California is the biggest the cannabis market in US. It is also one of the most difficult market to be a legal cannabis player. One of the biggest reason it is a tough market is because of the multiple layers of taxes and because of the illegal market.
California has been looking to make a huge legislative change to make the legal market grow. We today got a major boost for the legal cannabis market. The governor in his latest budget call for elimination of the cultivation tax and moved the excise tax from distributor level to retail level, allowing retailers to keep the cash (instead of having to pay the tax to distributor).
Glass House is going to be a huge winner from the removal of cultivation tax. The cultivation tax was Glass House’s second biggest cost. At 15% it was a huge cost that is now gone. Although not all the benefit is going to Glass House, as part of the elimination will mean part of that savings will go to consumer via cheaper product. This helps brands grow as the cost gets cheaper; also Glass House wins as it saves the tax it used to pay.
I think we are starting to see a huge change in the California cannabis market. Glass House is going to be a major winner from the legal California market growing.
I’m a buyer of Glass House on Monday.