What is a Cannabis Tax?

While both medicinal and adult-use commercial cannabis activities are currently illegal in Mountain View, the City is developing the regulatory framework to allow and regulate retail sales and evaluating a potential tax on such sales.

Current cannabis regulations and taxes

Proposition 64, which was approved by California voters in the 2016 General Election, legalized adult-use cannabis (marijuana) in the state effective January 1, 2018. The State of California began issuing license for adult-use commercial cannabis on January 1, 2018, and imposed a state excise tax of 15% on all retail sales of cannabis and a cultivation tax of $9.25 per ounce of flowers and $2.75 per ounce of leaves (dry-weight). Revenues from State taxes on cannabis funds the cost of administer and enforce the state regulations; research the impacts of use on medical cannabis; youth programs; drug education, prevention and treatment; and environmental damage from illegal cultivation. 

The State law allows cities decide whether to allow or ban cannabis business locally and impose local taxes if approved by voters.

What the City is THE CITY SENDING TO THE VOTERS?

In addition to preparing the regulations to allow local retail cannabis use, the City will be asking the voters to consider a tax on cannabis at a rate of up to 9% of gross receipts.  The City Council would have the flexibility to set the tax rate lower than 9%, to set different tax rates respectively for medical and recreational marijuana businesses, or to change the tax rates in the future.  The measure will not permit medical or recreational marijuana businesses. It allows the City Council to impose a tax on cannabis businesses if the city legalizes retail sales.

Several local Bay Area cities that have pass cannabis taxes, tax between 5% and 15%, including:

Berkeley 5% tax on gross receipts (recently reduced from 10%)
Campbell Initial tax rate of 7% of gross receipts, with a maximum tax rate of 15% (if City allows dispensaries)
Hayward 15% tax on gross receipts
Pacifica 6% tax on gross receipts
Pittsburg 10% tax on gross receipts
San Leandro 10% tax on gross receipts
Santa Cruz Initial tax rate of 7% of gross receipts, with a maximum rate of 10%)
San Jose 10% tax on gross receipts

 

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