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California made $345 million, not predicted $1 billion, on legal cannabis in 2018

California took in $345.2 million in tax revenue from legal cannabis during the first year of regulated sales in 2018, according to figures the state released Tuesday.

That’s just more than a third of the $1 billion in annual revenue analysts predicted California would see once the state’s regulated cannabis industry was in full gear. But it does put the state on track to hit the revenue totals Gov. Gavin Newsom forecast in his current fiscal year budget.

Marijuana tax revenues climbed substantially in the first three quarters of the year, from $60.9 million the first quarter to $80.2 million the second quarter to a revised $100.8 million in the third quarter. But revenue narrowly grew in the fourth quarter, according to figures Tuesday from the California Department of Tax and Fee Administration.

There was $103.3 million in cannabis tax revenue in the final three months of 2018. That includes $50.8 million from California’s 15 percent excise tax on all cannabis sales, $16.4 million from the cultivation tax passed to growers and $36.1 million in sales tax on all recreational products sold.

The industry, along with some regulators and lawmakers, says the state’s high taxes and a thriving black market are to blame.

Newsom is calling for increased enforcement this year, with a request to send National Guard troops from the border up to Northern California to combat illegal grows on forest land.

Assemblyman Rob Bonta, D-Oakland, also introduced a bill that would temporarily reduce the cannabis excise tax from 15 percent to 11 percent and suspend the cultivation tax completely for the next three years. An identical bill failed to get support in 2018.

California has had to reckon with more realistic cannabis revenue forecasts as the first-year totals came through.

Former Gov. Jerry Brown budgeted for the state to take in $185 million in excise and cultivation taxes over the first six months of the year. California missed that mark by more than $100 million.

For the current fiscal year, from July 2018 to June 2019, Brown initially budgeted for the state to take in $630 million in marijuana tax earnings. Newsom’s proposed budget substantially dropped that forecast down to $355 million this fiscal year.

With $204.1 million in revenue during the first six months of the fiscal year, California looks to be on track to hit or even exceed that budget in another six months.

This is a developing story. Check back for updates.

Source: Orange County Register

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