Graphic by Dani Ramirez
Written by Steven Mynott
On Sept. 22 California Governor Gavin Newsom signed a bill into law that reverses a tax increase on cannabis products in the State. Now, Californians can expect to continue paying a 15% excise tax on all cannabis products until 2028. The reversal comes after months of vocal frustration from cannabis growers, dispensary owners and consumer advocates.
How did we get here?
When California voters legalized recreational cannabis in 2016, part of the proposition required that taxes from cannabis sales be used to fund programs that offset the harms caused by cannabis. Nonprofits that receive grants from cannabis taxes include those that provide child care, environmental cleanup and substance abuse education. However, cannabis tax revenue has been on a steady decline since its peak in 2021.
To make up for lost tax revenue, Newsom signed a law increasing the excise tax on cannabis products. An excise tax is similar to a sales tax, except that it is only applied to specific goods and services. In this case the increase saw excise taxes on cannabis rise from 15% to 19%, effective July 1. Industry representatives argued that the excise tax increase would be counter-productive and could lead to a further decline in cannabis tax revenue in the long run.
One of the major factors contributing to the decline in cannabis tax revenue is competition from illegal cannabis sales. According to the California state Department of Cannabis Control, legal cannabis sales make up only about 40% of all cannabis consumption. The rest of cannabis consumption is from cannabis purchased on the illicit market. Illicit cannabis sellers are able to out-compete their legal counterparts due to a lack of taxes and regulations.
Assemblymember Matt Haney, Democrat from San Francisco, voiced his frustration with the tax increase. “This tax could kill this industry and there’s still not enough being done,” said Haney. “California is going to forfeit what should have been a huge opportunity for our state.”
Haney authored a measure to reverse the excise tax increase, bringing it back down to 15%. The measure was unanimously approved by the state assembly and passed the state senate 39-1. Newsom signed the measure into law on Sept. 22.
What do CI students think?
I talked to two students for this piece: Alex Miron, senior English major with an emphasis in creative writing, and another student who wished to remain anonymous as a precaution against negative stigma or retaliation. For the purposes of this article I will refer to the anonymous student by a pseudonym, Smith. Both Miron and Smith said they tend to use vape cartridges the majority of the time because of the lack of smell compared to smoking, although they both said that they do like to buy raw flower or pre-rolled joints to smoke every now and then.
When I asked Smith if they noticed a price increase after July 1 they said, “I don’t know if I particularly noticed one on July 1st. I do know that, um, around that, just in general, I would say a lot more recently, weed prices have been randomly going up and down. There have been many dispos (dispensaries) that have had sales on different brands and these brands really don’t, like, they may stick around for a few months and then they disappear, and then they’re onto the next brand. So I’ve noticed, like, weird pricing models and I’ve also noticed that dispos don’t share this sort of information over the phone. So it’s a very sensitive topic.”
Miron did not notice a change either. The only price changes noticed were when he bought vape cartridges from pricer brands, “I have had to resort to buy pricier vapes with difference being only $5 I figured it was because they’re usually out of stock of the cheaper vapes or perhaps they don’t sell them anymore.”
Both Miron and Smith say they always buy their cannabis from legal dispensaries, however Smith also admitted to buying from illegal sellers in the past. When I asked why they said, simply, “Access.” Then Smith expanded by saying, “I wanted to have, um, At the time, this person, the, the place I purchased from was very close to where I lived, and so there was a level of convenience, but they were also a friend. So I had that connect, but my primary reason was pricing. Um, it was more affordable, and I also knew the process of how everything was being brought to me. I feel like, with dispos, they’re very, they’ll give you answers, but you just don’t have the same transparency as you would with someone you know in the community.” It is interesting that Smith cited pricing as the primary reason for using the illegal market in the past. Illegal producers and sellers do not pay taxes and they do not have to comply with costly regulations.
Finally, I asked Miron and Smith about their favorite local dispensaries. Smith said their favorites are Catalyst and The Artist Tree, both in Oxnard, California. Miron said that his favorite is Skunkmasters, but he also sometimes goes to HPC, both of which are in Port Hueneme, California. He said he likes Skunkmasters for their welcoming and inclusive environment, “I’ve been going to Skunkmasters for five years now mostly because I live in South Oxnard/Hueneme area and I could walk there. The vibe is super welcoming compared the all the other ones I’ve gone to. Their staff is diverse and able to speak English and Spanish, an issue I had years ago at one dispensary who hired employees unable to speak any Spanish which made me feel like they welcome only certain people at their store. Skunkmasters has everything cbd/thc. They range from top shelf (potent) stuff to the most economic options. I feel super welcomed here and the staff there is awesome.”
