Cannabis leaders in California’s capitol and in the Coachella Valley are warning the industry could soon collapse under excessive taxation.
Local cannabis business owners in the valley say some shops are on their last leg – and there’s a new push to city leaders to lower taxes so they can stay afloat.
CEO of West Coast Cannabis Club Kenneth Churchill has three locations in Palm Desert and Cathedral City. He said he’s paying more than $1 million per year in local taxes, on top of a 15% state tax and the standard 8% sales tax.
“Taxes in the cannabis industry are significantly higher than the cost of doing normal business,” Churchill said. “If a customer comes in and spends $100, $31 of that automatically just goes directly to taxes.”
Churchill gearing up to send a letter to Cathedral City leaders as a last ditch effort by the end of the month, pleading for a break in the 10% city tax. He said at least nine cannabis businesses there are signing on.
“A good majority of them just don’t think they’ll be able to survive another year if we don’t find some kind of tax relief,” he said.
Jocelyn Kane with the Coachella Valley Cannabis Alliance Network said high taxes are pushing customers out of legal dispensaries and into the black market.
“That illegal market is a place where you can buy cannabis for less money, but it’s untested, it’s unhealthy and you don’t know where it’s coming from,” Kane said.
But cannabis taxes were always part of the deal, Kane said, with California cities and something business owners should expect. “The agreement is you pay the taxes for the ‘sin’ of cannabis and (cities will) let you do it,” she said.
Churchill said it’s a financial burden that, for some, is becoming too much to bear. “The ones who have been there for a long time are really struggling right now and you’re seeing stores close left and right because of it,” he said.