California Assembly Bill 195 has just passed and that means big changes for cannabis cultivators. With broad bipartisan support, the bill eliminates the state’s cultivation tax. So what does this mean for the cannabis industry? We’ll dive into the immediate changes coming to the industry and what this means for what we can expect in the future.
Cannabis Cultivators Taxes
California’s cultivation taxes have long been a burden to cannabis cultivators across the state. With B-195, over $161 of tax per pound of flower has been removed. This marks a noticeable change in the state’s cannabis tax structure. Currently, the excise tax is still set at 15%, but that number is able to change after three years. Removing the tax also provides a break for growers who have seen the price of their product fall nearly 50% and are looking to make up the difference wherever possible. Eliminating cultivation taxes is a step in the right direction for stabilizing the industry and allowing for less-impeded business growth.
This measure also creates new tax credits for some existing cannabis operations and transfers the responsibility of collecting excise tax from distributors to retailers. More so, the bill lowers the number of employees a company can have before setting off the requirements to create a labor peace agreement.
The bill also includes a $10,000 tax credit for social equity cannabis businesses. More so, social equity cannabis retailers can also keep 20% of the cannabis excise tax collected within a three-year period. However, many social equity retailers don’t think the bill goes far enough. There is stiff competition in the market, and social equity firms believe that more work needs to be done to even the playing field.
Whether you’re happy with the changes that AB-195 implements, or think there’s more that needs to be done; there’s no denying that this bill is changing the cannabis marketplace in California. We’ll continue to keep you updated on the progress of this bill and any future ones that affect the cannabis industry. BLAZE Grow, our seed to sale software, continues to adapt to these changes and ensures that your operations run smoothly.