SANTA BARBARA, Calif. (KEYT) A proposed ordinance that would adjust the tax rates on cannabis businesses in the city of Santa Barbara is under consideration.
The topic was on the agenda at a special Finance Committee meeting on Tuesday.
"The city council directed staff to look at potentially raising the cannabis rate from what it is right now at 6 percent as a way of generating more revenue to pay for essential services that the city provides to this community," said Finance Director Kevin DiMartini.
The topic comes at a time when recreational cannabis shops are offering deep discounts.
Some members of the committee don't want medicinal cannabis sales to be impacted if a hike is approved.
Cannabis taxes are in the 29 percent range when you include state and other taxes.
Governor Gavin Newsom recently signed a bill that rolled back a statewide cannabis tax hike to help the legal market grow.
The move kept the state rate at 15 percent.
"The Industry itself is not doing very strong, we can see it from our own cannabis tax revenue," said DiMartini, "It peaked at about $1.9 million, about 5 years ago ,and ever since then for us it has been declining."
Even so, the city is considering a 2 percent increase.
"Staff recommended raising the rate from 6 to 8 percent," said DiMartini.
He said voters approved a tax rate that gives the city the authority to raise is as high as 20 percent.
But that is not likely to happen.
"We evaluated a number of economic factors, we think there is a high risk of cannabis businesses going out of business and we obviously don't want that to occur."
Cannabis Industry workers at three shops declines to comment.
Numerous customers declined to comment on camera as well, but many said they believe tax hikes drive people to the black market.
The cannabis tax adjustment is going to go before the full Santa Barbara City Council in March.
For more information visit santabarbaraca.gov
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