- California, the world’s biggest cannabis market, legalized the drug in 2016
- Tax from cannabis is growing each quarter and expected to hit $1B within 3 years
California, the world’s biggest cannabis market, generated $300 million in taxes in its first year of commercial legalization. Legalized in 2016, sales of cannabis began in January 2018. The government collects a sales tax (8.75%), a state excise tax (15%) and a cultivation tax ($9.75/oz). Even with these heavy tax burdens, consumers are buying the plant and in growing numbers.
Quarterly sales in the first year of commercial activity are growing from $80M in Q2 2018 to $103M in Q4.
At this current pace, Califronia is expected to generate $1B from cannabis tax revenue by 2021.
Other states which also legalized cannabis from the prior prohibition have also started gathering tax revenues. Commercial sales got started first in July 2017 in Nevada and fall 2018 for Massachusetts.
Massachusetts may collect $60 million in its first year, which is ongoing. Nevada collected $69.8 million in its first year. Those are tiny fractions of California’s tax total, because California’s sheer size.
With leniency seeming to catch on nationwide, cannabis producers like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) are well positioned to supply the increase in demand.
Article By: Fatimah Aminu
Fatimah is an experienced editor at various financial and consumer publishing houses. She obtained a master’s degree in Publishing from NYU, where she earned a bachelor of fine arts degree. She is currently earning a second masters degree at CUNY online in Psychology. Fatimah covers healthcare, cannabis and technology.