Cannabis Business Tax

Each person engaged in business as a cannabis business is required to remit monthly the full amount of taxes owed based on the previous month's activity. Along with payment, the business must file a Cannabis Business Tax Statement. Cash payments in excess of $3,000 require an appointment. For questions or to schedule an appointment, please contact the Tax Administrator by phone, 619-825-3803. 

Tax Rates

City Council Resolution 2020-3782 established the following tax rates effective January 1, 2021.

• Retail sales of cannabis and/or industrial hemp - 5%
  • Receipts from customers with a valid CA State Medical Marijuana ID card are exempt
• Commercial cannabis and/or industrial hemp cultivation – 4%
• Operation of a testing laboratory for cannabis and/or industrial hemp – 2%
• Distribution of cannabis and/or industrial hemp – 3%
• Manufacturing or processing of cannabis and/or industrial hemp – 4%

History 

On November 3, 2020 the City of Lemon Grove voters approved Measure J, a Cannabis Business Gross Receipts Tax. The tax is codified in the Lemon Grove Municipal Code (LGMC) as Chapter 5.46 and began January 1, 2021. The  Cannabis Business Tax is payable by each person engaged in business as a cannabis business within the City as defined in LGMC §5.46.40. 

A gross receipts tax is a tax on the business conducting activities subject to the tax and is levied upon the business gross receipts. It is not a tax on the consumer like a sales tax. Chapter 5.46 specifically states, “The Cannabis Business Tax shall not be separately identified or otherwise specifically assessed or charged to any member, customer, patient, or caretaker.” 

The Cannabis Business Tax is a general tax, meaning the revenue is to be used for general governmental expenditures of the City. All proceeds of the tax will be placed in the General Fund in accordance with the LGMC §5.46.20. Any expenditure made from the General Fund, such as costs for fire, public safety, public works, recreation, is considered a general governmental expenditure.