Pot tax revenue is less than projected — again

The kinks, complications and competing interests plaguing legalized marijuana sales in California were reflected this week in tax revenue from cannabis that fell short of projections for the first six months of the year.

The cannabis industry brought in $74.2 million in state taxes between April 1 and June 30, according to the California Department of Tax and Fee Administration. The secondquarter number includes state cultivation, excise and sales taxes.

The state collected $60.9 million in the first quarter of the year, bringing the sixmonth total to $135.1 million. Gov. Jerry Brown’s January budget proposal predicted that $175 million would pour in during the first six months of the state’s newly created adultuse cannabis market.

“We’re not too far off his projection, and I think things are heading upwards,” said Dale Gieringer, director of the California branch of the National Organization for the Reform of Marijuana Laws, or NORML. “I am a little worried. There are a lot of kinks in the system that they have to work out, but the regulators are working on it, as is the Legislature, and I think we will get there.”

Legal sales of recreational cannabis started with great hoopla on Jan. 1 as regulators attempted to transform the state’s black market and looseygoosey medical marijuana market into what everyone expected would be a multibillion-dollar industry, the largest in the nation.

Cannabis industry officials blame the lackluster figures on the reluctance of retailers and growers to go through the legal and financial red tape of entering the lawful market, a situation that has kept black-market growers in business.

City and county officials across the state have also been bickering over local retail and cultivation licensing protocols, limits on the number of outlets and growers, and the high costs and difficulty of doing business using only cash.

The tax figures reflect these growing pains, said Gieringer, who believes revenues will ramp up over the next two years.

“We’re still at a fraction of the ultimate level, and there have been a lot of glitches and shortages as we make a transition to the new system,” he said. “There is still a lot of underground trafficking going on, and I suspect that will gradually get fixed ... and we will steadily see tax revenues rise.”

Some legislators and lobbyists are pushing for at least a temporary cut in cannabis taxes out of fear that the high costs are pushing consumers into the black market.

The taxes include a 15 percent excise tax on purchases of all cannabis and cannabis products, including medicinal marijuana. The law also added a $9.25 tax for every ounce of bud grown and a $2.75-anounce tax on dried cannabis leaves. Local taxes vary, but they average about 8 percent.

The money pays for marijuana research and regulation as well as programs to prevent drug abuse, protect the environment and test for pesticides.