San Francisco Delays Cannabis Business Tax
In a major win for the legal marijuana industry, San Francisco supervisors have agreed to suspend the city’s Cannabis Business Tax through the end of next year. Last week’s unanimous vote was the second such delay. It’s an attempt to blunt illegal marijuana sales by making the legal market more competitive.
“Cannabis businesses create good jobs for San Franciscans and provide safe, regulated products to their customers,” said Supervisor Rafael Mandelman, who introduced the ordinance. “Sadly, the illegal market is flourishing by undercutting the prices of legal businesses, which is bad for our economy as illegal businesses pay no taxes while subjecting workers to dangerous conditions and consumers to dangerous products. Now is not the time to impose a new tax on small businesses that are just getting established and trying to compete with illicit operators.”
The decision comes at a time of increased retail thefts, which have cost Bay Area cannabis businesses millions of dollars. The crime wave factored into supervisors' decision to delay the tax. In addition to the CBT delay, supervisors plan to discuss more permanent changes to help support the legal market.
The state’s illicit cannabis market is more than twice the size of the legal one, generating about $8 billion in annual sales. A report from the California Legislative Analyst’s Office partly blamed increased state cannabis tax rates for the black market’s enduring appeal. Yet California’s cultivation tax rate is scheduled to increase next year.