Sacramento Marijuana Tax Cut May Affect Kids’ Programs
- Cannabis operators in Sacramento are requesting the city to decrease a 4% tax on their gross receipts, arguing that the illegal black market and reduced consumer demand are negatively affecting their business. The tax, which is paid monthly by all cannabis businesses, contributes to the Sacramento Children’s Fund, which starting next year, will be allocated 40% of the tax to provide services for youth organizations.
- The city council’s Law and Legislation Committee is considering a proposal to reduce the tax rate to 2% for all businesses except for testing labs and distributors, which would no longer pay any tax. The tax cut would reduce the amount going to the Sacramento Children’s Fund from around $9 million to less than $3 million based on the current tax payments.
- Opposition to the tax reduction includes concerns about its impacts on the city general fund and potential cuts to city services. The committee members have agreed to create a task force composed of cannabis business owners and youth organizations to discuss the issue of the cannabis tax cut, aiming to help the cannabis owners financially while maintaining funding for the Children’s Fund.
Sacramento Cannabis Operators Seek Tax Reduction, Impacting Youth Organizations
Sacramento cannabis businesses are urging the city to reduce the 4% tax on gross receipts they presently pay, a move that could significantly reduce funding for youth-focused organizations.
The tax, required from all cannabis operators in Sacramento, dedicates 40% of its total to the newly formed Sacramento Children’s Fund starting next year. This arrangement was set up following a referendum approved by Sacramento voters in November 2022.
Yet, challenging times within the cannabis industry, driven by excessive cannabis supply, declining consumer demand, and competition from illegal markets, have prompted these businesses to call for a reduction in tax.
A proposal by Committee Chairwoman Katie Valenzuela aims to slash the cannabis tax to 2% for all businesses, excluding testing labs and distributors, which would pay no tax at all. This plan could potentially leave the Children’s Fund with less than $3 million, reliant on current tax payments from cannabis operators.
Another committee member, Eric Guerra, has voiced opposition to the tax cut, labeling it a “race to the bottom.” He expresses concern that reductions would impact not only the Children’s Fund but also the city’s general fund, leading to potential cuts in city services.
Valenzuela plans to move a resolution on the issue to the full City Council by March. Meanwhile, cannabis owners are pleading for a tax reduction. One such operator, Debbie Blurton, owner of the All About Wellness dispensary, states, “if we’re not here, there will be no money.”
Mike Snell, owner of Off the Charts dispensary, argues that cannabis should not bear the tax burden, suggesting instead an increase in taxes on alcohol sales.
Youth advocates, like Adwoa Akyianu from Youth Forward, oppose the tax cut, saying it would derail initiatives funded by the Children’s Fund, including a planned guaranteed income program for youth aging out of the foster care system.
Sacramento’s Office of Cannabis Management remains neutral on the tax reduction, reporting that the existing 4% tax aligns with charges on cannabis businesses in other Californian cities.
An agreed-upon action from the Nov. 28 meeting was the formation of a task force comprising cannabis business owners and youth organizations to deliberate on the cannabis tax cut issue.
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