Stockton council raises medical-cannabis business tax to $50 per $1,000; licensing, enforcement and zoning left for later

The Stockton City Council on Feb. 28 voted to set the business license tax rate for medical cannabis businesses at $50 per $1,000 in gross receipts, the top of the range approved by voters. The 5–2 vote followed hours of public comment on enforcement of illegal dispensaries, equity in licensing, and how the city should regulate cultivation, manufacturing and testing facilities.

The tax change stems from Measure Q, which amended local law to raise the allowable business license rate for medical cannabis businesses to a range of $35–$50 per $1,000; city staff recommended and council adopted the $50 rate. Matt Paulin, the city’s chief financial officer, told the council that “our recommendation is to set the tax rate at the maximum of $50 per thousand dollars in gross receipts.” The staff presentation estimated that doubling the current rate and adding two additional permitted dispensaries could generate about $1 million in annual general-fund revenue under the city’s models.

Why it matters: the council’s decision immediately increases the tax burden on legal, permitted dispensaries and all medical-cannabis businesses operating inside Stockton. Several speakers and council members said the city must pair any tax increase with stepped-up enforcement against unpermitted operators to avoid rewarding illegal businesses that undercut permitted stores.

Council and public discussion focused on three linked issues: (1) fairness and enforcement—several permitted operators said illegal dispensaries in Stockton are undercutting compliant businesses and urged…