San Diego, California – Cannabis customers in San Diego are paying among the highest taxes in California, yet city revenues from cannabis businesses have fallen sharply in recent years—raising questions about the long-term sustainability of the local market and the city’s policy approach.
According to records from the City Treasurer’s Office, San Diego collected $12.8 million in cannabis tax revenue during the first 11 months of the 2025 fiscal year, which ended July 31. While the final accounting won’t be complete until mid-August, the current figure represents nearly a 50% decline from the city’s cannabis tax peak in fiscal year 2021, when it brought in $23.6 million.
The downward trend has persisted for three consecutive fiscal years, with San Diego consistently collecting less revenue than projected. The city’s cannabis tax was initially approved by voters in 2016 through Measure N, which authorized a 5% gross receipts tax on non-medical cannabis businesses. That same vote gave the city council authority to raise the rate up to 15% without further public approval…