San Diegans, brace yourselves for a higher sticker price on your favorite cannabis products. Following a decision by the San Diego City Council, retail cannabis businesses will see their tax rate rise from 8% to 10%, a move aimed squarely at helping to plug the city's $250 million budget shortfall. The change, kicking in come May 1, is predicted to fatten city coffers by nearly $4 million, that is, if shoppers keep on snapping up goods at the current pace, as reported by NBC San Diego.
Despite naysayers warning that consumers might start looking elsewhere, the increased rates could steady the financial ship for the city. "It's the price you pay," Pacific Beach resident Alex Marquez told CBS 8, accepting the logic behind the hike. Even with raised eyebrows over the tax bump, it's clear that convenience will likely keep many customers coming back to their go-to dispensaries.
However, the City Council's decision wasn't unanimous, with Councilman Henry Foster III casting the lone dissenting vote amid concerns about the illicit market and sagging industry sales. Yet, this new tax rate puts San Diego on par with other California hubs like Los Angeles and San Jose, which have already set the cannabis business tax bar at 10%. The eyes now turn to neighboring areas, with cities like Chula Vista, Encinitas, and Vista maintaining lower rates at 7% and others like Oceanside, Lemon Grove, and the unincorporated areas of San Diego County at even more budget-friendly rates.
Worries about the potential ripple effect of these taxes have not fallen on deaf ears. Some residents fear the increase could drive more business to the illicit market, as one local expressed to NBC San Diego. Yet, there's the chance that dispensaries might counterbalance the tax bump with customer incentives. "I figure that most places will have deals that [for example], you spend over $50 and you get free delivery, or you get some kind of discount that could incentivize, kind of bypassing that 2% or pass the savings on," a San Diego resident mused in an interview with CBS 8.
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