Taxes & Fees Increase for California Cannabis
- When California opened its legalized adult-use market on January 1, some consumers were met with sticker shock.
- With new state and municipal taxes and fees being levied under the program, some Sonoma County consumers found themselves paying up to 42% more for products in 2018.
- In one example, 1/8 of an ounce of flower priced at $25 cost consumers $28.11 with taxes and fees on Dec. 31, 2017, but with new taxes on January 1, the same $25 product cost $39.93.
- Based on New Frontier’s analysis of cannabis demand elasticity, this dramatic price increase raises concerns that the new legal market will struggle to compete against the state’s significantly less expensive illicit market.