California Cannabis Taxes By City

California City Taxes for Medical and Recreational Marijuana

In November 2016, California passed Proposition 64 which legalized recreational marijuana in the state of California. At the same time, voters voted on a number of city tax ordinances which were designed to apply local city taxes to the cultivation, manufacturing, distribution, and sales of medical and recreational marijuana.

With 482 municipalities in California in all, dozens of ballot measures were up for vote in November 2016. For several cities, we have provided summaries of each of the tax laws that have been passed below. While this is only a partial list of the measures that were passed it can help you to get a clearer picture of what taxes you will be required to pay based on where you locate your cannabis business.

• Adelanto. The city imposes a commercial marijuana activity excise tax of up to 5% of revenue. Taxable commercial marijuana activities include all business activities licensed, authorized, or otherwise permitted by State or local law, including the transportation/distribution, testing, and dispensing of marijuana.
• Carson. Carson imposes a tax of $25 per square foot for marijuana cultivators and 18% of gross proceeds on all marijuana business activities pending the passage of a future ballot measure that permits such activities. The cultivation tax is adjusted annually based on the Consumer Price Index (CPI).
• Cathedral City. The city's marijuana tax, applied to both medical and recreational marijuana, is $25 per square foot of cultivation space and $1 per gram of cannabis concentrate and per unit of cannabis-infused product. The City Council retains the right to impose the tax at an amount that is lower than what has been approved by the voters.
• Coachella. The city imposes a tax of $15 per square foot on marijuana cultivation and manufacturing facilities. An additional tax of 6% of revenue is charged on both medical and recreational marijuana sales. Coachella permits only wholesale marijuana activities not recreational sales.
• Coalinga. Measure E establishes an annual tax for commercial marijuana operations of $25 per square foot for the first 3,000 square feet and $10 per square foot for the additional remaining space for commercial marijuana operation spaces. Measure G authorized the operations of a single marijuana dispensary. The city imposes a tax of 10% of gross receipts on this marijuana dispensary. No other marijuana dispensaries would be allowed in the City of Coalinga.
• Dixon. The city imposes a 15% tax on the gross receipts of cannabis businesses and dispensaries if such businesses or dispensaries are approved to operate in the City of Dixon. Dixon passed an ordinance prohibiting cultivation and distribution of medical marijuana in January 2016.
• Fillmore. Under Measure I, the city imposes a 15% on all medical and recreational marijuana sales within the city to be paid only by the marijuana business itself. Measure H enacts a permanent tax of $30 per square foot for the first 3,000 square feet of space, and not to exceed $15 per square foot for the remaining space on space used for cultivation by medical and recreational marijuana businesses. The tax will also increase every five years at the rate of the greater of CPI or $1.00 and $0.35. The sale of marijuana in Fillmore is currently prohibited by the Fillmore Municipal Code.
• Gonzales. The city imposes a tax on all cannabis cultivation and manufacturing businesses, which authorizes the city to charge an initial tax of $15 per square foot of space dedicated to cannabis cultivation with the ability to raise this tax after three years up to a maximum of $25 per square foot. In 2020, this cultivation tax will be subject to annual adjustments based on the CPI. It also establishes an initial tax rate of 5% on the annual gross receipts of cannabis manufacturers with the ability to raise this rate after 3 years to a maximum of 15% on gross receipts.
• Greenfield. The city imposes a tax on all for-profit and nonprofit cannabis cultivation businesses of $15 per square foot of canopy space authorized by city permit until June 30, 2020. For every year thereafter, the tax would be increased by $5 per square foot, not to exceed $25 per square foot. On July 1, 2023, the tax would be increased annually according to the CPI for inflation. Initially, commercial nursery cannabis cultivation operations would pay an initial tax of $2 per square foot of canopy space as authorized by city permit until June 30, 2020. Every year thereafter, the tax would be increased by $1.50 per square foot, not to exceed $5 per square foot. Then, starting on July 1, 2023, the tax would increase annually according to the CPI for inflation. A commercial cannabis nursery is a business that produces only immature plants, seeds, or products that are used specifically for the planting, propagation, and cultivation of cannabis. The city imposes a general tax of $5 on gross receipts per fiscal year on all other types of cannabis businesses. Beginning July 1, 2020, the tax rate would be increased by 2.5% per year, not to exceed a maximum tax rate of 10% per year.
