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Legal pot sales are sluggish. Here’s how the industry hopes to compete with a cheaper black market




David Burr removes leaves on marijuana plants to allow more light for growth at Essence Vegas' 54,000-square-foot marijuana cultivation facility on July 6, 2017 in Las Vegas, Nevada.
David Burr removes leaves on marijuana plants to allow more light for growth at Essence Vegas' 54,000-square-foot marijuana cultivation facility on July 6, 2017 in Las Vegas, Nevada.
Ethan Miller/Getty Images

The sale of recreational marijuana has been legal in California since the turn of the new year. But almost three months in, legal pot is still struggling to establish itself.

That's because illegal recreational marijuana is so much cheaper to buy on the black market. Two state Assembly members are now proposing a reduction in taxes so legal marijuana businesses can compete. 

Assemblyman Rob Bonta is co-author of the bill. He represents the East Bay in Northern California, and he joined Take Two to talk about the proposed legislation.

The price disparity between legal and black market pot

There's a number of taxes that apply to the legal market in California. The excise tax is 15% right now. The cultivation tax is $148 per pound, and sales tax starts at a base of 8.25% and builds up from there based on what local jurisdictions add on. Some counties and cities are adding their own taxes. In total it could be 30-35%, maybe even more. 

What other states with legal recreational marijuana have done

Washington state is a really good example. They also implemented a temporary tax reduction to help spur along and incentivize the transition from black and gray market to regulated market, and it really worked. Many more businesses decided to embrace the regulated market. What happened is that the tax revenue generated in Washington more than doubled because instead of a smaller number of businesses moving over to the regulated market and paying higher taxes, many more came over and paid the lower tax level.