Here’s How to Reduce the Cost of Cannabis for ConsumersPosted by On


Consumers could be saving money while cultivators extract higher profits.


This story originally appeared on Green Market Report

On August 6 we published an article that illustrated the savings for consumers and additional profits for cultivators that could be produced through the use of a properly organized Cannabis Cooperative Association (“CCA”). This article describes the savings for consumers and the additional profits for cultivators in the movement of cannabis in the form of extracted oil.

As we have said on multiple occasions, a CCA is the most financially efficient structure for engaging in business in California’s cannabis industry. The utilization of a CCA for the movement of cannabis as extracted oil produces even greater price reductions for consumers and increased profits for cultivators than with flower. This occurs because more costs are incurred between the cultivator and the consumer in the movement of extracted oil than in the movement of flower.

We have once again assumed the cannabis material is moved from cultivator to consumer through a fully integrated CCA. A fully integrated CCA is a CCA that is a single entity from cultivator to consumer for financial reporting purposes. Since the benefits of conducting business through a CCA occur at each step in the movement of cannabis from cultivator to consumer, a partially integrated CCA will always be a more financially efficient structure than a comparable conventional structure.

The first spreadsheet illustrates the division of a total of $10,000 paid by consumers for refined cannabis oil, including Sales Tax of 8.75% and a Local Cannabis Tax of 10.0%, among taxes other than income taxes, and among a cultivator, manufacturer, distributor, and dispensary, using conventionally structured businesses. The first spreadsheet assumes a total of $10,000, including all taxes other than the income taxes, is generated from the retail sale of 250 cartridges of refined cannabis oil ($40 including taxes per 0.5-gram cartridge).

In the first spreadsheet, we have allocated as dollar amounts the slices of the $10,000 total paid by the purchasers of the cartridges into taxes other than income taxes, and the costs, profits and income taxes of the four businesses. A mark-up by the dispensary of 60.0% of the wholesale cost from the distributor is reflected in the first spreadsheet. We have assumed the cultivator, manufacturer, and distributor each have a…

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