US (CA): San Jose cannabis tax revenue to drop due to competition from illicit market and delivery services

While San Jose's cannabis tax revenue is projected to drop by millions this year due to the growing competition from the black market and cannabis delivery services, city officials are scrutinizing ways to encourage the expansion of the legal cannabis industry and recover missing tax revenue according to San José Spotlight, a significant decline with the city's budget surplus being at $35 million; however, with a predicted $19 million budget shortfall for next year, boosting tax revenue from the cannabis sector remains crucial as previously reported by San José Spotlight.

In response, the San Jose City Council has shown interest in easing the regulatory burden on cannabis businesses, with recent moves towards loosening rules governing where dispensaries can establish themselves and reevaluating penalties placed on legal businesses, as indicated by San José Spotlight. Illegal sellers appear to be capitalizing on the market, often operating as seemingly legitimate delivery services, without generating any tax revenue for the city.

Sean Kali-rai, a lobbyist and founder of the Silicon Valley Cannabis Alliance, expressed his concern over the growing prevalence of unauthorized dealers from whom the city cannot collect cannabis taxes, stressing the importance of efforts by the city's Division of Cannabis Regulation in overseeing and regulating the cannabis market, with his poignant remark on legalization levels effectively handing the legal market over to the illegal per San José Spotlight.

In an attempt to address the local cannabis industry's limitations, San Jose city leaders have been evaluating existing regulations since late last year, passing changes to expand where dispensaries could establish their business and relaxing expensive annual audit requirements based on updates from San José Spotlight.


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