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Cannabis operators urge supervisors to freeze county tax at 6% to avoid business closures
Summary
Cultivators, manufacturers and retailers told the San Luis Obispo County Board of Supervisors that higher local cannabis taxes layered on a July state excise increase would push some operators out of the county and urged the board to freeze the county rate at 6% for 2025–26.
Public comments at the San Luis Obispo County Board of Supervisors Monday focused heavily on the county’s cannabis business tax as dozens of cultivators and retailers asked the board not to raise the levy above 6%.
At the podium, Steven Herring said county policymakers should mirror the approach used for transient‑occupancy taxes and “pay attention to the surrounding counties and stay competitive,” warning that taxes above 6% could force his processing operation to relocate. "If this tax goes above 6%, then I'll be forced to shut down my processing facility here in SLO County and move my business up north to King City," Herring said during the public‑comment period.
Sean Bean, a longtime local retailer, told the board the county previously lowered its cannabis tax from 8% to 6% and then saw collections rise. He added a state excise tax increase to 19% effective July 1 will increase the overall consumer tax burden and "an increase from you guys would just be kind of tacking on to that." Bean urged a nuanced approach — for example keeping retail at 6% while offering lower rates for manufacturing and distribution to attract larger operators and jobs.
Several small cultivators described high fixed costs beyond local tax rates. Justin Carlson, a cultivator in Cayucos and Los Osos, said legal operators pay "$18,000 in annual fees just to have a license" and thousands more for business licenses and compliance. "Paying 6% of gross receipts, not profits, is not a subsidy," he said, arguing the sector needs time and targeted relief to stabilize.
Board members questioned staff on whether the sector is being subsidized. Auditor‑Controller Justin Cooley said that while the county’s cost‑recovery fees do not fully cover regulatory costs, combining fees and taxes brings the sector "right around even." Supervisors signaled sympathy for legal operators and discussion focused on directing staff to return with options to reduce overhead and consider fee narrowing — rather than immediately increasing the tax.
The board did not take a final vote on the tax during the morning session; supervisors indicated they would weigh presentations, fiscal estimates and further staff analysis before deciding whether to pause the automatic increase built into the county’s taxing measure.
