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Announced by The California Department of Tax and Fee Administration (CDTFA), legal cannabis business tax is set to increase once again. The latest planned tax increase will continue to widen the price gap between illegal and regulated cannabis products within the industry.

According to the CDTFA website, “an analysis of statewide market data was used to determine the average mark up rate between the wholesale cost and the retail selling price of cannabis and cannabis products. Based on this analysis, [...] the newest markup rate will be at 80%.” The markup rate is what is used to calculate the average price on cannabis to determine the cannabis excise tax.

Co-owner of Erba Markets, Jay Handal, states "[t]he reason the black market continues to exist is that taxes are too high[.] People are looking for the best value, and the government, both state and city, are woefully poor at shutting down black market stores. Raising taxes will only exacerbate the situation by continuing to keep black market store prices ridiculously lower than legal dispensaries that carry tested products".

The increase in tax rates for the Californian marijuana industry is set to come in effect effective January 1, 2020.

Source: https://www.forbes.com/sites/sarabrittanysomerset/2019/11/22/california-is-raising-its-taxes-on-cannabis-again/#171c679c74eb

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