California took in more than $208 million in marijuana tax revenue during the last quarter, slightly exceeding figures from the first quarter of the year, the California Department of Tax and Fee Administration (CDTFA) announced on Wednesday.
While numerous industries are suffering amid the coronavirus pandemic, the report from California is another example of how the cannabis market seems to be riding out the storm.
“Total tax revenue reported by the cannabis industry is $208.4 million for 2nd Quarter returns due by July 31, 2020. This does not include tax revenue collected by each jurisdiction,” the department said in a press release. “Previously reported revenue for 1st Quarter 2020 returns was revised to $205.9 million, which included $107.4 million in cannabis excise tax, $26.9 million in cultivation tax, and $71.6 million in sales tax.”
All told, the state has seen $1.45 billion in marijuana tax revenue since retail sales were implemented in 2018. That’s from a combination of excise, cultivation and sales taxes.
According to a recent study, that revenue could be significantly stronger if local bans on cannabis businesses were lifted. Currently, 75 percent of cities and counties in the state have implemented marijuana market bans despite the 2016 statewide vote to legalize the plant for adult use.
CDTFA is also working to hold illicit marijuana operators in the state accountable and announced last month that it had issued tax warrants for twelve cannabis retailers that were doing business illegally in Los Angeles and San Bernardino counties.
While the department’s analysis shows an increase in revenue, the state Legislative Analyst’s Office (LAO) took a different approach and determined in a separate report released on Wednesday that there was actually a seven percent decline over the same time period. However, they decided against factoring in sales tax and focused exclusively on excise and cultivation tax revenue, accounting for the discrepancy in the two agencies’ findings.
Seth Kerstein, the analyst behind the LAO report, told Marijuana Moment that there are a number of reasons they omitted the sales tax data, including problems with the precision of the methodology to obtain that information and potential complications related to the timing of reporting sales tax.
He said the office has two theories about why excise and cultivation tax revenue might have declined: “The administrative rate adjustments and consumer stockpiling in the early days of the COVID-19 crisis.”
“We can’t say for sure whether the strong growth was due to one of these things, both of them, or something else we haven’t thought of,” he said of the increase in sales during the previous quarter earnings. “That said, there are some indications of an ‘all of the above’ story—these two factors, plus potentially others.”
Another state that’s seeing notable upticks in legal cannabis purchases is Illinois, which launched retail marijuana sales in January. The state experienced another record-breaking month of recreational cannabis sales in July, totaling almost $61 million. That smashed the previous record set in June of nearly $47 million.
Over in Oregon, officials have been witnessing a similar sales trend amid the global health crisis. Data released in May showed sales of adult-use cannabis products were up 60 percent.