The debate over cannabis taxation and its impact on the county's budget has been a point of contention among county officials. Supervisor Dawn Ortiz-Legg proposed a freeze on cannabis taxes to promote industry growth and sought to extend delivery hours and allow retail stores to boost tax revenue. In contrast, Supervisor Debbie Arnold argued against subsidizing the cannabis industry, according to a CalCoast report.
The Board of Supervisors, on June 20, decided to reduce the cannabis tax rate to 6% instead of raising it to the voter-approved 10%, with Arnold casting a dissenting vote. This decision, coupled with declining tax revenues from legal cannabis sales in California, has led staff to estimate that the county will need to allocate $1,008,727 to support the cannabis industry in the upcoming 2023-2024 tax year, despite expecting to collect $1,565,180 in cannabis fees and taxes while incurring program management costs of $2,573,907.
During an upcoming meeting, the SLO County Board of Supervisors will deliberate on potential changes to its cannabis ordinance, including permitting retail marijuana shops in the county and extending delivery hours until 10 p.m.
While the legalization of recreational marijuana has benefited California, the state's cannabis tax revenues have been steadily declining year after year. In the previous year, the state generated approximately $1.1 billion in cannabis tax revenue. However, the state's first-quarter revenue from cannabis excise taxes in 2023 dropped by 32% compared to the same period in 2022, amounting to $104.2 million. This decline is attributed to an oversupply of cannabis in the state, resulting in a 50% price drop for legal cannabis over six years. As a result, consumers are turning to the black market or growing their own cannabis as more cost-effective alternatives.
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