SAN DIEGO, CA – Major reductions to city cannabis production taxes received initial approval by the San Diego City Council on Tuesday.
According to a report by the San Diego Union-Tribune, the 6-3 vote ensured that the tax rate on cannabis production facilities will be lowered from 8% to 2%. However, all dispensaries within city limits will not see a change in their 8% rate.
Since taxes on local production facilities in San Diego is one of the highest in the state, it is much more challenging for new businesses to open in the city. As a result of this, only 19 of the 40 production facilities approved by the city were able to open.
The lack of cannabis production in the area forces many local dispensaries to ship their products in from different cities.
Supporters of the bill believe having more production facilities in the area will create jobs and reduce the risk that the cannabis black market poses in the area.
The measure’s critics say the city simply cannot afford to lose tax revenue in a time where the pandemic is taking away tourism revenue San Diego depends on.
An Independent Budget Analyst determined San Diego could lose between $2 million and $4 million over the next five years with the lowered tax. A separate review by the city’s treasurer found the loss would be less, but did not give an estimation.
Since the bill is a city ordinance, it will be put to a vote in the council once more next month.
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