Which California counties will benefit most from legalized recreational weed?
State and local tax revenue could hit more than $1 billion annually from marijuana by the mid-2020s
By Romy Varghese, Bloomberg
Twenty years after approving medical marijuana, Californians come 2018 will be able to consume it for recreational purposes, too, and the localities that have reaped the most from legal cannabis sales may be best positioned for what could be a billion-dollar windfall.
Los Angeles, San Francisco, and Alameda counties collected the most in sales taxes from medical marijuana dispensaries last year, according to the state Board of Equalization. The tally doesn’t include business taxes that cities assess.
As with other products subject to the sales tax, the bulk of proceeds goes to the state’s general fund, with cities and counties also taking cuts for their budgets. Under the expanded legalization, the state could reap hundreds of millions from a new excise tax while localities can assess their own fees and levies to boost their general funds.
The prospect of higher revenue is a positive for California municipalities that face limits on raising property taxes and must seek voter approval on other levies, said Stephen Walsh, an analyst at Fitch Ratings Ltd.
“We recognize that for local governments that have few ways of increasing revenue, pretty much anything is welcome,” Walsh said.
Because of the uncertainties around pot — which is still illegal under federal law — estimates vary on the cash that could be generated in California. State and local tax revenue could hit more than $1 billion annually from marijuana by the mid-2020s, according to the nonpartisan Legislative Analyst’s Office.
That would be more than a ten-fold increase from 2016 when medical marijuana dispensaries generated about $82 million in sales taxes alone, according to the Board of Equalization. Tom Adams, editor-in-chief of Arcview Market Research, an arm of Oakland-based cannabis investment firm the Arcview Group, projects legal sales — which he pegged at $1.8 billion last year — will hit $5.8 billion by 2021.
This article was shared by: TheCannabist.co
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