Cannabis business owners against Measure G (Opinion)
As cannabis business owners, we oppose Measure G because it over taxes the patients and customers who support our businesses.
When adult-use cannabis businesses were first licensed to operate in South Lake Tahoe in 2020, the City imposed an arbitrary 6% fee on gross sales that is collected by the dispensaries and paid for by our customers. This Development Fee served to expedite the opening of new dispensaries without waiting to put a new tax measure on the ballot and was also a method to collect revenue for a predicted increase in local crime.
The City agrees that there has been no demonstrated need to expand law enforcement to address crime, yet they continue to collect nearly one million dollars a year in fees from our local cannabis consumers.
At the federal, state, and local level, government has intervened to tax and regulate this industry to the detriment of the consumer who in SLT is paying 29.75% in tax at the register. The IRS (Section 280E) taxes cannabis businesses at more than nine times the rate of non-cannabis businesses. The state collects a 15% excise tax on cannabis sales along with an annual cannabis license that can cost more than $100,000. California and SLT’s high taxes and fees make it difficult for our businesses to compete with surrounding communities like Carson City, Incline Village and El Dorado County that charge significantly lower taxes than SLT.
Our leaders have made legal options so expensive that illegal and unsafe cannabis sales still dominate the market and undermine the ability of licensed operators to succeed. Illegal cannabis is untested and often contains harmful chemicals, mold, and pesticides that negatively affect the health of our community.
Legal cannabis sales in California are down 34% this year and the alarming number of business closures is evidence of an industry in trouble. Over taxation has become the death knell for the legal cannabis industry in California.
The City’s ballot measure (G) seeks to convert the existing, non-voter approved, Development Fee into a permanent 6% tax on gross sales. This could have been an opportunity for the City Council to recognize the over taxation on our customers, but instead they are doubling down to ask the voters to convert a temporary fee into a permanent tax.
The City and their communications consultant are calling this new tax a ‘Business and Professions Tax’ and describe this conversion from a fee to a tax as an administrative change. If it were merely an administrative change, the City would not be required to put this new tax before the voters for approval.
While the City is working to permanently tax our cannabis customers by $950000-plus annually, it should be noted that the four dispensaries currently operating in SLT collect 2.5% in local sales tax that stays in SLT and brings more than $400,000 in new revenue to the city’s general fund to provide services to the residents. This $400,000 in revenue will continue to be collected if Measure G is rejected by the voters.
Because this measure represents excessive taxation, we encourage you to vote no on Measure G.
Cody Bass is owner of Tahoe Wellness Center and is a city council member and Alex Gosselin is owner of Cannablue.
Correction: This guest column has been updated to reflect that the City engaged the services of a communications consultant, not a political consultant.
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