San Francisco to delay cannabis taxes to allow dispensaries to compete with illicit dealers

8th December 2021

Officials in the Californian city of San Francisco have announced plans to suspend cannabis taxes in an attempt to attract consumers away from the black market. The move would see the removal of the 1-5% tax on cannabis products that was originally approved in 2018.

California became one of the first US states to legalise recreational cannabis back in 2016. However, since then, legal dispensaries have struggled to compete with the illegal market and dealers offer unbeatable prices on cannabis products.

To counteract the reduced prices found on the black market, the San Francisco Board of Supervisors recently passed an ordinance to suspend the Cannabis Business Tax for the 2021 and 2022 tax years. Reports suggest that the city’s mayor intends to sign the ordinance once it passes the Board of Supervisors.

One of the supervisors, Rafael Mandelman, on the Board voiced support for the measure on his Twitter account:

“Cannabis businesses create good jobs for San Franciscans and provide safe, regulated products to their customers. Now is not the time to impose a new tax on small businesses that are just getting established and trying to compete with illicit operators.”

The sweep of cannabis legalisation that has taken the US by storm in recent years is still going strong. However, the black market is also surviving and, in some places, thriving.

This is largely believed to be down to the differences in prices between legal and illegal products – with taxes playing a huge role in the issue.

The same issues have been seen in Canada, where recreational cannabis was legalised at the federal level in 2018. Reports showed that the gap between the legal and illicit cannabis markets in Canada is widening as consumers are estimated to have spent around $1 billion on illegal cannabis products in 2020 alone.

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