California Lawmakers Approve Bill To Prevent ‘Double Taxation’ Of Marijuana By Local Governments

California lawmakers have given final approval a bill to prevent what advocates call the “double taxation” of marijuana by restricting the ability of local governments to calculate their cannabis levies after state taxes are already applied. The legislation’s sponsor says if the proposal is signed into law it will end what he calls the “collection of a tax on a tax.”

On Thursday, the Assembly unanimously passed the legislation from Sen. Steven Bradford (D) in a 75-0 vote. It would make it so state taxes that marijuana businesses pay wouldn’t be included in the calculus of how localities determine their own local cannabis taxes.

California NORML is encouraging Gov. Gavin Newsom (D) to sign the measure, arguing that marijuana is “already heavily overtaxed relative to comparable goods in California.”

“Compounding taxes simply leads to an artificially inflated purchase price and incentivizes consumers to purchase cannabis from the unlicensed, untested, and untaxed market,” the organization said in a call to action alert.

SB 1059 from @SenBradfordCA would end double taxation of #cannabis at the local level in California.
It passed the Senate today!

Please write to Gov. Newsom and ask him to sign SB 1059 into law, at: https://t.co/4cQ5t0qiI7 pic.twitter.com/KC3cBVik0v

— California NORML (@CaliforniaNORML) August 29, 2024

A legislative analysis from April included commentary from the author that says the bill, SB 1059, “will assist the legal cannabis industry by alleviating some of the tremendous tax burdens placed on this industry.”

“This bill would eliminate a local government’s collection of a tax on a tax. This calculation method is unfair to consumers, and disadvantages licensed retailers that continue to struggle against a thriving illicit market,” it says. “SB 1059 addresses this issue and ensures taxes are based on the actual goods being sold.”

“In some jurisdictions, including the City of Los Angeles, local cannabis taxes or fees are being calculated after the state excise tax is applied. This is in direct conflict with guidance provided by the [California Department of Tax and Fee Administration]. Additional changes are needed to existing cannabis tax laws, as this conflict between state and local tax regulations makes it impossible for legal operators to properly calculate and remit their taxes.”

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Meanwhile, California lawmakers also gave final passage to bills last week that would allow small marijuana growers to sell their products directly to consumers at state-organized farmers markets and legalize cannabis cafes in the state.

Also, a state-funded effort is underway to analyze the genetic information of various marijuana strains in order to preserve the state’s rich history of cannabis cultivation. It’s part of a project meant not only to acknowledge the past but also protect the future of legacy growing regions such as the Emerald Triangle.

Separately, a plan from the governor that would have ushered in sweeping changes to the state’s marijuana and hemp markets died earlier this month after a Senate committee did not call the bill for a vote ahead of a key legislative deadline.

The measure would have folded hemp-derived cannabinoid products into the state’s regulated marijuana system and opened the door to out-of-state hemp producers to sell products into California’s cannabis market. It was an attempt to rein in largely unregulated hemp-derived cannabinoid products and smokable hemp flower, but it received sharp pushback from industry groups including Origins Council as well as some medical patients who said they rely on hemp-derived CBD.

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