card holders is palpable. Now to address a word that’s been flitting around the state since last year’s election: taxes. How much will they go up, who will be affected and how do you avoid paying astronomical amounts of money for your medicine?

Licenses for growing, transporting and selling medical and recreational marijuana in California are scheduled to be issued beginning in January 2018, and with them come the new tax guidelines that litter the verbiage of Prop 64 and were approved and ironed out in Senate Bill 94 this past June. Taxes are imposed at the top, then trickle down to the bottom. For cannabis, the top is the growers, the bottom is the buyers (you) and the middle man (dispensaries) must be the go-between for these two classes.

We, retailers, must tax our recreational patients 15%* so we can pay our growers the 15% increase so they can in turn pay the state this excise tax that is non-negotiable. FYI: this 15% tax is applied before sales tax. There will also be a state cultivation levy of $9.25 per ounce for cannabis flowers and $2.75 per ounce for leaves. To break it down, an 1/8th of cannabis flower usually retails for about $35, with top shelf siting at around $50; these will increase to about $40 and $58, respectively for recreational sales. Accessories are not subject to this excise tax, so vapes, pipes, and papers will remain the same price.

Most medical marijuana sales will not be affected by the new tax system and we strongly encourage any frequent users or high-dose edible and concentrate lovers to keep or renew their medical cards before 2018. Growers will feel the pressure to pay these taxes and overhead will be higher all around — at first. Once the market bubbles up and the weaknesses are identified, the ebb and flow of American supply and demand will find its way back to all retail cannabis shops.

You might be tempted to shop at a dispensary whose prices are lower and that is open later, but don’t forget that staying compliant is part of your responsibility, too. Shops not paying taxes, not handing you receipts and staying open past 8pm are all susceptible to legal punishment and therefore you will be too if you find yourself in one of those establishments. (UPDATE: As of January 2018, licensed shops may now remain open until 10pm!)

What you can feel secure about is that we at The Higher Path will be transparent about all taxes, your receipts will be itemized accordingly, your medical information will be protected by HIPAA and the cannabis quality will be the same standard to which you’ve become accustomed to purchasing from our shelves.  It’s the dawn of a new era, and we’re all pioneers in the movement towards full legalization.

(CORRECTION 12/14/17: The original article stated that The Higher Path & other legal dispensaries in Los Angeles would be ready for recreational consumers come January 2nd, 2018; however, because dispensaries must wait until their temporary license has been processed by the city to begin accepting recreational consumers, we will continue to serve only medical patients until the date that our temporary license has been approved by the city of Los Angeles. We will continue to keep you updated on our recreational status, but please feel free to email info@thehigherpath.com with any questions you may have!)

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