One Year Later: How The Illegal Market Is Affecting Local Los Angeles Dispensaries

Tax revenue fell about $275 million less than projections

It has been about a year since California rolled out the legalization of recreational cannabis, and now that dispensary owners have had a whiff of the industry, some say the cost of running a legal shop is burning through their profits.

Jake Welty is the general manager at Captain Jack’s in San Bernardino. He says it’s a struggle to compete with lower prices at illegal shops, especially when the legal businesses have to add on the cost of three different taxes.

“Do I think the tax rate is too high? Absolutely, because I hear it every day from customers coming in the door,” he said. “Because the illicit market, the black market, is incredibly vibrant in California.” Customers seemed to agree. “There are other outlets where you can get it a lot cheaper,” Suzanne Urbanek said.

In San Bernardino for example, dispensaries are taxed 29%: a 15% excise tax, 6% city tax and 8% sales tax.

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