Why is weed so expensive?

Why is weed so expensive?

Posted by Rebecca Olmos on Oct 20th 2021

It is exciting to walk into a dispensary to purchase legal cannabis for the first time. Just make sure to prepare yourself for “receipt shock.” The taxes applied to your perfectly dosed gummies and conveniently rolled joints can go all the way to 38%, depending on which California city the dispensary is in.

What taxes are applied?

The breakdown you’ll see at the bottom of your receipt normally looks like the following:

  • 15% state excise tax
  • 7.25-10% local and state sales tax
  • 0-15% local business tax

They are always applied in that order and in California these taxes are cumulative. This means $100 worth of products can end up being anywhere from $125.63 to $138.52 according to a Leafly analysis.

But why?

The short answer is because of Prop 64. This allows local jurisdictions to charge whatever business tax they want.

Cannabis tax revenue funds a variety of local services but mainly goes towards public safety. One study found that in cities where cannabis taxes are most high, they also saw the biggest increase in police budgets.

Since 2018 California has made 2.8 billion dollars worth of tax revenue.

Location is key

High tax rates on legal weed are unavoidable if you’re at a dispensary in California. So it’s best to travel to a city with the lowest taxes and stock up. One search for low cannabis taxes found the best place to get the most weed for your buck is in unincorporated areas of Alameda County.

Find those deals

If traveling outside your city or to one with the lowest taxes isn’t an option for you, shop around for those deals! Ask about first time customer deals, daily specials or loyalty programs. You’d be surprised at how far you can stretch your dollar if you’re open to trying new things and chatting a bit with your budtender. The good news is that there is a plethora of cannabis flowing through the state so you’re sure to find something to fit your budget.