The Wall Street Journal (WSJ) has taken aim at a recent proposal by San Francisco Assemblymember Matt Haney to halt a planned increase in California’s cannabis excise tax. Currently set at 15%, the tax is slated to rise to 19% on July 1. Haney argues that this hike would further strain the state’s already struggling legal cannabis industry by driving consumers toward the untaxed illicit market.
In a Tuesday editorial, the WSJ responded with skepticism, highlighting the irony of a progressive politician advocating for tax relief. The editorial board referenced the “Laffer curve,” an economic theory suggesting that higher tax rates can lead to decreased overall revenue by altering consumer behavior. They noted that while the concept is theoretical and subject to debate, it underscores concerns that excessive taxation may push consumers away from legal markets.
This critique comes amid broader challenges facing California’s legal cannabis market. A recent state-commissioned study revealed that a significant portion of cannabis sales occur within the untaxed illicit market, supporting Haney’s concerns about the potential negative impact of higher taxes on legal businesses.
The WSJ editorial concludes with anticipation, suggesting it will be interesting to observe Haney’s efforts to navigate the legislative process and justify the proposed tax freeze. This development highlights the ongoing debate over taxation and regulation within California’s cannabis industry.
