Los Angeles voters are being asked to decide whether the city can start sending tax bills to unlicensed cannabis operators, including underground dispensaries, on June 2, 2026. Measure CB would extend the city’s existing cannabis gross-receipts tax to those illegal businesses, using the same tiered rates that licensed operators already pay. City officials say that could bring roughly 30 to 35 million dollars a year into the General Fund. Backers frame it as a fairness move and a new way to go after the black market. Critics argue that taxing illegal businesses will not magically turn them into compliant, licensed operators.
What Measure CB Would Do
The proposal would amend the Los Angeles Municipal Code to subject unlicensed cannabis businesses to the same cannabis business taxes that have applied to licensed operators since 2017, as outlined by the City Clerk. The ballot language keeps the existing tiered rates, from 1% up to 10%, depending on the type of cannabis activity. It also makes clear that any new revenue would go into the city’s General Fund, which pays for basic services like street repairs, emergency response and parks.
If voters sign off, the tax would stay in place until they choose to end it. Measure CB is written as a general tax, so it needs only a simple majority to pass.
Money Math and Official Estimates
The City Administrative Officer’s Financial Impact Statement pegs potential revenue at around 30 to 35 million dollars a year, but adds a big asterisk. The city could spend roughly 2.2 million to as much as 10.5 million dollars annually on administration and enforcement, depending on how aggressively it goes after unlicensed sites, according to the CAO. That wide range reflects uncertainty over how many illegal operators the city can actually find, audit or drag into court and collect from.
That tug of war between revenue on paper and real-world enforcement costs sits at the center of the argument among city officials, industry groups and budget watchers.
Collection Challenges: A $400 Million Backlog
The city’s own track record on collecting cannabis taxes is not exactly confidence inspiring. In an October 2025 report, the Office of Finance said more than 500 licensed or registered accounts together owe about 400 million dollars in unpaid liabilities. An industry-focused tax amnesty could realistically bring in about 30 million dollars, while waiving roughly 20 million in penalties, according to the Office of Finance.
That history explains why some analysts and city councilmembers view the higher revenue projections with skepticism. A significant chunk of what looks “collectible” on spreadsheets is tied up in old accounts, businesses that no longer exist or debts that may never be paid.
Who Supports It and Who Opposes
Supporters argue that Measure CB would help legal retailers compete with lower-priced, untaxed competitors and provide new money for everyday city services. Their basic pitch: if you are selling cannabis in Los Angeles, legal or not, you should not get a free pass on city taxes.
Equity advocates and some critics see a different problem. They warn that allowing unlicensed operators to simply pay a tax could undermine local social equity programs by letting them “operate through tax payment alone” instead of meeting licensing, labor and environmental standards, a concern reported by LAist. Councilmember Monica Rodriguez told LAist she fears the measure creates a “false expectation” that taxation alone will pressure illegal businesses into full compliance, a line that has helped fuel public doubts.
Why City Projections Vary
Different city departments have crunched the numbers in different ways, leading to some eye-catching gaps. One local report noted that the Office of Finance projected annual revenue in the 60 to 80 million dollar range, while the CAO and the official ballot materials use the more cautious 30 to 35 million dollar estimate. That lower figure bakes in the realities of enforcement limits and chronic collection problems, as reported by NBC Los Angeles.
The difference largely comes down to assumptions. Do you assume high participation, aggressive auditing and a winning streak in court, or do you assume a more modest scenario where many illegal operators stay underground and out of reach? That uncertainty shapes how both sides talk about Measure CB: supporters lean on the long-term goal of leveling the playing field for legal shops, while opponents call for a more detailed enforcement plan before anyone counts the money.
What Voters Should Weigh
For voters, the question is whether taxing unlicensed cannabis sellers is a realistic way to shrink the black market or mainly a bookkeeping move that lets illegal operators pay a fee without fully cleaning up their act. Even if Measure CB wins a simple majority on June 2, 2026, the hard work will not be over. The city will still need to decide how many auditors to hire, how much to spend on investigations and litigation, and how aggressively to chase operators who may be doing everything they can to stay off the books, as the City Clerk’s ballot materials and the CAO analysis both note.
Expect the fight over those enforcement details to ramp up as Election Day gets closer. The tax language may be short, but the policy questions behind it are anything but.
