The San Diego board of directors voted to lower tax rates for county cannabis stores to allow businesses to compete with those in neighboring cities, the San Diego Union-Tribune reported. After a 4-1 board vote, the tax measure would be imposed on five existing legal marijuana operations and anyone else who opens their doors.

“When we commit those dollars raised, I think they should benefit the communities that they are in,” said Jim Desmond, one of the supervisors. “The district code permits consumption or smoking and tasting rooms on site. When people get high and drive on winding roads that are dimly lit in the unincorporated area, that’s a bigger problem.”

CEO Nora Vargas proposed taxing crops by square foot rather than revenue, which would mean more predictable costs for cannabis company owners, she said.

Under the new system, marijuana operations (in unincorporated counties) would pay up to $7 per square foot for cultivation, 2.5 percent for manufacturing, 1 percent for testing, and 2 percent for distribution and gross receipts from retail sales , according to the local news outlet.

While some marijuana operators said even the reduced tax rates were too high, others said the board should set higher tax rates to cover costs (including law enforcement, public health, and the effects of market competition).

What’s next?

On February 28, the board will vote on whether or not to approve the Cannabis Tax Ordinance. If approved, the tax will take effect on April 1, with the first payments due in July.

In 2022, Governor Gavin Newsom signed Assembly Law 195 which one eliminates the state marijuana cultivation tax. A study conducted this year highlighted the impact that an immediate elimination of the cultivation tax would have on critical problems facing the state’s legal cannabis market from seed to sale. The state could increase legal cannabis sales and bring in an overall 123% increase in monthly cannabis-related tax revenue…