The city of Berkeley, California has dropped its sales tax on cannabis products from 10 percent to 5 percent in an effort to better compete with the illicit market, CBS SF reports. Despite the local tax drop, consumers are still paying 30 percent in taxes at the counter; sales taxes in the state can reach as high as 45 percent.
Sabrina Fendrick, of Berkeley Patients Group said the “sticker shock” of the new recreational market has “been an issue” for all of the state’s operators.
“Everybody wants to generate revenue, we all want to serve our communities, but if everyone is going to the illicit market then nobody is generating revenue and nobody is being helped.” Fendrick to CBS SF
Illegal cannabis is relatively easy to find in the state. Illegal dealers often use Craigslist to sell their products – often what a consumer can find at a dispensary – for much cheaper than the dispensaries. Dispensary owners argue that buying from the informal market is risky because dealers are not required to disclose the chemicals used in the growing process.
A bill in the state Assembly would lower the state excise tax from 15 percent to 11 percent – but that measure would still keep the effective rate hovering around 25 percent to 41 percent.