Berkeley’s cannabis industry is back in business. A new temporary “tax holiday,” lasting from January 2023 until July 2025, aimed at supporting legal chains was passed unanimously by city council on July 11. The tax poses a new solution to the long-lasting challenges of the suffering industry.
The previous tax rate demanded businesses pay $25 per $1000 of gross receipts in the calendar year, in addition to existing excise, state and federal taxes. Now, each cannabis operation will pay the business license tax rate that “most closely represents the nature of its current operations.” Additionally, late penalties since January will be renounced, and tax payments made in the first quarter of the year will serve as credit for future taxes, according to a city of Berkeley press release.
“Berkeley is the home of legal cannabis; we need to make sure the industry survives,” said Vice Mayor Ben Bartlett in the press release.
As one of the first cities in the state to establish a tax holiday for the cannabis industry, Bartlett hopes other city legislatures follow suit in listening closely to community needs and making necessary changes for additional support.
This tax holiday comes after consistent low profit margins across Berkeley, ultimately leading many cannabis businesses to close their doors. With the decline of the industry, Bartlett noted the turn many businesses make to illegal markets where contraband is not regulated for toxins, such as fentanyl.
“The illegal market is dangerous for a wide range of reasons, from the increase of EVALI (e-cigarette/vaping product-use-associated lung injury) to environmental degradation,” said Councilmember Mark Humbert in the press release. “Illegal cannabis growth has serious negative impacts on public lands.”
In the first quarter of the fiscal year, California’s taxable cannabis sales have amounted to a little over $1 billion. Bartlett expressed his gratitude for Berkeley’s cannabis industry playing a large role in the city’s economy, including providing taxable revenue and hiring local workers.
Enacting the tax holiday is also part of ensuring Berkeley’s industry remains competitive against other Alameda County tax rates, which have attracted large-scale supply chains. With the city of Berkeley being one of the first places worldwide to embrace legalized cannabis, Bartlett calls on the city’s responsibility to ensure prosperity for both medical and non-medical businesses.
“Here’s the thing – our community needs to know we have their back,” Bartlett said. “This is our industry, and (we must not let it) die on the vine.”
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