OAKLAND, Calif. – Some Oakland cannabis businesses are set to receive a significant reduction in their taxes.
The Oakland City Council has opted to lower the gross receipts tax for cannabis businesses making $500,000 or less per year. The rate will drop from 10 percent to 0.12 percent. This will result in a fee assessed of $1.20 per $1,000 taken in by businesses. The new tax rates will go into effect for 2019. Businesses also pay state taxes on top of local taxes.
The move comes as complaints are piling up over the cost of doing business in Oakland. Small cannabis businesses, in particular, are struggling to get off the ground and to keep their doors open.
“We don’t want it to be an industry [with just companies] like Phillip Morris, or something. We want some grassroots production,” council member Rebecca Kaplan said at a City Council meeting earlier this week.
Companies generating over $500,000 in revenue per year may also be in line for tax reduction. The City Council will discuss lowering taxes on gross receipts for larger businesses at a meeting scheduled for June 4.
Earlier this week Oakland cannabis businesses demonstrated a unified front at the City Council meeting. Employees and owners from dispensaries, laboratories, and cultivation companies testified the current business climate was making it nearly impossible to do business in Oakland.
“We had to shut down for two months,” Rasun Allah of Green Guyz Collective said at the meeting, faulting the high tax rates. “It’s like I got this license to work for you guys, and to give you guys all the money.”
Others are avoiding Oakland altogether, especially with many viable options nearby. “We didn’t even consider Oakland,” Flow Kana Vice President Michael Wheeler said at the meeting. “We went to West Sacramento instead.”
Business tax rates for cannabis businesses are substantially lower at nearby municipalities such as Berkley (5 percent), San Francisco (5 percent), and Santa Rosa (3 percent).
“If Oakland’s tax rates are not adjusted, our worry is that Oakland’s cannabis businesses will decline and that unregulated market will grow rather than comply with regulations,” said Oliver Luby, chief of staff for council member Dan Kalb.
Not all of Oakland’s regulators support the tax cut. Katano Kasaine, finance director for Oakland, is concerned lowering tax rates will result in $9.1 million less revenue for this year and $9.8 million less for 2020. Kasaine said the loss could hit the city hard and result in cuts to city services.
Here are some photos by Mike Rosati from the City Council meeting:
