San Jose, a city known for its thriving cannabis industry, is facing a significant drop in cannabis tax revenue this year. The decline, projected to be in the millions, is attributed to the growing competition from the black market and cannabis delivery services. With a predicted $19 million budget shortfall for next year, boosting tax revenue from the cannabis sector remains crucial.
The city’s budget surplus currently stands at $35 million. However, the decline in cannabis tax revenue is a significant concern. In response, the San Jose City Council has shown interest in easing the regulatory burden on cannabis businesses. Recent moves include loosening cannabis business licensing laws governing where dispensaries can establish themselves and reevaluating penalties placed on legal businesses.
Illegal sellers appear to be capitalizing on the market, often operating as seemingly legitimate delivery services, without generating any tax revenue for the city. Sean Kali-rai, a lobbyist and founder of the Silicon Valley Cannabis Alliance, expressed his concern over the growing prevalence of unauthorized dealers. He stressed the importance of the city’s Division of Cannabis Regulation in overseeing and regulating the cannabis market.