San Francisco Chronicle: High Cannabis Taxes Keep Black Market Alive in California
Check out WAYV CEO and Founder Keith McCarty’s article below.
By Keith McCarty
San Francisco Chronicle – July 2, 2019
Two years ago, California voters overwhelmingly approved Proposition 64, which legalized adult cannabis use. Fast forward two years later, and the illicit market is “getting worse, not better.”
The legal cannabis market has yet to achieve its desired impact for a number of reasons. More than three-quarters of California’s city and county governments still ban the sale of cannabis within their jurisdictions. Another is based on simple economics that falls on the entire state of California: taxes are too high on the legal cannabis industry and it is stunting the growth of the legal market.
With current tax rates, businesses and consumers are incentivised to turn to the illicit market and medical patients overpay for medicine they need, all while the state is receiving far less revenue than it projected.
Taxes are designed and implemented to discourage buying and spending. The theory goes that the higher the tax on an item, the less likely you are to purchase that item. Taxes that are too high discourage growth, stunt hiring and reduce profit. Economic theory still holds true for the cannabis industry.