San Francisco suspends cannabis tax to compete with drug dealers

An ordinance suspending San Francisco’s Cannabis Business Tax was unanimously approved by city supervisors.

San Francisco Supervisor Rafael Mandelman, the ordinance’s author, said in a statement suspending the business tax on cannabis will help support legal cannabis retailers as they struggle to compete with illegal cannabis sellers.

Cannabis businesses create good jobs for San Franciscans and provide safe, regulated products to their customers,” Mandelman said in a statement published by the San Francisco Examiner.

“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.”

Illegal sellers of cannabis skirt paying those taxes and are able to offer products at a lower cost, which entices consumers to purchase their product instead of legal sellers.

The tax itself was approved by voters in 2018 and imposed a 1%-5% tax on gross receipts from cannabis sales.

The new ordinance suspends the business tax through December 31, 2022.