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Committee amends cannabis tax ordinance and refers it to full Board without recommendation after heated debate
Summary
After extensive debate and public comment, the committee amended an ordinance to suspend the local cannabis business tax through Dec. 31, 2035 and then voted to forward the amended ordinance to the full Board without recommendation. Supervisors split over budget offsets and enforcement strategy.
The Budget and Finance Committee on Dec. 3 debated an ordinance proposed by Board President Mandelmann’s office to repeal—or as amended, suspend—the local cannabis business tax that was scheduled to begin Jan. 1, 2026.
Sophie Marie, legislative aide to President Mandelmann, told the committee the local tax (a 1–5% gross-receipts levy authorized by voters in 2018) would disproportionately burden already-struggling legal cannabis retailers and further push customers to an illicit market estimated in the presentation at 50–60% of local sales. She asked the committee to forward the ordinance with President Mandelmann’s amendment to suspend collection.
BLA summarized market trends and fiscal projections, noting statewide cannabis sales have declined ~6% over three years and San Francisco sales about 12% locally; the controller’s projection in the BLA packet estimated a general-fund revenue loss of roughly $3.7 million next fiscal year if the tax is suspended and about $8.7M the following fiscal year (full year). The BLA and Clerk emphasized the decision has clear budgetary consequences and is a policy matter for the full Board.
Supervisors split in the committee: Supervisors Mahmood and Souder supported suspension as a tool to undercut the illicit market and aid legal small businesses and patients; Chair Supervisor Connie Chan expressed fiscal concerns, urged stronger enforcement and asked supporters to explain how the city would offset projected revenue losses amid a large budget shortfall. Chan said she would not support forwarding the item with a recommendation without an identified offset.
More than a dozen public commenters—retailers, equity-business advocates and medical patients—urged suspension or repeal, arguing the tax makes medicine unaffordable and harms small businesses. Some speakers warned the tax would further enlarge the illicit market and cost jobs.
The committee voted to adopt Supervisor Mahmood’s amendment suspending the cannabis business tax through Dec. 31, 2035 (retroactive to Jan. 1, 2026). After a brief recess for consultation with Board President Mandelmann, Chair Chan moved to refer the amended ordinance to the full Board without recommendation; the motion passed 3–0. The full Board will take up the ordinance in its next session.
