The California Department of Tax and Fee Administration has just released the figures for California's legal marijuana tax revenue brought in from April to June 2018. The revenue fell far short of expected estimates in the second quarter.
California Weed Sales Fall Short
California's excise tax on marijuana generated around $42 million USD in revenue during that time. Broken down further, the cultivation tax generated almost $4.5 million and the sales tax equated to more than $26 million. The state department noted that sales tax is not collected on medicinal cannabis sales.
Officials estimated that the total revenue from the first half of 2018 would amount to $185 million. The actual total from legal marijuana tax revenue from both quarters ended up being $80 million short of the predicted estimates.
"The revenue from 1st quarter 2018 was $60.9 million, which included $32 million in excise tax, $1.6 million cultivation tax, and $27.3 million in sales tax," the official news release stated.
Who to Blame?
It seems that most recreational cannabis users in the state aren't willing to pay the high taxes on their marijuana.
However, according to data collected by Eaze, the lack of legal shops in much of California is causing marijuana users to turn to the black market. The company conducted a survey and found that 17 percent of California's recreational consumers bought from an unlicensed source within the last three months.
According to this same report, black market shops have a competitive advantage over the licensed retailers—thus allowing them to charge lower prices.
"Unlicensed retailers do not have to comply with worker protection laws, test products for pesticides and processing chemicals, or remit taxes," the report noted. "That results in a large pricing benefit."
State regulators are currently exploring solutions to handle the black market cannabis being sold. Licensed cannabis delivery is also being discussed to potentially boost sales.
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