Ordinance amending the Business and Tax Regulations Code to repeal the cannabis business tax beginning on January 1, 2026, and remove references to the cannabis business tax from the common administrative provisions of the Code.

The San Francisco Board of Supervisors, with File No. 250929 sponsored by Supervisors Mandelman, Dorsey, Sauter, and Mahmood, has amended an ordinance to extend the suspension of the cannabis business tax through December 31, 2035. This tax, originally approved by voters in November 2018 (Proposition D) and set to be effective January 1, 2021, has been continuously suspended since its inception through December 31, 2025. The amendment, made in committee on December 3, 2025, prevents the tax from taking effect on January 1, 2026, for another decade. The decision comes amidst a struggling legal cannabis market, with San Francisco's total taxable cannabis sales falling over 25% from $261 million in 2021 to $191 million in 2024. This decline is attributed to a 36% drop in retail prices and significant competition from the illicit market, which is estimated to comprise two-thirds of total cannabis sales in the city. The Budget and Legislative Analyst (BLA) estimated that repealing the tax would result in foregone General Fund revenues of approximately $24.8 million over four fiscal years (FY 2026–27 through FY 2029–30), with annual losses projected at $3.7 million in FY 2026–27, $8.7 million in FY 2027–28, and $6.2 million in both FY 2028–29 and FY 2029–30. The ordinance also removes all references to the Cannabis Business Tax (Article 30) from the Business and Tax Regulations Code's common administrative provisions.

This extended suspension of the cannabis business tax means consumers and medical patients will not face an additional local tax on cannabis purchases in San Francisco for the next decade. This helps keep legal cannabis products more affordable, especially for seniors, disabled residents, and low-income individuals who rely on cannabis for health, and aims to make the regulated market more competitive against the untaxed illicit market. For licensed cannabis businesses, it provides crucial financial relief by preventing an increase in their tax burden, potentially safeguarding jobs and preventing further business closures in the legal sector.

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