Business · Merced

Merced slashes taxes on cannabis operations

Three years after authorizing taxes on marijuana sales and cultivation, the City of Merced brought out its red pen to cut tax rates.

The Merced City Council unanimously approved slashing taxes for various cannabis operations throughout the city at Monday’s council meeting. 

The taxes were originally approved by voters in 2018, which established the maximum amount that the city could collect from cannabis operations. 

Taxes have been slashed for cannabis cultivation, manufacturing, distribution, retailing and testing. 

Here’s a look at the tax cuts for each operation: 

Cannabis Cultivation

The annual cultivation tax has been reduced to 2.5 percent of gross receipts. Previously, it had been the greater of $7 per square foot of cultivation area or four percent of sales. 

Cannabis Manufacturing

The manufacturing tax has been lowered from $7 per square foot of manufacturing area to $2.5 per square foot. 

Cannabis Distribution

Similar to the cultivation tax, the distribution tax was initially the greater of $1 per square foot of distribution area or two percent of sales. The council axed the square foot tax, meaning businesses will pay the two percent sales tax. 

Cannabis Retailing

The tax on Medical marijuana sales has decreased from four percent to two percent, but the recreational marijuana tax remains at seven percent of sales. 

Cannabis Testing

Initially, the testing tax was set at $0.25 per square foot of building area. The council has completely removed that tax.

Daniel Gligich is a reporter for The San Joaquin Valley Sun, focusing on Fresno State Athletics and the southern San Joaquin Valley. Email him at