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Residents in Barstow, CA voted yesterday on whether to approve a cannabis business tax. Measure F required a supermajority or 66.7% of voters to say yes in order for it to succeed. The measure failed as only 58.97% of residents voted yes for the measure.
The measure authorized a 15% tax on gross receipts and up to $30 per square foot for cultivation facilities. The city stated that it would generate $100,000 a year in revenue that would fund law enforcement and other city services.
Barstow’s proposed tax is quite high compared to most California cities. OBEDIO data shows that the average tax in California for adult-use retail operations is 0.867% of gross receipts with 15% being the maximum that is charged. The high tax rate is also surprising given the current trend among California cities to lower cannabis taxes.
California cities that are are now revisiting tax rates in an effort to boost local businesses and to fight the illegal market include Long Beach, San Leandro, Benicia, Cathedral City, Monterey County, Redding, and Salinas.
Long Beach, CA dropped rates from 6% to one percent 1% for manufacturers, distributors and testing laboratories in January 2020. This trend looks as though it will continue as operators find it difficult to operate given the high state taxes and regulatory costs. Barstow’s high-cost structure may prevent it from attracting quality applicants that can choose to operate in lower-cost jurisdictions.