San Francisco delays marijuana tax a second time to combat illicit market

San Francisco authorities approved a second one-year suspension of the city’s marijuana business tax, a decision intended to help licensed cannabis businesses become more competitive with illegal dealers.

According to San Francisco TV station KPIX, the variable tax rate of 1%-5% on gross receipts for marijuana businesses will not be enforced until Jan. 1, 2023.

The tax rate was originally approved by voters in 2018 and set to go into effect in January 2021.

But the San Francisco Board of Supervisors voted to push back the implementation by a year to New Year’s Day 2022.

The second delay is justified, Supervisor Rafael Mandelman said, because of the need to eradicate the underground cannabis market.

“Sadly, the illegal market is flourishing by undercutting the prices of legal businesses, which is bad for our economy as illegal businesses pay no taxes while subjecting workers to dangerous conditions and consumers to dangerous products,” Mandelman said in a statement reported by KPIX.

“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.”

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The move also comes after a spate of robberies at San Francisco Bay Area cannabis companies and other mainstream retailers such as Louis Vuitton, which likely lent even more support to the one-year tax delay.

Cannabis industry leaders in Oakland this week called for “tax amnesty” to give marijuana companies some financial wiggle room after the robberies, which reportedly affected at least 25 businesses in the Bay Area.