Redding council trims proposed cannabis tax increases after hours of public comment; cultivation rate raised to $5/sq ft

Redding — The Redding City Council narrowly approved an increase in local cannabis taxes Wednesday after a lengthy public-comment period in which dozens of business owners, workers and consumers urged the council to reject larger hikes.

By a 3–2 vote the council adopted a resolution that raises the cultivation canopy tax from $3 to $5 per square foot, increases the manufacturing/processing/testing/storage/distribution tax from 3% to 4% of gross receipts, and raises the initial retail excise from 5% to 6% of gross receipts. Council debate and public testimony were driven by the city’s stated need to close a roughly $5 million budget shortfall.

Why it matters: The council’s action increases revenue earmarked for general city services — including public safety — but business owners and industry representatives warned the hike would push customers to neighboring jurisdictions or the unregulated market and could accelerate business closures and layoffs in a crowded and low-margin industry.

Public comments: business owners, workers and consumers Dozens of speakers filled the council chamber to oppose larger proposed increases. Melanie Smith, who identified herself as co-owner of a micro cannabis business, said her family invested life savings in the industry and that market prices had collapsed; she urged the council not to “be the reason more businesses disappear from Redding.”

“I urge you to consider what that means, not just for my family, but for every local business trying to survive in this industry,” Smith said. Joe Baker, co-owner of Legacy Garden, said his 10,000-square-foot cultivation employs roughly 26 people and that a 333% increase in the canopy tax (a hypothetical jump from $3 to $10) would force layoffs or closure. “If that happens … where do you think they’re gonna go? They’re gonna go to Shasta Lake City,” Baker said.

Industry leaders repeatedly warned that raising local taxes while neighboring cities keep rates lower will shift sales across city lines and to the illicit market. Several speakers urged the council to pursue alternative revenue options — for example, a citywide sales tax measure or allowing regulated consumption lounges that could produce new taxable activity.

Council debate and compromise Council discussion ranged from calls to delay action until a proposed citizen-driven sales-tax initiative is resolved, to arguments that the cannabis tax had not been adjusted in seven years and needed updating. Vice Chair Lata and others said the city must broaden revenue sources, while Councilmember Audette (spelling in transcript varies) and several others emphasized fairness across industries and the public-safety role of locally taxed activities.

After extended exchanges, Councilmember Adam Resner moved to adopt a revised resolution that reduced the staff’s higher proposals and instead set cultivation at $5 per square foot, manufacturing/testing/distribution at 4%, and retail at 6%. The motion passed on a roll-call vote, 3–2.

What the vote does — and doesn’t — do The adopted increases will be included in upcoming budget discussions and take effect per the council’s schedule in the resolution. The council also discussed but did not adopt a longer sunset when the motion passed; staff noted the council can revisit tax rates by resolution in future meetings. The measure is not a voter-approved special tax; it remains a city council resolution within the range allowed by the 2018 ballot measure that initially set cannabis taxation in Redding.

Next steps: Council and staff will include the adopted figures in the fiscal-year budget and monitor impacts on businesses, jobs and revenue. Several industry speakers said they intend to press for alternatives such as consumption lounges or a broader sales tax to address the city’s fiscal gap without overburdening a single industry.