Should we tax marijuana sales up to 10 percent? SLO County voters will decide

Voters will decide whether to impose a local tax on commercial cannabis businesses in unincorporated areas of San Luis Obispo County, after supervisors on Tuesday agreed to place the issue on the ballot for the June 5 election.

While no commercial cannabis businesses have been approved by the county in unincorporated areas, a consultant for County Tax Collector Jim Erb estimated that revenue could range from $1.4 million to $28 million.

If approved, the “Erb tax” could take effect on July 1.

Supervisors propose a 4 percent sales tax on gross receipts from marijuana businesses that will increase 2 percent every year to a maximum of 10 percent. Testing labs would be exempt from the tax, and the board would have discretion to tax various business types at different rates.

Local business owners, like Megan Souza of Megan’s Organic Market, told the board that 10 percent would be too high and force consumers into the black market as prices have already drastically increased for cannabis products that have been licensed by the state of California since the program began in January.

Any local tax would be in addition to state taxes, which include a dry weight tax of $9.25 for every ounce of cannabis flower and $2.75 for every ounce of cannabis leaf and a 15 percent excise tax on all other cannabis activities in addition to existing retail sales tax.

Souza said she’s already losing business to the black market, and her business partner, Eric Powers, said businesses and customers aren’t going to be able to stay in a safe, regulated market.

Neither the state nor the county makes a distinction between commercial, recreational or medical cannabis.

Consumers can avoid state and local sales tax if they have a state-issued Medical Marijuana Card, but none of the other taxes are waived.

Two supervisors will submit the argument in favor the tax measure to appear on the June ballot, alongside any argument in opposition.

If the tax is passed, revenue becomes part of the county’s general fund and can be spent however the board chooses. Supervisors have said they intend to use revenue to cover the costs of legalized cannabis in the county, such as salaries for code enforcement officers and those in the Planning and Building Department who process the applications.

This story was originally published March 6, 2018 at 2:59 PM with the headline "Should we tax marijuana sales up to 10 percent? SLO County voters will decide."