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California Governor Gavin Newsom Proposes Cannabis Tax Cuts

May 17, 2022

California governor Gavin Newsom released an updated budget proposal that would remove the state’s tax on cannabis cultivation. Like most states, California collects an excise tax on cannabis sales, but also charges flat fees on cultivation of $9.25 per ounce of flower and $2.75 per ounce of trim. The system has created undue economic hardship, according to many in the industry, given that cannabis businesses are also prohibited from deducting standard business expenses due to federal prohibition.

Newsom’s proposal follows months of agitation on the topic, which included a letter in December signed by numerous high-profile business leaders and organizations as well as in-person demonstrations at the state capitol building. The budget proposal now needs to be passed by the state legislature to take effect.—Danny Sullivan

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