President Mandelmann to introduce repeal of never-imposed cannabis business tax; cites burden on legal market

Board President Rafael Mandelmann told colleagues on Sept. 9 that he will introduce legislation to repeal a cannabis business tax that voters approved in 2018 but that the board had repeatedly delayed from implementation. Mandelmann said the board delayed imposition from 2019 onward—most recently through multiple one-year and multi-year delays—because legal cannabis operators face unique federal and state constraints.

Mandelmann said cannabis businesses are disadvantaged because, as a Schedule I federally controlled substance, they cannot deduct ordinary business expenses for federal tax purposes and often cannot access conventional banking. He also said high state taxes and increases in state-level tax burdens have compounded the cost pressures on legal operators, who must also invest in physical security because they hold cash.

Mandelmann said the board's conversation over repeal is intended to avoid imposing a new local tax next year that could further disadvantage the legal market and drive business to the illicit market. He thanked staff in his office and listed Supervisors Dorsey, Sauter and Mahmoud as co-sponsors of the repeal effort.

Why it matters: Repealing a voter-approved local tax would lower the cost burden on licensed cannabis businesses if enacted; it is tied to broader debates about how to support the regulated cannabis industry while curbing illicit sales. Mandelmann urged discussion to prevent a tax from “kicking in” next year without Board action.

Next steps: Mandelmann said he will introduce the repeal legislation; the item will proceed through committee hearings and public input before a vote.