Officials in San Francisco want to postpone a tax on legal recreational cannabis businesses to help the retailers compete against illegal drug dealers.
"Cannabis businesses create good jobs for San Franciscans and provide safe, regulated products to their customers," District Supervisor Rafael Mandelman tweeted. "Now is not the time to impose a new tax on small businesses that are just getting established and trying to compete with illicit operators."
The Cannabis Business Tax would be suspended during the 2021 and 2022 tax years, according to an ordinance passed earlier in December by the San Francisco Board of Supervisors.
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To effectuate, the ordinance must receive the signature of Democratic San Francisco Mayor London Breed, but "Mayor Breed does intend to sign the ordinance," according to her office.
"In November 2018, approximately 66 percent of San Francisco voters approved Proposition D, the Cannabis Business Tax effective January 1, 2021," the ordinance stated. "The proposition levies a gross receipts tax of 1 percent to 5 percent on recreational cannabis businesses."
The Board of Supervisors approved an ordinance in November 2020 that shelved the imposition of the tax through December 2021.
Those in favor of the ordinance needing Breed's signature feel the tax relief is necessary, as cannabis retailers in the area are continuing with competition from illegal dealers and a string of violent robberies, according to a report. At least $5 million has been lost in the crime spree.
The cannabis industry boomed at the beginning of the COVID-19 pandemic, but business has since dropped off significantly, the San Francisco Cannabis Retailers Alliance said.
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The tax hike of the Cannabis Business Tax would not help matters and only result in increased prices for customers, the group added.