Despite opposition from the industry, the Board of Supervisors placed a gross receipts cannabis tax on the November ballot Tuesday.
Critics of the measure said that the tax could incentivize a black market and should instead be pursued after the market stabilizes.
Board president Malia Cohen, who introduced the measure, made concessions to the industry by lowering the rate from what she had initially proposed and delaying implementation to 2021.
“There is a black market now and there probably will always be one. I just feel like that is a little bit of an excuse,” Cohen said.
The board voted 8-3 to place it on the ballot. Supervisors Jane Kim, Rafael Mandelman and Hillary Ronen opposed it.
Mandelman said that “the retail cannabis industry is barely six months old and in my view needs more time to stabilize” and that “there is a significant unregulated illegal market that remains and may even be growing.”
He added, “cannabis businesses are already facing high taxes on the state level.”
If approved by voters, the cannabis tax would start on Jan. 1, 2021. There would be a 2.5 percent tax on retail cannabis gross receipts up to $1 million and a 5 percent tax on gross receipts in excess of $1 million. There would be a 1 percent tax on gross receipts up to $1 million in non-retail cannabis activities, and a 1.5 percent on gross receipts more than $1 million.
The board could approve legislation later to adjust the rates.