• Grover Beach. Grover Beach imposes a tax at the rate of 5% of gross receipts on dispensaries, manufacturing, testing and other medical cannabis businesses and 10% of gross receipts on recreational cannabis businesses. The city imposes a tax of $25 per square foot for the first 5,000 square feet and $10 per additional square foot of cultivation space for cannabis cultivation and nursery businesses. The tax for both cultivation and nursery operations would be paid on the maximum canopy area permitted or licensed under state laws and city regulations, regardless of whether the grower utilizes the entire space. The tax is subject to annual CPI adjustments.
• Hayward. The passage of the ballot authorized the city to impose a general tax not to exceed 15% on the gross sales of the adult use of recreation and medical cannabis. The city may impose a tax rate that is lower than 15% at a later date.
• King City. King City imposes a tax on medical and recreational marijuana cultivation businesses at a rate of $25 per square foot for the first 5,000 square feet and $10 per square foot thereafter for cultivation. The tax may not exceed $5 per square foot for nurseries; $30,000 each for manufacturing and testing facilities. The tax is subject to an annual CPI-based adjustment for inflation. The tax for both cultivation and nursery operations starts at an initial rate of $5 per square foot for the first 5,000 square feet and $2.50 per square for any additional space. It would be paid on the maximum canopy area permitted or licensed under State laws and City regulations, regardless of whether the grower utilizes the entire space.
• Long Beach. Marijuana businesses, including cultivators, dispensaries, and manufacturers are required to pay taxes under Measure MM. For medical marijuana dispensaries this tax is a 6 to 8% tax on gross receipts. For recreational dispensaries, it is 10 to 12% on gross receipts. For cultivators, it is $12 to $15 per square foot of cultivation space. For marijuana manufacturers, it is 6 to 8% of gross receipts. Measure MM also amended the city's current marijuana business license tax, which was approved in 2014.
• Perris. The city imposes a tax of $25 per square foot on medical marijuana cultivators and 10% of monthly business revenue for medical marijuana dispensaries. The tax on medical marijuana dispensaries is not a sales tax.
• Pittsburg. The city imposes a tax on all for-profit and nonprofit medical and recreational marijuana businesses within the city of no more than 10% of gross receipts. Personal cultivation of marijuana that is not sold, bartered or exchanged is excluded from this tax.
• Point Arena. The city imposes a maximum tax on recreational cannabis businesses of $0.10 for each $1 or fractional part of the business proceeds. For medical marijuana/cannabis businesses, the tax would not be more than $0.03 for each $1 or fractional part thereof. The City Council retains the authority to periodically adjust the tax rates as long as the rate does not exceed these maximum rates with any increases in the maximum rates to be approved by the voters.
• Salinas. For both for-profit and not-for-profit cultivation businesses, the city imposes a general tax of $15 per square foot of canopy area. After three years, the tax rate automatically increases to $25 per square foot of canopy area and is automatically adjusted based on the CPI. For marijuana dispensaries, manufacturing, and delivery businesses, the city imposes a tax rate of 5% of gross revenues. After three years, this tax rate automatically increases to 10% of gross revenue for these businesses.
• San Diego. The city imposes a tax, ranging from 5 to 15% on the gross receipts of recreational marijuana businesses.
• San Jacinto. The city imposes a gross receipts tax of up to 15% and up to a $50 per square foot cultivation/manufacturing tax on all commercial marijuana and marijuana-containing product businesses in the city. In 2016, the San Jacinto City Council adopted a comprehensive ban on all marijuana uses. However, under Proposition 64, the city is required to reasonably allow indoor cultivation of medical and recreational marijuana.
• San Leandro. The city imposes a 10% tax on gross receipts for all for-profit and non-profit medical and recreational marijuana businesses.
• Santa Barbara. The city imposes a 20% maximum tax on gross receipts for all medical and recreational marijuana businesses.
• Santa Cruz. The city imposes an initial tax rate of 7% of gross receipts for cannabis businesses operating in the city with a maximum tax rate of 10%. The ordinance includes both for-profit and nonprofit medical and recreational cannabis businesses.
• Stockton. The city has increased its business license tax rate to a minimum of $5 and maximum of $50 per $1,000 of annual gross receipts for medical marijuana businesses.
• Watsonville. The city imposes a tax on marijuana cultivation at a maximum rate of $20 per square foot per year of canopy area and maximum rate of 2.5% of gross receipts from the manufacture or processing of cannabis. From the sale of cannabis, the city imposes a tax of a maximum of 10% on gross receipts.

The California medical sales tax rate is 7.60%. The majority of these ballot measures do not address the sale of recreational marijuana directly because they left it up to the passage of state laws and/or additional city ordinances to determine whether or not recreational cannabis would be considered legal in their municipalities.

With the passage of Proposition 64, in many cases, these city ordinances now also apply to recreational cannabis businesses. For more specific details, please check with each city to determine the exact ordinances that apply to your medical or recreational cannabis business.