Measure C would impose a tax on cannabis businesses within the unincorporated areas of Los Angeles. The tax revenue will go to the L.A. County General fund and to a cannabis equity program to help ensure equitable access to opportunities in the cannabis industry.

Official title on the ballot: Los Angeles County Cannabis Business Tax Measure

What The Measure Would Do

California legalized recreational cannabis use and purchase among adults in 2016, but it is up to each locality in the state to decide whether and how to legalize and tax the sale of marijuana within their city boundaries.

Measure C would impose a tax on commercial cannabis activities associated with the sale of cannabis, such as cultivation, manufacturing, microbusinesses, testing labs, and distributing cannabis for sale. It would apply to unincorporated parts of L.A. County.

Cannabis sales and related commercial activities are prohibited in unincorporated L.A. County. If Measure C passes, the Board of Supervisors would still have to officially vote to legalize commercial cannabis activity and cannabis business owners would still need to apply for permits and licensing before engaging in any commercial activities.

An unincorporated area means any area or neighborhood that is not part of one of the 88 cities within L.A. County. Unincorporated parts of L.A. include Altadena, East Los Angeles, and Ladera Heights, to name a few. Check out the full list here.

Measure C follows similar measures in several cities in L.A. County. For example, the city of Los Angeles legalized cannabis sales in 2017 with Measure M, which repealed a ban on medical marijuana dispensaries and imposed a tax on gross receipts on cannabis businesses, the sale of cannabis and on delivery and manufacturing services.

The county Board of Supervisors voted in August 2022 to put Measure C on the ballot after years of research on how to regulate the cannabis industry.

If passed, starting July 1, 2023, Measure C would impose:

• An initial tax rate of $7 per square foot of cultivation
• A 4% tax on gross receipts on retail (gross receipts are the total amount of money made, before you subtract any expenses)
• A 3% tax rate on distribution revenue

See the full breakdown of the tax rates

Some tax rates will increase starting July 1, 2026.

The tax revenue would go into the L.A. County General Fund to “further support economic and workforce development” in the unincorporated areas and to the development of a cannabis equity program, which would attempt to address inequitable access to opportunities in the cannabis industry “caused by systemic racism and exacerbated by the War on Drugs.” The program would cover permit costs and provide loans and other types of financial assistance.

The program is part of a framework for cannabis regulation that would also provide permits to 25 storefront retail marijuana businesses, 25 delivery-only retailers, 10 cultivators, 10 manufacturers, 10 testing limits and 10 distributors as part of the initiative. Such social equity programs have already been developed in some cities in the county, such as L.A. and Long Beach.

Measure C needs a simple majority to pass.

Measure C supporters argue that the tax revenue generated will be instrumental in developing the workforce, providing job training and contributing to the overall growth of L.A. County’s economy. They say that the relatively low taxes will support the legal cannabis industry and incentivize cannabis consumers to buy legal products.

The L.A. Times Editorial Board endorses Measure C, agreeing with supporters’ arguments that Measure C would help stop cannabis consumers from patronizing illegal sellers and would help smaller companies participate in the legal cannabis market. Without a tax, the L.A. Times writes, L.A. County would need to gather revenue to cover the costs of its commercial cannabis licensing program solely through licensing fees, which would put the cost of such licenses out of reach for all but the largest companies.

Read the full argument in support of Measure C on Voter’s Edge.

Opponents of Measure C claim that the cannabis tax is another “forever” tax with no end in sight. They also say that any taxes will contribute to growth in the illegal cannabis market by raising prices in the legal cannabis market.

Read the full argument against Measure C on Voter’s Edge.

The measure is projected to generate anywhere from $10.4 million to $15 million in revenue every year. In the fiscal year of 2020-2021, California collected $817 million in adult-use cannabis tax revenue used for drug research, treatment, enforcement, youth programs and environmental damage protection from illegal cannabis production.

Further reading

• Read the full text of L.A. County Measure C