High taxes could drive up marijuana prices and bolster the black market in California, analysis says

High taxes on legal marijuana in California could have the potential to turn many consumers away from the state’s cannabis shops and toward the black market, according to a report from Fitch Ratings.

The credit rating agency estimates state and local taxes on marijuana, which will become legal in California on Jan. 1., could be as high as 45 percent in some cases.

It would trail only Washington state, which levies a 50 percent tax on marijuana.

“The existing black market for cannabis may prove a formidable competitor to legal markets if new taxes lead to higher prices than available from illicit sources,” the report says.

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