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California legislator wants explanation for pot-tax boost

A California legislator wants the state to explain its recent decision to increase business taxes on the state’s struggling legal marijuana industry
Marijuana Cultivation Facility (FILE)
Posted at 11:52 AM, Nov 26, 2019
and last updated 2019-11-26 14:52:14-05

LOS ANGELES (AP) — A California legislator wants the state to explain its recent decision to increase business taxes on the state’s struggling legal marijuana industry.

The changes that take effect Jan. 1 are expected to boost prices at the retail counter.

Palmdale Republican Tom Lackey says bigger price tags on buds, concentrates and other legal products will inevitably send more customers into California’s tax-free illegal market in search of bargains.

In a letter Monday, Lackey asked the Department of Tax and Fee Administration to provide the analyses it used to justify a boost in cultivation taxes and what’s known as the mark-up rate.

The mark-up rate is used when calculating taxes in certain business transactions, such as when a retailer purchases wholesale cannabis. It’s being pushed up over 30 percent.