Despite opposition by Oakland Mayor Libby Schaaf, the Oakland City Council voted unanimously on Tuesday night to give final approval to a tax reduction for the city's largest cannabis businesses.
The council had voted unanimously in favor of the tax reduction at its first reading last month and approved it again on Tuesday night.
City Councilman Dan Kalb, who proposed the tax reduction along with Councilwoman Sheng Thao, said it is necessary because Oakland's 10% tax on all non-medical cannabis business gross receipts is among the highest such tax rates in the state that's being imposed by local jurisdictions.
In a statement, Kalb said, "Many Bay Area jurisdictions tax their cannabis businesses at rates substantially lower than our rates in Oakland.
If we want to make sure our cannabis businesses thrive so we can realize the jobs and tax revenue that come with a thriving cannabis industry, then we must be competitive with other jurisdictions."
Kalb said the cities of Emeryville, Berkeley, San Francisco, Santa Rosa and Richmond all have lower taxes than Oakland. He said, "If Oakland doesn't act to reduce taxes on cannabis businesses, they simply might not survive, especially our equity-based cannabis businesses, or move to the neighboring jurisdictions."
In a message to Oakland residents before the meeting Tuesday night, Schaaf said, "Our City Council is poised to give a massive $4 million a year tax-break to Oakland's largest cannabis businesses. I urge you to call your councilmembers to oppose this reckless give-away."
Schaaf said the City Council already voted last spring to reduce taxes for the smallest 150 of the 195 registered cannabis businesses in Oakland. She said the proposal "will benefit the largest businesses -- with most of it going to a handful of businesses that gross more than $1.5 million a year!"
Schaaf said that if the council voted to approve what she called "this irresponsible tax-break," residents should insist that council members be "transparent and responsible by specifying the services they will cut to pay for it." She said that's because by law the council must maintain a balanced budget.
Kalb said he and other council members are sensitive to Schaaf's concern about not impacting the city's budget, so the measure calls for phasing in the break gradually over three years, not all at once.
In fact, Kalb said that in the first year the break for the largest cannabis businesses will be "very modest" and only drop by 0.5 percent, from 10 percent to 9.5 percent. He said the measure "clearly is not some huge tax break for big businesses."
Kalb said now that marijuana is legal in California the idea is to harmonize the tax rates for both medical and non-medical cannabis.
He said medical cannabis is only taxed at a 5 percent rate in Oakland now and the measure approved Tuesday night calls for reducing the tax on non-medical cannabis to 5 percent over three years so the rates are harmonized.
Kalb added that even under the new, lower rate, cannabis businesses "will still pay a substantially higher tax rate than any other type of business in Oakland."
Kalb also said he wants to be clear that he won't support "any budget reductions when it comes to vital services, including homeless services, wildfire prevention, public safety, pothole repair and road repaving."