Two local bodies moved to slash commercial cannabis tax rates last week amid major struggles in the market.
Sonoma County’s Board of Supervisors approved a 45% reduction for cannabis growers. According to California Cannabis Operators Association Executive Director Amy O’Gorman Jenkins, the number of licensed cultivators in Sonoma County has dropped from 155 to 66 over a two-year period. She called the tax reductions “a critical lifeline for the remaining businesses fighting to survive.”
City leaders in Palm Springs similarly voted to halve retail cannabis levies last week. There are 11 fewer licensed cannabis shops in Palm Springs than there were three years ago, according to a review by SFGATE. The cities of Desert Hot Springs and Cathedral City recently slashed taxes for the cannabis industry as well.
Despite these efforts, the environment is about to become even tougher for cannabis businesses. Thanks to legislation signed in 2022, the state’s cannabis excise taxes are set to increase by 25% this July.
California's legal cannabis market has been struggling for years because of declining wholesale prices, high taxes and regulation, and competition from illicit businesses.
Read more about the difficulties facing California’s cannabis industry and how local governments are responding here.