Peggi Clough
New data released by Flowhub finds the price of an eighth of cannabis in U.S. cities can vary by as much as 15 percent after taxes have been applied. Now that cannabis is being regulated by cities and states with complicated tax codes, consumers can pay 20 to 40 percent tax on their purchases.
The cities included in the data were Boston, Denver, Las Vegas, Los Angeles, Portland, San Diego, San Francisco and Seattle—the top eight major urban cannabis markets. In order to determine which city had the highest priced eighth of an ounce of flower, Flowhub started by assuming the price of each eight was $35 and then added on the taxes associated with that location. Prices do not reflect the actual cost of an eighth in those cities.
Most expensive was Seattle, with a cost of $51.49. Seattle was first place in price on the list because it also has the highest tax rate at 37 percent.
Second place Los Angeles came in at $48.48. The 35 percent taxes include excise, sales, and business-REC taxes. Taxes in California are calculated against the subtotal and applied taxes. For example, in San Francisco, the state sales tax is 8.5 percent of the subtotal plus the excise tax.
Interestingly, prices in the three California cities differ by quite a bit. Eighths in San Diego and San Francisco cost $45.54 and $43.67, respectively. That’s almost $5.00 less than the price in Los Angeles. San Diego taxes at 27.75 percent and San Francisco, 23.5 percent—a big difference from LA’s 35 percent.
Denver places the largest number of taxes on cannabis of any of the cities on the list. The 26.15 percent taxes include a state cannabis retail tax, state and municipal sales taxes, a Denver retail marijuana tax, an RTD tax, and a cultural tax. Still, with all these taxes, Denver was 5th in price, at $43.14.
Eighths in Boston and Portland are taxed at 20 percent and both have a cost of $42.00. Boston places excise, state sales and local municipal business taxes on cannabis, while Portland has two taxes: OLCC state and Portland city.
Las Vegas came in the lowest priced at $41.39. Taxes there run 18.25 percent and consist of a state recreational cannabis tax and sales tax.
Smaller dispensaries and entrepreneurs are fearful that high taxes will force them out of the market, so Flowhub has some advice for them. It includes understanding local laws, keeping detailed records, setting an order of operations for tax calculations and being upfront with consumers. They also suggest fighting for fairness by lobbying lawmakers for responsible regulations in the cannabis market.
2 comments
Michael Rattelmeier
August 6, 2018 at 2:24 pm
Um, just wow…you know, there probably should have been some research done on this article prior to it being published. The tax rate in each city is set as a percentage of sale amount. If you assume that each city has the same price, the obviously the city with the highest tax rate is going to have the highest overall cost. But is this accurate at all? An eighth in Colorado Springs will fetch you a mere 12 bucks. You’ll never find that in Vegas or Los Angeles. In Seattle there is a bit more stability, but it’s falling. In Oregon they don’t sell eighths anymore as that’s below the minimum transaction threshold. Do some research before writing an article that is grossly misleading.
Debra Borchardt
August 6, 2018 at 5:19 pm
Hi Michael,
The story states that these aren’t actual prices but that $35 was used as a baseline to compare the various tax rates. So, yes if a city has high taxes then the eighth will cost more. Not everyone knows what the tax rate of Seattle is versus Las Vegas – hence the story. The graphic makes this comparison for readers. If you go to this link, you will see the breakdown of each figure. https://taxes.flowhub.co/ This link was also in the story.
EIC