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Los Angeles County Voters Approve Cannabis Tax

Los Angeles County voters approved Measure C, which will apply a tax structure to businesses that are located in unincorporated areas after receiving permits. Los Angeles Daily News reports.

Nearly 60% of votes were for Measure C at the time this article was written.

Measure C establishes several tax rates. 4% for gross receipts from retail, 3% manufacturing and distribution, $4 for mixed light cultivation and $7 for indoor cultivation. Los Angeles County Board of Supervisors has the power to reduce or increase tax rates up to the maximum rate approved by the voters on July 1, 2026.

It’s important to note that Measure C itself does not legalize cannabis sales in the county, with additional steps before the industry can launch. The Board of Supervisors still needs to vote on that, and they’ve indicated they plan to do so in early 2023.

“All cannabis business activity will remain prohibited in the unincorporated areas of the County until the cannabis business permitting program is launched in 2023,” the bill summary reads. “This measure would make it legal for the County to tax the revenues of cannabis businesses operating in these areas. Once the permitting program launches, a cannabis business operator will need to obtain all the required permits and licenses from the appropriate state and local regulatory agencies including a cannabis business permit issued by the Los Angeles County Office of Cannabis Management.”

The Office of Cannabis Management (OCM) under Los Angeles County’s Department of Consumer and Business Affairs is developing an equitable commercial cannabis program that includes permitting and resources for eligible applicants with a proposed launch in late 2023.

“The approach we’ve adopted will equitably distribute legal cannabis businesses in each supervisorial district and specifies that cannabis cultivation will only be permitted indoors—not outdoors in greenhouses,” Supervisor Kathryn Barger said at a recent board meeting.

“Our board must be clear: we will not tolerate illegal cannabis operations. Growers operating illegally undercut our efforts to establish a regulated, responsible cannabis industry. This is often at the cost of the rural communities I represent. I’m firmly committed to upholding the law and will corral all available resources to enhance enforcement and abatement efforts.”

County officials have estimated that $10.4 million of tax revenue would be donated to the Los Angeles County General Fund. A cannabis equity program would also fund equitable entry into the cannabis sector.

Until the program is launched, marijuana businesses in the unincorporated parts of the county are currently prohibited.

All existing and new cannabis-related businesses must be registered with the Los Angeles County Treasurer or Tax Collector within 30 business days of their operation, or the effective date.

Although regulations are being developed still, Los Angeles County officials stated that the first plan would allow up to 25 retail marijuana businesses in storefronts and 25 delivery businesses. There will also be 10 indoor/mixed cultivation establishments. 10 manufacturing companies, 10 distribution centers, and 10 testing labs.

Another similar vote was held in San Diego County.

Voters also decided whether or not to approve Measure A in San Diego County’s unincorporated areas will pay a tax that would generate revenue going toward government services such as health care, fire safety, and parks.