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California Collected $817 Million in Pot Tax Revenue Last Year, 55% Over 2019
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The Golden State shattered its previous record for weed tax revenue for the latest fiscal year, but even so, many small weed farmers are still struggling to make ends meet.
Published on August 25, 2021

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California's adult-use cannabis industry added over $800 million dollars to the state tax coffers during the last fiscal year, shattering every previous record.

According to a new preliminary report by the state Legislative Analyst’s Office, the Golden State collected around $817 million in legal weed revenue during the 2020-21 fiscal year, a 55 percent boost over the previous fiscal year. Between April and June of 2021, the state collected $212 million in weed excise and cultivation taxes, breaking another record for the largest amount collected in any three-month period since legal sales began. 

As impressive as this year's revenue report is, it's actually an understatement. These figures are just a preliminary estimate of actual tax collections, and don't include businesses that file their returns late. So, the actual total is likely to actually surpass $817 million for the prior fiscal year. The current tally also only includes cannabis excise and cultivation taxes, and not the standard 7.25 percent state sales tax that also applies to weed sales.

An independent report by the Institute on Taxation and Economic Policy (ITEP) estimates that California actually collected over $1 billion in combined cannabis excise, cultivation, and sales taxes last year. This single year's worth of revenue accounts for more than a third of the Golden State's total all-time pot tax collection. Since adult-use sales went live in January of 2018, legal weed has brought the state a total of $2.8 billion in taxes, according to the state Department of Tax and Fee Administration.

California's record tax haul reflects the strength of America's legal cannabis industry as a whole. Last year, the US weed market made an estimated $18 billion in sales, bringing individual states more than $3 billion in tax revenue. This year, analysts are predicting the industry will blow past that record. Legal weed shops already moved an estimated $12 billion worth of product in the first six months of 2021, and early estimates predict sales could reach nearly $25 billion by year's end.

These record sales figures are great news for state tax coffers and the cannabis industry in general, but many small farms are still struggling to make ends meet. California's legal weed market is absolutely flooded with product at the moment, and the proliferation of larger national cannabis corporations and unlicensed, underground farms is making it harder for smaller licensed operations to compete.

“Times are really, really tough for small farmers,” said Jason Gellman, owner of Ridgeline Farms in Humboldt County, to the East Bay Times. “Most of us are in the red right now, and if you are lucky enough to sell your product, it seems to be the average price per pound is around $700, which is way, way down. The county wants their money, the state wants their money, the banks want their money, the trimmers need to be paid and all of the other fees. For a small farmer, it costs around $500 to grow a pound. It’s barely paying the bills.”

California currently licenses 1,775 acres of cannabis farms across the state, which produce an estimated 6 million pounds of weed annually. The state's adult-use market only sells about 2.5 million pounds of weed, though, leaving farmers forced with the decision to let perfectly good weed rot, or to sell it off on the unregulated market. And in addition to licensed cultivators, there are still thousands of farmers growing weed illegally in California, most of whom are using toxic, banned pesticides.

“California farmers are producing four to five times more cannabis than our legal market can consume,” Humboldt County Growers Alliance executive director Natalynne DeLapp told the East Bay Times. “Simple supply and demand economics demonstrates when your supply outpaces your demand, the prices go down. The question of survivability is in question.”

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ADULT-USE LEGALIZATION
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Chris Moore
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Chris Moore is a New York-based writer who has written for Mass Appeal while also mixing records and producing electronic music.
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