After 20 years of legalized Medical Marijuana in the State of California, the State Legislature passed regulation governing the Cannabis Industry. The Marijuana Regulation and Safety Act (MMRSA) adds what are known as Value Added Taxes at each step of production. These taxes are set to drastically increase the cost of Marijuana and possibly implode the regulatory system. We need regulation but not over taxation!
MMRSA does not call them taxes, they call them Type 11 Distributors. In the current California market, there is not a traditional distribution network set-up, as there are in most every other industry. Usually a distribution network can cut the costs of products by economies of scale. The Cannabis industry is not your most every day industry because of the law. Therefore, there are minimal steps to market for Cannabis. A grower would drive his harvest down to the local dispensaries distribute it. There was one step in the distribution chain and with concentrates, there might be an extra level or two in the distribution chain. A grower would sell the material to an extractor or an edible company; the extractor would process the material and sell it to a manufacturer of edibles to use, while the edible company who purchases raw material will simply pay an extractor to process it for them.
MMSRA requires Distributors that will be forced to tax roughly 15%* at each step to cover testing and logistics.
Hypothetical MMRSA Cannabis Taxation Regulation Effects:
1) Grower gives Cannabis to Distributor to give to Extractor or sell to Dispensary.
2) Distributor Taxes 15% to cover costs of testing and logistics. (Flower stops here)
3) Distributor gives Cannabis back to grower or manufacturer of Medical Cannabis products such as Cannariginals Emu 420 Essentials Medicated Rub.
4) Distributor Taxes 15% to cover costs of testing and logistics (Extraction stops here)
5) Manufacturer of Medical Cannabis products manufactures product and gives to Distributor.
6) Distributor Taxes 15% to cover costs of testing and logistics
*Not actual percentage of tax
Then when the product finally gets to the dispensary, I don’t know the margins of the Cannabis industry; but generally speaking, mark-ups can range from anywhere from 50% to doubling of the product price. If that is the case, that could make the value of the VATs to 90% in increases of taxes on Cannabis products.
This affects everyone from the grower, to the manufacturer, to the dispensary and ultimately, the PATIENT! It will cost some their livelihood and many will lose their ability to safe access to clean medicine.
If you live in California, we encourage you to contact your local representative and share your concerns.
Here’s how you can do that.Step 1: You can easily find your local representatives here: Find Your California State Representatives Here!
Step 2: Reach out to EVERY REPRESENTATIVE listed in your local area and send them an email, call them up, or make an appointment to go speak with them in-person. Their job is to listen to your concerns.
Step 3: Tell them:
“I am very opposed to mandatory distribution and excess taxation in the MMRSA to regulate medical Cannabis in California. It will substantially raise the price of cannabis for patients, and it will put many small farmers out of business. I am voicing my concerns so that you can represent our best interests to make sure this bill gets amended to support the people it’s designed to serve.”
That’s it! They just need to hear your voice to make a difference.
Together, we can save Cannabis in California. Let’s show our public servants that we don’t accept MMRSA’s mandatory distribution model and the excess taxation, and let’s flood their email boxes and voice mails so they know to act in favor of our best interests.
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