L.A. and San Diego County Cannabis Tax Measures on Nov. 8 Ballot
Los Angeles County voters will be asked Tuesday to consider Measure C, a ballot measure that would impose business taxes on cannabis operations in unincorporated areas, once such businesses are permitted.
The county is still developing regulations for cannabis operations in unincorporated areas, with an ordinance expected to come before the Board of Supervisors next year.
In the meantime, voters will consider the establishment of a tax schedule for such businesses when they eventually become permitted. The measure requires a simple majority of voters to be approved.
The proposal would enact a series of initial tax rates — 4% for gross receipts for retail operations, 3% for manufacturing and distribution, $4 per square foot for mixed light cultivation and $7 per square foot for indoor cultivation.
According to county staff, the levies would initially generate an estimated $10.36 million a year. Those rates would be in effect until July 1, 2026, after which the ordinance outlines additional increases in the rates.
Although regulations for cannabis operations in unincorporated areas are still being developed, county staff indicated the initial plan will likely allow for up to 25 storefront retail cannabis businesses countywide, 25 delivery retail businesses, 10 indoor/mixed light cultivation establishments, 10 manufacturing businesses, 10 distribution facilities and 10 testing laboratories.
The businesses are expected to be distributed equally in each of the five supervisorial districts.
.@LACountyBOS took action on cannabis taxation in unincorporated @CountyofLA today. As a result, on Nov. 8 voters will decide if there should be a general tax on cannabis businesses. Let me be clear - illegal cannabis grows won't be tolerated. More: https://t.co/NHb39WqKsq pic.twitter.com/TPbypX8lL7
— Supervisor Kathryn Barger (@kathrynbarger) August 9, 2022
Supervisor Kathryn Barger, whose district includes the rural northern reaches of the county that are hotspots of illegal marijuana operations, said in August the tax measure does not mean there will a proliferation of outdoor grows.
"The approach we've adopted will equitably distribute legal cannabis businesses in each supervisorial district and specifies that cannabis cultivation will only be permitted indoors — not outdoors in greenhouses," she said.
"Our board must be clear: we will not tolerate illegal cannabis operations. Growers who operate illegally undermine our efforts to create a regulated and responsible cannabis industry, and often do so at the expense of the rural communities I represent. I'm firmly committed to upholding the law and will corral all available resources to enhance enforcement and abatement efforts."
Voters on Tuesday will also decide whether medical and recreational cannabis businesses operating in San Diego County's unincorporated areas will pay a tax that could be used for government services such as health care, fire safety and parks.
If passed, the measure will impose tax rates of 6% for retail outlets, 3% for distribution, 2% for testing, 3% — or $10, which can be adjusted for inflation — per canopy square foot for cultivation and 4% for other businesses.
The county tax would not apply to cities that already impose a tax on marijuana businesses.
According to county officials, if Measure A passes on a simple majority vote, it would generate anywhere from $3 million to $5.5 million in the general fund to pay for services and infrastructure.
Measure A has support from county Supervisors Nathan Fletcher, Terra Lawson-Remer and Nora Vargas — all Democrats. The San Diego County Democratic Party is also supporting it.
During a June 15 presentation on the ballot issue, Fletcher said the county is "at another step in our progress towards establishing the safe, regulated and legal cannabis market in the unincorporated areas and I think this is a worthy endeavor."
Former county Supervisor Dianne Jacob, former La Mesa Councilman Barry Jantz, the San Diego County Taxpayers Association and Republican Party of San Diego oppose the measure.
Measure A is problematic because "the unincorporated part of the county gets taxed, but there's no guarantee that the money is used for the general obligations created in the unincorporated part of the county, and that's unfair," Haney Hong, taxpayers association president and CEO, told NBC7.
Since California voters legalized recreational marijuana in 2016, the county Board of Supervisors has moved from various bans toward a proposed cannabis "equity policy." Fletcher and Vargas say the proposal will help eliminate the black market, and address how anti-drug policies impact low-income and minority communities. When it goes before the board next summer, the cannabis equity proposal will be in the form of an ordinance.
Currently, five marijuana operations are allowed to operate in San Diego County — three in Ramona and one each in unincorporated areas bordering El Cajon and Escondido.
