CSAC Bulletin Article

Several Counties Adopt New Cannabis Tax Ordinances

June 7, 2018

Voters overwhelmingly approved several new cannabis measures in cities and counties up and down the state this week. Six county tax measures were approved by wide margins in Imperial, Mono, San Benito, San Luis Obispo, Santa Barbara and Yolo counties. This new group joins an increasing number of jurisdictions across the state that have decided to regulate and tax commercial cannabis activity. The measures vary in their rates and structure and reflect the diversity of local commercial cannabis regulatory programs that cities and counties are adopting.

Under Proposition 64, California has a dual-licensing system that requires both a state license and a local permit or authorization to engage in commercial cannabis activity. Local governments have the right to ban cannabis activity or regulate and/or tax both adult-use and medical cannabis operations within their boundaries.

While the state began accepting applications and issuing temporary licenses in January, many local jurisdictions held off at first, putting in place either bans or temporary moratoriums. Counties have used this time to conduct community outreach and public workshops to determine what type of commercial cannabis activity would be appropriate and supported within their community.

The ability for communities to say no to commercial activity was an important component of Proposition 64. While 57 percent of voters in California approved the initiative that legalized the adult-use of cannabis in California, many of these same voters had different opinions on whether or not cannabis businesses should be located in their neighborhoods.

This phased-in approach at the local level is helping many jurisdictions work with the industry and their community to develop programs with significant public support. To see a more complete list of what counties are doing, visit the CSAC website.

June 2018 County Cannabis Tax Measures

Imperial County – Measure Y Approved by 67%

Range of 5-8% gross receipts tax on retail & manufacturing, and $15 sq. ft. tax on cultivation, increasing to $22 in 2022

Mono County – Measure D Approved by 79%

Range of $0.50-3 sq. ft. tax on variety of indoor, outdoor cultivation. Range of 4-8% gross receipts on retail sales. Range of 2-4% on manufacturing and other cannabis operations.

San Benito County – Measure C Approved by 58%

Range of $3-17 sq. ft. tax on cultivation. Range of 2-4% gross receipts tax on distributors, range of 2.5% to 4% on manufacturers. Range of .5% to 8% on retailers.

San Luis Obispo County – Measure B-18 Approved by 76%

4% gross receipts tax on all commercial businesses, increasing 2% annually beginning in 2020, not to exceed 10%.

Santa Barbara County – Measure T Approved by 75%

1% gross receipts tax on nurseries; 3% on manufactures; 4% on cultivators; and 6% on retailers and microbusiness

Yolo County – Measure K Approved by 79%

Range of 1% to 15% gross receipts tax cannabis businesses; 4% on cultivators and 5% on any other type of cannabis business. The tax rate on cultivators will increase to 5% 2021.

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