California’s regulated cannabis market just got a little bit more competitive with the robust illicit market that has continued to flex its power in the state. 

Following Gov. Gavin Newsom’s signing of a $308-billion state budget on June 30, California’s weight-based cannabis cultivation tax was eliminated—effective July 1, 2022.

The cultivation tax, which imposed a $161-per-pound rate on licensed growers—regardless of the current market value of cannabis—was abolished via Assembly Bill 195, which was attached as a trailer to the state budget.

On June 29, the California Senate passed A.B. 195 via a 34-0 vote, while the Assembly passed the measure, 69-1. Assemblymember Rudy Salas casted the lone no vote before Newsom signed the budget the following day. 

For Graham Farrar, co-founder and president of Glass House Brands, a Santa Barbara-based cannabis operator with more than a half a million square feet of cultivation space, A.B. 195 is in line with one of two main changes being advocated and echoed among the state’s license holders: less taxes and more retail.

“It’s huge,” Farrar said of killing the state’s cultivation tax. “You can charge a premium for licensed product because nobody prefers ‘bathtub gin,’ right? I think we’d all rather have licensed product, but there’s only so much premium people are willing to pay. So, less taxes narrows that gap [so the licensed growers have a chance to be competitive with the folks who aren’t paying taxes].”

Among the measures included in A.B. 195, the bill also maintains a 15% cannabis excise tax but moves the collection of that excise tax from distributors to point of retail sale by Jan. 1, 2023.

Full Report @ California NORML https://www.cannabisbusinesstimes.com/article/california-cannabis-cultivation-tax-eliminiated-removed-excise-budget/