After adopting an ordinance that allows three recreational dispensaries and other cannabis business types to establish in the city, the SLO City Council will now decide how it wants to tax the new industry.

• File Photo By Jayson Mellom
• TAX IT? The SLO City Council will decide whether to send a cannabis tax measure in front of voters in November on June 5.

On June 5, the City Council will review a proposed cannabis tax measure and decide whether to place it on the November general election ballot. As it's drafted, the measure taxes cannabis retailers 6 percent on gross receipts and cultivators $7 per square foot of canopy per year. It also taxes cannabis manufacturers and processors 2.5 percent on gross receipts; distribution businesses, 2 percent; and testing labs, 1 percent.

The tax would take effect on Jan. 1, 2019. By 2022, the City Council could increase those taxes to 10 percent for dispensaries; $10 per square foot of canopy for cultivators; 4 percent for manufacturers; 3 percent for distributors; and 2.5 percent for testers.

SLO structured its cannabis ordinance so that pot businesses can't open until voters pass a tax measure.

The city expects to receive $100,000 in cannabis tax revenue in 2018-19, and $1.5 million annually after the industry ramps up.

The ballot question on the tax measure states that the tax will "maintain and improve essential city services" including police and fire; senior, youth, and park services; and "programs to retain and attract local jobs and address homelessness."

As a general tax, it would need a simple majority vote to pass. Δ