San Francisco Won’t Tax Cannabis Until 2023

San Francisco is officially suspending all cannabis business taxes throughout the next year, which was a unanimous vote amongst the city’s supervisors to help combat the illicit cannabis market.

One supervisor named Rafael Mandelman is the legislation’s author, and he says suspending San Francisco’s cannabis business tax until Dec. 31, 2022, would help boost legal cannabis sales while authorized dispensaries continue to compete with the illegal underground market.

Back in 2018, San Francisco voted for the taxing of cannabis, which would create a 1% to 5% citywide tax on gross receipts from cannabis businesses. But seeing as the illicit market continues to generate revenue, the city is deciding to suspend cannabis taxes, which will go into effect on Jan. 1, 2022.

In a statement from supervisor and legislation author Mandelman, he said, “Cannabis businesses create good jobs for San Franciscans and provide safe, regulated products to their customers.”

However, the illegal market is still booming and “undercutting the prices of legal businesses.” This does not help our economy one bit, especially since illegal businesses don’t pay taxes and subject workers to dangerous conditions, and expose consumers to hazardous products.

Mandelman said this would be a terrible time to impose a new tax on small businesses that are “just getting established” while they attempt to compete with illegal businesses and operations. Mandelman’s office felt obligated to enact the suspension after the California Legislative’s Analyst’s Office reported that increased state cannabis tax rates had a direct link to illicit cannabis sales.

There’s also the recent issue of increased theft and burglaries in San Francisco and throughout California. On Nov. 16, armed robbers stole thousands of dollars worth of cannabis products from BASA on Grove Street. Now, there has been a record of more than 25 cannabis-related burglaries since early November.

Mandelman’s press releases also touched on how cannabis businesses, “along with many other retailers in San Francisco, are struggling under the weight of out-of-control retail theft.” He said the city needs to act on protecting these businesses, their employees, and customers before San Francisco imposes a new tax.

Mandelman said his office would work with the City Controller’s Office, the Treasurer and Tax Collector’s Office, the Office of Cannabis, and other stakeholders to examine data on cannabis business sales in San Francisco once the legislation goes into effect.

He hopes doing this would present a variety of recommendations on the tax rate and structure of cannabis sales to the Board of Supervisors to create a new scheme for 2023 once the suspension ends.