No on San Francisco Proposition D

November 2018 election

Proposition D would tax large cannabis businesses by an addition 1 to 5 percent of gross receipts. While we could use the extra General Fund money, this severe tax endangers nascent cannabis businesses and risks pushing sales underground.

By 2021, Prop D would add $7–16 million per year to the General Fund. That would boost the currently-$5-billion General Fund by 0.1 to 0.3 percent, or 0.2 to 0.4 percent of the $4 billion that isn’t set aside. Many new taxes fund specific programs, such as Propositions C and D from June (commercial rent taxes for housing and child care; the child care measure passed) and Proposition C this cycle (gross receipts tax for homelessness). While that makes the tax more concrete to voters, it impedes the effective management of government, which requires authority to allocate flexible funds to current priorities. For example, more room in the General Fund could help the Mayor and Supervisors address the current homelessness crisis with or without Prop C.

Image for post
Image for post

The flexibility of funds generated by Prop D does not make up for its risks for the cannabis industry. 1 to 5 percent of gross receipts is a very hefty tax, especially when cannabis businesses still have difficulty operating as a normal business, such as in acquiring loans. If it causes too many businesses to close, cannabis may not be as easily available in legal, regulated settings. Consumers may be forced back into underground sales, with less ability to monitor the purity of their cannabis purchases.

Vote for other taxes that grow the General Fund, but not Prop D.

Written by

Economist. Founder and president of the UBI Center. Studied at MIT and UC Berkeley. YIMBY. Former Google data scientist.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store