0820_AUG Comstock's Magazine 0820 August | Page 49

And excise taxes on California cannabis remain sky-high, totaling about 55 percent between state and local levies, according to the state Legislative Analyst’s Office. That compares with 25 percent on beer and 12 percent on wine in federal and state taxes. (Cannabis isn’t subject to a federal excise tax since it’s not legal at the federal level, and beer and wine aren’t subject to local taxes, according to the LAO.) Worse, in January, two types of state cannabis taxes increased: the markup rate and the cultivation tax. A bill to cut industry rates died in committee in March, and industry advocates say they have little hope of tax relief at a time when the state is up against its biggest budget deficit ever at an estimated $54 billion. State license renewals aren’t cheap either. Cargile pays $57,000 a year to renew hers, and Keon Houston of Eminent Extracts, a Sacramento-based cannabis manufacturer, says he pays about $30,000. Sacramento’s resilient cannabis market Some national reports depict many California cannabis businesses as on the brink of collapse. As yet, that hasn’t shown up in the statewide numbers — sales for April and May were at or above the year-to-date average for 2020. Sales on the weekend of April 20 — the unofficial cannabis holiday when they normally spike — were slightly above those of 2019 statewide, according to BDSA. Numbers from industry analyst New Frontier Data show that average expenditure per purchase in the Bay Area — in which the Sacramento region is counted — went from about $90 in November 2019 to $120 in April. One reason sales are staying up is that longer-term statewide demand is growing so fast. BDSA survey data show that the percentage of California adults over age 21 consuming cannabis went from 23 percent in first-quarter 2017 to 37 percent in third-quarter 2019. BDSA projects California sales to grow from $2.9 billion in 2019 to $7.4 billion by 2025. “It’s clearly counter-recessionary,” says Bingham of the cannabis market. “Whether as much as alcohol was in the last recession is not clear.” All that fits with what some local businesses report. Eric Luchini, director of marketing communications for Kolas, which runs six dispensaries in Sacramento, says its sales were up 40 percent between mid-March and mid-May. Cargile says ATA’s sales are now pretty stable. Houston says his sales also were up in May, and prices were higher because greenhouse season hadn’t kicked in, so there wasn’t as much product on the market. Robert Baca is executive director of the Sacramento Cannabis Industry Association, which he says represents more than 100 cannabis and cannabis-affiliated companies. Sales across companies are “a little bit of a mixed bag. What I don’t think you see The next generation of Act! ™ is here! all-in-one CRM sales and marketing platform Contact me for a demo & free trial chris pumphrey | act! software coach [email protected] • 406.493.7047 • www.actcoaching.com August 2020 | comstocksmag.com 49