“I’m very concerned that this industry—that we’re going to see less revenue as a result of the increase than we would have without it, as well as severely hampering the legal industry and significantly advantaging the illicit and illegal activities around our state,” he added, Marijuana Moment reported. “So I hope we remain committed to solving that issue. I know the tax increase is scheduled to take effect next week, but that remains a problem.”

California Cannabis Industry Reacts To Impending Tax Increase

Representatives of California-licensed cannabis operators were also disappointed by the omission of cannabis excise tax relief from the state budget, a development that adds to challenges including competition from unregulated hemp products. Jeremy Zachary, found and CEO of weed edibles manufacturer Zen Brands, says that the failure to include cannabis tax relief in the budget leaves operators heavily invested in the California cannabis market with “no other option but to struggle through the economic environment they’re being served.”

“Hyper taxation and the unregulated hemp market will remain the biggest culprit to the sales decline California is experiencing,” Zachary writes in an email. “Adding additional taxation to a heavily taxed environment will not make up for the lost tax revenue to the state, rather further compounding the failures in California cannabis and reduced tax revenues due to retailer attrition.”

Chloe Kaleiokalani, co-founder and CEO of California cannabis brand CAKE She Hits Different, says the planned tax increase “is setting the industry up for failure.”

“Many consumers and companies have already started digressing back into the black market just to survive, and this will only create more desperation, ultimately resulting in exactly opposite of what they are claiming to work towards—a loss of tax dollars being collected,” she writes in an email. “The government is making it impossible for regulated cannabis operators to turn a profit while simultaneously allowing unregulated hemp to be used as a loophole for shipping untested products direct to consumer.”

Democratic state Assemblymember Matt Haney introduced a standalone bill to eliminate the cannabis tax increase earlier this year, giving the state’s industry and consumers another shot at potential relief. If passed, however, the legislation is not likely to go into effect until next year, leaving the tax increase in place for at least six months.