San Leandro’s cannabis industry has failed to gain a foothold nearly four years after approving its first medical cannabis dispensary. The first dispensary to open, actually the third permit given by the city, only opened earlier this year. Three years ago, voters gave the city permission to begin taxing cannabis sales and a schedule was approved by the City Council setting the rate six percent, starting last year and due to increase to seven percent on July 1.


But without much activity on the sales front, the San Leandro City Council is set to delay the one percent increase and essentially turn back the clock on the tax schedule. San Leandro’s tax schedule is set to plateau at eight percent in the third year. Under the proposal before the council Monday night, the city would hit the eight percent tax rate in July 2022, instead of 2021.

San Leandro Mayor Pauline Russo Cutter made the request to city staff last May.

The move comes at a time when other cities across the state have faced growing concern from the cannabis industry that their business is being overtaxed. The addition of local taxes, combined with a 15 percent state excise tax and high federal taxes has dampened expected tax receipts and led many customers back to the black market for cheaper cannabis.

>>Regular council meeting, Monday, June 17, 7 p.m.
Next meeting: July 1.

Blüm San Leandro opened its doors last January, but according to the city, it is difficult to extrapolate the dispensary’s first quarter receipts, since much of it was received prior to the City Council allowing the sale of retail cannabis in San Leandro in late February.

If the council chooses to rollback the cannabis tax schedule Monday night, doing so, could leave between $50,000 and $75,000 in tax receipts on the table, according to city staff.

Harborside and Nug, formerly the Davis Street Wellness Center, are expected to come online later this year. The council also placed a deadline for each to begin operations before Dec. 31 or risk losing their permits.