San Diego Union Tribune
San Diego is raising its city cannabis tax from 8% to 10% — a figure equal to the highest rate in California and significantly higher than the rates of all other local cities.
Critics said the increase, which the City Council approved Monday, will have the effect of boosting the illegal cannabis delivery market by pushing the total tax paid by legal dispensaries on each sale to more than 35% on July 1.
Council members said the tax hike makes them more willing to consider longtime requests from the local cannabis industry for longer hours, on-site consumption lounges and a crackdown on illegal delivery-based operations.
The goal of the increase is to help close a roughly $250 million budget deficit the city faces. But critics stressed that the higher cannabis tax would generate just $4 million annually — and that’s only if it doesn’t depress sales.
Council members were divided Monday on what impact the higher tax rate, which takes effect May 1, would have on cannabis sales at the city’s 25 dispensaries.
“This 2% bump will not be felt by the average consumer,” Council President Joe LaCava said. “It will not be a tipping point in their decision about whether to purchase through an illegal retailer or not.”
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