August 22, 2019
In November 2016, California voters approved Proposition 64, which legalized the nonmedical use of cannabis. The state levies two excise taxes on cannabis: a retail excise tax and a cultivation tax.
Fourth Quarter of 2018-19: $97 Million. The administration currently estimates that retail excise tax revenue was $74 million and cultivation tax revenue was $23 million in the fourth quarter of 2018-19 (April through June).
Revenue Growing Fast. Last quarter’s $97 million total is 21 percent higher than the current estimate for the prior quarter ($80 million) and roughly double the current estimate for the fourth quarter of the 2017-18 fiscal year ($48 million). Although we rarely observe such rapid growth in other revenue sources, it is not very surprising in the context of a new legal market.
Preliminary 2018-19 Total: $317 Million. The administration’s combined estimates for all four quarters of 2018-19 are $248 million of retail excise tax revenue and $70 million of cultivation tax revenue. (The total does not add up due to rounding.)
Current Tally Slightly Above Recent Projections. In early May, the Department of Finance estimated that 2018-19 revenue would be $288 million. Later in May, when additional data were available, our office estimated that it would be $307 million.