WALTER: NEW HERE, NEW TASKS. LEGAL POT SHOPS HAVING TO SHELL OUT MORE TO THE STATE ON THE INVENTORY THEY PURCHASE FROM DISTRIBUTORS. >> IT WILL DEFINITELY CAUSE A PROBLEM FOR US. IT WILL CAUSE A PROBLEM FOR THE PRICES AND INCREASE PRICES FOR THE CONSUMERS. WALTER: TOMMY PAWLOSKI IS THE MANAGER OF MIDTOWN’S ALL ABOUT WELLNESS. HE SAYS BECAUSE BUSINESSES ARE ALREADY STRUGGLING UNDER THE WEIGHT OF EXISTING TAXES AND FEES, BUSINESSES WILL LIKELY PASS ON THE COST TO CONSUMERS AT THE COUNTER. OWNER PHIL BLURTON EXPLAINED TO US THAT HE PAYS A $22,600 ANNUAL LICENSING FEE TO THE CITY OF SACRAMENTO. ANOTHER $96,000 ANNUAL LICENSING FEE TO THE STATE OF CALIFORNIA AND LAST YEAR, HIS BUSINESS OPERATION TAX WAS $400,000, WHICH HE SAYS MOST TRADITIONAL BUSINESSES ONLY PAY $5,000. ON TOP OF THAT, HE PAYS THE STATE SALES TAX OF 8.75%. PLUS, THE CANNABIS CITY TAX OF 4 PERCENT AND A CANNABIS STATE TAX OF 15%. ON 60% OF WHATEVER PRODUCT HE BUYS FROM DISTRIBUTORS. BEGINNING JANUARY 1, THAT NUMBER WILL JUMP TO A 15% TAX ON 80% OF THE PRODUCT HE BUYS FROM DISTRIBUTORS. MANY BELIEVE THE INCREASE IN LEGAL POT WILL FORCE EVEN MORE CONSUMERS TO BUY OFF THE BLACK MARKET. >> I THINK THE BLACK MARKET IS GOING TO GO CHEAPER. WALTER: ARMANDO RODRIQUEZ OF MIDTOWN SAYS CHEAPER IS GREAT, BUT NOT NECESSARILY SMARTER. >> FOR PEACE OF MIND, I’D PAY MORE. IF I WANTED TO BE CHEAP, I’D GO BLACK MARKET YOU’RE PAYING FOR PEACE OF MIND AND KNOWING SOMETHING HAS BEEN TESTED. BLACK MARKET IS ALWAYS GOING TO BE THERE, BUT IN THIS CASE NOWADAYS, YOU DON’T KNOW WHAT THEIR PUTTING IN IT. WA
California boosts pot taxes, shocking unsteady industry
California is increasing pot business taxes in the legal market, shocking the state’s struggling marijuana companies.Hefty marijuana taxes that can approach 50 percent in some communities have been blamed for sending shoppers into the tax-free illegal market, which is thriving.Beginning Jan. 1, legal pot shops will have to shell out more to the state on the inventory they purchase from distributors."It will definitely cause a problem for us," said Tommy Pawloski, the manager of All about Wellness in midtown Sacramento. "It will cause a problem for the prices and increase prices for the consumers."Owner Phil Blurton said he pays a fortune in taxes and fees, including a $22,600 annual licensing fee to Sacramento, a $96,000 annual licensing fee to California. Last year, his business operation tax was $400,000, which he said most traditional businesses only pay $5,000.On top of that, he said he pays the state sales tax of 8.75%, plus the cannabis city tax of 4%, and a cannabis state tax of 15% on 60% of whatever product he buys from distributors.Net year, that number will jump to a 15% tax on 80% of the product he buys from distributors.Many believe the cost increase of legal pot will force even more consumers to buy off the black market.The California Cannabis Industry Association says its members are “stunned and outraged.”The group says the tax increases will be passed on to consumers, pushing more to shoppers to the black market.The association said an 8-ounce purchase of marijuana could cost about $10 more next year.---The Associated Press contributed to this story
LOS ANGELES —
California is increasing pot business taxes in the legal market, shocking the state’s struggling marijuana companies.
Hefty marijuana taxes that can approach 50 percent in some communities have been blamed for sending shoppers into the tax-free illegal market, which is thriving.
Beginning Jan. 1, legal pot shops will have to shell out more to the state on the inventory they purchase from distributors.
"It will definitely cause a problem for us," said Tommy Pawloski, the manager of All about Wellness in midtown Sacramento. "It will cause a problem for the prices and increase prices for the consumers."
Owner Phil Blurton said he pays a fortune in taxes and fees, including a $22,600 annual licensing fee to Sacramento, a $96,000 annual licensing fee to California. Last year, his business operation tax was $400,000, which he said most traditional businesses only pay $5,000.
On top of that, he said he pays the state sales tax of 8.75%, plus the cannabis city tax of 4%, and a cannabis state tax of 15% on 60% of whatever product he buys from distributors.
Net year, that number will jump to a 15% tax on 80% of the product he buys from distributors.
Many believe the cost increase of legal pot will force even more consumers to buy off the black market.
The California Cannabis Industry Association says its members are “stunned and outraged.”
The group says the tax increases will be passed on to consumers, pushing more to shoppers to the black market.
The association said an 8-ounce purchase of marijuana could cost about $10 more next year.
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The Associated Press contributed to this story