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Prop D taxes cannabis businesses
Published on 10/12/18, 10:00 AM
This would also tax companies that do business in SF.
Ah, a pot tax
Prop D is a twofer! It'd establish an additional tax on businesses selling cannabis and other related products (medical marijuana being exempt) and tax companies that aren't based in SF but do business in the city. The proposition wouldn’t kick into effect until January 2021, but in the meantime, let’s dive into the weeds:
First, Prop D proposes a gross receipts tax on cannabis businesses, but exempts their first $500K in revenue. Any revenue generated up to $1M would be taxed at an additional 2.5% and revenue greater than $1M would be taxed at an additional 5%. Other cannabis business activities, like growing, manufacturing, processing, storing, labeling or distributing pot, would be taxed 1% up to $1M and 1.5% for anything more than $1M in gross receipts.
Secondly, Prop D amends our tax code to expand which businesses pay a gross receipts tax. Even if they're not based in SF, companies that do business in the city and earn more than $500K in gross receipts would also be taxed, i.e. e-commerce companies like Etsy, Amazon, and others.
Prop D is expected to generate about $7-16M annually by 2021, and the funds would be added to SF’s General Fund.
First, Prop D proposes a gross receipts tax on cannabis businesses, but exempts their first $500K in revenue. Any revenue generated up to $1M would be taxed at an additional 2.5% and revenue greater than $1M would be taxed at an additional 5%. Other cannabis business activities, like growing, manufacturing, processing, storing, labeling or distributing pot, would be taxed 1% up to $1M and 1.5% for anything more than $1M in gross receipts.
Secondly, Prop D amends our tax code to expand which businesses pay a gross receipts tax. Even if they're not based in SF, companies that do business in the city and earn more than $500K in gross receipts would also be taxed, i.e. e-commerce companies like Etsy, Amazon, and others.
Prop D is expected to generate about $7-16M annually by 2021, and the funds would be added to SF’s General Fund.
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Should we puff or pass?
Puff: Prop D supporters, including outgoing BoS President Malia Cohen, say more than 45% of all pot dispensaries in SF earn less than $1M, which only comprises of 3% of the total potential revenue. This measures actually gives mom and pop cannabis shops a break. Since Prop D wouldn't go into effect until 2021, proponents say City Hall can adjust the pot industry's tax rate as necessary and revise gross receipts tax rates for other industries.
Pass: Prop D critics say regulating cannabis businesses only works if the legal market replaces the black market. Since cannabis businesses are already taxed 25%, Prop D opponents are concerned that an additional tax would push pot consumers to turn to the black market. Many cannabis businesses are still trying to adapt to an ever-changing regulatory structure, and critics argue that another tax might endanger the fledgling cannabis industry before it can stabilize.
Pass: Prop D critics say regulating cannabis businesses only works if the legal market replaces the black market. Since cannabis businesses are already taxed 25%, Prop D opponents are concerned that an additional tax would push pot consumers to turn to the black market. Many cannabis businesses are still trying to adapt to an ever-changing regulatory structure, and critics argue that another tax might endanger the fledgling cannabis industry before it can stabilize.
Yes on Prop D
SF Bay Guardian
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Pretty much all rights reserved © By The Bay 2018
Pretty much all rights reserved © By The Bay 2018