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CA Cultivation Tax Elimination, Meaningfully Eases Pricing Pressures And Likely Drives Consolidation

Benzinga Real-time News ·  Jul 13, 2022 11:56

July 6, 2022: Last week, California's onerous cultivation tax ($161/lb.) was officially eliminated. While far from solving all the issues for California operators, the tax change meaningfully reduces the break-even threshold for growers and particularly those with the biggest scale in capacity. In California, scale permits a meaningful wholesale price premium as retailers and distributors are typically willing to pay up to consolidate relationships as well as a lower total cost of production on greater volumes. The other driver of premium wholesale pricing is branded products. Brand power also tends to come with scale of operation given that brand success...

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