Board advances 10-year suspension of San Francisco cannabis business tax after heated debate

President Mandelmann brought forward an ordinance to delay collection of the city cannabis business tax, asking the board to push implementation back 10 years to give legal retailers more time to compete with an active illicit market. The board debated the measure for over an hour and ultimately passed the ordinance on first reading.

Why it matters: Sponsors said the long deferral aims to protect licensed small businesses and reduce incentives for customers to buy from untaxed street dealers; opponents said suspending the tax now would worsen a projected budget shortfall.

What supporters said President Mandelmann, author of the deferral, framed the measure as relief for legal operators that face an illicit sector that "controls more than 50% of the market" and undercuts licensed sellers on price and safety. Mandelmann said previous deferrals pushed collection dates repeatedly since 2020 and argued a 10-year window could allow federal or state policy shifts that ease burdens on legal businesses.

Supervisor Mahmoud, a cosponsor, said suspending the tax would give licensed retailers "more breathing room" and help curb the black market, which he tied to public-safety incidents near Market and Jones. "When we increase the price of legal cannabis, we make things harder for businessesand we create conditions on our streets that are allowing public safety challenges to emerge," he said.

What opponents said Supervisor Chan, the board's budget committee chair, said the timing was wrong because the city faces a nearly $1 billion budget deficit and that "to waive any tax revenue for 10 years for a projected $80,000,000 in tax revenue ... it's simply irresponsible." Controller Greg Wagner told the board that the annual projected revenue once the tax is implemented is roughly $6.2 million per year on average; other speakers cited $6.2M and $6.5M projections during the discussion.

Vote and next steps The ordinance passed on first reading; the clerk recorded the item as passed on first reading with 8 ayes and 2 noes (Supervisors Walton and Chan voting no). The matter will return for final passage as required by the city's ordinance process.

Budget and scope notes Officials and members repeatedly warned that the suspension reduces anticipated revenue against a large projected deficit and recommended that any long-term tax policy be weighed through the budget process. Supporters urged the board to consider the industry's long horizons and federal-state uncertainty as context for the deferral.

The board moved on after the vote; the ordinance will be scheduled for any required subsequent readings or implementation actions.