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State revises cannabis tax structure

Elsa Olofsson
Flickr / Creative Commons

The changes, which were adopted last week as part of a broader state budget agreement, will also create tax credits for some cannabis businesses, expand labor rights within the industry and switch collection of a state excise tax from distributors to retailers.

That tax will pause at 15 percent for three years, after which regulators could raise the rate to recoup lost revenue from discontinuing the cultivation tax.

Prominent cannabis industry groups praised the plan for its potential to lower costs and help make legal sales more competitive with an illicit market that remains robust six years after California voters legalized recreational marijuana.

Yet even as the measure won overwhelming approval in the Legislature, it was met with vocal discontent from retailers. Some say they will not benefit and several lawmakers also complained that it did not do enough to address ongoing racial disparities in the industry.