Showing posts from November, 2019

Cannabis Tax Reform Before San Leandro City Council Tuesday, November 12th

A recent 60 Minutes report on the California cannabis industry highlights how the industry is a shadow of what was anticipated when adult use of cannabis was legalized three years ago. High taxes, costly and extensive regulations and bans on dispensaries by most cities statewide have enable the underground cannabis market to continue to thrive. Today it is estimated that $3 of every $4 spent on cannabis in California occurs in the illegal market.
Part of the reason why taxes on legal cannabis are so high is that many of the cities that allow cannabis sales impose a gross receipts tax on cannabis businesses. For the consumer this functions as a sales tax surcharge. Thus the consumer pays the regular sales tax (9.75% in San Leandro) plus the gross receipts tax (another 6% in San Leandro). That's nearly a 16% sales tax that a cannabis consumer buying from an unlicensed seller or delivery service never pays.
However, not all localities impose a gross receipts tax. In the City of Alameda…