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San Francisco’s Prop. D Would Tax Recreational Cannabis Sales

Proposition D levies a gross receipts tax on recreational cannabis businesses of between 1-5%

Top-of-the-line cannabis at BASA on Grove Street used to cost much less. But when the 15 percent state excise tax kicked in this year, Tariq Alazraie had to hike his prices and now an eighth-ounce of his premium product costs $62. If Proposition D, a San Francisco cannabis tax measure, passes in November, Alazraie said he’ll have to tinker with his prices again.

But in a new industry still competing with a robust black market, Alazraie says there’s a fine line to how much he can charge his customers: Too little and he’ll hurt his profit margin. Too much and his customers will go somewhere else. “My profit margins are just getting thinner and thinner and thinner,” said Alazraie, president of the collective, pinching his fingers closer together.

Proposition D would levy a gross receipts tax on recreational cannabis businesses of between 1 and 5 percent — depending on if the business is retail or non-retail and how much gross revenue it takes in — starting Jan. 1, 2021. The first $500,000 of gross receipts from sales of recreational cannabis would be exempt from the tax, as well as retail sales of medical cannabis. If passed, the tax’s top rate would be the highest gross receipts tax levied on any industry within San Francisco, according to the San Francisco Chamber of Commerce.

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