San Diego’s 10% Cannabis Business Tax Comes Up Short
$1.5 million short of the $21.3 million assumed in the budget
Earlier this year, the San Diego City Council voted to increase the city’s cannabis business tax from 8% to 10% to fill a budget hole. Now city finance officials say they likely overestimated how much revenue the tax hike would generate.
Receipts from July through September suggest the cannabis business tax is on track to generate $19.7 million this fiscal year — $1.5 million short of the $21.3 million assumed in the budget. Last fiscal year, when the tax rate was still 8%, the cannabis businesses tax generated $16.7 million for the city. The tax rate was set at 5% when it was approved by voters in 2016.
San Diego’s Office of the Independent Budget Analyst (IBA) wrote in a recent report that licensed retailers, manufacturers and distributors are still being undercut by their unlicensed competitors.
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