An American Heart Association study has found that daily marijuana use is linked to a significantly higher risk of heart attack and stroke. And the increased danger exists whether users smoke, vape or eat their cannabis products.
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.
San Diego’s tax has gradually increased: from 5% at launch, to 8% in 2019, and now to 10% as of May 2025. Yet higher rates haven’t translated into stronger revenues. Instead, industry observers and business owners suggest the elevated costs may be driving customers to dispensaries in nearby cities—or to the unregulated market.
Other municipalities in San Diego County offer far lower rates. Chula Vista, Vista, and Encinitas each charge 7%; Oceanside, Lemon Grove, and La Mesa impose a 5% tax. In unincorporated county areas, the cannabis tax is just 2%.
Moreover, San Diego’s local tax is only part of the burden placed on cannabis consumers. When combined with the 19% state excise tax and 7.75% sales tax, customers in San Diego can face a total tax markup of 36.75% at the register—among the steepest in California.
Despite the revenue decline, the city continues to approve new dispensaries. There are currently 25 licensed storefronts in operation, with 11 more in the pipeline. All cannabis businesses in San Diego are required to submit monthly remittance forms and payments. Facilities involved in cultivation, manufacturing, or distribution pay a lower tax rate of 2%.
San Diego’s declining tax revenue highlights a central tension in the state’s broader cannabis legalization framework: the balance between taxation, access, and the viability of a regulated market. While local governments depend on cannabis revenue to fund services, over-taxation may be undermining that very goal—driving consumers away from licensed dispensaries and into informal alternatives.
