Tax revenue from legal pot sales falls short of projections in California

California’s projections of cannabis tax revenue are coming down from their original highs.

State budget documents released Thursday by Gov. Gavin Newsom slash the administration’s cannabis tax prediction by $223 million through 2020. Industry analysts said tax revenue from the newly legal weed business is lower than expected because of limited access to legal pot in parts of the state, the impact of taxes on price-sensitive consumers and the state’s entrenched black market.

By dropping its expectations of tax revenue, California is simply acknowledging those realities, said John Kagia with New Frontier Data, a cannabis research firm.

“It is, I think, a pragmatic confession that the state still has a lot of work ahead,” he said. …

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