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In Overly Expensive California, San Diego takes a step back

Over the last few months, there have been stories of California cannabis businesses finding it difficult to make a profit with the amount they have to pay back in taxes. California has become the most profitable state for marijuana, but with that comes a cost too steep for lots of the smaller businesses looking to open up shop in the area.

In a move that may be coming to other areas in the state, San Diego is relaxing some of those steep prices. Starting May 1st, the city is reducing their 8% tax on Cannabis production facilities down to 2%. It’s estimated this will cause the city to lose $2-4 million in revenue within the next 5 years.

Notably, this doesn’t attain to dispensaries, who will still have to pay the 8% tax rate.

40 production facilities have been approved in the city to open, but of that number, only 19 have opened to date. The tax expense is a major factor in this gap. With less production facilities in the city, there are less opportunities for jobs along with an overall drying up in the supply chain.

Time will tell if this brings on a better environment for cannabis production facilities to open, but it’s potentially a sign of things to come in California, where a relaxing of some of the steeper prices could be used to lure new businesses into an area.

Read the original story at The San Diego Union-Tribune.

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