The Oakland City Council has decided against taking any action on reducing cannabis business taxes until the fall, leading to frustration from cannabis business operators who argue that the city is at risk of losing business.
The council was considering a package of tax reductions proposed by Councilmember Dan Kalb. It would eliminate distinctions between medical and non-medical business taxes and create a tiered and category-based structure for taxation.
Kalb’s plan would phase in the reductions over the next two years, potentially bringing relief to businesses as soon as 2020.
“Oakland’s cannabis business taxes are among the highest in the state, which harms the competitiveness of our cannabis industry with neighboring jurisdictions,” said Oliver Luby, Kalb’s chief of staff.
The council was authorized to restructure the taxes with the passage of Measure V last year, which also allowed cannabis businesses to make more deductions when calculating taxes and to pay taxes quarterly.
Council President Rebecca Kaplan argued that it was urgent for the council to act because while the rates wouldn’t take effect until next year at the earliest, knowing a break was coming could affect business decisions.
“If we made no decision, that could be an impediment to them,” Kaplan said. “A rate that would go into effect in a few months is soon enough.”
But in a packed agenda just before the council’s summer recess, debate did not begin on the policy until after midnight. Councilmembers Loren Taylor and Lynette Gibson McElhaney argued that the policy needed more careful consideration before passage.
Taylor questioned whether the legislation as written would most effectively achieve the council’s goals and whether the groupings make sense. McElhaney said that it deserved more careful consideration.
“We all agree that our rates, just like the rent, is too doggone high,” McElhaney said. “But the question is how do we do that and I think it is premature for us to take a debate on revenue when we are still in negotiations with our unions.”
“I think to do something half-baked at the midnight hour just to say we’ve done something does not serve this process well,” she added.
Several cannabis business owners stuck around until the early morning hours to express their frustration with the continued delay.
Anne Jackson, who operates a medical cannabis topicals business called Central Essence, said it was the third meeting she had attended and she was disappointed.
“I can’t understand why you push this back every month,” Jackson said. “We need the taxes lowered. You don’t know how much money I spend just on product.”
Tim Morland of Kiva Confections, which produces edible products and employs 200 people in Oakland, said the taxes were hampering the growth of the business.
“It is very evident that the high taxes and cost of regulation do affect the expansion of our business,” he said. “We’re trying to grow into something bigger but these numbers come into play.”
Even the plan proposed by Kalb would take too long, he said.
“Really waiting until 2022 is unacceptable to lower these taxes,” Morland said. “There are companies that wouldn’t even consider coming into Oakland considering the state of things.”