San Jacinto City Council moves to impose 15% tax on cannabis

The San Jacinto City Council voted 4-1 Monday to increase the cannabis tax rate to 15%, reversing a previous decision that had lowered the rate to 10%.

The council also approved a six-month study to examine cannabis sales data and tax impacts in the region.

Cannabis business owners packed the council chambers to protest the tax hike, warning it could force closures and job losses. They pointed to significantly lower rates in other jurisdictions, including Monterey County's 71 cents per square foot and Sonoma County's 75 cents per square foot, compared to San Jacinto's $5 per square foot for outdoor cultivation. The city's larger neighbor, Hemet, maintains an 8% rate.

Business owners emphasized the tax structure fails to account for seasonal operations in outdoor cultivation, where production doesn't occur year-round. They warned the higher rates could drive customers to neighboring jurisdictions with lower tax rates, ultimately reducing San Jacinto's revenue.

Supporters of the higher rate emphasized the need to fund essential city services, particularly firefighters and sheriff's deputies. Council members backing the increase noted that businesses knew the 15% rate when they applied to operate in the city.

Several speakers urged the council to cap the number of dispensaries to prevent market saturation. Council members defended the increase, noting cannabis businesses must submit five-year business plans when applying for permits, demonstrating their ability to operate under existing rules and regulations.

The six-month study will examine sales data and tax impacts before any further rate adjustments are considered.