Ask anyone who stays in a state where marijuana is legal, and they will tell you just the business is budding. Those who took the opportunity of investing in marijuana are now reaping all the benefits you could imagine. Based on a report released in 2017, it shows that marijuana has grown by 30% in 2017 when it comes to the annual revenue. It is expected that these sales will grow by 45% in 2018. As you can see, the opportunity of investing in marijuana is still there. Some have even estimated that by 2021, the sales will be up to $21 billion.
With the sale of marijuana increasing, this means that more people are accepting the idea of having to enjoy a break of pot once in a while. It is also because the medical sector has been promoting it to be used for treatment of various conditions. The Gallup Poll has been around since 1969 conducting surveys on the use of pot. Recently, it has shown that today 64% of the US population favor the use of marijuana as compared to 24% back in 1995. This goes on to show how the shift of opinion on marijuana has changed over the years and people got to know what it can do.
At the moment, 29 states have legalized the use of medical marijuana. The number has significantly increased over the years since 2012. It is not just about the use of medical weed now, there are some states now having laws that allow recreational marijuana to be sold easily. Colorado was among the first states to allow recreational marijuana. This has led the marijuana industry in the state generate $1.3 billion in sales for the year 2016. It is even expected that the sales will increase in 2017.
California which is seen as the marijuana kingpin voted to have recreational marijuana in 2016. The bill was passed by 56%, making it have an easy time when it came to implementation. Legalizing the recreational marijuana in California is expected to bring more fortune to the state. It is expected that the industry is going to add $1 billion in tax revenue annually. This should be the right step for any state economically.
As much as recreational weed will now be available in 2018 for California, some pundits are saying that the product might not be popular as expected. The reason mainly is because the state might end up imposing a lot of taxes on the product. This will easily make the marijuana expensive for people to afford. If that happens, then it will simply push them back to the black market of marijuana. The black market in California is well established.
The bill on recreational marijuana was overwhelmingly passed, but people did not notice the new two additional taxes. With the implementation of the law, the growers will have to pay a cultivation levy of $9.25 per ounce of cannabis flowers. There is also an additional 15% tax on the final product. This is double of what the other states are taxing for the same product. You can also find more taxes to be levied on the product before it can reach the consumer. There is no doubt that this will increase its price.
Having marijuana being sold at such high prices beats the logic of legalizing recreational marijuana in the first place. It would be better if the taxes were reduced to ensure that more people moved from the black market to access weed in the pot shops.
Some ideas are flying around that California should consider borrowing tax rules from Canada. Well, Canada is another major economy in the world that is looking to implement the use of recreational marijuana in the whole country. This is expected to happen in July 2018. Canada relied on the performance of the recreational weed market on states such as Washington, Oregon, and Colorado. The only difference would be its tax policy on the recreational marijuana.
In Canada, the proposed tax rate would be $1 per gram which is about $ 0.78 converted to U.S. dollars. The expensive marijuana types would have a flat rate of 10%. As you can see, this is low even for the basic weed types in California. The tax proposition in Canada is seen to be even lower than what is taxed on alcohol. The aim is to make marijuana cheap and easily available on the legal market. With the price of marijuana, the same as on the black market, then it will not make any sense to buy your weed from dark alleys. Well, that is how you get to remove the dark market business by competitive pricing.
California does not have to see the legalization of recreational marijuana as a new source of revenue. This is what has led to the state raising the taxes to make more money rather than considering the impacts.