California’s cannabis industry has brought in billions of dollars in tax revenue to the state since cannabis sales started in 2018.
But the venture has been far from an outright success, with California cannabis retailers owing nearly $1.3 billion in back taxes, according to a report from SFGate.
Zoom out: California voters legalized cannabis in 2016, with shops opening up in 2018 to sell the substance.
- The Golden State has received over $6.5 billion in cannabis tax revenue since January 2018.
- That includes third quarter returns from this year that totaled $250.5 million.
The big picture: According to the report, California retailers owe $354 million in unpaid taxes, with interest and penalties making up the rest of the $1.3 billion total.
Driving the news: California levies a 50% penalty on cannabis businesses for being late on their tax payments.
- Most other industries in the state only face a 10% penalty for unpaid tax bills.
What we’re watching: California plans to increase the cannabis tax rate from 15% to 19% in July, drawing fears that the legal cannabis industry in the state will go extinct.
Zoom in: The increase in back taxes for the cannabis industry statewide comes at a time when Fresno’s cannabis industry has taken longer to take off than initially expected.
- Fresno only brought in $1.575 million in cannabis sales tax revenue in fiscal year 2023 despite budgeting a $5.3 million projection.
- In fiscal year 2024, Fresno also projected $5.38 million in revenue but only took in $2.26 million.
- Despite being wildly off-target in 2024, Fresno officials remain exceedingly upbeat on the city’s cannabis industry, projecting it will deliver $7.12 million in cannabis tax revenue for fiscal year 2025.
- Fresno recorded $15.3 million in total taxable sales in the fourth quarter of 2023, according to the state. That number increased to $16.6 million in the first quarter of this year and $18.5 million in the second quarter, but it fell to $16.8 million in the third quarter of 2024.
