Oakland to lower tax rate on small cannabis businesses

By ALI TADAYON | East Bay Times - Bay Area News Group

OAKLAND — Oakland’s small cannabis businesses will get a substantial tax cut after several entrepreneurs complained that the city’s previous rate was making it so only big companies could survive.

The City Council voted unanimously to lower the gross receipts tax on cannabis businesses that make $500,000 or less from 10 percent — one of the highest rates in the state — to 0.12 percent, or $1.20 for each $1,000. The new rate will be levied on businesses’ 2019 earnings, which will be paid at the start of 2020.

“We don’t want it to be an industry (with just companies) like Phillip Morris, or something. We want some grassroots production,” council member Rebecca Kaplan said at Tuesday’s meeting.

Council members will consider lowering the taxes for cannabis businesses that make more than $500,000 at a June 4 meeting.Dozens of owners and employees of all types of cannabis businesses — dispensaries, testing labs, cultivators, and others — testified at Tuesday’s meeting about how difficult it was to get their businesses off the ground and keep them stable in Oakland’s economy.

Dispensary owner Amber Senter, who is also on the board of Supernova Women, an advocacy organization formed by and for women of color in the cannabis industry, said that the average profit margin for cannabis businesses is around 10 percent. That means companies that are making $500,000 in gross receipts are only generating around $50,000 in profits: That affords individuals to basically only employ themselves, she said. Oakland’s gross receipts tax rate of 10 percent brings those margins even lower.

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