LOS ANGELES (AP) — California is increasing its business tax rates on legal marijuana, shocking struggling companies that have been pleading with the state to do just the opposite.
Hefty marijuana taxes that can approach 50 percent in some communities have been blamed for pushing shoppers into California’s tax-free illegal market, which is thriving. Industry estimates say $3 are spent in the illegal market for every $1 in the legal one.
The California Cannabis Industry Association says its members are “stunned and outraged.”
Higher tax rates eventually passed on to consumers will kick in Jan. 1.
The association says the widening price gap between illegal and regulated products will send even more consumers underground to get their joints and concentrates. Products in the illegal market are not tested for safety.