Understanding Cannabis Taxes in California and Oklahoma

When it comes to enjoying your cannabis, several factors are at play. What kind of cannabis are you picking up? What dispensary is selling it? How potent is the bud? How loud is the terpene profile? How well can you function once you're high? How much does the product or products cost should you find your perfect strain? All of these factors can ultimately make or break your experience.

Statistically speaking, the final cost of the product is THE determining factor that would either leave you feeling good about your purchase or awful about it. If you were to walk into a dispensary and pick up something, you can expect to pay for the retail cost of the product and a hefty amount in taxes. Unfortunately, near-universal access to legal cannabis comes at the expense of high taxes associated with it. And depending on which state you live in, those taxes can deal some serious damage on your wallet.

So let's explore this a bit. Since BLVK Label is a multi-state operation, let's explore the various cannabis tax laws in the states we are currently available in: California and Oklahoma.

THE LOGIC BEHIND CANNABIS TAXATION

Back in the day, when cannabis was illegal everywhere in the country, it was unheard of to pay a tax on cannabis. That's because cannabis, to this day, remains a Schedule 1 drug at the federal level. Cannabis taxes sprung about when states began to introduce medical cannabis pilot programs and eventual recreational legalization as a way to collect revenue on its accessibility.

The logic behind these taxes aren't any different from say, taxes on cigarettes, alcohol, and other "luxury items." On a very basic level, taxes on these items are paid to the state in exchange for access. For example, cigarettes and other tobacco products are heavily taxed in exchange for people to buy and consume it. The taxes exist at the rates that it does to not only make it financially burdensome on its users, but to protect public health while also simultaneously filling state coffers with money that wouldn't otherwise come to the state. Do we think this way of taxation is ethical? Absolutely not. Is this simply a cost of doing business? Unfortunately, yes.

HOW EXACTLY IS CANNABIS TAXED?

There are three major types of cannabis taxes: taxes on the price of the product, taxes on the the weight of the product, and taxes on the potency of the product. Since cannabis is illegal at the federal level, the rates in which these taxes are calculated are left entirely by the states, counties, and individual cities. As you can imagine, all of these taxes together can add up and seriously impact your decision to walk out of a dispensary with your weed or leave empty-handed.

Percentage-of-price cannabis taxes are similar to a general sales tax in that the consumer pays a tax on the purchase price. The dispensary would then remit that back to the state on a monthly, quarterly, or annual basis. Cannabis taxed on a percentage-of-price model typically have higher rates.

Weight-based cannabis taxes are similar to cigarette taxes, except instead of taxing per pack of cigarettes the tax is based on the weight of the cannabis product. This tax is levied on the wholesale transaction. That is, the tax is paid by cultivator or manufacturer and is passed onto the dispensary or distributor. For example, BLVK Label as a brand needs to factor in the cost of bulk biomass to ultimately convert that into THC distillate for our products.

Potency-based cannabis taxes are similar to alcohol taxes in which the rates vary based on its alcohol by volume content. Swap out the alcohol content with THC content and you've got yourself a tax rate that almost unfairly over-taxes concentrate brands such as BLVK Label. Cannabis concentrates typically possess potencies ranging between 70 - 95% THC, so as you might imagine, this tax is very high!

CANNABIS TAX BREAKDOWN: CALIFORNIA

California taxes cannabis and its associated products by weight and by percentage-of-price. Weight-based taxes are updated annually and typically increases year-over-year. The percentage-of-price rate has not changed since its 2016 legalization. Here's how it breaks down:

Weight-Based Taxation:

Flower per dry-weight ounce: $10.08
Leaves per dry-weight ounce: $3.00
Fresh cannabis plant per ounce: $1.41

Percentage-of-Price Taxation: 15%

California State General General Tax: 6%

Local Sales Tax: Varies based on country/city

Generally speaking, California's cannabis tax hovers around 37% paid by you, the consumer. The state's cannabis taxes are one of the highest in the country, regardless of whether these products are distributed for the medical or recreational markets.

CANNABIS TAX BREAKDOWN: OKLAHOMA

If California is one of the most aggressive states of cannabis taxation, Oklahoma would be one of the most relaxed states. Oklahoma levies a modest percentage-of-price of 7% with an added 1.5% handling fee. Oklahoma, being one of the most relaxed states in almost every aspect, cannabis out there is highly attractive for both brands and consumers alike!

CANNABIS TAXES ARE HERE TO STAY

As we mentioned above, cannabis taxes generally exist to bring the state revenue. How each of these taxes ultimately affect the overall health and well-being of its residents remains to be seen. While the original intention of these taxes are to fund various health and education initiatives, poor management of tax revenue is a prevalent problem, regardless of what state it is. Our hope is that the tax dollars benefit everyone in a way that is both tangible and transparent.

What does this mean for you and I, as cannabis consumers? Well, if we want to be able to purchase weed, legally, and consume it, this is simply the cost of it - taxes and all! We hope you found this guide helpful. Feel free to reference this as much as you'd like as we'll keep it updated as we enter into more states. Happy blazing!