California doesn’t plan to raise marijuana excise tax in July

Although the California cannabis industry probably won’t see any state-level tax relief anytime soon, at least the excise tax won’t go up in July.

The state Department of Tax and Fee Administration (CDTFA) confirmed in an email to Marijuana Business Daily that the 60% markup rate that provides the basis for California’s 15% excise tax will remain unchanged as of July 1, despite the agency’s mandate to recalculate the markup rate every six months.

CDTFA Director Nicolas Maduros had raised the possibility of a tax rate change, explaining during an industry conference in March that the excise tax is based on a markup rate combined with the average wholesale market price of cannabis.

He suggested at the time that California’s track-and-trace system may lead to such a change once it’s utilized by more licensed companies because the information provided could better inform the average market wholesale price.

A CDTFA spokesman didn’t reply to an MJBizDaily request for clarification on the agency’s decision to leave the current markup rate as-is, so it’s unclear why the rate won’t change.

The system as currently structured also leaves the door open to a future tax rate increase or a decrease – perhaps at the end of 2019 – depending on wholesale prices and the status of the track-and-trace program.

A markup recalculation would not affect the state cultivation tax, which is $9.25 per ounce of flower, $2.75 per ounce of leaves and $1.29 per ounce of fresh plant.

A bill in the California Legislature to temporarily lower MJ taxes died in committee in May.

John Schroyer can be reached at [email protected]