Overview: California Cannabis Taxes in 2018

While there is no physical difference between recreational and medical pot, California’s recreational cannabis will be taxed in three major ways: (1) a 15% excise tax on cannabis retail sales; (2) a cannabis cultivation tax of $9.25 per ounce of flowers and $2.75 per ounce of leaves; (3) local and state taxes ranging from about 7.75% to 9.75%. All of this adds up to what experts predict will be an effective tax rate of about 45% on recreational pot. That’s more than twice as much as Oregon and Alaska tax their non-medical cannabis.

Tax Table
Stone Age FarmacyTax Rates
Medical: 29.5%
Recreational: 34.5%
Gardena Location
California’s medical marijuana patients will have to pay these new taxes as well, but are exempt from paying any sales tax.

This will make medical cannabis more expensive, but could ultimately be a good thing for the state of California.

If recreational pot is taxed at a significantly higher rate (making it more expensive) than medical pot and it’s easy to obtain a medical cannabis card, many consumers would just choose to buy weed in an untaxed, medical market—and the state would miss out on millions of dollars in tax revenue. That happened in Washington following the beginning of retail sales in 2014 (though, in the first year of legalization, the state still raked in $70 million in tax revenue from legal weed sales).

California Attorney General

Other states, like Colorado and Oregon, have chosen to fix this problem by enforcing strict laws on who can obtain a medical cannabis card. Since California laws prevent the state from making it harder for medical patients to access marijuana, lawmakers decided to tax both markets nearly the same.

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