Local legal cannabis consumers continue facing higher prices at dispensary registers.
In May, San Diego raised its cannabis sales tax from 8% to 10%. Furthermore, in July, the California Excise Tax on cannabis, meant to fund social equity programs in the state, rose from 15% to 19%.
Recently, Governor Gavin Newsom signed AB 564 to roll back the state excise tax to 15%.
Still, high cannabis taxes in San Diego are leading university students to ditch the city’s cannabis for another local source that is cheaper without compromising consumer safety: neighboring city La Mesa.
La Mesa is sporting a 4% tax rate, one of the lowest cannabis sales taxes in our region. The city has carefully cultivated a cannabis scene that has seen marginal growth behind its firm tax rate. This growth is amidst rising cannabis taxes in our region.
According to an NBC7 report, San Diego’s revenue from cannabis taxes has been steadily declining for the last five years, generating less money than the projected figures estimated for this budding market.
The same report found that last year, San Diego collected $4 million less from cannabis revenue than it had projected for the 2024 fiscal year.
La Mesa Vice Mayor Lauren Cazares acknowledged the tax rate changes, welcoming citizens to purchase from La Mesa to save money.
“If your pre-roll goes up a couple of bucks, a couple of bucks is a lot for a lot of people,” Cazares said. “Right now, the economy is not in a good place; anywhere that people can penny pinch, they will.”
Legal cannabis consumers among the student population of San Diego State University are following the trend, flocking to their nearby La Mesa dispensaries seeking relief at the register.
“I just turned 21,” SDSU senior student Greg Spicer said. “I’ve really started to learn how painful the taxes are. It adds almost like a third of the price. I am definitely impacted by that. I prefer to not pay all that tax. You know, when they ring it up and I’m like ‘Oh that’s not bad.’ But then the tax hits and I’m like ‘That’s a lot of money.’”
Cloud Rivera, the General Manager of Wellgreens, a dispensary on University Avenue, said people love cannabis no matter the cost.
“We’ve dealt with an increase twice. A lot of people, they do not like it,” said Rivera. “Certain patients can apply for a Medical Marijuana Identification Card, to take away one of the taxes, but it is still high taxes.”
The compounding nature of these different tax rates makes an individual item’s out-of-the-door price significantly higher than its listed price. For example, in San Diego, a cannabis product with the listed price of $35 will cost you $14.71 in taxes for a total price of $49.71.
“It does annoy me when they raise cannabis taxes,” SDSU junior student Julio Rodriguez said.
Rodriguez said that he enjoys shopping at Buzz Cannabis in La Mesa. He said contributing to a regulated market gives him peace of mind and is worth the trouble.
“I buy from dispensaries because it is much safer than buying cannabis off the street, something that could be laced with fentanyl,” Rodriguez added.
General Manager of Buzz Cannabis in La Mesa, Lucas Sisneros, says he has noticed an uptick in university students visiting his location.
“They come here for our prices,” Sisneros said. “It resonates with college students that maybe can’t afford the more expensive product.”
The 2% increase in San Diego’s cannabis sales tax is expected to generate $3.97 million of income for San Diego’s budget.
“As San Diego gets more expensive with their cannabis taxes, it makes sense that people are buying less cannabis,” Sisneros said. “For the most part, people are unhappy because they are having to pay more. I would say that because our taxes are slightly less than San Diego’s and because we can be more competitive with our pricing in La Mesa, people are more drawn to the area to buy their cannabis.”
Cazares says she understands the importance of keeping the La Mesa cannabis sales tax at 4%.
“It seems to me that both community members and business owners are all happy,” said Cazares. “Having the tax lower means that we are much less likely to have illicit and illegal sales and distribution in our city, which makes all of us safer.”
