California’s new marijuana law could cost millions in taxpayer dollars before it actually raises billions, thanks to a technicality in the language of the law that was just passed.
Prop. 64, which legalized recreational marijuana, was always intended to raise substantial tax revenue for the state. However, it was intended to do so with a 15 percent excise tax on both medicinal and recreational marijuana. The law also imposes a 7.5 percent sales tax on top of that for recreational marijuana, but repealed it for medical marijuana. Medical marijuana buyers have been paying that sales tax since the drug first became available as medicine. The idea was that medicinal users of the drug would get a tax break relative to recreational users once recreational sales start in January 2018. However, there was one problem: The 62-page initiative did not include the January 2018 target date relative to the repeal of the medical marijuana sales tax.
That means the repeal of medical marijuana sales tax in California became effective immediately. It also means that medical marijuana may be obtained tax-free in California until next January, when it will be under that 15 percent tax. Continue reading