The cannabis and hemp industries find themselves at odds as hemp explores lacing products with THC. Meanwhile, Gov. Gavin Newsom proposes a ban on THC-laced hemp products.| Two days before California Gov. Gavin Newsom proposed an emergency order to regulate easy access to “intoxicating hemp,” the state released cannabis tax results for the second quarter.
The tax rolls show an industry competing with hemp that’s continuing to a decline in revenue year over year.
The two communities that derive their THC-laced products from plants are currently vying over a limited market in California that’s perceived as a stalemate due to heavy, untaxed competition.
Total cannabis tax revenue for the period ending June 30 came in as $263.1 million, about $100 million less than the returns from three years ago.
Sales tax revenue didn’t fare much better for cannabis when singled out. This past quarter added up to $108.7 million, down by over 9% year of year. It has plunged by $30 million in the last three years.
Cannabis taxable sales — which are the actual receipts for goods — amounted to $1 billion in the second quarter. That’s down by a third when 2021 brought in $1.5 billion for those three months, according to the state tax rolls.
“It’s certainly an indicator of where the industry is. The illicit market is not taxed and not regulated. On top of that, the unregulated hemp market is out of control,” Solful CEO Eli Melrod said, citing hemp products sold in Bev Mo and over Door Dash as “outrageous to suggest that was anybody’s intent.”
The cannabis community blames a few factors on declining sales and less revenue. For one thing, it cites competition from the illicit marijuana market.
More recently, the cannabis community points to the hemp industry cutting into cannabis profit margins. Critics claim hemp products have become more plentiful in retail outlets and more intoxicating with rising levels of THC.Three years ago, Newsom signed into law regulations that limit the concentration of THC in hemp beverages and food at 0.3%. Labeling restrictions were also imposed. But critics claim producers have found a way to circumvent the […]
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