City weed taxes in Oakland, California are so high that they’re pushing business into other neighboring jurisdictions, or the black market. Today, all members of the Oakland cannabis industry must pay 10 percent tax, and medical businesses pay 5 percent. But today, the City Council decided to give Oakland residents a chance to change this. In November, Oakland will vote on whether to lower these taxes for weed businesses.
Oakland’s Ridiculously High Weed Taxes
In a state where inflated weed taxes are the norm, Oakland is in a league of its own. The city currently has tax rates of 5 percent on medical and 10 percent on adult use cannabis.
This hasn’t always been the case. A decade ago, Oakland became the first jurisdiction in the United States to have any type of weed tax. Back then, medical marijuana businesses paid 1.8 percent in taxes. This was already a big jump from the 0.12 percent all other businesses pay, but nothing compared to where it is today.
In 2010, the City Council increased taxes from 1.8 percent to 5 percent for medical cannabis and added a 10 percent clause for recreational businesses. Comparatively, adult use taxes in Berkely are half what they are in Oakland, and many agree that even that is too high.
High weed taxes translate to less economic growth and, as a result, a loss of city income. “, I could come to Oakland at 10 percent, or I could go to Santa Rosa at 2 percent, where am I going to go?” explains Oakland cannabis lawyer James Anthony. Anthony has been instrumental in the push to lower Oakland’s cannabis taxes.
Amendment To Appear On Ballot This Fall
But all this could change very soon. The Oakland City Council just approved a measure that will allow voters to give the council itself the right to lower cannabis taxes. As the law stands, city councilmembers do not think they have the authority.
Anthony disagrees but is hopeful that the measure will ultimately lead to legislative changes. All the problems stem back to the legislation that increased taxes to 5 and 10 percent. “When they created the 10 percent non-medical tax, they muddled the language,” explained the cannabis lawyer. This means that though legislators and voters might agree that the taxes need to change, they’ve been unable, or reluctant, to do so.
The amendment that will appear on Oakland’s November ballot will do three important things. First, it will give the City Council the power to change weed taxes in order to compete with other localities. It also would allow cannabis businesses to pay their taxes quarterly, instead of up front, which is often an insurmountable financial obstacle for new companies.
Come 2019, Oakland could become a virtually untapped market for weed businesses in California.