Calif. Pot Markup Will Rise On New Year’s Day, Tax Dept. Says

November 22, 2019

By: Dean Boerner

“California’s markup on cannabis products will rise to 80% from 60% starting Jan. 1, 2020, the state’s Department of Tax and Fee Administration said Thursday.

The tax administration sets the markup rate between the wholesale cost and the retail selling price of cannabis every six months, according to a statement. It said the new rate was determined “after analyzing thousands of transactions” in the state’s Cannabis Track and Trace system, which records the inventory and movement of cannabis products.

Oren Bitan, chair of Buchalter PC’s cannabis and hemp industry law group, told Law360 on Friday that as the legal cannabis industry battles the proliferation of unlicensed dispensaries and cannabis products, a tax increase is “a counterproductive move.”

“The tax authority should be lowering the tax rates to try and narrow the gap between licensed and unlicensed businesses,” Bitan said. ‘This is going in the opposite direction.'”

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