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California Cannabis Revenue Increases Despite Covid-19

August 24, 2020

The California Department of Tax and Fee Administration (CDTFA) announced on August 19th that the state took in more than $208 million in cannabis tax revenue during the second quarter, slighting increasing upon first quarter figures, where $205.9 million was received. The tax numbers include a combination of excise, cultivation, and sales taxes. 

As other industries across the state have stumbled during the coronavirus pandemic, the California report is yet another indicator of the health of the cannabis market. With strong second quarter numbers, the state has totaled over $1.4 billion in marijuana tax since retailers were implemented in 2018. 

Tax Revenue Could Still Be Stronger 

According to a recent study, tax revenue could yet still be significantly stronger if local cities and counties in the state lift bans on cannabis businesses. Currently, in the state of California, approximately 75% of cities and counties currently operate under a cannabis market ban, despite the legalization measures passed in 2016. 

Additionally, the CDFTA is fighting to hold illicit cannabis operators in the state accountable for potentially taxable income. Last month, the state announced tax warrants for cannabis retailers—twelve of them in total—that were said to be doing business illegally in San Bernardino and Los Angeles counties. 

California Cannabis Revenue

While the CDFTA reported an increase in revenue, a report released Wednesday by the Legislative Analyst’s Office (LAO) actually indicated a seven percent decrease in second quarter marijuana tax revenue. The LAO did not factor in sales tax, focusing solely on excise and cultivation tax, citing difficulty in obtaining precise data due to the timing of reporting sales tax. 

An analyst behind the LAO report said the precision of the methodology to obtain that information included several problems, prompting the organization to omit sales tax altogether in their study. 

Contributed by Jack Berning

photo credit Richard Vogel/AP