Cannabis excise tax passes California State Assembly, projected revenue $80 million annually

Assemblyman Jim Wood’s proposed cannabis excise tax AB 2243 won a major victory today passing the Assembly with 56 votes.  Any new tax in California requires the support of 2/3 of each house (54 votes in the Assembly) necessitating support from both Democrats and Republicans. 

Assemblyman Wood said, “I have worked from day one to ensure our rural communities have the resources we need to prevent, and cleanup the environmental catastrophe currently underway in our forests and watersheds.  This excise tax was part of AB 243 last year and was ultimately pulled at the last minute; this victory today is a huge step forward. ”

AB 2243 would levy a $9.25 per ounce tax on cannabis flowers, a $2.75 per ounce tax on cannabis leaves and a $1.25 tax on immature cannabis plants from nurseries.  The tiered approach is modeled after the way alcohol is taxed based on the potency of the product, and is designed to ensure funding goes to the most impacted communities. 

“AB 2243 imposes a reasonable tax on the production and distribution of commercial cannabis and will focus revenue on the communities, forests, and rivers,” said Hezekiah Allen, Executive Director of the California Growers Association. “This legislation is an important step to take to ensure immediate relief is available for the watersheds and communities that need help now." 

AB 2243 is projected to raise nearly $80 million annually.  These funds will be distributed as follows:

30% to fund the Watershed Enforcement Team

30% for local law enforcement

30% for environmental cleanup on public and private lands

8% to restart state funding of the Williamson Act

2% to fund inter-agency regional enforcement coordinators within the Department of Justice

“Last year the Legislature took important steps to create a regulatory and licensing structure for medical marijuana,” said Paul A. Smith, Senior Legislative Advocate with the Rural County Representatives of California (RCRC).  “AB 2243 fleshes out the Legislature’s work by providing the financial resources to preserve the integrity of the regulatory structure, with a special emphasis on addressing the environmental impacts associated with marijuana cultivation.  RCRC applauds the Assembly for recognizing the impacts that cultivation inflicts upon rural California.”

Eureka Police Chief Andrew Mills said, “As Chief of a city greatly impacted by cannabis, I appreciate Assemblyman Wood moving this bill forward to get those communities hit hardest by illegal cannabis cultivation the help we need.” 

AB 2243 will now go to the Senate to be heard next in Senate Rules Committee.