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Cohen introduces cannabis tax for November ballot

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Supervisor Malia Cohen on Tuesday introduced a cannabis tax for the November ballot. (Mira Laing/Special to S.F. Examiner)

San Francisco ushered in a new era of legal recreational cannabis this year. Now voters may be asked to impose a local tax on the industry in November.

Supervisor Malia Cohen on Tuesday introduced a cannabis tax that would begin levying a 2 percent tax on cannabis gross receipts beginning January 1, 2020.

In subsequent years, the tax would grow to 2.5 percent for retail cannabis sales up to $1 million in gross receipts and 5 percent for gross receipts above $1 million.

Also in subsequent years, there would be a 2 percent tax on cannabis business other than retail for gross receipts up to $1 million and a 3 percent tax on gross receipts in excess of $1 million.

Cohen’s proposal is expected to generate between $5 million and $10 million in 2021.The first $500,000 in gross receipts would be exempted from the tax. Medical cannabis also would not be taxed.

A City Controller’s analysis on a cannabis tax last year said a 1 percent cannabis gross receipts tax without exemptions would generate between $1 million and $2 million annually. A 5 percent cannabis gross receipts tax would generate between $6 million and $12 million.

“We want to make sure that we are not being overburdensome to those that try and play by the rules. We also want to be mindful that we are not giving a competitive advantage of those who continue to operate in the shadows,” Cohen said.

“We delayed the tax implementation until 2020, giving compliant operators the space to grow while we as a city prioritize bringing all operators into the sunlight and into compliance,” she added.

The board’s Budget and Finance Committee is expected to hold a hearing on the proposal on July 12.

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