California is weighing high taxes on legal marijuana, according to CNN.
What is legal marijuana use in California?
California voted last year to legalize the recreational use of marijuana, according to the Los Angeles Times. The legislation permits those who are 21 and older to “possess, transport, buy and use up to an ounce of cannabis for recreational purposes.” It will also allow residents to grow up to six marijuana plants. The legal retail market begins in January.
How high will taxes on marijuana be?
According to CNN, a Fitch Ratings report found that between consumers, retailers, and growers, taxes on marijuana could be as high as 45 percent in some parts of California, as local taxes on the drug will differ by municipality.
The report found that marijuana consumers will pay a sales tax ranging from 22.25 percent to 24.25 percent, including a state excise tax of 15 percent, and additional state and local taxes between 7.25 percent and 9.25 percent.
Retailers will pay a rate between 1 percent and 20 percent of their gross receipts, or $1 to $50 in taxes per square foot of their marijuana plants.
The report added marijuana growers will be taxed at $9.25 per ounce for flower, and at $2.75 per ounce for leaves.
Some analysts have argued that such high taxes may drive consumers from legal retailers to illicit vendors.
"High effective tax rates on California cannabis may complicate the state's efforts to establish legal markets" said analysts Stephen Walsh and Karen Ribble in the Fitch Ratings report about California's marijuana taxes plan.
How does the tax rate compare to rates in other states?
According to CNN, of the eight states that have legalized recreational marijuana, only Washington state — at 50 percent — has a higher tax rate. Colorado and Nevada tax marijuana at 36 percent, followed by Oregon at 20 percent. Parts of Alaska tax marijuana up to 20 percent as well.