Committee approves ordinance to exclude state cannabis excise tax from Los Angeles gross‑receipts tax

The Government Operations Committee on May 6 approved an ordinance amending the Los Angeles Municipal Code to exclude state excise taxes from the city’s definition of gross receipts for cannabis businesses, aligning city tax code with state law.

City Attorney staff said the city historically taxed gross receipts from cannabis businesses including state taxes, but a recent state change forbids local taxes from applying to state excise taxes. The ordinance amends Los Angeles Municipal Code section 21.51(a)(4) by removing language that had applied local tax to amounts imposed by the state; it retains local taxation of county or rapid transit district taxes.

City Attorney counsel told the committee the change brings the city into compliance with state law. The counsel said businesses would stop being double taxed once the ordinance becomes effective after full council passage, administrative processing and publication; the speaker noted some businesses may already be applying the state rule voluntarily.

The committee chair moved approval and asked that the item be scheduled to council as soon as possible; city attorney staff said the office would try to advance it "forthwith." The committee recorded three ayes: Councilmember Padilla, Councilmember Lee and Councilmember Gerardo, and the item was approved in committee for referral to full council.

The committee’s action removes the possibility that local cannabis tax collections include amounts collected as state excise taxes, subject to the ordinance’s effective date after council adoption and administrative publication.

The committee took no separate action on fees or other regulatory matters in this vote; those matters were addressed elsewhere in the meeting.