Richmond’s licensed cannabis operators are reportedly struggling under the weight of heavy taxes, rigorous regulations and a surge in illegal sellers bringing unfair competition.
Businesses including storefront dispensaries 7 Stars Holistic Healing Center, Green Remedy, and Holistic Healing Collective are being forced into a financial “state of crisis” because they must navigate a complex and expensive legal framework while unlicensed competitors, such as city smoke shops, operate in the shadows with zero oversight, according to city officials.
Cannabis businesses are subject to a layered tax structure that can cause the total rate for a consumer to exceed 30 percent of the retail price. They include a 15 percent state excise tax, 9.75 percent state and local sales tax, 5 percent local business tax (established by the passage of Measure U in November 2020, based on gross receipts), and various regulatory and compliance fees.
Officials warn that this revenue stream is at risk if the legal market continues to buckle under the pressure of unpermitted distribution.
To address this, the City Council has directed the City Manager to return within 60 days with a formal plan for market stabilization.
