La Mesa Advances Plan to Hike Cannabis Tax to 5%

Council Vote Moves Tax Increase Forward

La Mesa's city council voted July 30 to advance a cannabis tax ordinance that would set the rate at 5% of gross receipts. The proposal passed its first reading. It'll return for a second vote before taking effect. The city currently imposes a lower tax rate on cannabis businesses, though the exact current rate wasn't disclosed in public records reviewed.

The ordinance applies to all licensed cannabis retailers, distributors, and manufacturers operating within La Mesa city limits. No exemptions or tiered structures were mentioned in the council's action.

Regional Context for Local Cannabis Taxes

La Mesa joins dozens of California cities adjusting cannabis tax rates as municipalities seek revenue and respond to industry complaints about cumulative tax burdens. California law permits cities to impose local cannabis business taxes in addition to the state's 15% excise tax and standard sales tax. Combined effective rates in some jurisdictions exceed 30%.

San Diego County cities show wide variance. San Diego proper charges 8% on gross receipts for retailers. Chula Vista enacted a 6% rate in 2024. El Cajon maintains a 10% cap. For detailed tracking of municipal tax structures across the state, see the CannIntel topic hub on California local cannabis taxes.

Operators argue high cumulative tax loads drive consumers to the illicit market, and the numbers back them up. The California Department of Cannabis Control reported unlicensed sales still represent approximately 50% of total cannabis transactions statewide as of Q2 2026.

Revenue Projections and Budget Impact

La Mesa didn't release formal revenue projections tied to the 5% rate, but city budget documents show cannabis tax receipts have grown steadily since the first dispensary opened in 2022. The city collected approximately $180,000 in cannabis tax revenue in fiscal year 2024-2025, according to budget summaries. A 5% rate would generate revenue proportional to total gross receipts reported by licensed operators.

The ordinance doesn't specify an expiration or sunset provision. Most California municipal cannabis taxes are permanent unless voters or councils repeal them.

What Happens Next

The ordinance returns to the La Mesa city council for a second reading, expected within 30 days. California municipal code requires two readings for tax ordinances. If adopted on second reading, the tax takes effect 30 days after final passage unless the council specifies a later date.

No public opposition was reported at the July 30 meeting. Industry groups including the United Cannabis Business Association haven't issued statements on La Mesa's proposal. The city operates two licensed dispensaries as of mid-2026.

Operators will be watching whether neighboring East County cities follow suit. Both El Cajon and Santee permit cannabis retail and could revisit tax rates in upcoming budget cycles.