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Licensed cannabis operators urge county to hold tax at 6% and rewrite ordinance
Summary
Local cannabis cultivators urged the Board of Supervisors to keep the county cultivation tax at 6%, called out automatic voter-approved escalators that pushed the rate to 8%, and asked the board to pursue a comprehensive rewrite of the county ordinance to improve predictability for legal operators.
Licensed cannabis operators told the San Luis Obispo County Board of Supervisors on Aug. 4 that the industry cannot absorb another local tax increase and urged a permanent fix to the ordinance that governs cultivation taxation.
"I support freezing the tax at 6% because our industry simply cannot absorb another increase," said Justin Carlson, a licensed cannabis cultivator. Carlson said the county’s automatic escalator pushed legal operators into a competitive disadvantage with the illicit market and urged a comprehensive ordinance rewrite rather than recurring temporary fixes.
Austin Canela of Local Roots said the timing of the automatic increase meant small, family-run businesses paid 8% from July 1 until the board’s action, creating a material cash shortfall. "We will have been paying 8% since July 1, and this tax relief doesn't kick until October," Canela said, urging the board to either keep an active calendar item on rates or pursue a structural change through the voters.
Board members discussed the legal constraints: Justin Cooley, the county auditor-controller and treasurer-tax-collector, explained the ballot measure approved by voters in 2018 authorized a structure that starts at 4% and automatically increases by 2 percentage points each July 1 up to 10%. Cooley said the board can set the rate within the 4–10% range but changing that automatic structure would require returning to voters.
Supervisor Ortiz Lake requested a short memo from the auditor’s office tracking industry trends in advance of budget hearings to help the board avoid last-minute budget shortfalls tied to assumed rate changes. The board did not take an immediate ordinance-change vote; the discussion framed two follow-up actions: staff memo on industry trends and consideration of ordinance reform or more systematic calendarization of the rate decision.
