SOUTH LAKE TAHOE, Calif. – With only three members voting, the South Lake Tahoe City Council approved a resolution on Tuesday that reduced the cannabis tax rate from six percent to three percent while continuing to exempt the tax for medical cannabis. In the same motion, they approved a resolution to eliminate the public safety mitigation fee. Due to Cody Bass having to recuse himself since he owns a cannabis business, Scott Robbins acted as mayor during the agenda item.
When local voters approved Measure G in 2022, they supported replacing an existing community benefit fee with a formal cannabis and professions tax of up to six percent. The two amounts were estimated to be about equal at the time, and the tax was based on sales instead of a fixed fee. Since then, the City has had a formal six percent tax on cannabis, which is a pass-through tax and paid for by customers.
In Tuesday’s council action, that cannabis tax was cut in half after cannabis business owners said it was too high and was forcing customers away. Several local nonprofits that are beneficiaries of the current Cannabis Community Grant program spoke up during public comment. In 2021, the City Council pledged support for those nonprofits in the community who worked to mitigate the negative effects of cannabis in the community. Last year, the City took in $900,000 through cannabis taxes and divided up $450,000 among nonprofits that applied and went through the process. The other $450,000 went to a dedicated police officer, snow removal, and roads through the general fund.
When the original ordinance was passed, city leaders wanted to make sure funds from cannabis taxes were used to offset negative impacts of legal cannabis sales.
Nonprofits including Boys and Girls Club of Lake Tahoe, Mountain High Recovery, and Tahoe Youth and Family Services urged the council to keep the tax where it was. Resident Scott Loberg called reducing cannabis taxes “ridiculous,” arguing that other local businesses weren’t given similar breaks.
Councilman Keith Roberts echoed that concern, asking why only cannabis shops should benefit from lower cannabis taxes. Despite that, Roberts later voted in favor of the cut, acknowledging the need to balance community health and economic sustainability.
Some public comments focused on consumers buying cannabis in Nevada, where cannabis taxes are lower. Officials argued that cutting local cannabis taxes could help keep sales in South Lake Tahoe and reduce black market risks.
After lengthy debate, the council voted 3-0 to officially reduce the cannabis tax from six percent to three percent, marking a pivotal moment for local businesses and community funding alike.
