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California Cuts Taxes to Support Cannabis Businesses

Over a dozen cities and counties in California, including Los Angeles and San Francisco, have cut local sales, business or cultivation taxes over the past year.

According to new research compiled by Hirsh Jain of Los Angeles consultancy Ananda Strategy, reported by MJBizDaily, 14 states and cities have now taken action to help ‘preserve a struggling industry’.

Mr Jain said: “These local jurisdictions arguably need the revenue more than the state does… That’s why it’s all the more disappointing the state’s not getting the memo.”

In California, cannabis companies have long struggled with the 15% state excise tax, on top of state sales taxes ranging from 7.25% to 10.75%, alongside local taxes that cities or counties might impose.

San Luis Obispo County Supervisor Dawn Ortiz-Legg, who has pushed to cut taxes as a low as 4%, told MJBizDaily: “I think it’s our responsibility to help people who are following the rules and paying bills. Instead of being penalised, they should be supported and helped.”

READ MORE: Michigan On Track To Become Second Largest Cannabis Market In US, But Businesses Are Struggling

“In my opinion, we really need to be helping them a lot more than we have…The harder we make it for legal participants, the easier we make for the (illicit) market.”

Industry insiders have warned however that the recent collapse of Californian distribution company Herbl may be the tip of the iceberg, and that lowering taxes is just ‘one piece of the puzzle’.

University of California professor and chair of the Cannabis Economics Group Daniel Sumner, highlights that issues including rigid regulations, environmental protection laws, and licensing processes leaving would-be businesses paying rent for months with no income are also ‘a really big deal for legal cannabis’.

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