California has earned a reputation for high taxes. Yet, this week there is a sign of hope for tax resistance in the state legislature. On Monday, the California Assembly voted unanimously to delay by five years a tax increase that had been set to go into effect on July 1.
AB 564 — the legislation approved by the Assembly — deals with delaying the California Department of Tax and Fee Administration’s impending increase of a state-imposed special tax on marijuana sales from 15 percent to 19 percent. The state tax is in addition to special marijuana taxes that local governments impose.
A March press release from Assembly member Matt Haney, the bill’s sponsor, presented several arguments supporting the stopping, or at least delaying, of the impending tax increase. The press release noted that “the licensed cannabis market” in California that “has been in a sharp decline as evidenced by plummeting sales and tax revenue” is at a disadvantage because of marijuana taxes already being lower in other states such as Michigan and Colorado. The press release further argued that the expected tax increase would cause marijuana businesses across the state to fail and could even significantly hinder tourism in California.
I January of 2019, I wrote about the threat high taxes in California posed to the then one year old legal recreational marijuana market in the state. HR 564, which still has to be considered by the state’s Senate and governor before it can become law, is a starting place for addressing this problem.
Delaying a marijuana tax increase does some good. But, ultimately, to enhance respect for freedom and increase wealth, the special marijuana “sin taxes” imposed by governments in California and across America should be eliminated.
