The San Diego City Council has approved an increase in the cannabis business tax from 8% to 10%. The measure, set to take effect on May 1, aims to help cover the city’s $250 million budget deficit. The increase is expected to generate approximately $4 million in additional annual revenue. 

Cannabis tax revenue in San Diego has declined, dropping by $1.5 million between 2023 and 2024. While some residents see the tax hike as inevitable, others worry it could drive consumers toward the illegal market.  

With this adjustment, San Diego will have the highest cannabis business tax rate in the county, surpassing neighboring cities such as Chula Vista (7%) and La Mesa (4%). The increase applies only to dispensaries, while production facilities will maintain their 2% tax rate.