HUNTINGTON BEACH, Calif. — A couple of County cities weigh whether to adopt an ordinance to tax cannabis businesses if - or when - they come into their towns.

What You Need To Know

  • Two Orange County cities have cannabis tax initiatives just in case those types of businesses come into their towns

  • Voters in Huntington Beach and Laguna Woods will decide whether to add a 6% or 4% to 10% tax on cannabis retailers, respectively

  • The money generated from the tax will go straight to the city coffers

  • Currently, Huntington Beach and Laguna Woods prohibit cannabis business operations

Laguna Woods will ask voters in November to set the framework for taxing cannabis businesses if the city allows it in the future.

Measure T, the Cannabis Business Tax ordinance, would tax cannabis businesses 4% to 10% of gross receipts or $5 to $35 per square foot for retail operations; and 1% to 10% of gross receipts or $1 to $35 per square foot for other types of businesses, such as delivery, manufacturing, etc.

Once passed, the city council would ultimately select the specific tax rate.

Laguna Woods currently prohibits many cannabis businesses.

According to the city attorney, allowing cannabis businesses in Laguna Woods would require an amendment to the Laguna Woods zoning code.

If the city council ever permits cannabis businesses, the tax proceeds would go to the city’s general fund and be allocated for city services, programs and projects.

City officials said the tax could generate $750,000 annually but vary on the tax rates.

The measure only needs a simple majority of over 50% to pass.

In Huntington Beach, the city brings back a cannabis business tax initiative after the previous effort in June failed by a narrow margin.

Measure A failed to get the supermajority or two-thirds of the votes needed to pass in the June election. Over 64% of the 49,000 voters voted on passing the measure. The measure, however, required 66% to pass.

Similar to June’s Measure A, this November’s Measure O would place up to a tax of 6% of gross receipts for cannabis retailers and up to 1% for all other cannabis businesses. 

City officials estimate that the tax could generate an estimated $300,000 to $600,000 annually, which would fund general municipal services.

Like Laguna Woods, Huntington Beach currently prohibits cannabis businesses.

Opponents of the measure say that legalizing cannabis businesses might increase the number of impaired drivers on the road and cause air pollution.

Several city council members favor Measure O, stating that the tax could provide Huntington Beach with additional revenue that would be used for homeless prevention and intervention services, improving parks and roads, and increasing public safety.

“By acting now, the city will have a tax in place if cannabis businesses are approved later or imposed upon us by Sacramento,” the council members wrote in favor of the measure.

This time around, Measure O will need a majority of 50% plus 1 of the votes required to pass in November.