California distributors warn ‘double taxation’ by cities could further strain legal marijuana industry
California cannabis distributors are warning about what they call a “double-taxation” situation in San Diego that’s raising costs for businesses.
If the practice is adopted by other cities and counties, distributors note, it could contribute to further market instability in the state overall by squeezing profit margins and raising product costs for consumers.
San Diego set a formal policy in early 2018 that distributors delivering cannabis products to retailers located within the city also are liable for at least a percentage of its municipal 5% marijuana gross receipts tax – even if those distributors aren’t licensed by the city.
Distributors in other cities and counties already pay taxes to their home jurisdictions – where their actual distribution hubs are located – on wholesale flower, edibles and other MJ products.
They say San Diego’s method of taxing marijuana adds another layer of costs to the legal California cannabis industry, which is already struggling to compete with the unlicensed market.